CHINA INFORMATION TECHNOLOGY LAW NEWSLETTER
Vol. 3, No. 1- January 7, 2002
Special Edition: Regulations for Administration of Foreign-Invested Telecommunications Enterprises. This edition will feature the first half of the full text of these regulations. The second half will be published in the next issue. For more information on this new law and its effects on the industry, please send email to mail@chinalaw.cc. |
New Regulations for Telecom Business with Foreign Investment
The Regulations for Administration of Foreign-Invested Telecommunications Enterprises were promulgated by the State Council on December 21, 2001. They came into force on January 1, 2002.
Article 1: These regulations are drawn up on the basis of laws, administrative regulations, and the "People's Republic of China Telecommunications Regulations (hereafter referred to as telecommunications regulations), for the purpose of meeting the needs of opening up to the outside world and expediting the development of the telecommunications industry.
Article 2: A telecommunications business with foreign investment refers to a telecommunications business established in the People's Republic of China with investments from foreign and Chinese investors in the form of Sino-foreign joint ventures.
Article 3: The telecommunications activities of a telecommunications business with foreign investment must abide by telecommunications regulations and other relevant laws and administrative regulations as well as these regulations.
Article 4: A telecommunications business with foreign investment may provide basic telecommunications services and value-added telecommunications services; and its specific services may be categorized according to the rules in the telecommunications regulations. Acting in accordance with the relevant regulations, the State Council department in charge of information industry determines the areas in which a telecommunications business with foreign investment operates its business.
Article 5: The registered capital of a telecommunications business with foreign investment shall meet the following regulations:
(1) A business that provides nationwide telecommunications services, or services in areas that straddles provinces, autonomous regions, and municipalities under the Central Government's direct jurisdiction, shall have a minimum registered capital of 2 billion yuan; and a business that provides value-added services shall have a minimum registered capital of 10 million yuan;
(2) A business that provides basic telecommunications services within a province, autonomous region, or municipality under the Central Government's direct jurisdiction shall have a minimum registered capital of 200 million yuan; and a business that provides value-added telecommunications services shall have a minimum registered capital of 10 million yuan.
Article 6: The foreign investor's ultimate investment in telecommunications business with foreign investment that provides basic telecommunications services (except radio paging service) may not exceed 49 per cent of the business' capital.
The foreign investor's ultimate investment in value-added services in the telecommunications business with foreign investment (including radio paging services of the basic telecommunications services) shall not exceed 50 per cent.
According to the relevant regulations, the State Council department in charge of information industry determines the percentage of investment from Chinese and foreign investors in a telecommunications business with foreign investment in different periods.
Article 7: The foreign investor that invests in the telecommunications business shall have the capacity for operating basic telecommunications services, or value-added telecommunications services, as well as the capacity prescribed in Article 4, Article 5, and Article 6 of these regulations.
Article 8: The principal Chinese investor of the telecommunications business with foreign investment that provides basic telecommunications services shall meet the following requirements:
(1) It is a legally established company;
(2) It has the capital and professional personnel commensurate with its business;
(3) It meets the requirements that the State Council department in charge of information industry has set for special trades that operate their business with prudence.
The term - "the principal Chinese investor of the telecommunications business with foreign investment" - refers to the promoter whose capital subscription is the highest among all the other Chinese investors, and whose capital subscription accounts for 30 per cent or more of these investors' total capital subscription.
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Article 9: The principal foreign investor of the telecommunications business with foreign investment that provides basic telecommunications services shall meet the following conditions:
(1) It has the credentials of a business corporation;
(2) It has the license for providing basic telecommunications services in the country or region in which it is registered;
(3) It has the capital and professional personnel commensurate with its business; and
(4) It has a record of good business performance and experiences with respect to providing basic telecommunications services.
The aforementioned term - "the principal foreign investor of the telecommunications business with foreign investment" - refers to the promoter whose capital subscription is the highest among all the other foreign investors, and whose capital subscription accounts for 30 per cent or more of these investors' total capital subscription.
Article 10: The principal foreign investor that invests in operating a telecommunications business with foreign investment, which provides value-added telecommunications services, shall have a record of good business performance and experiences in providing value-added services.
Article 11: The telecommunications business with foreign investment that provides basic telecommunications services, or that provides value-added telecommunications services in areas that straddle provinces, autonomous regions or municipalities under the Central Government's direct jurisdiction, shall submit its establishment application to the State Council department in charge of information industry via the principal Chinese investor. The applicant shall also furnish the following documents:
(1) Project proposal;
(2) Report on feasibility studies;
(3) Proof of credentials of all the investors, or other documents of confirmation, prescribed in Article 8, Article 9, and Article 10 of these regulations; and
(4) Other proof or documents of confirmation that telecommunications regulations regard as essential for a business that provides basic telecommunications services or value-added telecommunications services.
The State Council department in charge of information industry shall examine these documents on the day the application is received. If the application is about basic telecommunications services, it shall complete the examination within 180 days and decide whether the application is approved or disapproved; and if the application is about value-added, it shall complete the examination within 90 days and decided whether the application is approved or disapproved. For the application that is approved, the department shall issue the "Opinion on Examining the Telecommunications Business with Foreign Investment;" and if the application is disapproved, it shall notify the applicant in writing and state the reasons.
Article 12: When the principal Chinese investor - the party that invests in the establishment of a telecommunications business with foreign investment that provides basic telecommunications services, or that provides value-added telecommunications services in areas that straddle provinces, autonomous regions, or municipalities under the Central Government's direct jurisdiction - submits the application in accordance with Article 11 of these regulations, it may, based on the actual situation, submit other documents without the report of feasibility studies, and then submit this report later after the State Council department in charge of information industry issues to it a written notification after examining the documents. However, the period from the day the written notification is issued to the day the report of feasibility studies is submitted shall not be longer than one year. Moreover, this period does not include the time prescribed for the examination.
(The second part of the full text will follow in the next issue)
China ISP/Portal For Sale Interested parties should write care of LLX at mail@chinalaw.cc. |
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