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January 2, 2020

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New foreign funding law begins

SHANGHAI’S market authorities granted the first business license to a foreign enterprise funded by a Chinese individual yesterday, when the country’s new Foreign Investment Law took effect.

The law allows Chinese “natural persons” to fund and establish foreign enterprises as domestic investors for the first time, the Shanghai Administration for Market Regulation said.

“Natural persons” are individuals, rather than corporations or partnerships.

In the past, Chinese natural persons were not included as a Chinese investor category for foreign-funded enterprises, blocking their ability to become direct shareholders in foreign companies.

“Chinese natural persons needed to set up a domestically funded company first, and then establish a foreign-funded enterprise with the cooperation of a foreign business,” said Ni Jiahui, director of the Changning District Administration for Market Regulation.

“The (new) law gives a legal guarantee for individuals to make investment in foreign-funded enterprise directly as domestic investors.”

Shanghai Zunyun Consultancy and Management Co, registered in the Pudong New Area, received its license yesterday morning.

“I originally expected to receive the license in late January, and it was a surprising delight to get it on the first day of the new year, which signifies a good start to 2020,” said Xu Jin, deputy general manager of the company.

He established the company with a friend from the United States.

“We can conduct business nearly one month ahead of schedule, which is very good news to secure market share,” he said.

Chen Xuejun, director of the Shanghai Administration for Market Regulation, said: “The new regulation satisfies market demand and will boost investment and spur market vitality.”

Shanghai has more than 91,000 foreign-funded enterprises, with combined registered capital of over US$640 billion.

“Shanghai is an international metropolis and the law will help the creation of an international, regulated and convenient business environment,” said Chen.




 

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