by lideting482 » Tue Sep 18, 2007 1:19 pm
Opinions of the Ministry of Construction, the Ministry of Commerce, National Development and Reform Commission, the People’s Bank of China, the State Administration for Industry of Commerce and the State Administration of Foreign Exchange on Regulating the Access to and Administration of Foreign Investment in the Real Estate Market
(No. 171 [2006] of the Ministry of Construction)
The people’s government of all provinces, autonomous regions and municipalities directly under the Central Government, all the ministries and commissions and directly affiliated institutions under the State Council:
Since this year, the foreign investment in China’s real estate sector has been increasing in a comparatively rapid manner and the overseas institutions and individuals have taken great initiative in purchasing real estate in China. In order to promote a sound development of the real estate market and upon the consent of the State Council, we hereby produce the following opinions on the access to and administration of foreign investment in the real estate market:
I. Regulating the Access of Foreign Investment into the Real Estate Market
1. An overseas institution or individual shall, when investing in China to purchase any not-for-self-use real estate, abide by the principles of commercial existence and apply, according to the relevant provisions on foreign investment in real estate, for establishing a foreign investment enterprise and may, upon obtaining the approval of the relevant department as well as completing the relevant registration, engage in the relevant operation according to its approved business scope.
2. As to a foreign-funded real estate enterprise with an investment amount of no less than 10 million yuan (including 10 million yuan), its registered capital shall not be less than 50% its investment amount. Where the total investment is less than 10 million yuan, its registered capital shall be governed by the existing provisions.
3. As to the establishment of a foreign-funded real estate enterprise, the administrative department of commerce and the administrative organ for industry and commerce shall grant an approval for establishment according to law, handle the relevant formalities for registration and issue a 1-year-term Approval Certificate of Foreign-funded Enterprises and Business License. Where an enterprise fully contributes its transfer fee of the right to land use, it can, upon the strength of the aforesaid certificates, go to the administrative department of land to apply for a Use Certificate of State-owned Land and may obtain an official Approval Certificate of Foreign-funded Enterprises in the administrative department of commerce on strength of the said Use Certificate of State-owned Land and thereafter, obtain a Business License with a term the same as the Approval Certificate of Foreign-funded Enterprises and then go through registration in the taxation authority.
4. The transfer of stock right and projects of foreign-funded real estate enterprises as well as the acquisition of domestic real estate enterprises by overseas investors shall be subject to the examination and approval of the department of commerce, etc. in strict accordance with the relevant laws and regulations. An investor shall submit the Guarantee Letters for performance of the Contract on the Transfer of State-owned Land Use Right, the License for the Planning of Construction Land and the License for the Planning of Construction Projects and the Use Certificate of State-owned Land, certification on the alteration of archival files in the administrative department of construction (real estate) as well as the relevant certification materials of tax return as produced by the taxation authority.
5. Where an overseas investor purchases a domestic real estate enterprise by such means as equity transfer or acquires the Chinese equity in a joint venture, it shall properly resettle the relevant employees, settle the bank debts and pay off the transfer price by its self-owned capital in a one-off manner. An oversea investor with any unfavorable record is not allowed to conduct any of the aforesaid activities within the Chinese territory.
II. Intensifying the Administration of Real Estate Development by Foreign-funded Enterprises
6. An overseas investor that has not obtained an Approval Certificate of Foreign-funded Enterprises or a Business License shall not engage in any development or operation of real estate.
7. Where any foreign-funded enterprise fails to make full payment of its registered capital, fails to obtain the Use Certificate of State-owned Land or fails to make its project development capital reach 35% the total project investment amount, it shall not deal with any domestic or overseas loan and the administrative department of foreign exchange shall not approve the settlement of the foreign exchange loan thereof.
8. The Chinese or foreign party in a foreign-funded real estate enterprise shall not stipulate any term on fixed return or disguised fixed return in any contract, constitution, equity transfer agreement or any other document in any form.
9. A foreign-funded real estate enterprise shall, according to the relevant laws, regulations and policies of real estate, strictly implement the stipulations of the contract on land transfer as well as the term and conditions as prescribed by the planning license. The relevant departments shall intensify the supervision over the business operation of development and sale by foreign-funded real estate enterprises. Such law-breaking or rule-breaking acts as hoarding and cornering of land and real estate resources and bid-up of house price as found shall be seriously investigated into according to Document No. 37 [2006] of the General Office of the State Council as well as other relevant provisions.
III. Strictly Administrating House Purchase by Overseas Institutions and Individuals
10. A branch, sub-branch or representative office of an overseas institution in China (except for an enterprise that has been approved to engage in real estate operation) or a foreigner that has worked or studied in China for more than 1 year may purchase a commercial house for self-use or self-accommodation, yet shall not purchase any commercial house not for self-use or self-accommodation. An overseas institution without any branch, sub-branch or representative office in China or a foreigner that has not yet worked or studied for more than 1 year in China may not purchase any commercial house. A resident in Hong Kong SAR, Macao SAR or Taiwan Region or an overseas Chinese may, out of his living requirement for self-accommodation, purchase a commercial house of limited area under quota for self-accommodation in China.
11. A real-name system shall be adopted for the purchase of commercial houses for self-use or self-accommodation by overseas institutions and individuals that meet the relevant provisions. An approved institution or individual shall, upon the effective certification (an overseas institution shall hold the certification as produced by the relevant Chinese departments on the establishment of China-based branch, an foreigner shall hold the relevant approval certification on his work and study in China), go to the administrative departments of land and real estate to handle the relevant formalities for registration of land use right and house property right. The administrative department in charge of the registration of property right shall, in strict accordance with the principles of self-use and self-accommodation, handle the relevant registration and shall not register for any house that fails to meet the relevant conditions.
12. The administrative department of foreign exchange shall, in strict accordance with the relevant provisions as well as the requirements of these Opinions, conduct the examination of inward remittance and settlement of foreign exchange by foreign-funded enterprises, overseas institutions and foreigners, and shall permit the inward remittance for those that meet the relevant requirements and make foreign exchange settlement therefor. The relevant RMB capital as generated from house transfer shall, according to the relevant provisions, be subject to the examination on compliance with regulations and be confirmed to have gone through such formalities for tax return before it can be used for purchase of foreign exchange and outward remittance.
IV. Further Intensifying and Implementing Supervision and Administration Responsibilities
13. A region, especially a municipal people’s government shall effectively assume its responsibilities, attach great importance to the potential problems that may arise from the access of foreign investment into the real estate market, further intensify its leadership and carry into effect the supervision responsibility. A region shall not promulgate any preferential policy for foreign-funded real estate enterprises without approval. Any unapproved preferential policy that has been promulgated shall be straightened out and corrected. Such departments as the Ministry of Construction, the Ministry of Commerce, National Development and Reform Commission, the Ministry of Land and Resources, the People’s Bank, the State Administration of Taxation, the State Administration for Industry and Commerce, China Banking Regulatory Commission and the State Administration of Foreign Exchange shall formulate the relevant detailed rules for operation in a timely manner, intensify the guidance for and supervision over local policies for access and administration of foreign investment in the real estate market and shall, as to any law-breaking or rule-breaking act of unlawfully lowering the enterprise registered capital or project capital proportion or absence of administration, make further investigation thereinto according to law. At the same time, it shall further intensify the investigation into and punishment of irregular trans-border trading of real estate as well as law-breaking or rule-breaking remittance and settlement of foreign exchange.
14. Improving the work mechanism of market supervision and analysis. The Ministry of Construction, the Ministry of Commerce, the State Statistics Bureau, the Ministry of Land and Resources, the People’s Bank of China, the State Administration of Taxation, the State Administration for Industry and Commerce and the State Administration of Foreign Exchange shall establish and improve a supervisory system of information on the access of foreign investment into the real estate market and improve the information network of foreign-funded real estate. The relevant departments shall intensify their coordination and supervision over trans-border capital flow so as to realize the information pooling of statistical data of foreign investment in real estate as soon as possible.
The Ministry of Construction of the People’s Republic of China
The Ministry of Commerce of the People’s Republic of China
The National Development and Reform Commission
The People’s Bank of China
The State Administration for Industry and Commerce of the People’s Republic of China
The State Administration of Foreign Exchange
July 11, 2006
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