Foreign Investment Bulletin July, 2015（二）

2、MOT Revised Interim Measures on Shipping Services Companies
On July 5, 2015, MOT released the revised Interim Measures on Shipping Services Companies to further relax market access to shipping services.
2.1 Background
On January 28, 2000, the Ministry of Foreign Trade and Economic Cooperation (latter be renamed to the Ministry of Commerce) and MOT jointly released Interim Measures on Shipping Services Companies. Such measures regulated market access requirements, application documents, procedures for establishment, business scope and minimum registered capital for wholly foreign-owned shipping services companies.
On August 15, 2011, to further promote the international shipping industry, MOT released the Notice on Strengthening the Examination and Approval of Wholly Foreign-owned Shipping Services Companies. Such notice relaxed market access for shipping services, broadened the scope of permissible business, and adjusted the procedures for establishment.
On July 5, 2015, MOT revised the Interim Measures on Shipping Services Company and removed “Interim” from its title.
2.2 Legal Review
The main revisions are set forth as follows.
First, the following requirements regarding registered capital are removed: (1) the minimum registered capital for a wholly foreign-owned shipping services company cannot be less than USD 1 million; (2) the registered capital must be fully paid-up before setting up a branch; and (3) prior to setting up each branch, the registered capital must be increased by at least USD 120,000.
Second, it absorbed the Notice on Strengthening the Examination and Approval of Wholly Foreign-owned Shipping Services Companies on market access and business scope, which resulted in the following changes.
(1) Foreign shipping companies are allowed to set up wholly foreign-owned shipping services companies directly. It is no longer necessary to set up representative offices prior to the establishment of such companies.
(2) Foreign shipping companies are allowed to set up wholly foreign-owned shipping services companies in the port cities where they have a consistent amount of cargo or passengers.
(3) Wholly foreign-owned shipping services companies are allowed to set up branches one year after the commencement of business.
(4) Wholly foreign-owned shipping services companies are allowed to advertise to passengers and issue passenger tickets. That is to say, the international cruise lines are allowed to set up wholly foreign-owned shipping services companies to provide services such as advertising and issuing passenger tickets to foreign cruises.
Lastly, it absorbed the Notice on Strengthening the Examination and Approval of Wholly Foreign-owned Shipping Services Companies on approval authority. The provincial commerce authority is the competent approval authority. The procedures for establishment are adjusted to require that the company: (1) obtains the approval from the provincial commerce authority (after the provincial commerce authority receives MOT’s consent); (2) satisfies the formalities for establishment registration; and (3) obtains an Operation Permit for a Wholly Foreign-owned Shipping Service Company.
2.3 Next Step
We will monitor whether the Measures on Shipping Services Companies will further promote the development of wholly foreign-owned shipping services companies.
3、PBOC issued Circular of the PBOC on Matters relating to the Investment in the Inter-bank Market with RMB Funds by Foreign Central Banks, International Financial Organizations and Sovereign Wealth Funds
On July 14, 2015, PBOC issued Circular of the PBOC on Matters relating to the Investment in the Inter-bank Market with RMB Funds by Foreign Central Banks, International Financial Organizations and Sovereign Wealth Funds (“Circular”) to further reduce the requirements for overseas investments in the inter-bank market.
3.1 Background
On April 30, 2000, PBOC promulgated Measures of the PBOC for the Administration of Bond Transactions in the National Inter-Bank Bond Market, according to which only the following enterprises are allowed to enter the national inter-bank bond market: (1) commercial banks with legal person status inside the territory of China and their authorized branches, (2) non-bank financial institutions and non-financial institutions that have legal person status inside the territory of China, and (3) branches of foreign banks allowed to operate the RMB business with the approval of PBOC.
On August 16, 2015, PBOC issued Circular of the PBOC on Issues Concerning Pilot Investment in Inter-bank Bond Market with RMB by Three Types of Institutions Including Overseas RMB Liquidation Banks. Accordingly, the three types of overseas institutions (i.e., overseas central banks or currency authorities, RMB liquidation banks in Hong Kong and Macao, and overseas banks providing RMB settlement in cross-border trades), may upon approval by PBOC engage in bond investment in the inter-bank market, to the extent of the approved amount.
On March 13, 2013, PBOC released Circular of the PBOC on Matters Relating to Qualified Foreign Institutional Investors (“QFIIs”)' Investment in Inter-bank Bond Market, under which, QFIIs with qualifications that have been granted by China Securities Regulatory Commission (“CSRC”) and with investment quotas approved by State Administration of Foreign Exchange (“SAFE”), may apply to PBOC for access to the inter-bank bond market, and upon the consent of PBOC, may invest in the same in accordance with the approved investment quotas. According to Administrative Measures for Domestic Securities Investments by QFIIs, QFIIs means any overseas fund management institution, insurance company, securities firm or any other asset management institution that has been approved by CSRC to invest in China's securities market, and that has obtained an investment quota from SAFE.
In order to further improve the efficiency of investment in the inter-bank market by foreign central banks or monetary authorities, international financial organizations, and sovereign wealth funds ("the relevant overseas institutional investors"), on July 14, 2015, PBOC issued the Circular to further reduce the requirements for overseas investments in the inter-bank market.
3.2 Legal Review
The Circular simplified the approval system for relevant overseas institutional investors to enter the inter-bank market by requiring an investor to send by mail the original copy of the Chinese Inter-bank Market Investment Registration Form or submit the said form via an inter-bank market settlement agent on their behalf to PBOC (i.e., a filing system). Such institutions may engage in the relevant business once the filing is complete.
In addition, the relevant overseas institutional investors may determine the scale of their investments, without the limitation of an approved investment quota.
Further, the Circular specifically provides that the relevant overseas institutional investors shall act as long-term investors, and conduct transactions based on the reasonable needs of maintaining and increasing the value of assets. The relevant overseas institutional investors shall entrust PBOC or other inter-bank market settlement agents capable of processing international settlements, to carry out transactions and settlement on their behalf. Where the relevant overseas institutional investors entrust inter-bank market settlement agents to conduct transactions and settlement, they shall sign settlement agency agreements and submit the same to the PBOC Shanghai Head Office for filing, in accordance with the relevant provisions.
Matters not covered in the Circular shall be covered by the relevant provisions of the Circular of the PBOC on Issues Concerning Pilot Investment in Inter-bank Bond Market with RMB by Three Types of Institutions Including Overseas.
3.3 Next Step
The Circular simplifies the formalities and broadens the channels for overseas international investment in the inter-bank market with RMB funds. It reflects the vision of opening up the capital market and achieving capital account convertibility in China. It is also an important measure to broaden backflow channels of RMB and accelerate the internationalization of RMB.
The implementation of the Circular, other new policies concerning the backflow channels of RMB and relevant supporting legislation and practice.