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02 51

2015.01.30

CommentaryNew Foreign Investment Law Takes Shape

Foreign Equity Ratio Limit Lifted for Online Data Processing in Shanghai FTZ

Legal and Regulatory DevelopmentsBanking and FinanceCompetition LawDispute ResolutionForeign InvestmentImmigrationIntellectual PropertyPrivate Equity Real Estate

AllBright Law Off ices is one of the leading full-service law f irms in the People’s Republic of China.

We provide a comprehensive range of legal solutions for both domestic and foreign clients from our 13 off ices in mainland China and Hong Kong SAR.

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Commentary: New Foreign Investment Law Takes Shape

It would appear that the decades-old foreign investment classification scheme which divides foreign investments into three entity types each governed by separate regulatory rules has run its course.1 The new Foreign Investment Law (public comment version) was issued by the Ministry of Commerce (“MOFCOM”) on January 19, 2015, signaling what may be the most sweeping change to the regulatory landscape for foreign investment in China since the Open Door policy in 1978. Several significant reforms are proposed under the Foreign Investment Law.

First, foreign investment is no longer recognized simply as direct foreign investment, but will cover various forms of investment, including through equity and debt, and the resulting domestic interest can be equity, property ownership or merely contractual. Foreign invested enterprises will no longer be distinguished as WFOEs, EJVs or CJVs, but will instead be recognized in the same manner as domestically-owned enterprises, which includes limited liability companies, partnerships and sole proprietorships. The Foreign Investment Law makes it clear that it will regulate the legally dubious variable interest entity (“VIE”) structure, although its status under the new law has yet to be made clear. In the Law’s

1 WFOEs (wholly foreign owned enterprises), EJVs (equity joint ventures), and CJVs (contractual joint ventures) are the current designated foreign investment entity structures, each of which is subject to its own set of rules.

explanatory notes, MOFCOM discusses the current mainstream views on this scheme, including how it may regulate the VIE structure. MOFCOM states that the performance of VIE contracts may be permitted if the de facto controller is a Chinese national, and that the continuing validity of a VIE which has a foreign de facto controller may be subject to the issuance of an “entry permit” under a new approval process as discussed below. MOFCOM has indicated that it will finalize its position on the VIE structure following additional analysis and a review of public comments on the issue. Undoubtedly, regulating the VIE structure will elicit many comments from investors and legal practitioners alike.

Second, entry restrictions on foreign investment have been restructured to follow the “negative list” model currently on trial in the China (Shanghai) Pilot Free Trade Zone. The long-practiced case-by-case approval regime has been removed. Subject to certain exceptions, foreign investments will enjoy national treatment, meaning new FIEs (either by way of formation or acquisition) within “permitted areas” can directly apply for business registration with the AIC.2 “Categories Subject to Special Administrative Measures” resembles the “Catalogue of Industries for Guiding Foreign Investment,” promulgated by the NDRC,3 in terms of distinctions made between restricted and prohibited categories. For restricted category investments, an “entry permit” instead of an “approval certificate” will be issued upon MOFCOM’s approval of the application. Notably, the focus of the application review will be on the foreign investor and the substance of the investment itself rather than formation

2 Administration for Industry and Commerce.3 National Development and Reform Commission.

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Foreign investment is no longer recognized simply as direct foreign investment.

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documents such as articles of association or joint venture agreements. During the review process, MOFCOM will also have discretion to grant conditional approvals in a manner similar to what is currently done for antitrust reviews. Conditional approvals may be contingent upon certain material aspects of the investment which MOFCOM will monitor on an ongoing basis through an annual reporting process discussed below.

Third, the Law introduces national security review clearance, which expands the applicability of the review from only foreign investment acquisitions to all types of foreign investment. It is worth noting that no appeal procedure is available for final decisions made as a result of a national security review.

Fourth, echoing the recent shift in government function from making merit-based decisions to promoting transparency and accountability through disclosure, information reporting becomes an important compliance aspect for foreign investment under the Law. In contrast with past mandatory pre-reporting requirements, enterprises will now generally have discretion to submit reports on either a pre- or post-event basis within 30 days of the occurrence of a reportable event, which will include modifying or initiating an investment. Periodic reporting is also required, including annual reports for all foreign investments and quarterly reports for key investments (with assets or annual revenue exceeding RMB10 billion, or having more than 10 subsidiaries).

These changes present quite a different landscape for foreign investment in China going forward. Changes to the concepts of foreign investor and foreign investment, the removal of the “case-by-case” approval regime, the introduction of a national security review system and enhanced reporting requirements, will all have a significant impact. It is unusual in China for such wide-reaching reforms to be made within one new law, but it is also inevitable in order for China to continue to attract and retain foreign investment and to promote efficient government administration. The Law is open for public comment until February 2015, and additional time will still be required before the Law is formally issued. But, in any event, this is a welcome change as the new law brings more clarity and certainty to what can sometimes be an uncertain regulatory environment.

Reference: 《中华人民共和国外国投资法（草案征求意见稿）》

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Commentary: MIIT Lifts Foreign Equity Ratio Limit for Online Data and Transaction Processing in Shanghai FTZ

To further relax restrictions on foreign entry into e-commerce, the Ministry of Industry and Information Technology (“MIIT”) issued the Circular on Lifting Restrictions on the Foreign Equity Ratio for Online Data and Transaction Processing Businesses in the China (Shanghai) Pilot Free Trade Zone (“Circular”) on January 13, 2015, pursuant to which the foreign equity ratio limit for online data and transaction processing businesses (e-commerce operations) has been lifted on a trial basis in the China (Shanghai) Pilot Free Trade Zone (“Shanghai FTZ”).

This Circular is a follow-up to the 2014 Opinions on Further Opening up the Value-added Telecom Service Sector to Foreign Investment in the China (Shanghai) Pilot Free Trade Zone (“Opinions”). While the Opinions explicitly allow for foreign investment in the value-added telecom service sector in the Shanghai FTZ, the foreign equity ratio for online data and transaction processing businesses (e-commerce operations) was to be no greater than 55%. The Circular permits foreign investors to wholly own the equity of such businesses.

This change is a part of the continuing trend to fully open e-commerce to foreign investment. According to a proposed amendment to the Catalogue of Industries for Guiding Foreign Investments (2011), circulated for public comment by the NDRC1 on November 4, 2014, the foreign equity ratio in value-added telecommunications (excluding e-commerce) could not exceed 50%, which implied that e-commerce businesses

1 National Development and Reform Commission.

could be wholly foreign-owned. Now, through this Circular, MIIT has made it explicitly clear that it will permit wholly foreign owned enterprises to engage in online data and transaction processing (e-commerce operations) in the Shanghai FTZ. This may be regarded as a prelude to a full opening of e-commerce to foreign investment at the national level. But, beyond that, we are of the opinion that this Circular, along with the Opinions, also conveys the signal that policymakers recognize that e-commerce includes online data and transaction processing.

Though implicit in its delivery, this signal clears up the long-existing confusion over the definition of e-commerce, which will have a significant impact on the regulation of e-commerce. To better understand this, we must examine the value-added telecom service sector classifications as well as the evolution of regulators’ mindset towards e-commerce.

Classification of Value-added Telecom Services

According to the Classification Catalogue for Telecommunications Business (amended 2003) (“2003 Catalogue”), value-added telecom services are classified into eight categories, which are (A1) online data and transaction processing, (A2) domestic multi-party communication services, (A3) domestic internet virtual private networks, (A4) internet data centers, (B1) store-and-forward type businesses, (B2) call centers, (B3) internet access services, and (B4) information services.

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Classification of E-Commerce

It would make logical sense if general e-commerce was defined as category (A1), transaction processing. However, a plain reading of the 2003 Catalogue does not permit e-commerce to be classified under category (A1). Thus, e-commerce has been generally regarded as falling under category (B4), information services, which has resulted in this category being used to classify well-known e-commerce platform enterprises, such as Amazon, JD.com, and Taobao. Our search via the State Enterprise Credit Information Publicity System (全国企业信用信息公示系统) showed that all of these enterprises define their current business scope as “(B4) information service business.” However, it is notable that Yihaodian is an exception in that it includes both h des both current businessg and transaction processing business” and “(B4) information service business” within its business scope.

Redefining “Transaction Processing”

On May 23, 2013, MIIT issued the amended Classification Catalogue for Telecommunications Business (2013) (Draft for Public Comment) (“2013 Catalogue”), in which transaction processing is redefined to include “transaction processing platforms which are connected to a communications network (including the internet), which provide a public platform service to the general public for all kinds of commodities and service transactions such as financing, securities trading and e-commerce.” Although the 2013 Catalogue is merely a draft for public comment and the finalized version has not yet been promulgated, the rephrased definition of “transaction processing” which explicitly refers to e-commerce reflects regulators’ view towards the definition of e-commerce. Not surprisingly, the subsequently issued Opinions and the Circular began to include e-commerce together

with “(A1) online data processing and transaction processing business.”

Potential Implications

It goes without saying that e-commerce is of great significance to the public interest. As such, we believe MIIT is on the way to creating a systematic regulatory scheme to better serve the development of e-commerce. As discussed in the above paragraphs, MIIT is beginning to signal that general e-commerce will be classified as “(A1) online data processing and transaction processing business” rather than “(B4) information service business.”

This speculation has also been confirmed through our informal phone consultations with the Shanghai Communications Administration, which indicate that e-commerce enterprises are required to apply for (A1) classification licenses while (B4) licenses are not required unless the e-commerce enterprise also seeks to engage in such business.

In conclusion, as a result of the Circular, wholly foreign owned enterprises in the Shanghai FTZ are now qualified to engage in e-commerce by applying for an (A1) license. Nevertheless, if the proposed e-commerce enterprise also intends to engage in category (B4) activities (excluding software application stores), it shall still be subject to a foreign equity ratio limit of 50% as stated in the Opinions. Given the lack of regulatory guidance in this area, the impact that the Circular has on the supervision and administration of e-commerce is still subject to further observation.

Reference: 《关于在中国（上海）自由贸易试验区放开在线数据处理与交易处理业务（经营类电子商务）外资股权比例限制的通告》

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Legal and Regulatory Developments

Banking and Finance

Decision on Revising Administrative Regulations on Foreign-invested Banks

ISSUING AUTHORITY:State CouncilDATE OF ISSUANCEDecember 20, 2014EFFECTIVE DATE:January 1, 2015

The State Council issued on December 20, 2014 its Decision on Revising Administrative Regulations on Foreign-invested Banks, which is effective as on January 1, 2015.

The purpose of the Decision is to relax entry conditions for foreign-invested banks operating in China. Pursuant to the Decision, both foreign-invested and Sino-foreign joint venture banks shall be allocated operating funds denominated in RMB or in other freely-convertible currencies. The Decision has also cancelled the previously existing minimum funds limitation.

In addition, the Decision cancels the requirement that foreign banks operating in China must have a representative office within the country when proposing to establish new operations.

Reference: 《国务院关于修改<中华人民共和国外资 银行管理条例﹥的决定 》

Banking and Finance

Announcement on Issues Concerning Use of the National Financial Leasing Enterprise Management Information System for Inquiries of Leased Items

ISSUING AUTHORITY:Ministry of CommerceDATE OF ISSUANCE:December 4, 2014EFFECTIVE DATE:November 1, 2014.

The Financial Leasing Enterprise Management Information System (“System”) is a comprehensive financial leasing service platform established by the Ministry of Commerce. The primary purpose of the System is to avoid lease item ownership conflicts. The public may use the System to retrieve information regarding lease item registrations, exchanges, and businesses.

The public is encouraged to use the System when acquiring mortgages, pledges, or other security interests in property in order to avoid false transactions and mitigate business risk. The system is accessible via the following URL: http://leasing.mofcom.gov.cn.

Reference: 《商务部公告2014年第84号 商务部关于利用全国融资租赁企业管理信息系统进行租赁物登记查询等有关问题的公告》

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Legal and Regulatory Developments

Banking and Finance

Notice of the State Administration of Foreign Exchange on Issues Relating to Foreign Exchange Control for Overseas Listings

ISSUING AUTHORITY:State Administration of Foreign ExchangeDATE OF ISSUANCE:December 26, 2014EFFECTIVE DATE:December 26, 2014.

On December 26, 2014, the State Administration of Foreign Exchange issued the Notice of the State Administration of Foreign Exchange on Issues Relating to Foreign Exchange Control for Overseas Listings (“Notice”). The Notice supersedes Hui Fa [2013] No. 5, which was issued on January 28, 2013.

The Notice simplifies and facilitates business transactions related to the overseas listing of domestic companies. According to the Notice, the local branch of the foreign exchange bureau shall handle registration applications for overseas listings and shareholding, and shall issue registration vouchers stamped with an official service seal to duly registered domestic companies and shareholders.

Upon receipt of a registration voucher, a domestic company may open designated overseas listing accounts at a local bank for its initial public offering (or follow-on offering) and share repurchase transactions, or to remit and transfer funds for the company. Domestic shareholders may open designated overseas shareholding accounts with a local bank for the purpose of increasing or decreasing overseas shareholding and may use the accounts to handle the exchange, remittance and transfer of funds related to their investment.

Additionally, the Notice cancels the approval process for the foreign exchange settlement of funds in designated overseas listing accounts. Instead, domestic companies shall open exchange settlement pending payment accounts with the bank at which their designated overseas listing accounts are held. These pending payment accounts are to be used for the purpose of depositing exchange settlement funds, RMB-denominated funds raised in overseas listings, RMB-denominated funds for overseas share repurchases, and surplus funds from such share repurchases.

Reference: 《国家外汇管理局关于境外上市外汇管理有关问题的通知》

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Legal and Regulatory Developments

Competition Law

Notice on Further Implementing Provisions on the Establishment of Commercial Bribery Adverse Records for Purchases and Sales in the Pharmaceutical Industry in Shanghai

ISSUING AUTHORITY:Shanghai Municipal Health and Family Planning CommissionDATE OF ISSUANCE:December 22, 2014EFFECTIVE DATE:December 22, 2014

In order to regulate the purchase and sale of pharmaceuticals and to combat commercial bribery in Shanghai, the Shanghai Municipal Health and Family Planning Commission (“SHFPC”) has released the Notice on Further Implementing Provisions on the Establishment of Commercial Bribery Adverse Records for Purchases and Sales in the Pharmaceutical Industry (“Provisions”) in Shanghai (“Notice”) on December 22, 2014.

The Notice requires the relevant administrative authorities and health and medical institutions to strictly comply with the Provisions in order to improve the completion and maintenance of commercial bribery adverse records. The Notice also clarifies the reporting procedures that these authorities shall follow when entering the names of enterprises and their agents into the adverse records as stipulated by Article 4 of the Provisions. The adverse records will be published on the SHFPC’s official website and be reported to the National Health and Family Planning Commission within one (1) month after publication. Both regional administrative authorities and medical and health institutions are obligated to play an important role in supervising and inspecting business transactions in the industry.

In addition, the Notice emphasizes the requirement of signing an Integrity Purchase and Sales Contract along with a purchase contract in accordance with the Provisions. For enterprises which have not signed an Integrity Purchase and Sales Contract, such agreements must be signed as a contract supplement by the end of January 2015.

Reference: 《关于本市进一步落实医药购销领域商业贿赂不良记录有关工作的通知》

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Legal and Regulatory Developments

Dispute Resolution

Interpretation on Several Issues regarding the Application of Law in Civil Cases involving Environmental Public Interest

ISSUING AUTHORITY:Supreme People’s CourtDATE OF ISSUANCEJanuary 6, 2015EFFECTIVE DATE:January 7, 2015

The Supreme People’s Court issued on January 6 its Interpretation on Several Issues regarding the Application of Law in Civil Cases involving Environmental Public Interest (“Interpretation”), which has come into effect as of January 7, 2015.

The Interpretation clarifies the requirements for public interest organization plaintiffs to have standing in such cases and does not impose any regional restrictions on where such lawsuits may be initiated. The Interpretation stipulates that the plaintiff must be engaged in promoting environmental protection as evidenced by its articles of association, and that the plaintiff’s main objective in filing the lawsuit is to protect the public interest.

The Interpretation also confirms that, generally, people’s courts above the intermediate level have jurisdiction to hear such public interest civil lawsuits, while some of these cases may also be heard by lower level courts as determined on a case-by-case basis.

Reference: 《最高人民法院关于审理环境民事公益 诉讼案件适用法律若干问题的解释》

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Legal and Regulatory Developments

Dispute Resolution

New Arbitration Rules of the China Maritime Arbitration Commission Take Effect

ISSUING AUTHORITIES:China Council for the Promotion of International Trade, The China Chamber of International Commerce DATE OF ISSUANCE:November 4, 2014EFFECTIVE DATE:January 1, 2015.

On November 4, 2014, the Arbitration Rules of the China Maritime Arbitration Commission (2015 Edition) (“Rules”) were officially adopted by the China Council for the Promotion of International Trade and the China Chamber of International Commerce, and have been in effect since January 1, 2015.

The Rules adjust the structure and administration of the Arbitration Commission by establishing a court of arbitration which specializes in hearing maritime cases and also by adding provisions regarding the charging of arbitration fees.

The Rules improve the arbitration procedure system by including specific requirements for written arbitration agreements, adjusting the provisions on initiating arbitration proceedings, clearly distinguishing between the site of the arbitration and the place of the hearing, coordinating jurisdictional matters between the Arbitration Commission and the arbitral tribunals, improving the delivery of services, and expanding the parties’ rights during a proceeding in terms of the way in which the arbitration hearing is conducted. In addition, the new Rules, for the first time, explicitly provide that the parties involved in an arbitration have the right to hire professional record-keeping personnel at their own discretion and also provide for an emergency arbitrator system.

Reference: 《中国海事仲裁委员会仲裁规则》

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Legal and Regulatory Developments

Foreign Investment

Announcement Concerning the Establishment of For-profit Elderly Care Institutions by Foreign Investors to Engage in Elderly Care Services in China

ISSUING AUTHORITIES:Ministry of Commerce & Ministry of Civil Affairs DATE OF ISSUANCE:November 24, 2014EFFECTIVE DATE:November 24, 2014.

The Ministry of Commerce and Ministry of Civil Affairs have jointly released an announcement to clarify issues concerning current and prospective foreign investment in for-profit elderly care institutions in China.

The announcement encourages foreign investors to establish for-profit elderly care institutions in China on their own or jointly with Chinese companies, enterprises and other economic organizations. Foreign investors are also encouraged to assist in privatizing State-owned elderly care institutions while properly handling issues such as the protection of employees’ interests, and the maintenance and appreciation of State-owned assets. Foreign-invested and domestic for-profit elderly care institutions shall both be entitled to the same preferential tax treatment and policies relating to the reduction in, or exemption from, administrative and institutional fees.

Reference: 《关于外商投资在华设立营利性养老机构有关事项的公告》

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Legal and Regulatory DevelopmentsLegal and Regulatory Developments

Immigration

Procedures on Handling Relevant Formalities for Foreigners to Enter China to Complete Short-term Work Tasks (for Trial Implementation)

ISSUING AUTHORITIES:Ministry of Human Resources and Social Security, Ministry of Foreign Affairs, Ministry of Public Security, Ministry of CultureDATE OF ISSUANCE:November 6, 2014EFFECTIVE DATE:January 1, 2015

The Ministries of Human Resources and Social Security (“MOHRSS”), Foreign Affairs, Public Security, and Culture (“Ministries”) have jointly issued the Procedures on Handling Relevant Formalities for Foreigners to Enter China to Complete Short-term Work Tasks ( for Trial Implementation) (“Procedures”) on November 6, 2014, which supplement and clarify the different procedures for short-term entry visa applications. The Procedures are effective as of January 1, 2015.

The Procedures stipulate that any entry for stays not exceeding 90 days for the following purposes shall receive short-term work permits and Z visas, but shall no longer receive M or F visas:

1. to complete technical work, research, management, guidance or other activities in cooperation with a domestic party;

2. to perform trial training for domestic sports organizations (including coaches and athletes);

3. to shoot video footage (including news, promotions, etc.);

4. fashion shows;5. undertaking foreign commercial performances;

and6. other circumstances deemed eligible by

MOHRSS.

According to PRC regulations on the Administration of the Entry and Exit of Foreign Nationals, M visas, which permit the conduct of commercial activities, will be issued primarily at the invitation of a domestic commercial sponsor. F visas will be issued primarily upon the invitation of a domestic party for the purpose of exchange, visits, research, and other activities. While Z visas will be issued to foreigners planning to work in China, work status is mainly handled pursuant to the issuance of work permits issued by the relevant authorities.

In accordance with the Procedures, foreign theatrical performance teams or individuals entering China for short-term commercial performances shall hold approval documents issued by the Ministry of Culture. Foreigners performing other short-term work tasks shall hold foreigner work permits issued by MOHRSS.

These Procedures do not apply to other activities which require fewer than 90 days of presence in China, including:

1. repair, installation, adjustment, teardown, guidance, and training required for machine and equipment procurement;

2. guidance, supervision, and confirmation on winning project bids;

3. dispatches to accomplish short-term work at domestic branches, subsidiaries or representative offices;

4. attending competitive sporting events;5. entry for work without remuneration or volunteers

compensated by external organizations; and6. any other activity which a cultural

administrative authority does not regard as a “foreign-related commercial performance” in the approval documents.

According to the Procedures, individuals falling into categories 1, 2, 3, and 4, above, shall apply for an M visa, whereas categories 5 and 6 shall apply for an F visa.

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Legal and Regulatory Developments

Sponsors and individuals entering China to accomplish short-term work tasks should be aware of the new Procedures and apply for the appropriate visa type so as to avoid potential legal risks. The Ministries emphasize that foreigners entering China for such short-term work without the proper documentation may be found in violation of immigration laws.

Reference: 《外国人入境完成短期工作任务的相关 办理程序（试行）》

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Legal and Regulatory Developments

Intellectual Property

Shanghai Municipal People’s Government Releases Decision on Issues concerning Work Related to Intellectual Property in Pudong New Area

ISSUING AUTHORITY:Shanghai Municipal People’s GovernmentDATE OF ISSUANCE:October 18, 2014EFFECTIVE DATE:January 1, 2014.

On October 18, 2014, the Shanghai Municipal People’s Government promulgated its Decision on Issues concerning Work Related to Intellectual Property in Pudong New Area (“Decision”), which has taken effect as of January 1, 2015.

The Decision makes new arrangements for the implementation of intellectual property administration in Pudong New Area. According to the Decision, the Pudong New Area intellectual property administrative department (“Department”), as entrusted by the Shanghai Intellectual Property Administration, has the power to mediate patent infringement disputes, impose penalties for the issuance of false patent retrieval reports or other activities for illegal profit, and to impose penalties for facilitating the production or use of fake or counterfeit patents. The Shanghai Copyright Administration also entrusts the Department to implement registration procedures for overseas book publishing contracts, duplicate overseas audiovisual product copyright licensing contracts, and overseas copyright trade activities.

In addition, the Department shall also have the power to impose administrative penalties related to activities that are in violation of the laws, regulations and rules with respect to copyrights, trademarks, special marks and official marks.

Reference: 《上海市人民政府关于浦东新区知识产权工作有关事项的决定》

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Legal and Regulatory Developments

Private Equity

CIRC Issues Circular on Investments in Venture Capital Funds with Insurance Funds

ISSUING AUTHORITY:China Insurance Regulatory CommissionDATE OF ISSUANCE:December 12, 2014EFFECTIVE DATE:December 12, 2014.

On December 12, 2014, the China Insurance Regulatory Commission issued the Circular on Issues Concerning Investments in Venture Capital Funds with Insurance Funds (“Circular”).

Venture capital funds under the Circular refer to lawfully established private equity funds which are managed by qualified fund management institutions, mainly investing in the equity of “venture enterprises,” which includes common shares, convertible preferred shares, and convertible bonds. Venture enterprises under the Circular refer to non-public enterprises which are in their start-up or early growth stage, or those in industries which have entered their early growth stage and which lack a mature development model.

The Circular clarifies the standards for fund management institutions and their funds under management, and proposes explicit standards and requirements with respect to historical performance, management scale, management teams and operating mechanisms for fund management institutions, fund-raising scale and diversif ication level of the funds.

The Circular requires that the total investment allocated for a venture capital fund scheme not exceed 2 percent of an insurance company’s total assets registered at the end of the previous quarter. In addition, an insurance company’s investment in a single venture capital fund cannot not exceed 20 percent of the fund’s total value.

Reference: 《中国保监会关于保险资金投资创业投资基金有关事项的通知》

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Legal and Regulatory Developments

This publication is intended to keep our clients and friends apprised of regulatory and legislative changes that have an impact on the way business is conducted in China. Information presented in this publication is for general information purposes only and does not represent legal or other advice. We are not responsible for the content of the information on external webpages hyperlinked in this publication. Inclusion of a hyperlink in this publication neither represents nor implies an endorsement of, or an affiliation with, that website.

Real Estate

Provisional Regulations on Real Estate Registration

ISSUING AUTHORITY:State CouncilDATE OF ISSUANCE:November 24, 2014EFFECTIVE DATE:March 1, 2015.

On November 24, 2014, the State Council promulgated the Provisional Regulations on Real Estate Registration (“Regulations”), which shall take effect as of March 1, 2015.

The Regulations require a unified registration system for real estate in China. According to the Regulations, the following rights to real estate shall be registered: 1) ownership of collectively-owned land, houses and other buildings and structures, forests and woods, 2) contractual management rights to land, 3) land use rights for construction, housing sites and ocean areas, 4) easements, 5) mortgage rights, and 5) other rights to real estate which shall be registered as required.

The Regulations clarify that real estate registration shall be conducted by the real estate registration authorities of the county-level people’s government where the real estate is located. The people’s government of province-level municipalities or districted cities may designate real estate registration authorities at the district level to uniformly register real estate in all districts within its jurisdiction.

Real estate which lies within two administrative regions at the county level are to be registered based on: dual-registration, through consultationwith authorities, or as designated by the common superior people’s government.

Real estate registration authorities shall establish a unified real estate register on a national level which is used to record the condition and status of ownership rights to real estate and to provide notice to interested parties regarding limitations on, and other issues affecting, rights to real estate. No one may alter or destroy the real estate register, or amend the registered entries, unless done so in accordance with the Regulations.

The Regulations also prescribe general rules for the real estate registration process, and the sharing and protection of registered information.

Reference: 《不动产登记暂行条例》

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