Online FIE filing in ChinaNov 09, 2016
As of October 1st, foreign-invested enterprises (FIE) who want to conduct business in China don’t have to obtain approval from the government, and can instead go through an online filing process.
Who can apply? All FIEs can are eligible for record filing, including foreign investment holding businesses, wholly foreign-owned enterprises, foreign equity investment enterprises, and foreign-invested venture capital businesses.
When should filing take place? To establish a FIE, the Draft Measures permit foreign investors to go through record filing practices for existing enterprises prior to the emanation of a company license from the Administration for Industry and Commerce (AIC) or within 1 month of obtaining a company business license. With regards to FIE modifications, the Draft Measures specify that record filing should be done within one month of such amendments occurring.
How long is the record filing process? In comparison to the existing system where approval could transpire between 10 to 20 business days, record filing should be done within three working days of receiving the submission online.
What documentation is needed to file? For the intention of administrating foreign investment, you can now file through a consolidated online information system. Through this process, the original paperwork to be sent is an online application form showcasing vital details about the FIEs and investors.
Are other submissions needed? The Draft Measure forecasts a pair of scenarios where more submissions would be required. For one, if the foreign investment consists of antitrust matters, the investor might be required to make further submissions that adhere to the relevant guidelines. Secondly, if the application consists of national security measures, the investor will need to apply to the Chinese Ministry of Commerce (MOFCOM) for a national security review.
What happens after filling? Once the online form is sent, the authorities will validate the legitimacy of the details provided and ensure all submitted documents are acquired. If it involves record-filing, it can be done within three business days. If there are inconsistencies or incompleteness, the FIE will submit the necessary details within 15 days.
What are the repercussions of wrongful filing? If a breach of the record filing occurs, a fine may be implemented that ranges from 1 to 3 times the amount of illegal revenue, even though it is restricted to RMB 30,000.
Are current FIEs required to send their records? Regarding current FIEs, there is no rule imposed on them to send records. That said, if there are any modifications to the FIE, the current FIE should finish the online filing process.
In spite of the streamlined processes for putting together a FIE, the FIE is still required to keep several documents that need to be submitted to the AIC for issuance and registration of the business license.
The changes certainly make doing business in China easier for foreign investors, and the necessary working days for record filing will be substantially shortened. That said, it doesn’t take into consideration a potential delay as a result of inconsistencies or incompleteness of submitted documents.