Several Opinions of Shanghai Municipal People's Government on Promoting Development of Regional Headquarters of Multinational Companies in the Municipality will be implemented on September 1, 2019

The Shanghai Municipal People’s Government has released the beneficial policy on promoting development of regional headquarters of multinational companies from 2002, and updated the relevant policy every few years. Recently, in order to further attract foreign investments, and level up the quality of foreign investments, the government has updated the policy again, which is the “Several Opinions of Shanghai Municipal People’s Government on Promoting Development of Regional Headquarters of Multinational Companies in the Municipality” (Hu Fu Gui [2019] No.30, hereinafter referred to as the “Opinions”). The main points are as follows:

1. To reduce the determination standards

(1) To relax total asset requirements for parent company of a regional headquarter of multinational company to US$200 million, and relax total asset requirements for parent company of a headquarter organization of multinational company to US$100 million.

(2) To remove the restrictions pertaining to paid-up registered capital of parent company of a regional headquarter of multinational company, and the number of authorized management organizations of a regional headquarter. Remove the restrictions pertaining to the number of investee enterprises in China by the parent company of a headquarter organization of multinational company.

(3) To remove the restriction that the regional headquarters of multinational companies and headquarters organizations must be wholly foreign-owned enterprises.

(4) To relax the criteria for establishment of an investment company by foreign investors, reduce the minimum total asset amount of foreign investor to US$200 million in the year prior to the establishment of the application, and remove the requirements for domestic paid-up registered capital or the number of investee enterprises.

2. To further improve fund use liberty and convenience

(1) Regional headquarters or headquarters organizations of multinational companies could centrally operate domestic and overseas funds of member enterprises under the multinational company’s cross-border funds central operation and management business, and to carry out fund collection, transfer, settlement, hedging, investment, financing transactions etc. in accordance with group business model.

(2) Regional headquarters and headquarters organizations may, centrally manage foreign debts and (or) overseas loans of member enterprises in accordance with the prudential principle, borrow or repay foreign debt or conduct overseas lending business on their own in accordance with commercial principles; and handle registration of each transaction of foreign debt (or overseas loans) for all members without distinction of currency type, creditor (or debtor) for all members.

(3) Regional headquarters and headquarters organizations of multinational companies could carry out accounting centrally for funds receivable and payable under current account for their domestic and overseas member enterprises, and to conduct netting settlement business.

(4) To remove the restriction pertaining to the number of cooperating banks and domestic main accounts for cross-border fund pool business.

In addition, the “Opinions” has prescribed the policy guidelines on the offshore resale business with real trade background, finance, investment, trade, logistics, R&D and etc..