The China Securities Regulatory Commission Decree of the China Securities Regulatory Commission No.8 The Rules for the Establishment of Foreign-shared Securities Companies are hereby promulgated, and shall come into force on July 1, Chairman of the China Securities Regulatory Commission Zhou Xiaochuan June 1, 2002 Rules for the Establishment of Foreign-shared Securities Companies Article 1 To meet the demand of opening the securities market, to strengthen and improve the supervision and administration of foreign-shared Article 2 Foreign-shared securities companies as referred to in the Rules shall include domestic securities companies whose shares are transferred Article 3 The China Securities Regulatory Commission (hereinafter referred to as CSRC) shall be responsible for the examination, approval, supervision Article 4 The organizational structure of a foreign-shared securities company shall be that of limited liability. The name, registered capital, Article 5 A foreign-shared securities company may engage in the following businesses: 1) Underwriting of shares (including RMB ordinary shares and foreign shares) and bonds (including bonds issued by the government and 2) Brokerage of foreign shares; 3) Brokerage and proprietary dealing of bonds (including bonds issued by the government and companies); 4) Other businesses approved by the CSRC. The foreign shares as used in the preceding paragraph shall refer to domestic listed foreign Article 6 A foreign-shared securities company shall possess the following qualifications: 1) The registered capital is in accordance with the provisions of the Securities Law on the registered capital of comprehensive securities 2) The shareholders should possess the qualifications as provided for by the Rules, and the proportion and form of their capital contribution 3) Staff members that have obtained the qualifications as securities practitioners according to the provisions of the CSRC shall be no 4) The company should have sound systems of internal management and risk control, separate systems of organization, personnel, information 5) The company should own the operating place and other facilities for transactions as required. 6) Other prudential conditions provided for by the CSRC. Article 7 The foreign shareholders of a foreign-shared securities company shall possess the following qualifications: 1) Their home countries shall have sound legal and regulatory systems on securities transactions, and the securities regulatory bodies 2) They have legitimate qualifications for securities dealing in their home countries and have engaged in the financial business for 3) The various risk supervision indicators during the past three years should conform to the legal provisions and the requirements of 4) Having sound internal control systems; 5) Having good reputation and sound track record on the international securities market; 6) Other prudential conditions provided for by the CSRC. Article 8 The domestic shareholders of a foreign-shared securities company shall possess the qualifications as shareholders of securities companies Article 9 The domestic shareholders may invest by cash and tangible objects essential for the business operation; while the foreign shareholders Article 10 The shares held by foreign shareholders or the equity possessed by them (both directly and indirectly) in a foreign-shared securities Article 11 The board chairman, general manager, and deputy general manager of a foreign-shared securities company shall possess the qualifications Article 12 To apply for the establishment of a foreign-shared securities company, the representatives appointed or the agents entrusted by the 1) The application form jointly signed by legal representatives or authorized representatives of the domestic and foreign shareholders; 2) Contract and draft corporate statute for the establishment of the foreign-shared securities company; 3) Application forms of qualified candidates for the board chairman, general manager and deputy general manager of the foreign-shared 4) Photocopies of the business license or registration certificate and securities transaction credentials of the shareholders; 5) Audited financial statements of the foreign and domestic shareholders of the year prior to the application; 6) Statements issued by the securities regulatory bodies of the home countries of the foreign shareholders on whether those shareholders 7) Legal opinions presented by law firms in China qualified for securities-related businesses. Article 13 The CSRC shall, according to relevant laws, administrative regulations and the Rules, examine the application materials as provided Article 14 The shareholders shall contribute the capital in full or provide the cooperative conditions as agreed upon, elect the board of directors, Article 15 The board chairman or authorized representatives of a foreign-shared securities company shall, within 15 working days as o the issuance 1) A copy of the business license; 2) The company statute; 3) A capital verification report produced by an accounting firm in China qualified for securities-related businesses; 4) A name list and resumes of the directors, supervisors and other members of the senior management, a name list of the main business 5) A written version of the internal control system regulations; 6) Descriptions of the operating place and transaction facilities. Article 16 The CSRC shall, according to related laws, administrative regulations and the Rules, examine the application materials as provided Article 17 A foreign-shared securities company is not allowed to operate in the securities business without the License for Securities Business Article 18 Domestically funded securities companies applying to be changed into foreign-shared securities companies should meet the requirements Article 19 Domestically funded securities companies applying for a change to foreign-shared securities companies shall submit the following documents 1) An application form signed by the legal representative; 2) Decision of the shareholders’ meeting on changing the company into a foreign-shared securities company; 3) Draft company statute 4) Agreement on share transfer or capital contribution (agreement on share purchase); 5) A name list and resumes of the personnel appointed by the foreign investors to take post in that securities company; 6) The business license or registration certificates of the foreign shareholders and copies of their credentials for the securities business; 7) Audited financial statements of the foreign shareholders of the year prior to the application; 8) Statements issued by the securities regulatory bodies of the home countries of the foreign shareholders on whether those shareholders 9) Plans for eliminating businesses that are prohibited from a foreign-shared securities company by related laws; 10) Legal opinions issued by a law firm in China qualified for securities-related businesses. Article 20 The CSRC shall, according to related laws, administrative regulations and the Rules, examine the application materials as provided Article 21 Securities companies approved for the change shall, within 6 months as of the issuance of the approval by the CSRC, complete the transfer Article 22 A securities company approved for the change shall, within 15 working days as of the alteration registration, submit the following 1) A copy of the business license; 2) Corporate statute of the foreign-shared company; 3) Original license for securities business and copies thereof of the company; 4) A capital verification report presented by an accounting firm in China qualified for the securities business; 5) Work report on the elimination of the businesses that are banned from a foreign-shared securities company by related laws; 6) Legal opinions and verification report on the above-mentioned elimination issued by a law firm and an accounting firm qualified for Article 23 The CSRC shall, according to related laws, administrative regulations and the Rules, examine the application materials as provided Article 24 A securities company newly established or continuing to exist after the merger of foreign-shared securities companies or the merger Article 25 The application materials and documents submitted to the CSRC as provided for in the Rules shall be in Chinese. If the documents Article 26 The Rules should be equally applicable to investors from the Hong Kong Special Administration Region, the Macao Special Administration Article 27 Other related provisions not covered by the Rules should be applicable for the establishment, alteration, termination and business Article 28 The Rules shall enter into force as of July 1, 2002. |
The China Securities Regulatory Commission
2002-06-01