MOFCOM Issues Rules on Contributions of Equity Interests to FIEs
On October 22, 2012, the Interim Provisions of the Ministry of Commerce on Contributions of Equity Interests Involving Foreign Invested Enterprises (Interim Provisions) took effect. The Interim Provisions apply to contributions of an equity interest in a domestic enterprise (Equity Enterprise) held by a foreign or domestic investor (Investor) in a foreign invested company (Invested Enterprise). The equity contribution can create a newly established foreign invested enterprise (FIE), or it can take the form of a capital increase to an existing FIE or to an existing domestic enterprise, which is then converted into an FIE. The Interim Provisions do not apply to situations where an Investor contributes its equity in an offshore company. In addition, contributions of equity interests in real estate, investment or venture capital enterprises, or where otherwise prescribed by law, are not permitted. More…