The State Council promulgated the “Catalogue of Investment Projects Subject to Governmental Verifications(2013)（《政府核准的投资项目目录（2013年本）》）” on the 2nd December 2013. This catalogue changes the verification requirement into a filing requirement on some overseas investment projects. However, the catalogue does not provide the detailed verification and filing procedures.
On 8th April 2014, the National Development and Reform Commission (the “NDRC”) promulgated the “Administrative Measures for Verification and Filing on Overseas Investment Projects（《境外投资项目核准和备案管理办法》）” (the “Measures”), which clarify the verification and filing procedures in relation to overseas investment projects. The Measures also provide the time limit for NDRC to verify or file the projects, enabling the applicant in relation to overseas investment projects to estimate how much time the verification or filing procedures may take.
The Measures will come into force on 8th May 2014. At the same date, the “Tentative Measures for the Verification Administration on the Overseas Investment Projects《境外投资项目核准暂行管理办法》)” will be abolished.
The major differences between the Measures and the Tentative Measures for the Verification Administration on the Overseas Investment Projects are as below:
1. The Measures do not distinguish resources projects and non-resources projects. Instead, the Measures provide certain administrative requirements in relation to different types of overseas investment projects according to the Chinese parties’ investment amount and whether the projects are in any “sensitive countries and regions” or involving any “sensitive industries”.
According to the Measures:
- “Sensitive countries and regions” means any country or region that has not established diplomatic relations with China or is subject to international sanctions, or where there is a war or riots.
- “Sensitive industries” means foundational development of telecommunications systems, multi-regional water resource development and utilization, large-scale land development, main line power grids as well as media and other related industries.
2. Apply for verification or filing for the up-front fees of overseas investment projects
According to the requirement of the effective foreign exchange administrative regulations, the investor may refer to Article 7 and 8 of the Measures to apply for verification or filing for the up-front fees of the overseas investment projects.
3. Information report
The “Notice of delegating verification powers on overseas investment projects of NDRC (《国家发展改革委关于做好境外投资项目下放核准权限工作的通知》)” provided that, if a Chinese investor is to conduct overseas acquisition projects or bidding projects with an investment amount more than USD 100 million, it shall submit an information report to NDRC before the investor conducts any substantial activities in relation to the investment. The Measures change the project investment amount from USD 100 million to USD 300 million.
If the project complies with the overseas investment policy of China, the NDRC shall issue a confirmation letter within 7 business days after it receives the information report. If the investor did not submit the information report pursuant to Article 10 of the Measures before conducting any substantial activities in relation to the investment, NDRC shall circulate a notice of criticism and order the investor to correct their course of action. If the investor seriously violates this provision resulting in serious damage to China’s interests, NDRC shall punish the investor together with other competent authorities, and submit or transfer the case to other competent authorities to investigate the legal or administrative responsibility of the investor according to law.
4. Provide more predictable time limit for NDRC to verify or file the projects:
- The NDRC shall notify the applicant within 5 business days if any other documents require to be submitted
- If the project involves any sensitive countries and regions, or involving any sensitive industries, NDRC shall ask for other related authorities’ opinion on the project within 3 business days after it receives the application, and the related authorities shall respond within 7 business days
- If needed, NDRC shall authorize a qualified consultative institute to assess the project within 5 business days after it receives the application, and that consultative institute shall provide its assessment report within 40 business days
- If the project complies with the verification conditions, the NDRC shall verify the project or submit the application and its preliminary opinion on the project to the State Council within 20 business days after it accepts the application for the project. If the NDRC cannot verify the project or submit its preliminary opinion on the project to the State Council within that period, the responsible official at NDRC can approve an extension of a further 10 business days, and notify the applicant about the extension. The period above does not include the period taken by the consultative institute for its assessment report
- If the project complies with the filing conditions, the NDRC shall issue a filing notification within 7 business days after it accepts the application for the project.
5. Financial institutions shall not finance overseas investment projects, which did not obtain the verification certificate or filing notification from the competent authority or through appropriate procedures pursuant to the Measures.
6. The effective period of the verification certificates and filing notification
The verification certificates and filing notification will specify their own effective period. The effective period of the verification certificates and filing notification for construction projects shall be two years, and the effective period of the verification certificates and filing notification for other projects shall be one year. If the applicant cannot complete all the procedures provided in Article 24 of the Measures, the applicant shall apply to extend the effective period of the documents 30 business days before the expiration of their effective period.
Other than the changes above, the Measures also clarify some unclear matters in the Tentative Measures for the Verification Administration on the Overseas Investment Projects, such as the definition of the “Chinese parties’ investment amount” and the effective period of the verification certificates and filing notification. The Measures are generally consistent in all other aspects with the Tentative Measures for the Verification Administration on the Overseas Investment Projects.
Please note that the Measures do not apply to investment projects in Taiwan. The NDRC will refer to the Measures to make other administrative measures for the investment projects in Taiwan.
 According to Article 4 of the “Tentative Measures for the Verification Administration on the Overseas Investment Projects”, resources projects refer to projects that conduct outbound investment to explore and develop resources such as crude oil, mines, etc.