Provisions of Shanghai Municipality on Encouraging Transnational Companies to Establish Regional Headquarters in Shanghai

Article 1 (Purpose and Basis)

The provisions are enacted in accordance with relevant laws and regulations and in light of the conditions of Shanghai in order to implement the decisions of the Central Committee of the CPC and the State Council on building a new system of open economy, to intensify opening up to the outside world, to create a more open investment environment amenable to common international rules, to create a more convenient trade environment, more favorable legal environment, more sound production and living environment and more of a enabling environment for the development of talents.

The aim is to encourage transnational corporations to set up regional headquarters and quasi-headquarters in Shanghai and to support these organizations to aggregate business, expand functions and enhance competencies, as well as to engage in the development of the "Four Centers" and the science and technology innovation center with global influence in Shanghai.

Article 2 (Definition)

A regional headquarters of a transnational corporation (hereafter"regional headquarters") refers to the sole head office established in Shanghai by a parent company that is registered outside China, to perform, in the form of investments or authorizations, management and service functions for enterprises that operate in a region covering one or more countries. A transnational corporation can only establish its regional headquarters in Shanghai in the form of a foreign-owned investment company, management company or other forms of enterprises with separate legal personality.

A quasi-headquarters of a transnational company (hereinafter "quasi-headquarters") refers to the foreign-owned enterprise (and its branches) that is below the standard of a regional headquarters but undertakes multiple functions among management and decision making, capital management, procurement, sales, logistics, settlement, research and development, training and other support services in a region covering one or more countries for its parent company that is registered outside China.

Article 3 (Scope of Application)

The Provisions apply to any regional headquarters and quasi-headquarters established within the area of Shanghai.

Article 4 (Administrative Departments)

Shanghai Municipal Commission of Commerce must take charge of the recognition of regional headquarters and quasi-headquarters and coordinates relevant departments to provide management services for regional headquarters and quasi-headquarters.

The bureaus of Industry and Commerce, Finance, Taxation, Foreign Affairs, Human Resources and Social Security, the Entry-Exit Administration and Foreign Exchange Administration and the People's Bank, Customs offices, the Entry-Exit Administration of Inspection and Quarantine and such other relevant departments must, within their respective scope of functions, dutifully provide management services for regional headquarters and quasi-headquarters.

Article 5 (Conditions for Recognition of Regional Headquarters)

To apply for the recognition of a regional headquarters, the applicant must meet the following conditions:

1. It must be a foreign-owned enterprise with a separate legal personality.

2. The total assets of the parent company must not be lower than $400 million dollars; in the case of a regional headquarters established by a company of the service sector, the total assets of the parent company must not be lower than $300 million dollars.

3. The overall registered capital of businesses invested by the parent company in China shall not be lower than $10 million dollars and the number of the enterprises managed upon authorization from the parent company in and outside China must not be less than three; or the number of the enterprises managed upon authorization from the parent company in and outside China must not be less than six. The eligible applicant for recognition that has remarkably contributed to the local economic development will be taken into consideration.

4. The registered capital must not be less than $ 2 million dollars.

Article 6 (Conditions for recognition of Quasi-headquarters)

To apply for the recognition of regional headquarters, the applicant must meet the following conditions:

1. It must be a foreign-owned enterprise or its branch with an independent separate legal personality.

2. The total assets of the parent company must not be lower than $200 million dollars and it has to have established two or more foreign-invested enterprises in China, at least one of which should be registered in Shanghai.

3. The registered capital must not be less than $2 million dollars. In the case that it is established in the form of a branch, the operational capital allocated by the parent company must not be less than $2 million dollars.

Article 7 (Application materials)

To apply for the recognition of a regional headquarters or quasi-headquarters, the applicant must submit the following materials to Shanghai Municipal Commission of Commerce:

1. The application signed by the legal representatives of the company.

2.The authorization documents of the basic functions of the regional headquarters or quasi-headquarters signed by the authorized signatories of the parent company.

3. Copies of the certificate of approval (or the receipt of filing) and the business License of the company（copies only）. In the case that a quasi-headquarters is a branch, the copy of the business License of the Shanghai branch and the certificate of operational capital allocation from the parent company are also required.

4.The audit report of the parent company for the recent year.

5.Copies of certificate of approval (or receipt of filing) and the business License of the enterprises invested by the parent company in China.

6. Other materials provided in accordance with laws, regulations and stipulations.

The original documents of the materials must be submitted if their copies are not explicitly required in the above clauses.

Article 8 (Auditing)

Shanghai Municipal Commission of Commerce should complete the auditing within eight working days from the day of receiving the application and other materials. It renders its decision on whether to approve or disapprove the application. A certificate of approval must be awarded if the application is approved.

Article 9 (Grants and Incentives)

Regional headquarters may be awarded with subsidies for establishment and building rental in accordance with relevant regulations.

Regional headquarters undertake comprehensive operational functions such as management, capital management, research and development, procurement, sales, logistics and support services. Those that have made outstanding contribution towards the economic development and have yielded positive economic benefits may be awarded in accordance with relevant regulations.

The transnational companies that establish their headquarters in Asia, Asia Pacific or a wider region in Shanghai and meet the relevant requirements may be awarded with grants in accordance with relevant regulations.

Specific implementation measures of subsidies and incentives will be formulated by relevant administrations.

Article 10 (Capital Management)

A uniform system of internal capital management may be built in regional headquarters and quasi-headquarters to perform consistent capital management and must comply with the relevant regulations on foreign exchange management when foreign exchange operation is involved. The qualified headquarters and quasi-headquarters can perform foreign exchange intensive operation and management businesses including centralized receipts and payments of foreign exchange funds and netting settlement under current accounts, centralized management, settlement and sale of foreign exchanges onshore and offshore and centralized deployments of foreign debts and outbound loan limit, in compliance with the Provisions on the Centralized Operation and Management of Foreign Exchange Funds of Transnational Companies (No 36 [2015] of the State Administration of Foreign Exchange) issued by the State Administration of Foreign Exchange and other relevant regulations.

Investment companies may establish finance companies in accordance with the Measures for the Administration of Finance Companies of Enterprise Groups to provide centralized finance management for the investment companies in China.

Regional headquarters and quasi-headquarters are encouraged, in light of their operational and managerial needs, to run cross-border RMB businesses. Regional headquarters and quasi-headquarters may conduct centralized capital operation and management in the group to increase the capital usage rate through channels such as cross-border two-way RMB capital pool and centralized cross-border RMB receipts and payments under the current accounts.

Optimize the procedure of foreign exchange payment under non-trade accounts and intensify guidance on taxation and services for regional headquarters and quasi-headquarters to facilitate the filing of foreign exchange payment contracts and taxation decision under non-trade accounts for regional headquarters and quasi-headquarters.

The regional headquarters and quasi-headquarters in pilot free trade zones may open free trade accounts in accordance with relevant regulations and perform cross-border payments and receipts of local and foreign currencies and domestic RMB payments and receipts in accordance with the principle of convertibility.

Article 11 (Simplifying Entry-Exit procedures)

Eligible Chinese personnel of regional headquarters and quasi-headquarters may apply for the APEC business trip card. In the case of business trips to the regions Hong Kong, Macau and Taiwan or overseas, relevant administrations should facilitate the exit formalities.

Foreign personnel of regional headquarters and quasi-headquarters who need multiple temporary exits may apply for multiple entry visas valid for no more than one year with the duration of no more than 180 days. Foreign personnel who require temporary visit to Shanghai should apply for visas at Chinese embassies and consulates, while the applicants pressed for time may apply to public security departments for port visas in accordance with relevant regulations.

Foreign personnel of regional headquarters and quasi-headquarters who need long-term residence in Shanghai may apply for the foreign residence permission valid for three to five years.

Legal representatives and other senior executives are recommended to apply for the Foreigners' Permanent Residence Permit in accordance with the Measures for the Administration of Examination and Approval of Foreigners' Permanent Residence in China.

The Entry-Exit Administration of Inspection and Quarantine should facilitate the issuing of the health certificate for legal representatives of regional headquarters and quasi-headquarters and senior executives who are related with the functions of the organizations.

Article 12 (Talent Introduction)

The Human Resources and Social Security Bureau should facilitate the application for relevant certificates from foreign talents introduced by regional headquarters and quasi-headquarters to work in Shanghai.

The eligible talents introduced by regional headquarters and quasi-headquarters may apply for Shanghai Household Registration.

Overseas students of foreign nationalities employed by regional headquarters and quasi-headquarters with undergraduate (bachelor) degree or above or any special talent, overseas students and other professionals with Chinese passport and permanent (long-term) foreign residence permit but without domestic household registration and professionals from Hong Kong and Macau SARs and Taiwan Regions may apply for Shanghai Residence Permit (B) in accordance to relevant regulations. Their spouse and children under the age of 18 or studying in senior high schools may apply for dependent permits.

The district government should facilitate the schooling of children, medical care, application for talent apartments and other procedures for talents introduced by the regional headquarters and quasi-headquarters in the district.

Article 13 (Convenience in Customs Clearance)

Customs offices and the Entry-Exit Administrations of Inspection and Quarantine should take efforts towards increasing the efficiency for Customs clearance for regional headquarters and quasi-headquarters to facilitate the clearance for their goods imported and exported by adopting innovative supervision systems and modes that focus on trade facilitation.

Customs offices, the Foreign Exchange Administration, the Entry-Exit Administration of Inspection and Quarantine and other administrations should simplify the supervision measures on the logistics centers and distribution centers established by regional headquarters and quasi-headquarters for logistics integration.

Article 14 (District Governmental Support)

District governments may make policies to support the development of regional headquarters and quasi-headquarters in light of the conditions of the districts to create a favorable business environment for the development of the organizations.

Article 15 (Analogical Application)

The Provisions shall analogically apply to regional headquarters and quasi-headquarters established by investors from the regions of Hong Kong, Macau and Taiwan.

Article 16 (Date and duration of implementation)

The provisions will go into effect as of February 1, 2017 and remain valid until January 31, 2022.

The implementation of the provisions of Shanghai Municipality on Encouraging Transnational Companies to establish regional headquarters in Shanghai (No. 51 [2012] of Shanghai Municipal People's Government) forwarded by Shanghai Municipal People's Government Office and the supplementary provisions on encouraging transnational companies to establish regional headquarters in Shanghai (No. 348 [2014] of Shanghai Municipal Commission of Commerce) issued by Shanghai Municipal Commission of Commerce, Shanghai Municipal Human Resources and Social Security Bureau, Shanghai Municipal Entry-Exit Administration Bureau of Public Security Bureau and Shanghai Municipal Entry-Exit Administration of Inspection and Quarantine shall both be repealed.

Provisions of Shanghai Municipality on promoting the development of Zhangjiang Hi-Tech Park

(Promulgated on July 5, 2001 by Shanghai Municipal People's Government and revised for the first time on June 24, 2004 in accordance with the "Decision of Shanghai Municipal People's Government on the Revision of 32 Regulations and Normative Documents, including the 'Procedures of Shanghai Municipality on the Supervision and Administration of Safety in the Production of Dangerous Chemical Substances' "and revised for the second time on March 29, 2007 in accordance with the"Decision of Shanghai Municipal People's Government on the Revision of the 'Provisions of Shanghai Municipality on Promoting the Development of Zhangjiang Hi-Tech Park"' and re-promulgated)

Article 1(Purpose)

In order to promote the development of Zhangjiang Hi-Tech Park Area, these provisions are formulated in accordance with the "Decision of the Central Committee Of the Communist Party of China and the State Council on Strengthening Technological Innovations, Developing High Technology and Realizing their Industrialization", taking into account the actual Situation of this Municipality.

Article 2(Administrative organization)

This Municipality must establish the Administrative Committee of Zhangjiang Hi-Tech Park Area (hereinafter referred to as the AC) as an agency of the Municipal People's Government and the Pudong New Area Government. On the commission or authorization of relevant administrative departments and organizations of this Municipality and the Pudong New Area, the AC shall be responsible for the examination and approval of investment projects and infrastructure construction projects within the park Area. They are responsible for the accreditation of new and hi-tech enterprises, software enterprises, IC enterprises and transformation projects of new and hi-tech achievements within the Park Area; responsible for coordinating other administrative departments in day-to-day administration and annual inspection of enterprises in the Park Area and implementation of preferential policies. They should also be responsible for providing a variety of necessary services for enterprises within the Park Area.

Article 3(Establishment of enterprises)

The establishment of enterprises in the park area must be directly registered.

Registration of enterprises that meet the requirements for establishment must be completed within three work days by the industrial and commercial administrative departments.

Where prioritized examination and approval are required by law or administrative statutes, applications must be "accepted and handled by industrial and commercial administrative departments, reported with copies to relevant departments, examined and approved concurrently and jointly and completed within a specified time limit"．Competent authorities must complete the prioritized examination and approval formalities within 5 work days.

Enterprises that apply for the establishment may also commission enterprise registration agencies to go through for their necessary formalities.

The prioritized examination and approval process prescribed for enterprise establishment by the Municipal Government and departments under it must be abolished.

Scientific and technological personnel and managerial personnel who apply for the establishment of science and technology-type enterprises within the park area while remaining in their current positions or after leaving their positions may submit applications to the industrial and commercial administrative departments by presenting relevant personal certificates. There should no longer be any restrictions imposed on the scope of business for science and technology-type enterprises.

Article 4(Examination and approval of projects)

The AC must be authorized by the Municipal Foreign Investment Commission to examine and approve foreign investment projects within the park area and report the results of examination and approval to competent administrative departments for the record.

The AC shall be authorized by competent administrative departments of this Municipality to examine and approve domestic investment projects within the park area.

Article 5(Administration of Planning and Project Construction)

Matters concerning the administration of planning within the park area shall be subject to the examination and approval by the AC in accordance with the approved detailed plans upon the authorization of the planning administration departments of the Municipality and Pudong New Area, while matters concerning the administration of project construction within the park area shall be subject to the examination and approval by the AC upon the authorization of the construction administration departments of the Municipality and Pudong New Area. The AC must report the results of the examination and approval to competent administrative departments of the Municipality and Pudong New Area for the record.

Article 6(Major patronized industries)

The park area must focus on patronizing the following new and hi-tech industries;

(1)Industries listed in the State Catalogue of New and Hi-tech Products;

(2)Bio-pharmaceutical industries;

(3)Information industries;

(4)Other industries stipulated by the Municipal People's Government.

Article 7(Accreditation of enterprises and projects and issue of certificates)

The accreditation of new and hi-tech enterprises, software enterprises, IC enterprises and projects for the transformation of new and hi-tech achievements within the park area must be conducted unified by the AC upon the authorization of the Municipal Science Commission, Municipal Information Commission and municipal new and hi-tech enterprise accreditation organizations and must also be accepted and handled by one single designated department. In conducting accreditation, the AC shall adhere to the accreditation standard, increase efficiency, simplify procedures and bring convenience to the enterprises. For the record, it must report the accreditation results to the competent municipal administrative departments and organizations.

Competent municipal, administrative departments and organizations must supervise the accreditation and certification by the AC and have the power to cancel any accreditation result that does not meet the standards or requirements.

Article 8(Preferential policies)

Enterprises and projects accredited by competent municipal administrative departments and organizations or the AC may enjoy the following preferential policies within the park area:

(1)A variety of preferential policies of the State and this Municipality designed to

encourage technological innovations：

(2)A variety of preferential policies of the State and this Municipality designed to encourage the transformation and industrialization of scientific and technological achievements;

(3)A variety of preferential policies of the State and this Municipality designed to encourage software industry and IC industry;

(4)Relevant, preferential policies of this Municipality: for the promotion of the development of small and medium-sized enterprises.

Article 9(Autonomy of enterprises and scientific research institutions)

Enterprises within the park area shall enjoy autonomy in operation and in making personnel and distribution decisions, and be solely responsible for their own profits and losses in accordance with the law.

Scientific research institutions within the park area may establish professional and technical posts as required by their own development programs, make professional and technical appointments for themselves and decide on their own on the post responsibilities and requirements of appointment.

Article 10(Notification and commitments)

Competent administrative departments must inform the enterprises within the park area in advance and in writing of the statutory obligations they shall undertake.

Enterprises may make the commitment or guarantees for themselves to competent administrative departments with regard to the statutory obligations they must undertake and bear corresponding legal responsibilities.

Article 11(Provisions on routine administration and annual inspections)

Administrative departments may conduct supervision, inspection and sample testing on the quality of the products of the enterprises in the park area in accordance with the law, by showing their legal certificates.

Notice of the inspections and supervisions to be made in accordance with the law on enterprises in the park area must be given 15 work days in advance by the administrative departments to the enterprises and unified and coordinated arrangements shall be made by the AC thereafter.

Annual inspections of enterprises in the park area by the administrative departments in accordance with the provisions of the law and administrative regulations must be coordinated and arranged in a unified manner by the AC.

Article 12(Normalization of flee-charging acts)

Fee-payment registration cards must be introduced for the enterprises in the park area.

When collecting fees from the enterprises, fee-charging units must show their “Fee-collecting Permits (Annex)’” or other 1egal certificates and fill the “Fee-Payment Registration Cards Of Shanghai Enterprises” thoroughly, enterprises have the right to refuse to pay the fees if the fee-collecting units do not show their ‘‘Fee-collecting Permits” and fill in the “Fee-Payment Registration Cards of Shanghai Enterprises”.

Article 13(Intermediary services)

The intermediary service system in the park area must be improved so as to provide units and individual persons that are engaged in technological innovations, transformation and industrialization of scientific and technological achievements with a variety of intermediary services that comply with international practice and State norms, such as operational management, technology marketing, information, talents, finance, banking standards and weight and measurement, patents, law and notarization services.

Intermediary service agencies must raise their service level in transaction of technology, transaction of technological property, brokerage of technology, consultation of technology, evaluation of intangible assets, consultation of investment in science and technology and appraisal of technology.

Article 14(Attracting talents and simplifying formalities for going abroad)

Professionals at home and abroad are encouraged to join enterprises in the park area to engage in the development of scientific research projects and the transformation of research achievements.

The formalities of examination and approval for enterprise staff in the park area going abroad or across border on business shall be simplified. Persons going abroad or across border in connection with major projects of technical innovation and the transformation and industrialization of scientific and technological achievements must only have to go through the examination and approval once for multiple visits and must be accorded priority by relevant departments．

Article 15(Protection of intellectual property rights)

Enterprises in the park area are encouraged to develop technologies with independent intellectual property rights. The enterprises must be encouraged to provide on-the-job related inventors, designers, authors and main executors of intellectual property rights with remunerations or profit of share right appropriate to their actual contributions.

Technological innovations and activities involving the transformation and industrialization of scientific and technological achievements in the park area must be subject to the laws and regulations on the protection of intellectual property rights, as well as to those international treaties and agreements to which China is a party or signatory.

Special reward funds shall be established in the park area to encourage enterprises to take the initiative in applying for patents and support the industrialization of patented projects.

Article 16(Investments in starting projects)

Domestic and foreign organizations are encouraged to establish investment organizations for starting projects in the park area.

Enterprises in the park area are encouraged to develop mechanisms for the entry and withdrawal of risks investment funds.

Enterprises in the park area are encouraged to conduct transactions of technologies and property rights.

Article 17(Prohibited Acts)

Administrative departments and other units are prohibited to require enterprises in the park area to participate in any kind of inspection and comparison on and appraisal activities.

Unauthorized collection of fees from enterprises in the park area in any name is prohibited.

Article 18(Lodging complaint)

The AC must be made public at the working places on the basis, contents, conditions, procedures and time limit. The catalogue of the materials must be submitted and so should the model text of application concerning the examination and approval matters.

In case the applicant requests the AC to give an explanation or an interpretation of the contents that are made public, the AC must provide accurate and reliable information.

An enterprise in the park area may lodge complaints to the AC about the administrative acts of the administrative departments that fail to comply with these provisions or about the fact that the preferential treatment it is entitled to fails to be carried out.

Article 19(Scope of application and date of implementation)

These provisions must apply to the enterprises in the developed area of the park area.

The AC and competent departments may formulate detailed rules for implementation on the basis of these provisions. These provisions will become effective on the date of its promulgation.

These provisions must apply to the enterprises in the developed area of the park area.