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NDRC Simplifies Approval Process for Overseas Investment

On 8 April 2014, the National Development and Reform Commission (“NDRC”) promulgated the Measures on the Administration of the Verification and Registration of Overseas Investment Projects (“Measures”). The Measures, which took effect on 8 May 2014, aim to promote overseas investment by Chinese companies and allow Chinese investors to be more competitive abroad by lowering transaction costs and limiting the time for completing the Chinese government’s overseas investment approval process. In a fundamental change, the Measures simplify the approval process by replacing the “verification” procedure with a “registration” (or filing) procedure, except in regard to proposed investments where the total amount of investment exceeds US$ 1 billion or projects involving sensitive countries and regions and/or sensitive industries. The Measures define “total amount of investment” as the aggregate sum of cash, securities, in kind contributions, intellectual property rights or technology, equity, debt and guarantees. The term “sensitive countries and regions” refers to countries or regions with which China has no diplomatic relations, or which are under international sanction or are in a state of conflict. “Sensitive industries” include basic telecommunications operations, cross-border water resources development and utilization, large-scale land development, transmission lines, power grids and news media, etc. As a result, many Chinese overseas investments now only require registration. It should be noted, however, that under the Measures the NDRC and its counterparts at the local level retain their broad discretionary powers on all overseas investment, and the NDRC still maintains a project information reporting regime for overseas acquisitions or bids over USD 300 million. More…