Legislation roundup: Shanghai regional headquarters, investment funds and Shenzhen Free Trade Zone

As for the recognition of a headquarters-type entity, the total asset requirement of the parent company is lowered from not less than US$200 million to not less than US$100 million while the registered capital requirement of such a headquarters-type entity is lowered from not less than US$2 million to not less than US$1 million.

See the full translation.

Further reading

Shanghai Municipality, Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations (Revised)

Shanghai Municipality, Plan for Thoroughly Implementing the «Several Measures for Supporting Intensified Reform and Innovation in Pilot Free Trade Zones»

Shanghai Municipality, Several Opinions on Further Supporting the Participation by Foreign-invested Research and Development Centers in the Establishment of Globally Influential Scientific and Technological Innovation Centers in Shanghai

Capital Markets

China Securities Regulatory Commission, Guidelines for the Side Pocket Mechanism of Publicly Offered Securities Investment Funds (Draft for Comments)

中国证券监督管理委员会公开募集证券投资基金侧袋机制指引 (征求意见稿)

Specific assets in the investment portfolio of a publicly offered securities investment fund will be removed from the original account and placed in a dedicated account where they will be independently managed if:

• no active market price exists for reference for such assets and where use of valuation techniques would still result in material uncertainty as to their fair value; and

(2) the value of such assets would still remain materially uncertain if calculated based on their amortized cost and if allocation to an asset impairment reserve were made therefor.

Further reading

PRC Securities Investment Fund Law (Revised in 2015)

Measures for the Administration of Information Disclosures by Publicly Offered Securities Investment Funds

China Introduces More Measures to Open Up Financial Sector

Free Trade Zones

Shenzhen City, Implementing Rules for Intensively Promoting Pilot Exchange Control Reform in the Shenzhen Qianhai and Shekou Area of the China (Guangdong) Pilot Free Trade Zone

深圳市深入推进中国(广东)自由贸易试验区深圳前海蛇口片区外汇管理改革试点实施细则

Subject to genuineness and compliance, a non-investment type foreign-invested enterprise in the Shenzhen Qianhai and Shekou Area of the China (Guangdong) Pilot Free Trade Zone may, in line with the scale of its actual investment, use foreign exchange revenues on the capital account or the renminbi proceeds derived from the conversion thereof for equity investments in China in accordance with the law.

Further reading

Circular on Issues Relevant to Launching a Pilot Project for Reform of the Administration Method for the Settlement of the Foreign Exchange Registered Capital of Foreign-invested Enterprises in Certain Regions

Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (Negative List) (2019 Edition)

Foreign investors flock to Guangdong

Tentative Measures for the Administration of the Pilot Foreign-invested Equity Investment Enterprise Project