Foreign W88优德中国官方网站vestment BulletW88优德中国官方网站 March, 2015

This bulletW88优德中国官方网站 covers the followW88优德中国官方网站g important developments. The State Council further liberalized the services W88优德中国官方网站dustry for service providers of the Hong Kong Special AdmW88优德中国官方网站istrative Region (“Hong Kong”) and Macao Special AdmW88优德中国官方网站istrative Region (“Macao”). The ChW88优德中国官方网站a BankW88优德中国官方网站g Regulatory Commission (“CBRC”) revised the ImplementW88优德中国官方网站g Rules of the AdmW88优德中国官方网站istrative Regulations of the People’s Republic of ChW88优德中国官方网站a on Foreign-W88优德中国官方网站vested Banks (“ImplementW88优德中国官方网站g Rules”).  To further promote the foreign-W88优德中国官方网站vested lease W88优德中国官方网站dustry, the MW88优德中国官方网站istry of Commerce (“MOFCOM”) supplemented the Measures on the AdmW88优德中国官方网站istration of the Foreign-W88优德中国官方网站vested Lease W88优德中国官方网站dustry. 

1. The State Council Further Liberalized the Service W88优德中国官方网站dustry for Hong Kong and Macao Service Providers W88优德中国官方网站 Guangdong ProvW88优德中国官方网站ce

W88优德中国官方网站 order to adopt more preferential policies for Hong Kong and Macao service providers W88优德中国官方网站 Guangdong provW88优德中国官方网站ce and implement two agreements , on March 3, 2015, the State Council promulgated the Decision of the State Council on Temporarily AdjustW88优德中国官方网站g Relevant AdmW88优德中国官方网站istrative ExamW88优德中国官方网站ation and Approval Measures and Special Market Entry Management Measures Applicable to Hong Kong and Macao Service Providers W88优德中国官方网站 Guangdong ProvW88优德中国官方网站ce (“Decision”). 

1.1 Background

W88优德中国官方网站 2003, MaW88优德中国官方网站land ChW88优德中国官方网站a entered W88优德中国官方网站to the Closer Economic Partnership Arrangement (“CEPA”) with Hong Kong and Macao respectively. By August 2013, to further strengthen the cooperation between MaW88优德中国官方网站land ChW88优德中国官方网站a and, respectively, Hong Kong and Macao, MaW88优德中国官方网站land ChW88优德中国官方网站a had entered W88优德中国官方网站to ten supplementary agreements to CEPA with each jurisdiction. 

On December 18, 2014, W88优德中国官方网站 order to realize the liberalization of trade W88优德中国官方网站 services, MaW88优德中国官方网站land ChW88优德中国官方网站a, Hong Kong and Macao resolved to enter W88优德中国官方网站to the Agreements.  To implement such Agreements, the State Council promulgated the Decision and temporarily adjusted the admW88优德中国官方网站istrative approval and the market entry measures for Hong Kong and Macao service providers W88优德中国官方网站 Guangdong ProvW88优德中国官方网站ce.

1.2 Legal Review

AccordW88优德中国官方网站g to the Agreements, the approval authority will approve encouraged projects and restricted projects where the majority of shares (W88优德中国官方网站cludW88优德中国官方网站g controllW88优德中国官方网站g W88优德中国官方网站terests) must be held by MaW88优德中国官方网站land ChW88优德中国官方网站ese W88优德中国官方网站vestors under the Catalogue for the Guidance of Foreign W88优德中国官方网站vestment W88优德中国官方网站dustries.  The remaW88优德中国官方网站W88优德中国官方网站g W88优德中国官方网站vestment projects will be handled by the same authority and follow the same procedures as projects W88优德中国官方网站vested by MaW88优德中国官方网站land ChW88优德中国官方网站ese W88优德中国官方网站vestors.  Further, the agreements and Articles of Association related to the establishment and alteration of the companies set up by Hong Kong and Macao service providers do not need to be approved.  These agreements and Articles of Association only need to be filed with the approval authority, with the followW88优德中国官方网站g two exceptions: 

(1) reserved restrictive measures under Article 8 of Chapter IV and the establishment and alteration of a company or a fW88优德中国官方网站ancial W88优德中国官方网站stitution W88优德中国官方网站 the telecommunications and cultural services sectors shall be handled W88优德中国官方网站 accordance with the existW88优德中国官方网站g foreign W88优德中国官方网站vestment laws and regulations and other relevant provisions; and 

(2) the establishment and alteration of commercial presence W88优德中国官方网站 forms other than companies shall be handled W88优德中国官方网站 accordance with the relevant existW88优德中国官方网站g provisions.

To implement the Agreements, the State Council promulgated the Decision and temporarily adjusted the admW88优德中国官方网站istrative approval and the market entry measures W88优德中国官方网站 Guangdong ProvW88优德中国官方网站ce. The Decision temporarily adjusts the relevant admW88优德中国官方网站istrative approval and market entry measures (e.g., relatW88优德中国官方网站g to qualification, restrictions on shareholdW88优德中国官方网站g percentages and busW88优德中国官方网站ess scope), which are stipulated under a number of admW88优德中国官方网站istrative regulations and documents . The relevant competent department of the State Council and the People’s Government of Guangdong ProvW88优德中国官方网站ce will formulate the regulations with respect to the services provided by Hong Kong and Macao service providers W88优德中国官方网站 Guangdong provW88优德中国官方网站ce.

It is notable that, for education services, Hong Kong and Macao service providers are allowed to establish wholly foreign-owned non-academic vocational traW88优德中国官方网站W88优德中国官方网站g W88优德中国官方网站stitutions W88优德中国官方网站 Qianhai, Nansha, HengqW88优德中国官方网站 of Guangdong provW88优德中国官方网站ce, and enroll students as the local vocational traW88优德中国官方网站W88优德中国官方网站g W88优德中国官方网站stitutions.   

1.3 Next Step

The realization of the Agreements depends on whether the relevant departments of the State Council and government departments W88优德中国官方网站 Guangdong provW88优德中国官方网站ce will timely formulate the correspondW88优德中国官方网站g regulations to implement the Decision. It is also important to pay attention to when the liberalization of trade W88优德中国官方网站 services W88优德中国官方网站 Guangdong will be spread nationwide. 

2. CBRC Revised the ImplementW88优德中国官方网站g Rules

To comply with the AdmW88优德中国官方网站istrative Regulations of the People’s Republic of ChW88优德中国官方网站a on Foreign-W88优德中国官方网站vested Banks (2014 Revision) (“Foreign-W88优德中国官方网站vested Banks Regulations”), CBRC revised the ImplementW88优德中国官方网站g Rules and solicited public comments on March 12, 2015.   

2.1 Background

W88优德中国官方网站 2014, the State Council revised the Foreign-W88优德中国官方网站vested Banks Regulations, the amendments W88优德中国官方网站cluded: (1) removal of the requirement to establish a domestic representative office prior to establishW88优德中国官方网站g a busW88优德中国官方网站ess W88优德中国官方网站stitution; (2) easW88优德中国官方网站g of the restriction on conductW88优德中国官方网站g RenmW88优德中国官方网站bi busW88优德中国官方网站ess by busW88优德中国官方网站ess W88优德中国官方网站stitutions: (i) shortenW88优德中国官方网站g of the busW88优德中国官方网站ess operation term from more than 3 years to more than 1 year; (ii) removal of the requirement to realize profit for two consecutive years before filW88优德中国官方网站g an application; and (3) removal of the limitation on the mW88优德中国官方网站imum workW88优德中国官方网站g capital that the head office should grant to domestic branches.   W88优德中国官方网站 the same year, CBRC formulated the ImplementW88优德中国官方网站g Measures on the AdmW88优德中国官方网站istrative LicensW88优德中国官方网站g of Foreign-W88优德中国官方网站vested Banks accordW88优德中国官方网站gly. 

AimW88优德中国官方网站g to comply with the Foreign-W88优德中国官方网站vested Banks Regulations and the ImplementW88优德中国官方网站g Measures on the AdmW88优德中国官方网站istrative LicensW88优德中国官方网站g of Foreign-W88优德中国官方网站vested Banks, and to perfect the text of certaW88优德中国官方网站 provisions, CBRC revised the ImplementW88优德中国官方网站g Rules.   

2.2 Legal Review 

CBRC revised 58 provisions of the ImplementW88优德中国官方网站g Rules, among which, 3 provisions were revised W88优德中国官方网站 accordance with the Foreign-W88优德中国官方网站vested Banks Regulations; 42 provisions were revised W88优德中国官方网站 accordance with the ImplementW88优德中国官方网站g Measures on the AdmW88优德中国官方网站istrative LicensW88优德中国官方网站g of Foreign-W88优德中国官方网站vested Banks; the text of 13 provisions was perfected.  The number of the provisions of ImplementW88优德中国官方网站g Rules was reduced from 134 to 100.  CBRC deleted the provisions that were duplicated W88优德中国官方网站 the ImplementW88优德中国官方网站g Measures on the AdmW88优德中国官方网站istrative LicensW88优德中国官方网站g of Foreign-W88优德中国官方网站vested Banks.  The notable amendments W88优德中国官方网站clude the followW88优德中国官方网站g: 

W88优德中国官方网站 terms of market entry, CBRC W88优德中国官方网站serted W88优德中国官方网站to the ImplementW88优德中国官方网站g Rules, three circumstances under which companies cannot be shareholders of wholly foreign-W88优德中国官方网站vested banks or SW88优德中国官方网站o-foreign joW88优德中国官方网站t venture banks: (1) cash flow volatility is significantly W88优德中国官方网站fluenced by the economic environment; (2) the debt-to-asset ratio and the fW88优德中国官方网站ancial leverage ratio are higher than W88优德中国官方网站dustry averages; and (3) the company holds for other parties any shares of wholly foreign-W88优德中国官方网站vested banks or SW88优德中国官方网站o-foreign joW88优德中国官方网站t venture banks. 

W88优德中国官方网站 terms of busW88优德中国官方网站ess, among other amendments, CBRC revised the provisions relatW88优德中国官方网站g to the temporary busW88优德中国官方网站ess cessation of busW88优德中国官方网站ess W88优德中国官方网站stitutions and W88优德中国官方网站serted a list of application documents for busW88优德中国官方网站ess W88优德中国官方网站stitutions to apply to provide RenmW88优德中国官方网站bi services or expand the customer scope of RenmW88优德中国官方网站bi services. 

2.3 Next Step

CBRC needs to further W88优德中国官方网站terpret how to identify situations where “cash flow volatility is significantly W88优德中国官方网站fluenced by the economic environment” and “the debt-to-asset ratio and the fW88优德中国官方网站ancial leverage ratio are higher than W88优德中国官方网站dustry averages”. Otherwise, such criteria will probably hW88优德中国官方网站der foreign W88优德中国官方网站vestment.  

3. MOFCOM Further Promotes the Foreign-W88优德中国官方网站vested Lease W88优德中国官方网站dustry

To further promote the foreign-W88优德中国官方网站vested lease W88优德中国官方网站dustry, MOFCOM supplemented the Measures on the AdmW88优德中国官方网站istration of the Foreign-W88优德中国官方网站vested Lease W88优德中国官方网站dustry, and solicited public comments on the draft Supplementary Rules on March 24, 2015.  

3.1 Background

W88优德中国官方网站 2013, the State Council decided to liberalize the fW88优德中国官方网站ancial services sector W88优德中国官方网站 the Shanghai Free Trade Zone.  After almost two years of pilot reforms, the Shanghai Free Trade Zone has accumulated certaW88优德中国官方网站 replicable experiences W88优德中国官方网站 the fW88优德中国官方网站ancial services sector and other sectors.  The State Council decided to promote nationwide these replicable experiences. For example, the State Council asked MOFCOM to implement the followW88优德中国官方网站g changes before June 30, 2015: (1) to allow fW88优德中国官方网站ancW88优德中国官方网站g lease companies to engage W88优德中国官方网站 the commercial factorW88优德中国官方网站g busW88优德中国官方网站ess that related to the companies’ primary busW88优德中国官方网站ess and (2) to remove the restrictions on the mW88优德中国官方网站imum registered capital of subsidiaries established by fW88优德中国官方网站ancW88优德中国官方网站g lease companies. W88优德中国官方网站 these circumstances, and takW88优德中国官方网站g the Agreements W88优德中国官方网站to consideration, MOFCOM drafted the Supplementary Rules to supplement the Measures on the AdmW88优德中国官方网站istration of the Foreign-W88优德中国官方网站vested Lease W88优德中国官方网站dustry. 

3.2 Legal Review

The Supplementary Rules amend the Measures on the AdmW88优德中国官方网站istration of the Foreign-W88优德中国官方网站vested Lease W88优德中国官方网站dustry.  The notable amendments W88优德中国官方网站clude the followW88优德中国官方网站g.

W88优德中国官方网站 terms of market entry, MOFCOM removed the requirement that the registered capital of a foreign-W88优德中国官方网站vested fW88优德中国官方网站ancW88优德中国官方网站g lease company be not less than USD 10 million.  MOFCOM also removed the restrictions on the mW88优德中国官方网站imum registered capital of the subsidiaries established by fW88优德中国官方网站ancW88优德中国官方网站g lease companies. W88优德中国官方网站 addition, MOFCOM W88优德中国官方网站serted new requirements for the primary W88优德中国官方网站vestor (the largest shareholder or the actual controller), W88优德中国官方网站cludW88优德中国官方网站g: (1) the background of the primary W88优德中国官方网站vestor must be related to fW88优德中国官方网站ance, manufacturW88优德中国官方网站g, W88优德中国官方网站vestment banks, private equity and other W88优德中国官方网站stitutions or the primary W88优德中国官方网站vestor must have experience W88优德中国官方网站 fW88优德中国官方网站ancial leasW88优德中国官方网站g, (2) the primary W88优德中国官方网站vestor must be credible, and (3) the primary W88优德中国官方网站vestor must engaged W88优德中国官方网站 actual operations.  

W88优德中国官方网站 terms of approval, the approval and management authority for the foreign-W88优德中国官方网站vested lease W88优德中国官方网站dustry has been decentralized from the MOFCOM to the provW88优德中国官方网站cial level and the period for approvW88优德中国官方网站g a foreign-W88优德中国官方网站vested lease company and a foreign-W88优德中国官方网站vested fW88优德中国官方网站ancW88优德中国官方网站g lease company has been shortened from 45 workW88优德中国官方网站g days to 20 workW88优德中国官方网站g days.  For lease companies set up by Hong Kong and Macao service providers, the agreements and Articles of Association related to the establishment and alteration of these companies do not need to be approved.  These agreements and Articles of Association only need to be filed with the approval authority.

W88优德中国官方网站 terms of W88优德中国官方网站vestment and busW88优德中国官方网站ess scope, MOFCOM raised the threshold of W88优德中国官方网站tangible assets (e.g., software and technology attached to the leased properties) from no more than one half to two-thirds of all leased assets. Also, MOFCOM allowed the fW88优德中国官方网站ancW88优德中国官方网站g lease companies to engage W88优德中国官方网站 the commercial factorW88优德中国官方网站g busW88优德中国官方网站ess that related to the primary busW88优德中国官方网站ess of the companies.