CHINA: CSRC Q&A on Administrative Measures for Foreign Invested Securities Companies

Wednesday May 2 2018

The China Securities Regulatory Commission has published the following Questions & Answers on Administrative Measures for Foreign-Invested Securities Companies:

Q: After the release of theAdministrative Measures for Foreign-Invested Securities Companies, when will the CSRC start to accept applications? Have companies already raised such request?

A: The CSRC has officially issued the Administrative Measures for Foreign-Invested Securities Companies (hereinafter referred to as the “Foreign Investment Measures“) and accordingly updated the service guidelines for applications on the establishment of securities companies and other administrative licensing matters. With immediate effect, eligible overseas investors can submit application to change the actual controller or set up joint venture securities companies to the CSRC in accordance with the requirements laid out in the latest rules. During the public consultation for the Foreign Investment Measures, a number of large foreign financial institutions from Europe, Asia and other regions have consulted the CSRC on specific requirements on the establishment or shareholding changes in joint venture securities companies, and have repeatedly expressed their interest in preparing related materials for submission. The CSRC will review the documents as per the Foreign Investment Measures, upon receiving their formal applications.
Q: The current opening-up policy allows the cap on foreign shareholding in fund management companies to be raised to 51%. When will the relaxation be effective for the fund industry?

A: Per the Measures for the Administration of Securities Investment Fund Management Companies, the aggregate shares or equity held directly or indirectly by foreign investors in joint venture fund management companies shall not exceed the overall opening-up commitment of the Chinese domestic securities industry. Consequently, the latest movement in the opening-up of fund management companies that allows foreign ownership up to 51% does not entail changes to current regulations. Eligible foreign investors can make applications to change actual controller or set up new joint venture fund management companies in accordance with laws, regulations, CSRC rules, and relevant service guidelines.

Q: We’ve learned that some domestic institutions are interested in undertaking securities-related business. Are there policy arrangements in this regard?

A: Under current regulatory framework, eligible domestic entities can acquire stakes in existing securities companies or co-found joint venture securities companies. Lately, the CSRC is soliciting public comments on the Administrative Rules on Shareholdings in Securities Companies (Draft for Comment) to further clarify shareholder qualifications and shareholding requirements, etc.. The Rules, once finalized and officially released, will be integrated into the CSRC’s overall regulatory framework.

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