In order to achieve the objectives of the Foreign Investment Law (FIL), which came into effect on 1 January 2020, the Ministry of Human Resources and Social Security of the PRC has undertaken amendments to three particular departmental regulations as follows:
Regulations on the Administration of The Sino-foreign Joint Venture talent intermediary agencies, Interim Provisions on the Establishment and Administration of Sino-foreign joint venture sin-foreign cooperative employment agencies
As a consequence of these changes, the restrictions on foreign investment in human resources services have been removed, which is in line with the principle of equal treatment of domestic and foreign investors.
Overview of the three main changes
1. Cancellation of the requirement that both Chinese and foreign investors must have over three years of experience when applying for the establishment of foreign-funded talent intermediaries and employment agencies.
2. Cancellation of the requirement that a foreign investor’s capital contributions shall proportionally not be less than 25% and that a Chinese investor’s capital contributions shall proportionally not be less than 51% in any JV entity.
3. Cancellation of the restriction on setting up wholly foreign-owned HR-services companies.
In addition, the three newly revised regulations further lower the threshold for the approval of foreign-invested HR-services companies and simplify the approval process. The approving authority for the establishment of foreign-funded talent intermediaries and employment agencies will be downgraded from the provincial level to the county level or above.
The provisions that foreign-funded intermediary institutions and employment agencies must be approved by the Ministry of Commerce have been removed.
The provisions regarding the establishment of branches of foreign-funded talent intermediaries and employment agencies, changes in registered capital, share transfers, shareholder changes, etc. must be approved again by the initially examining authority have also be removed.
Useful link:
MINISTRY OF COMMERCE OF THE PEOPLE’S REPUBLIC OF CHINA
