China Securities Regulatory Commission and State Administration of Foreign Exchange, Several Questions Concerning Investment in Domestically Listed Foreign Investment Shares by Individual Residents in China Circular

Issued: February 21 2001
Effective: As of date of issue in respect of B share account application by securities business institutions, and as of February 26 2001 in respect of fund transfers and account openings for B share investments by domestic resident individuals (Section 11).

Main contents: The Circular states that individual residents in China may invest in foreign investment shares, commonly known as B shares (Section One). Before June 1 2001, only the foreign exchange deposited with domestic commercial banks on or before February 19 2001 can be used as funds for such investment, and at no time may cash foreign currency be used to make such investments (Section Two). For such investment, an investor is required to transfer a minimum of US$1,000 or its equivalent in another foreign currency directly from the bank with which the deposit was made to a permitted securities business institution within the same city for the opening of a B share fund account. For the time being, the investor is not allowed to transfer his funds to other banks or other cities for the purpose of such investment (Section Four). The investor is not allowed to withdraw foreign exchange cash from the B share fund account (Sections Six and Seven). A domestic resident investor is not allowed to transfer his B shares to a non-resident investor, nor is he allowed to deposit his B shares abroad for custody (Section Eight).
Related legislation: State Council, Listing of Foreign Investment Shares Inside China by a Company Limited by Shares Provisions, 1995 and Administration of Foreign Exchange of Individual Residents Within China Tentative Procedures (Revised), Sep 16 1999
Repealed legislation: China Securities Regulatory Commission, Strictly Controlling the Opening of B Share Accounts Circular, 1996 and Screening B Share Accounts Circular, 1996