Finding a balance between speedy approval and customised contracts

By Kenneth Kong and Shelly Sui, Martin Hu & Partners
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On 18 October 2011, the Shanghai Municipal Commission of Commerce (the approval authority in charge of foreign investment in Shanghai) issued the Notice on Launching the Pilot Project for the Examination and Approval of Standardised Contracts for, and Articles of Association of, Foreign-Invested Enterprises in Shanghai Municipality. Following the notice, from 1 November 2011 to 31 October 2012, the Shanghai commission has, in respect of newly established foreign-invested enterprises, promoted standardised foreign-invested enterprise articles of association and equity/co-operative joint venture contracts, so as to standardise the examination and approval procedure and radically shorten the time required for foreign investment approvals.

Kenneth Kong Partner Martin Hu & Partners
Kenneth Kong
Partner
Martin Hu & Partners

The Shanghai Commerce Commission issued the Model Foreign-Invested Enterprise Contracts/Articles of Association to serve as the standardised contracts and articles of association from which investors can choose. Between 1 April and 31 October, the commission extended the pilot project for the examination and approval of the standardised contracts and articles of association down to district and county level foreign investment approval authorities.

It has been strongly rumored in the industry recently that the commission intends to further strengthen the uniform use of the standardised contracts and articles of association in foreign-invested enterprises to be established in future. Whether provisions that diverge quite substantially from the standardised contracts and articles of association will be approved by approval authorities has become an issue that is being closely monitored. In this regard, the authors sought the opinions of the Shanghai and various district and county commerce commissions, and will explore the issue by examining the status of the implementation in Shanghai of the standardized contracts and articles of association.

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Kenneth Kong is a partner and Shelly Sui is an associate at Martin Hu & Partners (MHP Law Firm)

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胡光 Martin Hu

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孔焕志 Kenneth Kong

电子信箱 E-mail: kenneth.kong@mhplawyer.com

隋雪芹 Shelly Sui

电子信箱 E-mail: shelly.sui@mhplawyer.com