Giving a Boost to Foreign Equity Participation in Domestic Financial Institutions

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clpstaff &clp articles

For the first time legislation has been issued that makes clear the requirements for foreign acquisition of PRC banking and finance companies.

By Christina Choi & Carmen Kan, Clifford Chance, Hong Kong

China is now more receptive than ever to foreign investment in domestic financial institutions. From a statement released on the website of the China Banking Regulatory Commission (CBRC) on February 9 2004, it is clear that private and foreign equity investment will be particularly encouraged in small and medium-sized domestic commercial banks. This policy trend is well supported by the recently issued Administration of Investment and Equity Participation in Chinese-invested Financial Institutions by Offshore Financial Institutions Procedures(境外金融机构投资入股中资金融机构管理办法) (the Procedures).1 The Procedures are a milestone in PRC commercial law. For the first time, a legal framework and transparent requirements for equity investment by foreign investors in domestic financial institutions is given.

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