Summary
The Supplemental Regulations on the Administration of Foreign-Invested Construction Enterprises (Decree No. 121), Construction and Engineering Design Enterprises (Decree No. 122) and Urban Planning Service Enterprises (Decree No. 123), which were deliberated and ratified at the 24th working meeting of the Ministry of Construction and Ministry of Foreign Trade on 9 December 2003, were promulgated for implementation as from 1 January 2004.
Pursuant to the Supplemental Regulations (Decrees No. 121-123), the main amendments to the previous position are that Hong Kong and Macau service suppliers may now be sole investors when establishing foreign-funded construction enterprises, construction and engineering design enterprises, or urban planning service enterprises in Mainland China.
Full Update
A. Supplemental Regulations (Decree No. 121) to the Regulations on Administration of Foreign-Invested Construction Enterprises – Decree No. 113
The key amendment to the previous regulation is that Hong Kong and Macau service suppliers can now be sole investors when acquiring Mainland construction enterprises. Further, when applications are submitted for the examination and approval of the establishment of foreign-invested construction enterprises, the performance of Hong Kong and Macau service suppliers shall be taken into account regardless of whether the companies are located in Hong Kong, Macau or the rest of China.
Another important change is that when Hong Kong and Macau service suppliers establish construction enterprises in the Mainland and participate in a Sino-foreign construction project, they are not constrained by any Sino-foreign investment ratios stipulated in the construction project, and once a qualification certificate is obtained from the relevant construction administration department, the construction enterprise can legally bid for construction projects within the boundaries of Mainland China.
Lastly, Hong Kong and Macau service suppliers must abide by the Regulations on Administration of Foreign-Invested Construction Enterprises and any other relevant regulations. The foreign trade and economic cooperation administration department of the State Council and the construction administration department shall each be responsible for the interpretation and administration of the regulations.
The Supplemental Regulations shall apply from 1 January 2004.
B. Supplemental Regulations (Decree No. 122) to the Regulations on Administration of Foreign-Invested Construction and Engineering Design Enterprises – Decree No. 114
The key amendment to the previous regulation is that Hong Kong and Macau service suppliers may now be sole investors when establishing foreign-invested construction and engineering design enterprises in the Mainland.
Hong Kong and Macau service suppliers must abide by the Regulations on Administration of Foreign-Invested Construction and Engineering Design Enterprises and any other relevant regulations. The foreign trade and economic cooperation administration department of the State Council and the construction administration department shall each be responsible for the interpretation and administration of the regulations.
The Supplemental Regulations shall apply from 1 January 2004.
C. Supplemental Regulations (Decree No. 123) to the Regulations on the Management of Foreign-Funded Urban Planning Service Enterprises – Decree No. 116
The main amendment to the previous regulation is that Hong Kong and Macau service suppliers may now be sole investors when establishing foreign-funded urban planning service enterprises in Mainland China.
Hong Kong and Macau service suppliers must abide by the Regulations on the Management of Foreign-Funded Urban Planning Service Enterprises and any other relevant regulations. The foreign trade and economic cooperation administration department of the State Council and the construction administration department shall each be responsible for the interpretation and administration of the regulations.
The Supplemental Regulations shall apply from 1 January 2004.
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The Supplemental Regulations (Decrees No. 121-123) stipulate that Hong Kong and Macau service suppliers must fulfill the requirements of the Mainland and the Hong Kong Closer Economic Partnership Agreement and the Mainland and Macau Closer Economic Partnership Agreement (both known as "CEPA"), particularly, they must fulfill the requirements laid down in the definition of "service supplier" and other relevant provisions.
"Service supplier" as used in "CEPA" and its Annexes refers to any person that supplies a service. In this context, a "person" means either a "natural person" or a "juridical person" (as defined in CEPA, and for your ease of reference set out below).
"Natural person" in the case of the Mainland, means a citizen of the People's Republic of China; and in the case of Hong Kong or Macao, means a permanent resident of the Hong Kong Special Administrative Region or the Macao Special Administrative Region respectively of the People's Republic of China.
"Juridical person" means any legal entity duly constituted or otherwise organized under the applicable laws of the Mainland or the Hong Kong Special Administrative Region or the Macao Special Administrative Region, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association (business association).
The full text of the Mainland and Hong Kong Closer Economic Partnership Agreement ("CEPA") and its Annexes can be viewed at the Trade and Industry Department's website http://www.tid.gov.hk/english/cepa/fulltext.html, or alternatively click here to view Annex 5 of CEPA.
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