China Regulatory Brief: Service Fee Standards Relaxed & BRICS Bank Headquartered in Shanghai
BRICS Development Bank to Set Up Headquarters in Shanghai
On July 15, the five finance ministers of BRICS (Brazil, Russia, India, China and South Africa) signed an agreement on the New Development Bank (NDB) during the 6th meeting of BRICS national leaders. The NDB, designed to finance infrastructure projects in BRICS and other emerging nations, will have an initial subscribed capital of US$50 billion, contributed in equal shares of US$10 billion by its 5 member states. The bank will be headquartered in Shanghai and its initial presidency held by an Indian national.
Shanghai Encourages the Establishment of MNC Regional HQs
On July 14, the Shanghai Municipal Commission of Commerce, Shanghai Human Resources and two other Shanghai departments jointly released the “Supplementary Provisions on Encouraging the Establishment of Regional Headquarters by Multinational Corporations (Hu Shang Wai Zi  No. 348),” which took immediate effect and will be valid for five years. The Provisions officially launched the so-called “Quasi-HQ Policy,” expected to relax the requirements for establishing a regional headquarters. Under the new Policy, eligible WFOEs not meeting the standards for a MNC HQ may still enjoy the preferential policies (such as financial support and bonuses) for MNC headquarters offered by the Shanghai government.
Shanghai Launches Commercial Factoring Measures
The Shanghai Municipal Commission of Commerce and Shanghai Administration for Industry and Commerce (AIC) jointly released the “Interim Measures on Commercial Factoring Businesses (Hu Fu Ban  No. 65)”, which will take effect on August 1, 2014 and last until July 31, 2016. The Measures defines a commercial factoring business as one in which a supplier obtains financing or services such as accounts receivable collection or bad debt guarantees by transferring accounts receivables to a commercial factoring provider. According to the Measures, a commercial factoring business must meet the following conditions:
- Has been established for more than one year;
- Has a registered capital of over RMB50 million;
- One of the company’s investors has previously engaged in a related business;
- Has set up a sound financial system and a risk control system; and
- Two of the company’s senior managers have three years of experience in the financial sector.
China Relaxes Restrictions on Service Fee Standards
On July 10, the National Development and Reform Commission (NDRC) released the “Circular on Relaxing Several Standard Charges for Construction Project Services (Fa Gai Jia Ge  No.1573).” According to the Circular, a market-regulated price, rather than a national standard, will be implemented for 15 professional services including patent agency services, customs clearance services and four types of service charges for construction projects (excluding government-invested projects), including preliminary project consultation, survey and design, tendering and project supervision. The Circular will take effect on August 1, 2014.
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