In recent years, the phenomenon of return on investment has been rising, which has aroused widespread concern from all walks of life. In a large number of return investments, there are various practices with different motives and purposes. In 2006, the newly revised Regulations on Merger and Acquisition of Domestic Enterprises by Foreign Investors paid great attention to this new investment method and used a large space to regulate it.
First, the concept of return on investment
According to the Notice of the State Administration of Foreign Exchange on Relevant Issues Concerning Foreign Exchange Management of Domestic Residents' Financing and Return Investment through Overseas Special Purpose Companies, it is defined as: direct investment activities conducted by domestic residents through special purpose companies in China. These investment activities include but are not limited to:
1. Purchase or replace the Chinese equity of the enterprise;
2. Establish foreign-invested enterprises in China and control domestic assets through purchase or agreement;
3. Agree to purchase domestic assets and set up foreign-invested enterprises with the assets;
4. Capital increase to domestic enterprises.
Second, the motivation analysis of return on investment
1, overseas financing demand. In fact, many domestic enterprises need to transfer the rights and interests of domestic enterprises to overseas shell companies in the form of return investment in order to raise funds overseas in a "red chip" mode.
2. Transnational reorganization of international companies. For example, a network company integrates and acquires overseas network companies on a global platform.
3. Avoid the censorship policy of MBO in state-owned enterprises. For example, the management of individual state-owned enterprises tries to conduct so-called foreign mergers and acquisitions of domestic enterprises in the name of overseas enterprises under their control.
4. Policy rent-seeking. Rent-seeking domestic and foreign-funded enterprises in tax relief, land and hydropower infrastructure price concessions, borrowing foreign debts and remittance of funds and other aspects of policy convenience.
5. Transfer of personal property.
6. Increase the liquidity of domestic assets.
Third, domestic laws and regulations related to investment returns.
1, company law. The Company Law defines the terms "controlling shareholder", "actual controller" and "related relationship" which are closely related to the return investment from the legislative technology.
2. Notice on relevant issues concerning foreign exchange management of domestic residents' financing and return investment through overseas special purpose companies. This provision has three main points:
First, the review and registration procedures for the establishment of financing special purpose companies have been clarified. The two steps of "buying shell" and "injecting capital" need to go through the foreign exchange registration procedures for overseas investment and the foreign exchange registration procedures for overseas investment respectively.
Secondly, the problem of capital return after financing of special purpose companies is clarified. Fully respect the principle of autonomy of the will.
Thirdly, the cross-border payment of capital gains between domestic residents and special purpose companies is clarified. Domestic residents can pay profits, bonuses, liquidation, share conversion, capital reduction and other funds to special purpose companies after going through the foreign exchange registration and change procedures for overseas investment according to regulations. Foreign exchange income such as profits, dividends and capital changes obtained by domestic residents from special purpose companies shall be repatriated to China within 180 days from the date of acquisition.
3. "Regulations on Merger and Acquisition of Domestic Enterprises by Foreign Investors" appropriately adjusted the management mode of foreign capital, and embodied the management idea of "actual control".
First, the parties are required to disclose their management relationship and actual controller to the examination and approval authority, and all the return investment behaviors caused by the actual controller of domestic entities are reported to the Ministry of Commerce for approval.
The second is to allow the parties to make return investment.
Third, refine the treatment and let the expectations of individual parties' preferential treatment fail. If the return investment is only changed by the same actual controller, the assets and rights and interests of the target company have not changed. Because it will not bring new capital formation and employment, it will lead to the reduction of national tax sources, so the foreign-invested enterprises that are changed and established do not enjoy preferential treatment. On the contrary, if you can create new value, you will enjoy preferential treatment. Overseas companies do not enjoy preferential treatment when merging domestic affiliated enterprises, but domestic companies subscribe for capital increase and the capital increase reaches more than 25% to enjoy preferential treatment.
Four. Overseas investment management issues involved in return investment
1, safe. Whether domestic enterprises or natural persons invest abroad as domestic residents, they should register their foreign exchange abroad.
2. Ministry of Commerce. Where a domestic enterprise establishes an enterprise in Hong Kong or Macao, the Provisions on Examination and Approval of Mainland Enterprises Investing in and Establishing Enterprises in Hong Kong and Macao Special Administrative Regions shall apply. In other countries, the provisions on the examination and approval of overseas investment in starting enterprises are applicable to the examination and approval of starting enterprises.
3. National Development and Reform Commission. According to the Interim Measures for the Administration of Approval of Overseas Investment Projects, "approval management" is implemented for enterprises and natural persons' "overseas resource development and large-scale foreign exchange use projects".