Array of policies to encourage equity investment enterprises

The General Plan for the China (Shanghai) Pilot Free Trade Zone, adopted in principle at the executive meeting of the State Council on 3 July 2013, calls for the establishment of the Shanghai Pilot Free Trade Zone, comprising the four special customs supervision zones of the Shanghai Waigaoqiao Free Trade Zone, the Shanghai Waigaoqiao Bonded Logistics Zone, the Yangshan Free Trade Port Area and the Pudong Airport Comprehensive Free Trade Zone, covering a total area of 28.78 square kilometres. The zone was formally established on 29 September 2013.

The plan for the zone serves to promote investment and trade, and market-oriented innovation in finance. As one of the measures in this respect, equity investment enterprises are the beneficiaries of policy encouragement and support in the zone.

Policies on investment abroad

Since the establishment of the zone, a series of new policies and regulations conducive to the establishment and development of equity investment enterprises has been issued. For example, the general plan contains a number of policy measures that are favourable to equity investment enterprises, including:

• exploration of the establishment of an administrative model using a negative list, and implementation on a trial basis of pre-establishment national treatment for foreign investors;
• implementation of the recordal system for general offshore investment projects;
• support for the engagement in various forms of offshore investment by various types of investment entities in the zone;
• encouragement for the establishment in the zone of project companies that specialise in offshore equity investment;
• support for the establishment of offshore equity investment funds by qualified investors; and
• active consideration and improvement of tax policies appropriate for offshore equity investment and offshore business development.

David Yu is a partner and Kevin Huang is an associate at Llinks Law Offices