On 5 August 2010, the Supreme People's Court issued its "Provisions on Several Issues Concerning the Trial of Disputes Involving Foreign-Invested Enterprises"(SPC Provisions), following the circulation of a draft version of the law in November 2009. The SPC Provisions provide detailed guidance to courts in the PRC in deciding a range of issues involving foreign invested enterprises (FIEs), including: i) regulatory approval and its impact on the effectiveness of FIE contracts; ii) regulatory approval and the transfer of equity in an FIE; iii) the exercise of pre-emptive rights by shareholder(s) of an FIE; iv) nominee shareholder arrangements; v) the validity of share pledge agreements involving the shares of FIEs; and vi) delays in the performance of capital contribution obligations by the shareholders of FIEs. It is worth noting that the SPC Provisions do not apply to transactions governed by the M&A Rules, which apply to acquisitions by a foreign investor of the assets or equity of a PRC domestic company.
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