"One Window Service" for Establishment and Change of Foreign Invested Enterprises in Shanghai Pudong
On 26 March 2014, the Pudong Market Supervision Bureau (PMSB), the Pudong Bureau of Commerce and the Pudong Tax Bureau jointly launched a Pilot Policy of One Window Service in respect of Handling the Establishment and Change of Registration of Foreign Invested Enterprises ("FIEs") ("Pilot Policy"). The Pilot Policy too effect on 26 March 2014 and applies to FIEs in the encouraged and permitted categories with a total amount of investment below USD 100 million.
The applications for five certificates of an FIE, i.e. Approval Letter and Certificate of Approval, Business License, Organizational Code Certificate, Tax Registration Certificate and Food License (if required) ("Five Certificates") can be submitted and processed directly at the PMSB The applicant no longer needs to visit different authorities to apply for and collect the Five Certificates. The entire process is shortened to 5 working days only. However, in order to enjoy the One Window Service, the applicant must adopt the template application documents provided by the Pudong authorities, including the template Articles of Association and Joint Venture Contract.
If the applicant agrees to use the template application documents and applies for the One Window Service, upon submission of the documents the applicant must sign a letter of undertaking confirming the truthfulness of the application materials and the compliance with law. Based on such letter of undertaking, the Pudong Bureau of Commerce will conduct examination of the format of the documents but not of the contents. This procedure takes 2 days out of the 5 days mentioned above.
However, if the applicant wants to use its own application documents instead of the template documents provided by Pudong authorities, the One Window Service does not apply and the time period required by the Pudong authorities to issue the certificates remains unchanged, i.e. around 4 to 6 weeks.
The Pilot Policy is the first reform measure promoted after establishment of the PMSB in January 2014. It can save time for foreign investors. However, that applicants can only use the draft templates provided by the authorities is a major disadvantage. Normally investors are well advised to pay attention to the Articles of Association and especially the Joint Venture Contract of their FIEs and to be careful in wording the contract clauses. Saving some time in the establishment procedures might be a small benefit compared to the disadvantages which may result from contracts which do not or do not fully reflect the interests and intentions of the parties.