China Clarifies Filing Process for Foreign-Funded Venture Capital Enterprises

In order to improve the management of foreign-funded venture capital enterprises (VCs), China’s Ministry of Commerce (MOFCOM) issued the “Ministry of Commerce Circular on Improving the Administration of Record Filing for Foreign-funded Venture Capital Enterprises (shangzihan[2-12] No.269, hereinafter referred as the “Circular”)” on May 7, clarifying the filing procedures for foreign-funded VCs.

General filing process
Related commerce authorities at the provincial level in charge of examining and approving the establishment of foreign-funded VCs shall submit the filing applications to MOFCOM through the online system before May 31 every year according to related provisions and notices. Completed filings will be made public on the MOFCOM website.

Foreign-funded VCs filed with MOFCOM can benefit from government policies, apply for registration change, and carry out business within the territory of China. VCs not listed on the MOFCOM website are not allowed to enjoy the abovementioned benefits.

VCs in the “encouraged” and “permitted” industry
The filing process for VCs doing business in the encouraged and permitted industry under the Catalogue for the Guidance of Foreign Investment Industries will be completed within five days after the submission of the application. They will be issued an opinion on the filing for record and the authorized certificate for foreign invested enterprises.

Documents required for filing

• Application form for foreign-funded VCs to set up new investments or to apply for registration change (3 copies)
• Authorized certificate for venture capital enterprise (photocopy)
• Business license of venture capital enterprise (photocopy)

VCs applying for registration change shall follow the same procedure.

Other specific guidance for certain VCs
Foreign investors are encouraged to set up VCs using RMB or to increase the RMB capital of VCs. The filing for record process is guided by the “Notice of the Ministry of Commerce on Issues Concerning Cross-border Direct Investment in RMB (shangzihan [2011] No.889).”

The filing process for VCs investing in restricted industries shall follow Article 41 of the “Provisions Concerning the Administration of Foreign-funded Business-starting Investment Enterprises (Order of Ministry of Foreign Trade and Economic Cooperation, Ministry of Science and Technology, State Administration for Industry & Commerce, State Administration of Taxation, and State Administration of Foreign Exchange [2003] No. 2).”

The Circular also orders local commerce authorities to guide and attract VCs to invest in strategic emerging industries and modern service industries, as well as to provide easy access and better service for foreign-funded VCs in order to promote diversity in foreign capital utilization.

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