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Rules for the Formation of Securities Companies with Foreign Shareholders

(Promulgated by Order No. 8 of the China Securities Regulatory Commission on June 1, 2002, and amended according to the Decision of the China Securities Regulatory Commission on Amending the Rules for the Formation of Securities Companies with Foreign Shareholder on December 28, 2007, and amended according to the Decision of the China Securities Regulatory Commission on Amending the Rules for the Formation of Securities Companies with Foreign Shareholder on October 11, 2012)

Article 1 In order to meet the demands of opening up the securities market, to strengthen and improve the supervision and administration of securities companies with foreign shareholders and to define the conditions and procedures for the formation of securities companies with foreign shareholders, these Rules have been formulated according to the relevant provisions of the Company Law and the Securities Law.

Article 2 The “securities companies with foreign shareholders” as mentioned in these Rules refers to:

1. The securities companies that are jointly contributed and established by the foreign and domestic shareholders; and

2. The securities companies that are changed from domestic-funded securities companies through the acceptance or purchase of shares by foreign shareholders.

Article 3 The China Securities Regulatory Commission (hereinafter referred to as the CSRC) shall be responsible for the examination and approval, supervision and administration of securities companies with foreign shareholders.

Article 4 The name, form of organization, registered capital, establishment and duties of the departments of a securities company with foreign shareholders shall comply with the relevant provisions of the Company Law, the Securities Law and the CSRC.

Article 5 A securities companies with foreign shareholders may engage in the following businesses:

1. Underwriting and recommendation of stocks (including RMB common stocks and foreign capital stocks) and bonds (including government bonds and corporate bonds);

2. Brokerage of foreign capital stocks;

3. Brokerage and proprietary trading of bonds (including government bonds and corporate bonds); and

4. Other businesses approved by the CSRC.

Article 6 A securities companies with foreign shareholders shall meet the following conditions:

1. The registered capital is in compliance with the provisions of the Securities Law;

2. The shareholders have the qualifications as provided for by these Rules, and the proportion and form of their capital contribution comply with the provisions of these Rules;

3. The numbers of persons who have obtained the qualification for securities dealing according to the provisions of the CSRC should be 30 or more, and there are necessary professionals for accounting, legal affairs, and computing;

4. Having sound internal management, risk control, as well as the separated management system of underwriting, brokerage and proprietary trading in the aspects of institution, personnel, information and business execution, etc., and having an appropriate internal control technical system;

5. Having the business premises that meet the requirements and the qualified business facilities; and

6. Other prudential conditions as provided for by the CSRC.

Article 7 The foreign shareholders of a securities company with foreign shareholders shall meet the following conditions:

1. Their home countries or regions have a sound legal and regulatory system of securities, and the securities regulatory bodies have signed the memorandum of understanding on securities regulation and kept an effective cooperative relation with the CSRC or the institution accepted by the CSRC;

2. They have been lawfully formed in their home countries or regions, at least one of them is an institution that has the lawful financial business qualification; and they shall not transfer their equities in the foreign-shared securities company within three years after the equity participation;

3. They have engaged in the financial business for five years or more, and haven’t been given major punishment by the securities regulatory body, the administrative or justice department of their respective home countries or regions in last three years;

4. All of their financial indicators in last three years are in compliance with the legal provisions of their respective home countries or regions and the requirements of their respective securities regulatory bodies;

5.They have a sound internal control system;

6. They have a good reputation and business performance; and

7. Other prudential conditions as provided for by the CSRC. 

 




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