August 6 Regulatory Roundup

Sunday, August 6, 2006 21:12

M&A Regulations (SOE and Private):
Overall Impact Rating: 10 of 10
Industries Affected: All
Date of Implementation: August 1, 2006

Overview/ Introduction:
In what may encourage more foreign investment in Chinese publicly traded companies, the CIRC issued new guidance on the purchase of publicly traded companies. with many believing that these new rules provide more visibility and access, it could encourage more investors to use the securities market to purchase companies. Buyers cannot resell shares for a year.

Government Agencies Involved:
State-owned Assets Supervision and Administration Commission
China Securities Regulatory Commission

Links for further Information: China Post; The Deal; FT; Shanghai Daily

New Tax Incentives for Foreign Companies:
Overall Impact Rating: 7 of 10
Industries Affected: Real Estate; Transportation; Energy
Date of Implementation: July 1, 2006

Overview/ Introduction:
In an effort to assist local manufacturers of machinery and equipment in the real estate, transportation, and energy sectors (three of the most regulated for foreign entrants), new tax incentives are being offer if you purchase domestically produced equipment.

Unfortunately, as with many first releases, while the goal of the regulation is known, the exact details (the actual benefit are unknown. However, it appears that the purchase a wide range of equipment is included in this

Government Agencies Involved:
National Development and Reform Commission
State Administration of Taxation

Links for further Information: People’s Daily; Shanghai Daily; Xinhua

Foreign Insurer Regulations and Restrictions:
Overall Impact Rating: 5 of 10
Industries Affected: Insurance
Date of Implementation: August 1, 2006

Overview/ Introduction:
In a double header, the central government in partnership with the CIRC and the China Insurance Association have released new regulations that will are designed to protect consumers. Through the Management Regulations on the China Representative Office for Foreign Insurance Organizations just released, insurance companies must have 20 years of history before applying for a rep office license (no prosecutions in last 3 years). in addition to that, insurance companies hoping to establish partnerships must comply with a series or requirements that were issued by the CIRC and china insurance Association.

Government Agencies Involved:
Ministry of Finance
China Insurance Regulatory Commission
China Insurance Association

Links for further Information: Shanghai Daily; Xinhua News

Yellow River Water Usage Regulations:
Overall Impact Rating: 5 of 10
Industries Affected:
Date of Implementation: August 1, 2006

Overview/ Introduction:
In an effort to control the ebbs and flows of the Yellow river (and ensure there is enough water to be diverted as part of the South-North Transfer Water Project), the State council has brought the management of the Yellow river under the aptly named Yellow River Conservancy Committee (a sub of the Ministry of Land and Resources). With numerous areas of the river going dry over the past 20 years, the government believes that this move will give them the power needed to better manage the water resources of the country

Government Agencies Involved:
Ministry of Water Service
Yellow River Conservancy Committee
Ministry of Land and Resources

Links for further Information: Yellow River Conservancy Commission; China Daily; Washington Post ; FT

(Note: To make sure you are up to date on all regulations, we advise you speak with legal and/ or industry professionals to ensure you have the most up to date and industry specific information)

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One Response to “August 6 Regulatory Roundup”

  1. All Roads Lead To China » China’s New Found Economic Nationalism says:

    August 16th, 2006 at 9:40 am

    […] With the economy growing at 11.3% a year and FDI increasing year on year there is no reason to believe that the doors are closing. Investors that move inland will still find very receptive government officials that will offer incentives, tax breaks, and access to companies within their market. The national government has itself recently come out and begin promoting new incentives for investments in technology and machinery that has been made in China. […]