In the latter half of 1997, China has promulgated two regulations with the purpose to strengthen the supervision of FIEs. Given the fact that there was no such concept as equity interests then, here the registered capital represents the equity interests. This represents a step forward.
Assignment amounts, in a sense, to reorganization of an enterprise.
That explains why it is necessary to obtain approval from the examination and approval authority. This has been followed by the later regulation. It requires only the approval by the examination and approval authority, while it provides no test for making decision. As a result of which the test and standard used in practice differ from region to region and from case to case, no uniform rules could be followed. It stipulated only the approval by the examination and approval authority in case of assignment to the third party.