China Securities Regulatory Commission, Circular on the Qualifications of Shareholders of Futures Brokerages and Related Issues

Issued: September 26 2005
Effective: as of date of issue
Applicability: The Circular on Issues Relevant to Equity Participation by Hong Kong and Macao Service Providers in Futures Brokerages shall apply to Hong Kong and Macao service providers applying for the shareholder qualifications of futures brokerages (Article 6).

Main contents: The shareholder qualifications of a party intending to hold an equity interest of 10% or more, or have de facto control, in a futures brokerage shall be verified by the China Securities Regulatory Commission in advance (Article 1). Article 2 specifies the application qualifications for a shareholder of a futures brokerage, including, among others: (1) registered capital and net assets of no less than Rmb10 million, having been operated continuously for two years or more, and having been profitable for the most recent two years; or registered capital of Rmb50 million or more, having been operated continuously for more than one year, and net assets of Rmb50 million or above; (2) no pending litigation, or the amount in dispute for pending litigation is less than 30% of its net assets; and (3) the shares intended to be held by the applicant in the futures brokerage shall account for less than 50% of the total amount of shares of the brokerage (Article 2).
Related legislation: Tentative Regulations for the Administration of Futures Trading, Jun 2 1999, CLP 1999 No.6 p.39; Decision on Establishing Administrative Licensing for Administrative Examination and Approval Requirements That Truly Have to be Retained; PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p.21 and Circular on Matters Relating to Equity Participation by Hong Kong and Macao Service Providers in Futures Brokerages, 2005
Repealed legislation: China Securities Regulatory Commission, Circular on Issues Relevant to the Qualifications of Shareholders of Futures Brokerages, 2004