China’s New Foreign Investment Law

23 May 2019

The new Foreign Investment Law (“FIL”) was passed and published on March 15, 2019 and will take into effect on January 1, 2020. The FIL is composed of six chapters, mainly focusing on the national treatment of foreign investment, including the promotion and protection of foreign investment and investment management system. In addition, the FIL provides general principles on the information report system and security review system.

As the first unified law in the field of foreign investment, the FIL will replace the existing PRC Sino-foreign Equity Joint Ventures Law, PRC Wholly Foreign-owned Enterprises Law and PRC Sino-foreign Cooperative Joint Ventures Law as well as their respective implementing rules (the “FIE Laws”).

Any foreign invested enterprise incorporated after the effectiveness of the FIL shall comply with the Company Law of the PRC or the Partnership Enterprise Law of the PRC as the case may be, in terms of its organizational form and corporate structure.

As for the foreign invested enterprise established before the effectiveness of the FIL, an interim period of five (5) years is provided for its transition. That is to say, the existing foreign invested enterprise may keep its current organizational form and corporate structure (including the highest authority, the voting mechanism and etc.) for five (5) more years commencing from January 1, 2020. 

It is currently not clear whether the foreign invested enterprise needs to go through relevant approval/filing/registration process to revise its existing organizational form and corporate structure which may be stipulated in the specific or detailed rule on the implementation of the FIL.

We have summarized all key features of the FIL by comparing them with existing laws and regulations on foreign investment on the booklet that you can upload below.

We hope that this content will help you better understand this upcoming legal environment.

To know more, please contact Bruno Grangier (b.grangier@leaf-legal.com) or Jean-Philippe Engel (jp.engel@leaf-legal.com)