By King & Wood Mallesons’ Healthcare Group

On 13 November 2013, Shanghai Municipality released the Provisional Measures on the Administration of Wholly Foreign-Owned Medical Institutions in the China (Shanghai) Pilot Free Trade Zone (hufubanfa [2013] No.63, “Measures”), which provides the requirements and application matters for foreign investors to set up medical institutions in the form of wholly foreign-owned enterprises (“WFOE Medical Institution(s)”) in China (Shanghai) Pilot Free Trade Zone (“FTZ”) with the highlights as follows:

Qualification of Foreign Investors

According to the Measures, foreign investors of the WFOE Medical Institution: (1) shall be medical institutions, companies, enterprises and other economic organizations, the actual controller of which should be a foreign medical institution; (2) shall be legal persons that bear civil liabilities independently,
and shall have directly engaged in the investment and management of medical institutions for more than five years; and (3) shall meet one of the following

  • capable of providing internationally-advanced management experience, management modes and service modes of medical institutions;
  •  capable of providing internationally-advanced medical technologies and equipment;
  • capable of supplementing or improving the local medical service capacity, medical technologies,medical funds and medical facilities.

Requirement of the WFOE Medical Institution

According to the Measures, the WFOE Medical Institution shall be an independent legal person with total investment no less than RMB 20 million and with an operating period no longer than 20 years (renewable upon application).

Application Procedures

According to the Measures, establishment of WFOE Medical Institution generally shall go through the following procedures: (1) applicant submits all application documents to FTZ Administrations for Industry and Commerce (“FTZ AIC”); (2) Shanghai Municipal Commission of Health and Family Planning (“Shanghai CHFP”), FTZ Administrative Committee and FTZ AIC will issue the approval/disapproval document; (3) FTZ AIC deliveries the Medical Institution Establishment Certificate, the Approval Certificate of Foreign Invested Enterprise, the Business License and other documents to the applicant upon approval; (4) WFOE Medical Institution conducts the practicing registration with Shanghai CHFP to obtain the Medical Institution Practice License.