Amendment to Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China promulgated
E220422Y5．E220421Y5 | Aug. 2022（E269）
With an eye to preventing key technologies outflow to Chinese nationals and in contemplation of the development of emerging technologies, the Ministry of Economic Affairs promulgated the amendment to Article 5 and Article 10 of the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” (hereinafter referred to as the “Regulations”) on April 21, 2022, to extend the scope of technical cooperation and to avoid Chinese investors’ substantial control of key technology as a result of share transfer.
Key points of the amendment are summarized as follows.
1. Transfer or licensing of trademark right is removed from the scope of technical cooperation subject to the regulatory control of the Regulations because trademark right and copyright transfer or licensing is a common commercial practice nowadays and is different from the technical cooperation in nature specified in Article 5 of the Regulations. The proposed deletion will form a more clear-cut scope of technical cooperation subject to the Regulations.
2. In view of the booming development of emerging technology, such as, artificial intelligence or programming that should be covered in the scope of copyright regulation, under the amendment, the transfer or licensing of the copyright subsisting in any computer programs should be categorized into the scope of technical cooperation subject to the regulatory control of the Regulations, so as to prevent key technology outflow.
3. For the investments that have been examined by the key technology committee convened by the competent authority and have been approved by the Investment Committee of the Ministry of Economic Affairs, the transfer of shares of such investments, if any, may cause the technology involved in such investments to be used by the Chinese investor, and that will ultimately and simultaneously give rise to technology transfer. In view of the foregoing, addition of the 2nd paragraph of Article 5 is proposed in the amendment to include the aforesaid circumstance as one of types of technical cooperation to be administered by the Regulations and subject to the competent authority’s approval. Moreover, Article 10 of the Regulations is also amended for the proposed addition. (Released 2022.04.22)