Changes in regulating overseas investments by CGEs

State-owned assets (SOAs) play a dominant role in China’s economy, and state-owned enterprises (SOEs) are among the most important participants in Chinese overseas investments. The enhancement of an enterprise’s international competitiveness through overseas investments and acquisitions to maintain and increase the value of SOAs will become one of the reform directions for SOEs. This article focuses on the State-owned Assets Supervision and Administration Commission’s (SASAC) recently issued Measures for the Regulation of Overseas Investments by Enterprises under the Central Government (order No. 35), and analyzes the recent changes in regulating overseas investments with SOAs.

Innovative regulation

SASAC formulates a negative list for offshore investments by enterprises under the central government (CGEs), determines the offshore investment projects that fall into the prohibited category and the special oversight category, divides the regulation of the offshore investment projects of CGEs into categories, specifies the baseline for the oversight of the investments of investors, and draws a red line for the investments of CGEs.

CGEs are prohibited from investing in all offshore investment projects included in the prohibited category of the negative list; for offshore investment projects included in the special oversight category of the negative list, CGEs are required to make submissions to the SASAC to carry out investor review and checking procedures; and for offshore investment projects not included, CGEs are free to decide based on their strategic development plans.

Lin Zhong is a partner at EY Chen & Co. Law Firm