China 20/20 Legal and Regulatory Developments - April 27, 2012

by Orrick, Herrington & Sutcliffe LLP

Measures to Supervise Overseas Investments of Central Enterprises

On March 18, 2012, the State-owned Assets Supervision and Administration Commission ("SASAC") issued the Interim Measures for the Supervision and Administration of Overseas Investment by Central Enterprises, which will take effect on May 1, 2012.  The measures govern the investment activities of Chinese state-owned enterprises and their subsidiaries in foreign countries, Hong Kong, Macao or Taiwan.  Under the measures, SASAC requires “central enterprises, i.e. state-owned enterprises to which SASAC directly contributes capital, to establish an internal overseas investment management mechanism and formulate an annual overseas investment plan.   In principle, central enterprises are not permitted to engage in overseas investments in areas outside their core industries.  The measures require SASAC to carry out a record-filing for a key investment project that falls within a central enterprise's core industry or issue a written objection to such an investment.  If an investment falls outside a central enterprise's core industry, SASAC approval must be obtained before the investment may proceed.  Central enterprises also must report to SASAC if major changes occur during the execution of key investment projects. 

The full Chinese text of the interim measures is available here.

Provisions Governing Overseas Manufacturers of Imported Food

On March 22, 2012, the State Administration of Quality Supervision, Inspection and Quarantine issued the Provisions for the Administration of the Registration of Overseas Manufacturers of Imported Food, which will take effect on May 1, 2012 and supersede the Provisions for the Administration of the Registration of Foreign Manufacturers of Imported Food, issued in 2002.  The new provisions continue to require overseas food manufacturing, processing and storage enterprises to complete a registration procedure with the Certification and Accreditation Administration of China before their related food products may be imported to China.  The registration number is valid for four years and the registration may be renewed during the year before the registration number expires.  The registration number will be cancelled if an overseas food manufacturer (1) fails to file the renewal application within the prescribed time period, (2) causes a major food safety incident, (3) exports unqualified food to China, or (4) leases, lends, transfers, sells or alters its registration number.  Penalties may be imposed on the importer of the food products of an overseas food manufacturer that fails to complete the registration procedure.

The full Chinese text of the provisions is available here.

China to Amend Measures for Foreign Invested Medical Institutions

On April 13, 2012, the Ministry of Health ("MOH") published for public comment a draft version of the Measures for the Administration of Sino-foreign Equity and Cooperative Medical Institutions.  The public may submit comments until May 16, 2012.  Under the draft, investors in foreign invested medical institutions are no longer required to be able to provide internationally advanced management and service experience, medical technology or equipment.  However, the minimum total investment of jointly-owned Sino-foreign medical institutions has been increased to RMB 100 million from RMB 20 million (in central and western China or remote and poor areas, the minimum total investment is RMB 50 million).  The draft also simplifies the approval process for setting up a foreign invested medical institution.  Under current practice, an investor first must go through the municipal and provincial level health authorities before obtaining approval from the MOH.  The draft amendment allows investors to submit their applications to, and obtain approval from, the provincial health authorities directly.  The draft also clarifies that the nature of foreign invested medical institutions may be profit oriented or non-profit oriented. 

The full Chinese text of the draft measures is available here.

Hong Kong and Macao Investors May Establish Wholly-owned Hospitals throughout Mainland

On March 21, 2012, the Ministry of Health and the Ministry of Commerce jointly issued the Notice on Expanding the Territorial Scope in the Mainland where Hong Kong and Macao Service Providers May Establish Wholly-owned Hospitals.  The notice permits Hong Kong and Macao service providers to establish wholly-owned hospitals in all Mainland provincial capitals and municipalities directly under the central government starting from April 1, 2012.  Application procedures must be carried out in accordance with the Interim Measures for the Administration of the Establishment of Wholly-owned Hospitals in the Mainland by Hong Kong and Macao Service Providers, issued in 2010.

The full Chinese text of the notice is available here.

Shanghai's 12th Five-year Plan for Absorption of Foreign Capital and Overseas Investment

On February 27, 2012, the Shanghai Municipal Development and Reform Commission and the Shanghai Municipal Commission of Commerce jointly issued the "12th Five Year Plan for the Absorption of Foreign Capital and Overseas Investment."   According to the plan, during the period from 2011 to 2015, Shanghai aims to further improve the structure of local foreign investment, seek new channels for foreign investment in capital markets, further promote the facilitation of investment, and further encourage the integration of the absorption of foreign capital and overseas investment.  The plan encourages foreign investors to participate in the ongoing development of Shanghai as a center of international finance, international shipping and international trading.  It also supports domestic enterprises to make outbound investment in high and new technologies, acquire technologically advanced foreign manufacturers, and develop international markets by obtaining brands, equity or service businesses in foreign countries. 

The full Chinese text of the plan is available here.

Draft Amendment to PRC Copyright Law

On March 31, 2012, the National Copyright Administration issued for public comment a draft amendment to the Copyright Law of the People's Republic of China.  The public was permitted to submit comments on the draft until April 30, 2012.  The draft provides a definition of "works" and adds artworks with a practical application to the list of works that are eligible for copyright protection.  It also clarifies that copyright is generated automatically when a work is completed, and that no extra procedures need be performed.  The draft permits copyright and related rights holders to register their rights with the relevant government authorities and provides that proof of registration provides preliminary proof of ownership.  Copyright owners may license, transfer, pledge or otherwise lawfully use their property rights in a copyright.  Under the draft, a written contract must be concluded to transfer or to exclusively license property rights to a copyright, and a registered transfer contract or exclusive license agreement may be enforced against third parties.  Copyright administration departments are required to establish mediation commissions to handle copyright-related disputes. 

The full Chinese text of the draft amendment is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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