Poor local enforcement hampers FIE reform

Author: Brian Yap | Published: 1 Dec 2015

Counsel in China have revealed a lack of enforcement of the country’s amended Company Law by local officials, as the central government seeks to ease restrictions on foreign investment enterprises (FIEs).

On October 28, the Ministry of Commerce (Mofcom) issued new rules removing minimum registered capital previously imposed on FIEs and PRC holding companies, two years since the Company Law was first amended.    

But counsel have dismissed it as a mere clarification of the previous amendments, arguing that local enforcement of the new measures has been weak even with the announcement made in late October.   

"Two years after the Company Law was amended, we still run into local officials who, regardless of what the law says, still want FIEs and PRC holding companies to commit to a substantial...