The regulatory regime for recording foreign-invested real estate enterprises was first established in May 2007 by MOFCOM and the State Administration of Foreign Exchange (SAFE). This “FIREE recordal” regime was part of a scheme of regulatory measures introduced between 2006 to 2007 to monitor and control foreign investment in the real estate sector at a time when the central government considered the real estate sector to be overheated. This regime controls all types of foreign capital inflow being injected into the real estate sector for purposes such as the setting up of new entities, capital increases and mergers & acquisitions. Foreign capital flowing into China cannot be converted into Renminbi (China’s legal currency) unless and until the “FIREE recordal” process has been completed with MOFCOM and SAFE.
Since July 2008, the provincial-level commerce authorities have been charged with the primary responsibility of vetting the legal compliance of FIREE-related transactions. MOFCOM reserves the right to conduct random checks on the recordals filed by the provincial-level commerce authorities. Generally, within one to two weeks of receiving an electronic submission from a provincial-level commerce authority, MOFCOM will release the new FIREE recordal on its public website. Only then can the local bureau of SAFE and the local commercial bank credit the foreign currency funds into the accounts of the transaction parties concerned. In December 2008, MOFCOM further simplified the local recordal procedures such that the general office of the provincial government is no longer required to jointly endorse the recordal form with the provincial-level commerce authority.
Pursuant to Notice 340 issued by MOFCOM, starting from August 2014 provincial-level commerce authorities are authorized to complete the FIREE recordal process for companies located in their respective regions. MOFCOM will continue to consolidate all the new FIREE recordals on a nation-wide basis and publish such data on its official website. MOFCOM will also conduct random checks on the recordals submitted and the local authorities and parties involved, and non-compliance will lead to sanction and black-listing of the violators.