Notice on Shanghai Encouraging MNCs to Establish Regional Headquarters
Date: 2017/2/22 15:32:35
Notice of Shanghai Municipal Government on Issuing the Revised Version of Provisions of Shanghai Municipality on Encouraging Transnational Companies to Establish Regional Headquarters in China
No. 9  of Shanghai Municipal People’s Government
To all districts and all commissions, offices and bureaus of Shanghai Municipal People’s Government:
The Revised version of Provisions of the Shanghai Municipality on Encouraging Transnational Corporations to Establish Regional Headquarters in Shanghai are hereby issued for your compliance and implementation.
Shanghai Municipal People’s Government
January 27, 2017
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, more convenient trade environment, more favorable legal environment, more sound production and living environment and more 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 shall apply to any regional headquarters and quasi-headquarters established within the area of Shanghai.
Article 4 (Administrative Departments)
Shanghai Municipal Commission of Commerce shall 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 other relevant departments shall, 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 shall meet the following conditions:
1. It shall be a foreign-owned enterprise with separate legal personality.
2. The total assets of the parent company shall not be lower than USD 400 million; in the case of a regional headquarters established by a company of the service sector, the total assets of the parent company shall not be lower than USD 300 million.
3. The overall registered capital of businesses invested by the parent company in China shall not be lower than USD 10 million and the number of the enterprises managed upon authorization from the parent company in and outside China shall not be less than three; or the number of the enterprises managed upon authorization from the parent company in and outside China shall 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 shall not be less than USD 2 million.
Article 6 (Conditions for Recognition of Quasi-headquarters)
To apply for the recognition of a regional headquarters, the applicant shall meet the following conditions:
1. It shall be a foreign-owned enterprise or its branch with an independent separate legal personality.
2. The total assets of the parent company shall not be lower than USD 200 million and it has established two or more foreign-invested enterprises in China, at least one of which should be registered in Shanghai.
3. The registered capital shall not be less than USD 2 million. In the case that it is established in the form of a branch, the operational capital allocated by the parent company shall not be less than USD 2 million.
Article 7 (Application materials)
To apply for the recognition of a regional headquarters or quasi-headquarters, the applicant shall 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 needed.
4. The audit report of the parent company in 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 shall 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, and renders its decision on whether to approve or disapprove the application. A certificate of approval shall 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 to economic development and have yielded good 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 relevant requirements may be awarded with grants in accordance with relevant regulations
Specific implement 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 shall comply with relevant regulations on forex management when forex operation is involved. The qualified headquarters and quasi-headquarters can perform forex-intensive operation and management businesses including centralized receipts and payments of forex funds and netting settlement under current accounts, centralized management, settlement and sale of forex onshore and offshore and centralized deploys 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  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 current accounts.
Optimize the procedure of forex payment under non-trade accounts and intensify guidance on taxation and services for regional headquarters and quasi-headquarters to facilitate the filing of forex 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 Hong Kong, Macau and Taiwan Regions 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 duration of no more than 180 days; foreign personnel who needs temporary visit to Shanghai should apply for visas at Chinese embassies and consulates, and 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 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 Region may apply for Shanghai Residence Permit (B) in according to relevant regulations. Their spouse and children under 18 years of age 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 make efforts to increase the Customs clearance efficiency 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 Hong Kong, Macau and Taiwan Region.
Article 16 (Date and duration of implementation)
The Provisions shall 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  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  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.
N.B. The translation is provided by Invest Shanghai for reference only.