China 'Foreign Investment Law' Five-Year Transition Period Ends

Effective January 1, 2020, the Foreign Investment Law of the People's Republic of China was officially implemented. To ensure a smooth implementation of this law, a five-year transition period has been established for foreign-invested enterprises that were set up under the previously existing laws: the Chinese-Foreign Equity Joint Ventures Law, the Wholly Foreign-Owned Enterprises Law, and the Chinese-Foreign Cooperative Joint Ventures Law. These enterprises are required to adjust their organizational forms and structures and complete the necessary registration modifications by December 31, 2024.

Which enterprises need to change their organizational form?

Enterprises that were established before January 1, 2020, without corporate legal person status under the implementation rules of the Chinese-Foreign Cooperative Joint Ventures Law or the Wholly Foreign-Owned Enterprises Law, and are applying to be restructured as partnership enterprises, must apply for registration changes in accordance with the provisions of laws and regulations such as the Partnership Enterprise Law of the People's Republic of China. After these enterprises change their organizational form, their branches must also promptly apply for modification registration.

Which enterprises need to register changes in organizational structure (for the record)?

Companies invested by foreigners that were established before January 1, 2020, must, within five years of the implementation of the Foreign Investment Law, adjust their highest governing bodies, legal representatives, or directors' production methods, and decision-making mechanisms to conform with the mandatory provisions of the Company Law of the People's Republic of China. They must revise their articles of incorporation and apply to the registration authorities for handling change registration, articles of incorporation filing, or directors' filing procedures.

Method 1: Online Reporting

• Log into the Guangzhou Business Startup One-stop Platformand scroll to the bottom of the page to the "More Optimization Plans" section, click on "Enterprise Change" to complete the whole process electronically.

Method 2: Submitting Paper Materials Offline

• Go to the Guangzhou Market Supervision Administration's website - Government Services - Service Instructions - Form Downloads - Domestic Registration Forms and Material Standards, refer to the "Market Entity Registration Documentation Standards (2022 Edition)" and the "Market Entity Registration Submission Material Standards (2022 Edition)", download the relevant forms and templates, prepare the paper materials, and make an appointment to handle it at the offline counter.

Consultation and Assistance

Companies uncertain about the registration process can consult with the 12345 hotline or seek help from live customer service during the electronic submission process.

Implications of Non-compliance

Starting January 1, 2025, foreign-invested enterprises that fail to comply with the new regulations will face registration restrictions. The market supervision departments will not process other registration-related requests from these non-compliant companies and will publicly disclose these infractions.

Some instructions

The new Foreign Investment Law in China aims to streamline and unify the legal requirements for foreign enterprises operating in the country. It replaces several older laws and introduces a standardized approach to governance, compliance, and registration for all foreign investments. The transition period until the end of 2024 provides existing foreign-invested companies time to adjust their internal structures to meet the new legal standards, thereby facilitating smoother operations and legal compliance in the evolving Chinese market.

This initiative is part of China's broader effort to simplify business processes and make the regulatory environment more transparent and consistent for foreign investors. Enterprises that do not comply by the end of the transition period may face difficulties with further business registrations or amendments, emphasizing the importance of timely compliance with the new law's requirements.