On 18 January 2018,the Ministry of Commerce (‘MOFCOM’) and six other administrative agencies jointly issued the Interim Measures for the Reporting of Outbound Investments Subject to Approval or Record-filing (对外投资备案（核准）报告暂行办法), with immediate effect.
The measures aim to facilitate transparency and inter-agency co-operation relating to outbound investment. Under the measures, administrative agencies will continue to have administrative authority for outbound investment projects within their scope of regulation, and each agency's rules governing relevant outbound investments will remain in effect.
Under the measures, administrative agencies are required to evaluate outbound investments based on the relevant guidelines and restrictions, and to apply the principle of the "ultimate destination enterprise", that is, the entity that will actually engage in project construction or operations in the target destination. Shell firms that are established by domestic investors to invest in ultimate destination enterprises will not be considered.
The measures compel outbound investors to comply with periodic reporting obligations (as determined separately by each administrative agency), as well as emergency reporting obligations in the event of a major adverse event or sudden security incident. In turn, each administrative agency is required to share this information through a new online platform administered by MOFCOM.
The measures also impose new post-closing supervision requirements on the various administrative agencies, including spot checks, as well as special inspections, where an outbound investment involves:
- At least USD300 million by the Chinese side.
- A sensitive country or region or a sensitive industry.
- A major operating loss, a major security incident or mass incident, or a serious violation of law.
- Other important circumstances.