From a strike soon after Shougang invested in a mine in Peru to the frustration of Chinalco’s attempted acquisition of a stake in Rio Tinto, the road to overseas investment by PRC mining companies has been bumpy. One of the major bumps is legal risk. To ensure the success of their investments, PRC mining companies should prepare for the rain before striding out of the door.
Domestic considerations
Managing Partner
V&T Law Firm
Before going global, a PRC mining company should first understand China’s policies and laws on investment abroad. China, for example, exercises controls over foreign exchange, and accordingly the first issue that a Chinese company encounters when venturing overseas is how to remit funds abroad.
To do so, it must carry out specified foreign exchange registration procedures for direct foreign investment with the local foreign exchange control authority, and apply for a foreign exchange registration certificate from that authority. It must then carry out the procedures for the outward remittance of funds in connection with a direct foreign investment with a designated foreign exchange bank on the strength of the approval document of the competent direct foreign investment authority and the foreign exchange registration certificate for direct foreign investment.
Aside from foreign exchange, the PRC has now issued support policies that encourage companies to go global. Companies should understand and take full advantage of these policies.
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Wang Jihong is the managing partner of V&T Law Firm. She practises in the field of infrastructure development. Gao Lei is a lawyer at V&T Law Firm
