Public Document of Shanghai Municipal People’s Government H.F.G. [2019] No.31

Notice of Shanghai Municipal People’s Government on Publishing the Amended Provisions of Shanghai Municipality on Encouraging Multinational Corporations to Establish Regional Headquarters

To all district governments, all commissions, general offices and departments of the municipal government,

The amended Provisions of Shanghai Municipality on Encouraging the Multinational Corporations to Establish Regional Headquarters are hereby published and distributed. Please read it carefully and implement these provisions as required.

Provisions of Shanghai Municipality on Encouraging the Multinational Corporations to Establish Regional Headquarters (H.F.F [2017] No.9 published by the municipal government on January 27, 2017 is repealed simultaneously.

Shanghai Municipal People’s Government (sealed)

July 25, 2019

(For Public Release)

Provisions of Shanghai Municipality on Encouraging Multinational Corporations to Establish Regional Headquarters

Article 1 (Purpose and Basis)

In order to implement the Foreign Investment Law of the People’s Republic of China, Several Opinions of CPC Central Committee and the State Council on Building a New Open Economic System (Z.F.[2015] No.13), Notice of the State Council on the Measures for Expanding the Opening to the Outside World and Actively Utilizing Foreign Investment (G.F.[2017] No.5), Notice of the State Council on the Measures for Promoting the Growth of Foreign Investment (G.F. [2017] No.39), Notice of the State Council on Several Measures for Actively and Effectively Utilizing Foreign Investment to Promote High-Quality Economic Development (G.F. [2018] No.19) and Several Opinions on Promoting the Development of Multinational Corporation Regional Headquarters (H.F.G.[2019] No.30) issued by Shanghai Municipal Government, encourage multinational corporations to establish regional headquarters and organizations acting as headquarters in Shanghai, support and help the regional headquarters and organizations acting as headquarters in Shanghai to integrate the business, expand the functions, upgrade the capabilities, strive to make Shanghai the International Economic Center, Financial Center, Trade Center, Shipping Center and Technological Innovation Center in the world, these provisions are formulated in accordance with relevant laws and regulations.

Article 2 (Definition)

Multinational corporation regional headquarters (hereinafter called “regional headquarters”) refer to the sole head office established in this city by the parent company of a multinational corporation registered abroad in the form of investment or authorization for the purpose of managing and providing service to the member companies within one or more than one countries. The regional headquarters to be established by multinational corporations in Shanghai shall be an independent legal entity such as an investment company or management company etc.

Organizations acting as headquarters of multinational corporations (hereinafter called “organization acting as headquarters”) refer to a foreign-funded company (including subsidiaries and branches) with multiple functions including management decisions, fund management, procurement, sale, logistics, settlement, research and development, training and other supportive services within one or more than one countries on behalf of the overseas parent company, although it hasn’t achieved the standard of multinational corporation regional headquarters.

Article 3 (Scope of Application)

These Provisions shall apply to the regional headquarters and organizations acting as headquarters established in the city.

Article 4 (Regulatory Authority)

The Municipal Commission of Commerce is responsible for the recognition of regional headquarters and organizations acting as headquarters, coordinating the management service to multinational corporation regional headquarters and organizations acting as headquarters among all the concerned departments.

The market supervision administrations, the departments of treasury, taxation, foreign affairs, public security, human resources and social security, entry and exit administration, administration of foreign exchange, the People’s Bank of China and the Customs etc. shall provide the management services to regional headquarters and organizations acting as headquarters within their respective scope of job responsibilities.

Article 5 (Criteria for the Recognition of Regional Headquarters)

When applying for recognition as a regional headquarter, the following conditions shall be satisfied,

The Company shall be a foreign-funded enterprise as an independent legal entity.
The total assets of the parent company shall be no less than 200 million US Dollars.
Upon the authorization of the parent company, the Company shall perform the functions of headquarters for all the member companies within one or more than one countries, including the management decisions, fund management, procurement, sale, logistics, settlement, research and development and training etc.
The registered capital of the Company shall be no less than 2 million US Dollars.
In case the abovementioned conditions are basically satisfied and the Company has made great contribution to the local economic development, the recognition of regional headquarter may be at the discretion of the relevant authority.

Article 6 (Criteria for the Recognition of Organizations Acting as Headquarters)

When applying for recognition as an organization acting as headquarters, the following conditions shall be satisfied,

The Company shall be a foreign-funded enterprise or a subsidiary of a foreign-funded enterprise as an independent legal entity.
The total assets of the parent company shall be no less than 100 million US Dollars.
Upon the authorization of the parent company, the Company shall perform the functions of headquarters for all the member companies within one or more than one countries, including the management decisions, fund management, procurement, sale, logistics, settlement, research and development and training etc.
The registered capital of the Company shall be no less than 1 million US Dollars. In case the Company is a subsidiary, the working capital allocated by the parent company shall be no less than 1 million US Dollars.

Article 7 (Application Documents)

When applying for recognition as a regional headquarter or an organization acting as headquarters, the following documents shall be submitted to the Municipal Commission of Commerce:

Application signed by the legal representative of the Company;
Power of Attorney signed by the authorized signatory on behalf of the parent company, which specifies the basic functions of multinational corporation regional headquarters or organization acting as headquarters.
Business License of the Company (photocopy). In case the organization acting as headquarters is a subsidiary, the business license of Shanghai branch (photocopy) and the working capital allocation certificate issued by the parent company are required.
The Auditor’s Report of the parent company for the previous accounting year.
Business license or registration certificate (photocopy) of the authorized domestic and overseas companies responsible for the management of the Company.
Other documents required by the laws, regulations and rules.

The original document shall be submitted unless it is clearly specified that the photocopy is acceptable.

Article 8 (Review and Approval)

The Municipal Commission of Commerce shall complete the review within eight working days upon receipt of the application documents and decide on the recognition. In case the Company is recognized as a regional headquarter or an organization acting as headquarters, a recognition certificate shall be issued.

Article 9 (Financial Aid and Rewards)

According to relevant rules and regulations, regional headquarters are entitled to the financial aid for the start-up and house rent.

Regional headquarters with comprehensive operational functions including the business management, fund management, research and development, procurement, sale, logistics and supportive services, making great contribution to the economic development and yielding good benefits will receive the rewards according to the relevant regulations.

Headquarters of Asia, Asia Pacific Region or larger regions established by multinational companies will receive the financial aid according to the rules provided that the conditions are satisfied.

The implementing measures regarding the financial aid and rewards will be determined by the relevant authority.

Article 10 (Capital Operation and Management)

Regional headquarters and organizations acting as headquarters may establish a unified internal fund management system to realize the unified management of their own funds. The fund operation related to foreign exchange shall be in accordance with foreign exchange regulations. The eligible regional headquarters and organizations acting as headquarters can conduct the centralized management of cross-border funds for multinational corporations, including the centralized receipts and payment of foreign exchange in current accounts, net settlement, centralized operation and management of domestic and overseas funds, centralized settlement and sale of foreign exchange, centralized allocation of foreign debts and loans etc.

Investment companies may establish a finance company in accordance with Measures for the Administration of Finance Companies of Enterprise Groups to provide the centralized financial management service to the investment companies in China.

Optimize the foreign exchange payment procedures under non-trade accounts, provide guidance and service to regional headquarters and organizations acting as headquarters in the tax payment, provide convenient green channel for regional headquarters and organizations acting as headquarters to file and register the foreign exchange payment contract and tax payment and determination under non-trade accounts.

Regional headquarters and organizations acting as headquarters may open the free trade account according to the regulations and handle the cross-border receipts and payments in local and foreign currency as well as the receipts and payments in RMB according to the convertibility principle.

Article 11 (Simplify the Exit and Entry Procedures)

Eligible Chinese employees of regional headquarters or organizations acting as headquarters may apply for the APEC Business Travel Card. The relevant authority shall provide convenience to those employees who need to travel to Hong Kong, Macau, Taiwan or foreign countries for business purpose.

Foreign employees of regional headquarters or organizations acting as headquarters who need to travel to and stay in China temporarily on multiple occasions can apply for multiple entry visa with a valid term of one year and maximum length of stay no longer than 180 days. Foreign employees who need to pay a visit to this city shall apply for entry visa at Chinese consulate in foreign countries or apply for the port visa at the Exit and Entry Administration of the Public Security Bureau in case of the tight schedule.

Foreign employees of regional headquarters or organizations acting as headquarters who need to stay in this city for a long time can apply for foreigner’s residence permit with a valid term of three years to five years.

Legal representative and other senior executives of regional headquarters or organizations acting as headquarters may be recommended to apply for foreigner’s permanent residence permit in accordance with Measures for the Administration of Examination and Approval of Foreigner’s Permanent Residence in China.

Shanghai Customs (Exit & Entry Inspection and Quarantine Bureau) will provide the convenient green channels for the legal representatives of regional headquarters and organizations acting as headquarters and senior executives related to the headquarter functions in the application for the health certificate.

Article 12 (Talent Introduction)

Human Resources and Social Security Department and Science and Technology Departments shall provide convenience for the foreign talents introduced by regional headquarters or organizations acting as headquarters in the employment procedures and application for work permit and other permissions.

Eligible Chinese talents introduced by regional headquarters or organizations acting as headquarters can apply for the local household registration.

Talents with undergraduate (bachelor) or higher degree or any exceptional capability who used to study abroad and have the foreign nationality, talents with the experience of studying abroad, holding the Chinese passport, having permanent (long-term) residence in foreign country and no permanent household registration in China and other professional talents, or talents from Hong Kong, Macau Special Administrative Region or Taiwan, employed with regional headquarters or organizations acting as headquarters may apply for Shanghai Residence Permit (Type B) according to the regulation. The spouse or children under the age of 18 or any child studying in senior high school of the abovementioned talent can also apply for the residence permit of accompanying family members.

The local government shall provide convenience to the talents introduced by regional headquarters or organizations acting as headquarters in their children’s education, health care and application for talent apartment.

Article 13 (Trade Facilitation)

The Customs shall focus on the trade facilitation, put forward innovated supervisory system and modes to improve the efficiency of customs clearance and provide convenience to eligible regional headquarters and organizations acting as headquarters in the import and export of goods.

The Customs and Administration of Foreign Exchange shall provide convenient regulatory measures to regional headquarters and organizations acting as headquarters with distribution centers for logistics integration.

Article 14 (Support of the District Government)

The district government may draw up policies and measures to support the development of regional headquarters and organizations acting as headquarters and create excellent business environment for the development of regional headquarters and organizations acting as headquarters according to the actual situation in this district.

Article 15 (Reference and Application)

These provisions shall also be applicable to the regional headquarters and organizations acting as headquarters to be established in this city by investors from Hong Kong, Macau or Taiwan.

Article 16 (Effective Date and Valid Term)

These provisions shall take effect since September 1, 2019 and expire on August 31, 2024.