VIII. Investment in Cinemas by Foreign Investors

There are special approval procedures for the establishment of foreign-funded cinemas: 1. The Chinese party must file an application with the provincial administrative department of commerce of the place where it is located, and submit the following materials: (1) the application form for the project of establishment of the foreign-funded cinema;(2) the certifi cate of legal person status of the Chinese party, and the materials relating to the land use right of the cinema; (3) the qualifi cation certifi cate of the foreign party; (4) the notice for preliminary ratifi cation of the cinema name issued by the department of market regulation; (5) the feasibility study report, contract, and articles of association; and (6) other materials to be provided as required by the laws and regulations and the examination and approval body. 2. The provincial administrative department of commerce of the place where the applicant is located shall, after obtaining consent from the provincial administrative department of film, make the examination and approval pursuant to the relevant laws and regulations of the state on foreign investment, and report to the Ministry of Commerce, the China Film Administration, and the Ministry of Culture and Tourism for record. The Certifi cate of Approval for Foreign-funded Enterprises shall be issued to the foreign-funded enterprise that has been approved to establish. 3. For a foreign-funded cinema that has been approved to establish, the applicant shall, within one month from the day of receiving the Certifi cate of Approval for Foreign-funded Enterprises, make the registration with the provincial department of market regulation by taking the Certifi cate of Approval for Foreign-funded Enterprises. 4. After the construction or reconstruction of a foreign-funded cinema has been finished and upon examination for acceptance by the relevant departments, the applicant shall apply for a Permit for Film Projection Business with the provincial administrative department of film by taking the Certifi cate of Approval for Foreign-funded Enterprises and the Business License before starting the business of film projection.

Foreign investors shall satisfy the following conditions for investing in cinemas: (1) the arrangements and planning are in line with the local cultural facilities; (2) there are fixed business (projection) premises; (3) with respect to Chinese-foreign equity joint cinemas, the proportion of the investment made by the Chinese party in the registered capital shall account for no less than 51%; with respect to Chinese-foreign equity joint cinemas established in such pilot cities as Beijing, Shanghai, Guangzhou, Chengdu, Xi'an, Wuhan, and Nanjing, the proportion of the investment made by the foreign party in the registered capital may not exceed 75% at the most; (4) the period of the equity or contractual joint venture shall not exceed 30 years; and (5) the relevant laws, regulations and provisions of China shall be complied with.

In addition,according to the Regulation for Implementing the Foreign Investment Law of the People's Republic of China issued by the State Council on December 26, 2019 and eff ective on January 1, 2020, the registration of foreign-invested enterprises shall be handled by the administrative department of market regulation of the State Council or the administrative department of market regulation of the local people's government that is authorized, which means the examination, approval and archive-fi ling procedure of the establishment of foreign-funded enterprises will be cancelled, and are simplifi ed into “one-stop” examination and registra tion by the administrative department of market regulation, which is a very important and positive measure for foreign-funded enterprises. In addition,Foreign Investment Law of the People's Republic of China issued by the Standing Committee of the National People's Congress on March 15, 2019 and eff ective on January 1, 2020 also provides preferential treatment for foreign investment in China, which means that the entry threshold for foreign-invested enterprises will be greatly reduced, providing support for foreign investors to enter the Chinese market.

Meanwhile,the Special Administrative Measures(Negative List)for the Access of Foreign Investment(2019)abolished the restriction that“the construction and operation of movie theaters must be controlled by the Chinese party”. China will issue supporting measures to further facilitate foreign investment in domestic movie theaters.

Picture 2 List of Relevant Licenses