Out-Law / Your Daily Need-To-Know

Chinese supervision and administration of outbound investment by centrally managed state owned enterprises

Out-Law Guide | 20 Feb 2017 | 11:41 am | 1 min. read

China's State-Owned Assets Supervision and Administration Commission of State Council (SASAC) has released updated details of how it will supervise and administer the outbound investment of centrally managed state owned enterprises (SOEs).

This guide was last updated in Feburary 2017

A negative list has been created in which the outbound investment projects of centrally managed SOEs are divided into three categories:

  • Prohibited projects, in which the centrally managed SOEs can not invest in any circumstances;
  • Controlled projects, which the centrally managed SOEs have to submit to the SASAC for investor review; and
  • Projects outside of the negative list, where the centrally managed SOEs can make the decision to invest based on its development strategy and plan.

The negative list will be reviewed and amended by SASAC from time to time.

In a controlled project, the SASAC review process will take place between the internal decision-making procedure of the centrally managed SOE and the legal procedures of review and approval or filing undertaken by other government authorities such as the National Development and Reform Commission or the Ministry of Commerce.

The SASAC review will cover a number of areas including the investor's internal decision-making documents, a feasibility report on the proposed project, the financing plan, and reports on risk control and mitigation.

SASAC has also been given the power to supervise the on-going investment projects made by the centrally managed SOEs.

The SOEs are required to compile an annual outbound investment situation report and submit it to SASAC before January 31 of the following year.

Centrally managed SOEs are encouraged to cooperate with other investors from various backgrounds, including state owned capital, private sector capital, international investors and local investors from the host country, to reduce the risks of outbound investment projects.