The Research On Examination And Approval System Of Foreign Equity Transfer Under The Free Trade Reform

On September 29, 2013 China has formally established the Shanghai Free Trade Zone, the reform within the free trade zone will provide new references to the reform of the current examination and approval system. The focus of the reform is to put an end to the examination and approval system and gradually establish former national treatment. The reform will change the government function and let market act as the main allocation of resources. The establishment of Shanghai Free Trade Zone is under the trend of the new global development, which is also a measure of more proactive opening-up strategy and a chance for our country to take the global competitive advantage. It will build a new platform of cooperation with other countries, and promote our country’s economic growth. The thesis also provides some suggestions on the reform of examination and approval system.With China’s accession to the WTO, more and more foreign investors come to invest in China, foreign trade is expanding rapidly. In the consideration of national economic security, the foreign investment enterprise business is limited in many aspects. A large number of disputes is rising in the activities of foreign investment enterprises, since the policy involving foreign investment in our country has a lot of limits. More and more problems are coming out in the business activities of the foreign investment enterprises, especially in the equity transfer activities. Equity transfer of foreign enterprises has a profound impact on the development of the foreign investment, and good investment environment is very important for the country’s economic development.Contract act as the existence foundation of foreign investment enterprises, the examination and approval system involves companies’ set up and termination process. The legal dispute in the field of foreign investment enterprises is very special, especially in the equity transfer aspect. Equity transfer of foreign investment enterprises is very different from Chinese legal person’s, since it often involving economic security and national industry policy, and subjects to the approval of registration and capital flow problem. The equity transfer of the foreign investment enterprises affects the equity interests of the shareholders, also affect the company development and our country’s economic stability.The main dispute of the equity transfer of the foreign investment enterprises is about the effectiveness of the equity transfer contract. The thesis is based on the equity transfer contract dispute, systematic analysis of the relationship between the foreign capital stock transfer and the examination and approval system. The thesis analyzed how the examination and approval system effects the share-transfer contract, and the other factors affecting the equity transfer contract effectiveness. The thesis provided the comprehensive analysis of domestic and foreign scholars opinions, and it turns out that the foreign investment approval system is not reasonable. The thesis try to seek the relief way of the unapproved equity transfer contract. In the end, the thesis give some advice to the improvement of the laws and regulation. We can see the defects in the legislation in our country through problems existing in the examination and approval system. With the modification to the company law, we should rebuild the foreign legal system, to build good foreign enterprise development environment. We should further promote foreign investment in China and promote the development and reform, in order to participate in international competition.On January 19, 2015 the Ministry of Commerce announced the Foreign Investment Law Draft. The draft established the national treatment and negative list management pattern, in order to meet the needs of the admittance of foreign capital management system. The special administrative measures directory listed investment access permission, contract, articles of association is no longer the audit object, but foreign investors and their investment behavior. In the negative list management mode, the vast majority of foreign investment will no longer required approval. We should build the before foreign investment access, national treatment and negative list of management mode, in order to adapt to the situation of opening to the outside world. We should further reform the foreign investment approval system, to maintain foreign policy is stable, transparent and predictable. We should build the market-oriented and international legal system, in order to create more stable, transparent and predictable legal environment for the foreign investment development.The thesis is divided into five parts, the first part introduces the developing situation of the foreign investment enterprises and the problem rising in the equity transfer contract. Put forward the important relationship of the foreign investment enterprise equity transfer contract and the system of examination and approval. Second part analyses the background of the establishment of examination and approval system and its existing problems. Also analyses the judicial relief of the fail to fulfill approval obligation under the examination and approval system. In the last part, the thesis put forward advice on how to improve the system of foreign investment enterprises approval. Chapters are arranged as following: the first chapter mainly introduces the current development situation of the foreign investment enterprises, and analyses the dispute of equity transfer of foreign investment enterprises, which leads to the effectiveness of the examination and approval system on foreign enterprise equity transfer contract. The second chapter describes the equity transfer of foreign investment enterprises under the approval system. Analyzes the scope and nature of the examination and approval system, and put forward the problems existing in the current examination and approval system. The third charter discusses the relationship between the examination and approval system and the effectiveness of the foreign capital enterprise equity transfer contract. And the thesis analyses the source of the inactive theory and its legal basis. The fourth charter analysis legal responsibility under the examination and approval system, and give advice to about how to take the judicial relief when the obligation is not timely completed. The last chapter is focused on how to perfect the current foreign investment approval system, how to build the new foreign investment legal system from the perspective of practical experience and theoretical analysis. The approval system of the Free Trade Zone will give a new reference to the modification of the examination and approval system. The promulgation of the Foreign Investment Law Draft, forecast that the basic law of foreign capital enterprise is going to establish in our country. The new foreign capital enterprise basic law conforms to the China’s current economic development stage, and promote to create more stable, transparent and predictable legal environment in our country.