Joyce Wen
On June 30, 2020, the General Office of the Ministry of Commerce and the General Office of the State Administration for Market Regulation issued the Circular on Further Improvements to the Foreign Investment Reporting System and Ex Post Supervision (the “Circular”). Under Article 34 of the Foreign Investment Law, which came into effect on January 1, 2020, the state would set up a foreign investment information reporting system, and foreign investors or foreign-invested enterprises shall report their investment information to the competent authorities through the enterprise registration system and the enterprise credit information disclosure system. The Regulations for the Implementation of the Foreign Investment Law and the Measures for Reporting Foreign Investment Information as subsequently promulgated further refined the relevant provisions on the foreign investment information reporting system. The Circular now aims to implement the foreign investment information reporting system and to clarify the work requirements to the relevant local agencies.
The Circular requires the local commerce authorities and the relevant agencies in each pilot free trade zone and national economic and technological development zone (collectively the “Local Commerce Authorities”), as well as the market supervision departments, to clarify the division of responsibilities. The local market supervision departments are responsible for promoting the revamping of the enterprise registration system and the optimizing the registration service process to provide better protection to foreign investors and foreign-invested enterprises in performing their reporting obligations. The Local Commerce Authorities are responsible for reporting their local foreign investment information, take on initiation, change and cancellation reports, and supervise the compliance of foreign investors and foreign-invested enterprises with the information reporting obligations under the Measures for Reporting Foreign Investment Information.
The Circular emphasizes that the Local Commerce Authorities and the market supervision departments should further strengthen and improve their interim and ex post supervision, perform their regulatory duties and create a good business environment. Open and transparent regulatory rules and standards should be adhered to with emphasis that all market entities are equal under law. In addition, all market entities should be treated equally in administrative enforcement, and fair competition should be promoted through fair regulation. Through continued innovation in the regulatory approach, “internet plus regulation” will be promoted in depth via oversight through inspection of randomly selected entities by randomly selected inspectors, with only the results made public. More tolerant and prudent supervision with regulated administrative law enforcement will reduce the burden on market entities and effectively protect the rights and interests of foreign investors.