May 10 – China’s Ministry of Commerce (MoC) and the Ministry of Civil Affairs (MCA) jointly released the “Circular on the Establishment of For-Profit Senior Care Institutions and Service Institutions for the Disabled by Hong Kong and Macau Service Providers (hereinafter referred to as the ‘Circular’)” on March 12. Detailed information can be found below.
The Circular allows service providers from Hong Kong and Macau to set up for-profit senior care institutions and service institutions for the disabled in Mainland China through new launches or mergers and acquisitions, either in the form of Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures, or wholly foreign-owned enterprises.
According to the Circular, the establishment and change of senior care institutions and service institutions for the disabled shall be approved by the civil affairs and commerce authorities at the provincial level in accordance with laws and regulations on foreign investment.
Moreover, from July 1, 2013, the establishment and change of such institutions shall be handled according to the “Law on Protection of the Rights and Interests of the Elderly (hereinafter referred to as ‘Law’).” Applicants shall first obtain the administrative license from the appropriate civil affairs departments, before then acquiring approval from the competent commerce departments at the provincial level.
According to the Law, entities intending to establish senior care institutions in Mainland China shall satisfy the following conditions:
The entity shall have its own name, domicile and articles of association
The entity shall have the funds that are commensurate with the content and scale of services
The entity shall have qualified management and professional service personnel
The entity shall have basic living rooms, facilities and equipment
Outside of the above-mentioned conditions, Hong Kong and Macau investors applying to set up such institutions shall also have good credibility and the relevant operational capacity, with at least one senior care provider within their investor groups having a minimum three years’ experience in conducting services for the elderly and the disabled. Such investors shall hand in the documents required for the establishment of foreign-invested enterprises to the relevant authorities, along with supporting documents or certifications issued by relevant social welfare authorities from Hong Kong or Macau.
In addition, the Circular has expressly prohibited any facility from providing residential options under the disguise of senior care service.
As China’s elderly population is expected to reach 221 million by 2015, the potential for the private senior healthcare business is immense. While the Circular only applies to investors from Hong Kong and Macau, it has signaled that China may be easing foreign investment restrictions in the private health sector.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia.
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