Administrative Provisions on Foreign-funded Telecommunications Enterprises

Source: Government Website

Release Date: 02-06-2016

Chinese Title: 外商投资电信企业管理规 (2016修订)

Article 1   These Provisions are formulated pursuant to the relevant foreign investment laws and administrative regulations and the Telecommunication Regulations of the People’s Republic of China (hereinafter referred to as the “Telecommunications Regulations”) for the purposes of adapting to the needs of opening up of the telecommunications industry and promoting development of the telecommunications industry.

Article 2   Foreign-funded telecommunications enterprises shall mean enterprises established pursuant to the law in the People’s Republic of China in the form of a Sino-foreign equity joint venture by foreign investors jointly with Chinese investors to operate telecommunications businesses.

Article 3   Foreign-funded telecommunications enterprises engaging in telecommunications business activities shall, in addition to compliance with these Provisions, comply with the provisions of the Telecommunications Regulations and other related laws and administrative regulations.

Article 4   Foreign-funded telecommunications enterprises may engage in basic telecommunications businesses and value-added telecommunications businesses; categorization of businesses shall comply with the provisions of the Telecommunications Regulations.

The geographical scope for business operations of foreign-funded telecommunications enterprises shall be determined by the industry and information technology authorities of the State Council pursuant to the relevant provisions.

Article 5   The registered capital of foreign-funded telecommunications enterprises shall comply with the following provisions:

(1) The minimum registered capital of foreign-funded telecommunications enterprises with nationwide basic telecommunications operations or operating across provinces, autonomous regions or centrally-administered municipalities shall be RMB1 billion; the minimum registered capital of foreign-funded telecommunications enterprises operating value-added telecommunications businesses shall be RMB10 million;

(2) The minimum registered capital of foreign-funded telecommunications enterprises operating basic telecommunications businesses within a province, an autonomous region or a centrally-administered municipality shall be RMB100 million; the minimum registered capital of foreign-funded telecommunications enterprises operating value-added telecommunications businesses shall be RMB1 million.

Article 6   The capital contribution ratio of foreign investor(s) in a foreign-funded telecommunications enterprise operating basic telecommunications businesses (except for wireless paging business) shall not exceed 49% ultimately.

The capital contribution ratio of foreign investors in a foreign-funded telecommunications enterprise operating value-added telecommunications businesses (including wireless paging business in basic telecommunications businesses) shall not exceed 50% ultimately.

The capital contribution ratio of Chinese investors and foreign investors in a foreign-funded telecommunications enterprise in different phases shall be determined by the industry and information technology authorities of the State Council pursuant to the relevant provisions.

Article 7   Foreign-funded telecommunications enterprises engaging in telecommunications business shall, in addition to satisfying the criteria stipulated in Articles 4, 5 and 6 of these Provisions, meet the requirements for engaging in basic telecommunications businesses or value-added telecommunications businesses as stipulated in the Telecommunications Regulations.

Article 8   The main Chinese investor of a foreign-funded telecommunications enterprise operating basic telecommunications businesses shall satisfy the following criteria:

(1) It is a duly incorporated company;

(2) Its funds and employed professionals correspond to its business activities;

(3) It satisfies the prudential and specific industry requirements stipulated by the industry and information technology authorities of the State Council.

The main Chinese investor of a foreign-funded telecommunications enterprise referred to in the preceding paragraph shall mean the capital contributor whose capital contribution is highest among all the Chinese investors and constituting 30% or more of the total capital contribution of all the Chinese investors.

Article 9   The main foreign investor of a foreign-funded telecommunications enterprise operating basic telecommunications businesses shall satisfy the following criteria:

(1) It is an enterprise legal person;

(2) It has obtained a business permit for basic telecommunications businesses at its country or region of registration;

(3) Its funds and employed professionals correspond to its business activities;

(4) It has good track record and operational experience in basic telecommunications businesses.

The main foreign investor of a foreign-funded telecommunications enterprise referred to in the preceding paragraph shall mean the capital contributor whose capital contribution is highest among all the foreign investors and constituting 30% or more of the total capital contribution of all the foreign investors.

Article 10   The main foreign investor of a foreign-funded telecommunications enterprise operating value-added telecommunications businesses shall have a good track record and operational experience in value-added telecommunications businesses.

Article 11   For establishment of a foreign-funded telecommunications enterprise to operate basic telecommunications businesses or operate value-added telecommunications businesses across provinces, autonomous regions or centrally-administered municipalities, the main Chinese investor shall submit an application with the following documents to the industry and information technology authorities of the State Council:

(1) Application report for the project;

(2) Qualification certificate or the relevant confirmation document of the investors of the joint venture stipulated in Article 8, Article 9 and Article 10 of these Provisions;

(3) Certification or confirmation document to prove satisfaction of any other criteria for basic telecommunications businesses or value-added telecommunications businesses stipulated in the Telecommunications Regulations.

Upon receipt of an application, the industry and information technology authorities of the State Council shall examine the relevant documents stipulated in the preceding paragraph. In the case of an application for basic telecommunications businesses, examination shall be completed within 180 days and a decision on approval or non-approval shall be made; in the case of an application for value-added telecommunications businesses, examination shall be completed within 90 days and a decision on approval or non-approval shall be made. An “Approval Opinion for Foreign Investment in Telecommunication Business” shall be issued to successful applicants; unsuccessful applicants shall be notified in writing and the reason shall be stated.

Article 12   The main Chinese investor of a foreign-funded telecommunications enterprise proposing to operate value-added telecommunications businesses within a province, an autonomous region or a centrally-administered municipality shall submit an application with the following documents to the telecommunications authorities of the province, autonomous region or centrally-administered municipality:

(1) Qualification certificate or the relevant confirmation document stipulated in Article 10 of these Provisions;

(2) Certification or confirmation document to prove satisfaction of any other criteria for value-added telecommunications businesses stipulated in the Telecommunications Regulations.

The telecommunications authorities of the province, autonomous region or centrally-administered municipality shall issue an opinion within 60 days from receipt of an application. In the case of issuance of a consent opinion, the application shall be forwarded to the industry and information technology authorities of the State Council; in the case of issuance of a non-consent opinion, the applicant shall be notified in writing and the reason shall be stated.

The industry and information technology authorities of the State Council shall complete examination and decide on approval or non-approval of the application for which a consent opinion is issued within 30 days from receipt of the application documents forwarded by the telecommunications authorities of the province, autonomous region or centrally-administered municipality. An “Approval Opinion for Foreign Investment in Telecommunication Business” shall be issued to successful applicants; unsuccessful applicants shall be notified in writing and the reason shall be stated.

Article 13   The main contents of the application report for establishment of foreign-funded telecommunications enterprise shall include: names and basic information of each joint venture party, the proposed enterprise’s total investment amount, registered capital, capital contribution ratio of each party, types of business proposed to be undertaken , and joint venture term etc.

Article 14   Where the investment project of a proposed foreign-funded telecommunications enterprise requires approval by the development and reform authorities of the State Council pursuant to the relevant provisions of the State, the industry and information technology authorities of the State Council shall, prior to issuance of the “Approval Opinion for Foreign Investment in Telecommunication Business”, forward the application materials to the development and reform authorities of the State Council for approval. Where an application is forwarded to the development and reform authorities of the State Council for approval, the examination and approval period stipulated in Article 11 and Article 12 of these Provisions may be extended by 30 days.

Article 15   For establishment of a foreign-funded telecommunications enterprise to operate basic telecommunications businesses or operate value-added telecommunications businesses across provinces, autonomous regions or centrally-administered municipalities, the main Chinese investor shall present the “Approval Opinion for Foreign Investment in Telecommunication Business” to submit the contract and articles of association of the proposed foreign-funded telecommunications enterprise to the commerce authorities of the State Council; for establishment of a foreign-funded telecommunications enterprise to operate value-added telecommunications businesses within a province, an autonomous region or a centrally-administered municipality, the main Chinese investor shall present the “Approval Opinion for Foreign Investment in Telecommunication Business” to submit the contract and articles of association of the proposed foreign-funded telecommunications enterprise to the commerce authorities of the People’s Government of the province, autonomous region or centrally-administered municipality.

The commerce authorities of the State Council and the commerce authorities of the People’s Government of the province, autonomous region or centrally-administered municipality shall complete examination and decide on approval or non-approval within 90 days from receipt of the contract and articles of association of the proposed foreign-funded telecommunications enterprise. An “Approval Certificate for Foreign Investment Enterprises” shall be issued to successful applicants; unsuccessful applicants shall be notified in writing and the reason shall be stated.

Article 16   The main Chinese investor of a foreign-funded telecommunications enterprise shall present the “Approval Certificate for Foreign Investment Enterprises” to complete registration formalities with the administration for industry and commerce, and then present the “Approval Certificate for Foreign Investment Enterprises” and business licence to apply to the industry and information technology authorities of the State Council for a “Telecommunications Business Permit”.

Article 17   Foreign-funded telecommunications enterprises operating cross-border telecommunications businesses shall be subject to approval by the industry and information technology authorities of the State Council, and shall operate through the international telecommunications gateway established with approval by the industry and information technology authorities of the State Council.

Article 18   Any violation of the provisions of Article 6 in these Provisions shall be ordered by the industry and information technology authorities of the State Council to make correction within a stipulated period and shall be subject to a fine ranging from RMB100,000 to RMB500,000; Where correction is not made within the stipulated period, the industry and information technology authorities of the State Council shall be revoke the “Telecommunications Business Permit” and the commerce authority which is the original issuing authority of the “Approval Certificate for Foreign Investment Enterprises” shall revoke the “Approval Certificate for Foreign Investment Enterprises”.

Article 19   Any violation of the provisions of Article 17 in these Provisions shall be ordered by the industry and information technology authorities of the State Council to make correction within a stipulated period and be subject to a fine ranging from RMB200,000 to RMB1 million; where correction is not made within the stipulated period, the industry and information technology authorities of the State Council shall revoke the “Telecommunications Business Permit” and the commerce authority which is the original issuing authority of the “Approval Certificate for Foreign Investment Enterprises” shall revoke the “Approval Certificate for Foreign Investment Enterprises”.

Article 20   In the case of provision of false or forged qualification certificate(s) or confirmation document(s) to obtain approval for establishment of a foreign-funded telecommunications enterprise, the approval shall be void, and the industry and information technology authorities of the State Council shall impose a fine ranging from RMB200,000 to RMB1 million and revoke the “Telecommunications Business Permit”; the commerce authorities which is the original issuing authority of the “Approval Certificate for Foreign Investment Enterprises” shall revoke the “Approval Certificate for Foreign Investment Enterprises”.

Article 21   Foreign-funded telecommunications enterprises which violate the provisions of the Telecommunications Regulations and other related laws and administrative regulations in the operation of telecommunication businesses shall be punished by the relevant authorities pursuant to the law.

Article 22   Companies and enterprises from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan operating telecommunications businesses in Mainland China shall refer to these Provisions.

Article 23   These Provisions shall be effective 1 January 2002.

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