Provisions on the Evaluation and Approval of the Establishment of Real Estate Enterprises with Foreign Investment
(A) Main Legal Basis
Following documents define the basic regulations set for Foreign-Funded Real Estate Enterprises: the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures and the Implementation of the regulation of the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, the Law of the PRC on Sino-Foreign Contractual Joint Ventures and the Implementation of the regulation of the Law of the People’s Republic of China on Sino-Foreign Contractual Joint Ventures, the Law of the People’s Republic of China for Wholly Foreign-Owned Enterprises and the Rules for the Implementation of Law of the People’s Republic of China for Wholly Foreign-Owned Enterprises, the Implementation of the Opinions on Regulating the Access to and Administration of Foreign Capital into the Real Estate Market (No.171  of the Ministry of Construction), the Notice of the General Office of the Ministry of Commerce on Implementing of the Opinions on Regulating the Access to and Administration of Foreign Capital into the Real Estate Market (No.192  of the Ministry of Commerce), the Notice of the Ministry of Commerce and State Administration of Foreign Exchange on Further Strengthening and Regulating the Examination, Approval and Supervision of Foreign Direct Investment in Real Estate Industry (No.5  of the Ministry of Commerce).
(B) Examination and Approval Authority
1. The Ministry of Commerce — foreign-invested real estate enterprises (FIREE) approved by the Ministry of Commerce in accordance with relevant laws and regulations (enterprises whose total investment is eligible for examination and approval by the Ministry of Commerce in the form of shareholdings, etc. )
2. The Hunan Provincial Department of Commerce — other FIREEs besides those above-mentioned ones.
Except “Application Requirements” in Item 4, establishment of FIREEs shall also meet the following requirements:
1. FIREEs refer to foreign-funded enterprises engaged in the construction and operation of all kinds of residence including ordinary residence, apartments and villas, hotels (restaurants), vacation villages, office buildings, convention and exhibition centers, commercial facilities, theme parks, or land development and tract development projects that aim for the construction of the above-mentioned projects.
2. The ratio between the registered capital and the total investment of FIREE:
(1) For an enterprise with a total investment of $10 million or over, the registered capital shall account for at least 50% of the total investment;
(2) For an enterprise with a total investment more than $3 million but less than $10 million, the registered capital shall account for at least 50% of the total investment;
(3) For an enterprise with a total investment of $3 million or lower, the registered capital shall account for at least 70% of the total investment.
3. Where an overseas investors mergers domestic real estate enterprises through equity transfer or any other ways, shall make appropriate arrangements for the relevant employees, deal with bank debts and pay transfer fees with its own capital in a one-off manner within three months as of the day the business license of The foreign-invested enterprise was issued. Where an overseas investor acquires the equities of the Chinese party of a FIREE, it shall make appropriate arrangements for the relevant employees, settle the bank debts and pay the transfer fee with its self owned capital in a one-off manner within three months as of the day the equity transfer agreement came into force.
4. Overseas investors engaged in domestic real estate development or operation shall comply with the principle of business existence, lawfully apply for establishing FIREE and engage in relevant business in accordance with approved business scope. Neither tThe Chinese party nor the foreign party of FIREE may enter into any clauses ensuring fixed return or fixed return in disguised form of any party by any means in contracts, regulations, equity transfer agreement or other documents.
5. Foreign-funded investment in the development and operation of real estate market shall follow the principles of project companies.
(1) Prior to the application for establishing real estate companies, foreign investors shall obtain the right of land use and ownership of real estate building, or sign agreement of booking sale/purchase of land use or real estate right with land administration authority and land developers/real estate building owners.
(2) For those FIREEs that have established new-added real estate development or operation business, as well as those engaged in the development and operation of new real estate projects, the enterprises hereof shall, in accordance with relevant laws and regulations, apply to the examination and approval authority for relevant procedures dealing with increasing business scope and extending business scale.
6. Overseas investors shall not alter the means of actual manipulator of domestic real estate enterprises, evade the examination and approval of foreign-invested real estate.
(D) Application Materials
1. Application form for the establishment and the trial documents of commerce (investment invitation) department in local city or prefecture;
2. The feasibility study report compiled by all investment parties or foreign investors;
3. Joint (Cooperative) venture contracts and articles of association signed by the legal representative or authorized representatives of the joint (cooperative) venture parties; articles of association signed by the legal representative or authorized representatives of foreign investors is required for foreign-invested enterprises;
4. The name list of Chairman of the joint (cooperative) venture or Joint Management Committee Director, Vice Chairman or Deputy Director, Director or committee candidates designated by the joint (cooperative) venture parties or by cooperative parties through consultation, their resumes, valid IDs (photocopies), and attorney for directors of investing parties; name list of legal representatives (or board of directors candidates) of foreign-invested enterprises, resumes, valid IDs (photocopies), and attorney for directors of each investor.
5. The certificate for the qualification or notary certificate of identity of foreign investors issued by their local notary organs (investors from Hong Kong, Macau and Taiwan shall provide the certificate for qualification or notary certificate of identity issued by their local notary organs ) .
6. Documents of investor’s qualification certificate and notary certificate of identity provided by Chinese Embassy or Consulate in investor’s country to the notary public of the country where the foreign investors locate in (investors in Hong Kong, Macao and Taiwan excluded.)
Note: If the foreign investors are natural persons, resumes shall be provided; notary and certificates are not needed for those owning passports copies with Chinese Embassy (Consulate) visa provided as identity certificate with valid passport for verification. If the investors in Hong Kong, Macao and Taiwan regions are natural persons, resumes shall be provided. Notary documents are not needed for those owning copies of the Mainland Travel Permit for Hong Kong and Macao Residents or Mainland Travel Permit for Taiwan Residents issued by Mainland public security authorities provided as identity certificate with valid passport for verification.
7.A Power of Attorney for the Service of Legal documents signed by the overseas investor (the authorizer) and the addressee of service of domestic legal documents (the authorized);
8. The qualification and credit certification of foreign investors and legal representative certificate (photocopy);
9.Chinese bank credential letter, certificate of registration (photocopy), legal representative certificate (photocopy);
10. Shareholders Registration of foreign investor;
11.Certification of project land or real estate source (state-owned land use certificate, building ownership certificate ( BOC) or booking sale/purchase of land and building property right etc.)
12.In case of investing with state-owned assets, China shall provide the appraisal report of state-owned assets and comfirmation of state-owned assets administration department;
13.the written notification on pre-approval of the enterprise name;
14.Submission of other materials requested by the Ministry of Commerce
For equity and project transfer of FIREE, merger of domestic real estate enterprises by overseas investors, investors shall submit the Guarantee Letters for carrying out the Contract for the Transfer of State-owned Land Use Right, the License for the Planning of Construction Landand the License for the Planning of Construction Projects and the Certificate for Using State-owned Land, certification on the alteration of archive files in the administrative department of construction (real estate), as well as relevant tax document issued by tax authorities.
Chinese source: hunan.gov.cn