Chapter 1  General Provisions
Article 1 In order to support Shanghai private enterprises to directly participate in global competition and international economic and technical cooperation, standardize the administration on private enterprises seeking for establishing oversea enterprises, the Measures is formulated in light of the practical situation of Shanghai, and in conformity with relevant laws and regulations of the state as well as the requirement from Shanghai municipal government to encourage private enterprises to “walk out” into the international market.

Article 2 Shanghai Overseas Investment Promoting Center is an authoritative consulting institution founded by Shanghai Municipal Government with the purpose to accelerate Shanghai’s outward investment. In order to promote the outward investment of private enterprises in Shanghai, Shanghai Foreign Economic Relation and Trade Commission entrusts Shanghai Outward Investment Promoting Center with transactions of relevant approval and registration formalities concerning private enterprises seeking establishing oversea enterprises.

Article 3 Private enterprises involved in the Measures refer to sole investment companies, partnership enterprises, companies of limited liability and companies limited by shares, with more than 50% privately owned capitals.

Article 4 The Measures shall apply to private enterprises that have registered and enrolled at Shanghai Administration of Industry & Commerce at all levels, and that apply for establishing oversea non-financial enterprises or economic and trade organizations (Hereinafter oversea enterprises).

Chapter 2: Application conditions and investment forms
Article 5 Private enterprises applying for establishing oversea enterprises must conform to the following conditions:
 
1. The enterprise must be registered and enrolled at Shanghai Administration of Industry & Commerce, conduct independent financial accounting, and operate on substantial scale.
2. The enterprise must have more than two years’ operation experience, and has been law abiding in this duration.
3. 3 the enterprise must have solid economic foundation and capability to set up oversea enterprises, as well as specialized capacity and talent pool in production, technology, management and administration.
4. After making the intended overseas investment, the parent company must remain in China.

Article 6 Chinese investors can set up overseas enterprises in the form of joint capitals, partnership, single-venture, shares holding and shares purchasing.
Article 7 The organization of the oversea enterprises shall be decided by all investing parties through joint negotiation in conformity with laws and regulations of the host country. However, enterprises can bear limited responsibility only.
Article 8 Chinese investors can contribute in forms of spot exchange, physical products, industrial property rights and proprietary techniques.
Article 9 Chinese investors shall conduct oversea investment mainly through equity capital.
 Article 10 Oversea projects with Chinese investment below US$1 million, or below US$ 3 million in kind shall be examined, approved and registered at Shanghai Overseas Investment Promoting Center. Enterprises eligible for Approval Certificate for Oversea Enterprises can report to the Foreign Economic Relation Section of Shanghai Foreign Trade and Economic Relation Commission.

Chapter 3: Projects Allowed and Approval Procedures
Article 11  Projects allowed for oversea investment by private enterprises include:
1. Oversea processing projects with self-fetched materials;
2. Development and exploitation projects on all kinds of resources in short supply in China;
3. Projects utilizing local markets;
4. Projects promoting technology import;
5. Other manufacture, trade or service-oriented projects.
  
Article 12 Materials to be Submitted
1. Project survey;
2. Agreement of joint venture or cooperative enterprise or project contract;
3. Corporation Charter;
4. Financial report of the applicant enterprise for the past two years prepared by certificated public accountants companies in Shanghai
5. Photocopy of business license of applicant enterprise, and private enterprise testimonial documents prepared by relevant department of Shanghai Administration of Industry & Commerce
6. Credit certification of the oversea partner (Not required in case of sole proprietorship);
7. Qualification documents of the enterprise provided by Shanghai Industry & Commerce Association (hereinafter Industry & Commerce Association) at city or county level
8. Other materials
  
Article 13 Application Procedures
1.  When the materials listed in Article 12 are ready, the applicant enterprise shall make formal application to Shanghai Overseas Investment Promoting Center. After examination and approval, Shanghai Outward Investment Promoting Center will provide registration service and issue Certificate on Oversea Investment by Shanghai Private Enterprise to qualified applicants.
2.  In cases where investment is to be made in sensitive or hot countries or regions, consultations shall be made to Commerce Department of embassies of the People's Republic of China in countries concerned. Letters of consultation shall be drafted by Shanghai Overseas Investment Promoting Center, inspected and stamped by Foreign Economic Relation Department of Shanghai Foreign Trade and Economic Cooperation Commission.

Article 14 Private enterprise shall bring Certificate on Oversea Investment by Shanghai Private Enterprise to relevant department to finish the needed procedures.
  
Article 15 Approved and registered oversea enterprises should conduct foreign procedures of registration and enrollment timely and submit photocopies of relevant enrollment documents of oversea enterprises to Shanghai Overseas Investment Promoting Center to be put on record. The overseas enterprises shall be subject to the supervision and guidance of PRC embassies in host countries.
 
Chapter 4: Alteration, termination and management of investment
  
Article 16 Application for alteration or termination of ratified oversea enterprises shall be made to Shanghai Outward Investment Promoting Center for examination, approval and registration.
  
Article 17 Upon the cancellation of oversea enterprises, Chinese investors shall properly deal with business liquidation on creditor’s rights, indebtedness, etc., appropriately settle relevant staff and transact foreign exchange capitals legally obtained by Chinese investors back to China within 30 days upon liquidation
  
Article 18 Oversea enterprises shall establish and perfect its rules and regulations. Chinese investors shall report the operation and management of oversea enterprises to Shanghai Outward Investment Promoting Center annually.

  
Chapter 5: Supplementary Provisions
   
Article 19 The Measures does not apply to private enterprises establishing oversea enterprises in Hong Kong, Macao or countries without formal diplomatic relationship with People’s Republic of China.
  
Article 20 Other things not mentioned in this administrative regulation shall refer to relevant laws and regulations issued by Shanghai municipal government or the state.
  
Article 21 Shanghai Foreign Trade and Economic Cooperation Commission shall be responsible for the interpretation of the Measures, and Shanghai Overseas Investment Promoting Center shall be responsible for its implementation.

Article 22 This administrative regulation will go into effect as of the day of publication.

March 1, 2002