Measures for the Administration of Overseas Investment of Enterprises

On 1 March 2018, the National Development and Reform Commission (NDRC)'s Measures for the Administration of Outbound Investment by Enterprises (Regulation No.11) came into effect. The rules, which were issued on 26 December 2017 after public consultation between 3 November 2017 and 3 December 2017, govern outbound direct investment by Chinese companies. This is a follow-up measure to the State Council’s guideline on overseas investment issued in August 2017. The new rules replace the Measures for the Administration of Approval and Filing of Outbound Investment Projects of 2014. The new rules prohibit investments in countries or regions that have no diplomatic ties with China, zones at war or under civil disturbance, or are subject to investment restrictions by international treaties or agreements to which China is a Party. Restrictions also apply for outbound investment in certain sensitive sectors, notably media organisations, weapons manufacturing, multi-national water resources exploitation, as well as sectors in which outbound investment is restricted under China’s laws, regulations and macroeconomic policies, and which include sectors such as hotels, cinemas, entertainment, and sports clubs. The rules also streamline requirements to inform authorities about overseas investment in non-sensitive sectors below USD 300 million, and abolish a requirement to submit a project information report to NDRC prior to competitive bidding on projects of USD 300 million or above. Finally, the rules strengthen the supervision over outbound investment projects.