Oct. 17 – The Shanghai Municipal Government released the “Interpretation of the Administrative Measures for the Shanghai Free Trade Zone (hereinafter referred to as the ‘Interpretation’)” on October 15, which clarifies several issues regarding the administrative measures for the Shanghai Free Trade Zone (Shanghai FTZ). Detailed information can be found below.
Q: What is the background for introducing the “Administrative Measures for Shanghai Free Trade Zone”?
A: With the view to regulate the daily operations of the Shanghai FTZ, the Shanghai Municipal Government released the “Administrative Measures for Shanghai Free Trade Zone (hereinafter referred to as ‘Measures’)” on September 29, which clarify the administrative system and regulations for the zone.
Q: What’s the main content of the Measures?
A: The Measures contain 39 provisions and regulate the following six aspects:
Q: What are the main functions of the Shanghai FTZ?
A: According to the Measures, the main functions of the Shanghai FTZ are as follows:
Q: Which areas will be further opened up to domestic and foreign investors?
A: The Shanghai FTZ will deepen the opening-up level in the following areas:
Moreover, the Shanghai FTZ will suspend or cancel the entry requirements on investors’ qualifications, as well as restrictions on shareholding proportions and business scope.
Q: Has the Shanghai FTZ rolled out any new measures in terms of foreign investment management?
A: The Shanghai FTZ will implement a “Negative List” approach towards foreign investment management. Foreign investment projects in the sectors not covered under the negative list only need to go through record-filing procedures.
Q: Has the Shanghai FTZ rolled out any new measures in terms of overseas investment by enterprises in the zone?
A: Overseas investment projects by enterprises in the zone only need to go through record-filing formalities.
Q: Has the Shanghai FTZ rolled out any new measures in terms of industrial and commercial administration?
A: The Shanghai FTZ will implement a capital registration system. Shareholders of enterprises in the zone shall agree upon the contributing amount, forms and period independently, and record such in the company’s articles of association.
The shareholders shall be liable for the authenticity and legality of the capital contribution and are held accountable to the enterprise within the limits of their respective subscribed capital or shares. The industrial and commercial authority will register the registered capital of the company, instead of the paid-in capital.
The zone will also pilot the “license before certificate” registration system. Enterprises in the Shanghai FTZ may commence normal production and operation activities after obtaining the business license. Enterprises engaged in businesses which require administrative approval may file an application with the competent authorities for the approval items after obtaining the business license.
Q: Has the Shanghai FTZ rolled out any new measures in terms of entry and exit supervision?
A: The Shanghai FTZ has rolled out the following entry and exit measures:
Q: Has the Shanghai FTZ rolled out any new measures in terms of financial innovation?
A: The Shanghai FTZ has put forward the following four measures for the financial reform:
RMB Convertibility under Capital Account
Under a controllable risk level, the Shanghai FTZ will implement a trial program of RMB convertibility under the capital account, and innovate business and management modes through separate accounting.
Interest Rate Liberalization
The Shanghai FTZ will cultivate an independent pricing mechanism in line with the development of the real economy, and gradually promote the reform of interest rate liberalization.
RMB Cross-border Usage
Enterprises in the Shanghai FTZ may innovate cross-border RMB businesses based on their actual situation, thereby to facilitate the cross-border usage of RMB.
Foreign Exchange Management
The Shanghai FTZ will set up a foreign exchange management system to facilitate trade investment.
Q: Has the Shanghai FTZ rolled out any new measures in terms of strengthening comprehensive management and services?
A: The Shanghai FTZ has established a “one-off handling” system to simplify the administrative procedures in the zone. For approval of foreign investment projects and enterprises establishment, the industry and commerce authorities in the zone shall accept the application documents submitted by applicants and deliver relevant instruments to such applicants in a unified manner.
Moreover, enterprises in the zone are required to submit annual reports to the industry and commerce authorities. Such reports will be publicized and enterprises will be held liable for the authenticity and legality of the reports.
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Administrative Measures Released for Shanghai Free Trade Zone
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