Public Document of Shanghai Municipal People’s Government H.F.G.[2019] No. 30

Several Opinions of Shanghai Municipal People’s Government on Promoting the Development of Multinational Corporation Regional Headquarters

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

In order to implement the Foreign Investment Law of the People’s Republic of China, Notice of the State Council on Several Measures for Promoting Growth of Foreign Investment (G.F.[2017] No.39) and 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), further expand the opening to the outside world and improve the quality and level of the utilization of foreign investment, accelerate the cluster development of functional organizations like multinational corporation regional headquarters, expand the functions and upgrade the capabilities, strive to make Shanghai the International Economic Center, Financial Center, Trade Center, Shipping Center and Technological Innovation Center in the world, the following opinions are given for promoting the regional headquarters of multinational companies.

Further promote and encourage the cluster development of multinational corporation regional headquarters

Adjust the standard for defining the multinational corporation regional headquarters and organizations acting as headquarters by reducing the minimal requirement for total assets of the parent company of multinational corporation regional headquarters to 200 million US Dollars and reducing the minimal requirement for total assets of the parent company of organizations acting as headquarters for multinational corporations to 100 million US Dollars. (Subject to the administration and supervision of the Commission of Commerce)

Adjust the standard for defining the multinational corporation regional headquarters and organizations acting as headquarters by removing the restrictions on the contribution of registered capital to be made by the parent company of multinational corporation regional headquarters and the number of authorized management organizations of regional headquarters. The restriction on the number of invested companies in China by the parent company of the organizations acting as multinational corporation regional headquarters is also removed. (Subject to the administration and supervision of the Commission of Commerce)

The restriction that multinational corporation regional headquarters and organizations acting as regional headquarters must be wholly foreign-owned enterprise is removed. (Subject to the administration and supervision of the Commission of Commerce)

Provide more convenience for the multinational corporations to make investment

Relax the conditions for foreign investors in establishing investment companies. The total assets of the foreign investors in the previous year before the incorporation application shall be no less than 200 US Dollars and the restrictions on the contribution of registered capital and number of invested companies are removed. (Subject to the administration and supervision of the Commission of Commerce and Municipal Market Supervision Bureau)

Support the participation in group reorganization by multinational corporation regional headquarters and organizations acting as regional headquarters and provide convenience for the corporate restructuring related to multinational corporation regional headquarters or organizations acting as regional headquarters. (Subject to the administration and supervision of Municipal Tax Bureau and Municipal Finance Bureau)

Give more freedom and convenience to multinational corporations in the use of funds

Facilitate the operation and management of domestic and overseas funds by multinational corporation regional headquarters or organizations acting as regional headquarters. The centralized operation and management of the domestic and overseas funds of member companies is allowed under the centralized operation and management business of cross-border funds conducted by multinational corporations (hereinafter called “cross-border capital pool business”), including the capital collection, capital allocation, capital settlement, hedging, investment and financing etc. according to the group business modes. Cooperative banks will arrange the compliance audit under the principle of foreign exchange business development of banks and process the business to provide convenient settlement and payment service of foreign exchange in capital account. (Subject to the administration and supervision of State Administration of Foreign Exchange, Shanghai Branch)

Support the cross-border receipt and payment of local and foreign currency by multinational corporation regional headquarters and organizations acting as regional headquarters under the cross-border capital pool business. Multinational corporation regional headquarters and organizations acting as regional headquarters may conduct the centralized operation of cross-border funds through the primary multi-currency (including RMB) account of domestic funds. Multinational corporation regional headquarters and organizations acting as regional headquarters are encouraged to make the cross-border settlement in RMB and all cross-border transactions to be settled with foreign exchange can be settled in RMB. (Subject to the administration and supervision of the State Administration of Foreign Exchange, Shanghai Branch)

Encourage the multinational corporation regional headquarters and organizations acting as regional headquarters to produce the size effect of the group and allocate the cross-border financing resources flexibly. Multinational corporation regional headquarters and organizations acting as regional headquarters may file the cross-border capital pool business plan with the State Administration of Foreign Exchange Shanghai Branch directly, implement the centralized management of the foreign debts and (or) overseas loans of member companies by following the macro-prudential principles, seek loans, repay foreign debts or give overseas loans according to the business practice. It is unnecessary for all member companies to go through procedures for the registration of foreign debts (or overseas loans) on a deal-by-deal basis by currencies or by creditors (or debtors). (Subject to the administration and supervision of the State Administration of Foreign Exchange, Shanghai Branch)

Remove the restrictions on the cooperative banks for cross-border capital pool business and number of the primary domestic capital accounts. There is no restriction on the number of cooperative banks for multinational corporation regional headquarters and organizations acting as regional headquarters, no need to distribute the foreign debts among cooperative banks before the filing, no centralized quota of overseas loans, no restrictions on the number of primary domestic capital accounts. (Subject to the administration and supervision of the State Administration of Foreign Exchange, Shanghai Branch)

Facilitate the cross-border receipt and payment of current accounts by multinational corporation regional headquarters or organizations acting as regional headquarters in cross-border capital pool business. Multinational corporation regional headquarters are allowed to process the receipts and payments of current accounts on behalf of member companies according to the needs in production, operation and management. Multinational corporation regional headquarters and organizations acting as regional headquarters may also be responsible for the centralized accounting of the accounts receivable and accounts payable of member companies under the current accounts as well as the net settlement business. (Subject to the administration and supervision of the State Administration of Foreign Exchange, Shanghai Branch)

Facilitate the purchase and payment of foreign exchange regarding the legal RMB income of foreign employees of multinational corporation regional headquarters and organizations acting as regional headquarters as well as the sale and utilization of foreign exchange remitted from abroad. Foreign employees of multinational corporation regional headquarters or organizations acting as regional headquarters are allowed to make investment in the stock market in China. Foreign employees of multinational corporation regional headquarters or organizations acting as regional headquarters are encouraged to participate in the equity incentive fund management of A-share listed companies in China. (Subject to the administration and supervision of the State Administration of Foreign Exchange Shanghai Branch)

Support the multinational corporation regional headquarters or organizations acting as regional headquarters to conduct the offshore resale business with genuine trading background. Companies that conduct such business legally and properly may handle the foreign exchange receipts and payments directly at banks while these banks will provide the convenient cross-border financial service according to the international general rules. (Subject to the administration and supervision of the State Administration of Foreign Exchange Shanghai Branch)

Support the qualified financial companies or capital operation centers established by multinational corporation regional headquarters or organizations acting as regional headquarters have access to the interbank foreign exchange market to make foreign exchange transaction and foreign currency lending etc. (Subject to the administration and supervision of the People’s Bank of China Shanghai Branch)

Support the qualified multinational corporation regional headquarters and organizations acting as regional headquarters to finance by issuing bonds and stocks, issue and use the commercial bill of exchange, make securities investment, reduce the financing costs, improve the capital strength, capital turnover efficiency and capital gains and enhance the stable business operation. (Subject to the administration and supervision of the People’s Bank of China Shanghai Branch)

Support the qualified multinational corporation regional headquarters and organizations acting as regional headquarters to enter Shanghai gold market and conduct gold business to promote its development. (Subject to the administration and supervision of the People’s Bank of China Shanghai Branch)

Further improve the investment functions of free trade account. Offer guidance to the financial institutions to diversify the financial products in the free trade account. (Subject to the administration and supervision of the People’s Bank of China Shanghai Branch)

Banks grant the cross-border loans through the free trade accounting units, use the experience in the world market, optimize the management methods to satisfy the investment and financing needs. (Subject to the administration and supervision of the People’s Bank of China Shanghai Branch, Shanghai Banking and Insurance Regulatory Commission)

Include all the multinational corporation regional headquarters and organizations acting as regional headquarters with good credit standing in the Recommendation List. In respect to the switch trade of commodities based on the free trade account by the companies in the List, banks will offer the cross-border financial service according to the international general rules. (Subject to the administration and supervision of the People’s Bank of China Shanghai Branch, Municipal Commission of Commerce)

Provide more convenience to multinational corporations in the trade and logistics

The chain enterprises affiliated to multinational corporation regional headquarters or organizations acting as regional headquarters in some pilot areas may share the same business license with multiple business addresses to make it more convenient for the regional headquarters or organizations acting as regional headquarters with advantages in trade to establish chain stores. (Subject to the administration and supervision of the Municipal Market Supervision Bureau)

Multinational corporation regional headquarters and organizations acting as regional headquarters in good standing are allowed to print the certificate of origin for export by themselves to simplify the issuance of certificate of origin. (Subject to the administration and supervision of Shanghai Customs)

Support the multinational corporation regional headquarters, organizations acting as regional headquarters and foreign-funded R&D centers to participate in the pilot program of customhouse bond insurance. (Subject to the administration and supervision of Shanghai Customs).

Support the qualified multinational corporation regional headquarters and organizations acting as regional headquarters in the cross-regional outward processing or deep processing transit. (Subject to the administration and supervision of Shanghai Customs)

Explore the implementation of some Customs controls, including group guarantee, improvement of consolidated account books and sharing credit measures to attract more multinational corporation regional headquarters and organizations acting as regional headquarters. (Subject to the administration and supervision of Shanghai Customs)

Promote the one-stop integrated customs service for multinational corporation regional headquarters, organizations acting as regional headquarters and foreign-funded R&D centers, including the registration, customs clearance, tax reduction or exemption and bonded warehousing services. (Subject to the administration and supervision of Shanghai Customs)

Provide more convenience to the multinational corporations in the research and development

Have the risk assessment and classification management on the import and export of materials required for the experiment by multinational corporation regional headquarters, organizations acting as regional headquarters and foreign-funded R&D centers to make the import and export of materials for research and development experiment convenient. (Subject to the administration and supervision of Shanghai Customs, Municipal Drug Administration)

Adjust the minimum number of employees to 50 in the application of start-up financial aid and housing allowance by foreign-funded R&D centers. (Subject to the administration and supervision of the Municipal Commission of Commerce, Municipal Finance Bureau)

Strengthen the administrative protection of intellectual property, improve the intellectual property protection and service system, build up the long-term mechanism of intellectual property protection in key fields, improve the protection of foreign trademarks, add the vulnerably infringed famous foreign trademarks to the local trademark protection list, improve the multiple intellectual property dispute settlement mechanism to provide better intellectual property protection service to multinational corporation regional headquarters and organizations acting as regional headquarters. (Subject to the administration and supervision of the Municipal Intellectual Property Bureau)

Further improve the supporting facilities for multinational incorporation headquarters

The housekeepers hired by the senior executives of multinational corporation regional headquarters or organizations acting as regional headquarters may apply for residence permit for private affairs (marked as “housekeeping service”) (Subject to the administration and supervision of Municipal Public Security Bureau)

Further improve the service capabilities of medical facilities and medical personnel to provide excellent medical service to foreigners, encourage the introduction of world famous medical service groups to establish local medical facilities and provide multi-level and diversified medical service; promote the cooperation between the medical organizations and international insurance companies to provide convenience to foreigners in the medical insurance settlement. (Subject to the administration and supervision of Municipal Health Commission)

Establish excellent schools or expand the school size for the foreign families according to the local needs of the multinational corporation regional headquarters and organizations acting as regional headquarters. (Subject to the administration and supervision of Municipal Education Commission)

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

Shanghai Municipal People’s Government (sealed)

July 25, 2019

(For Public Release)