When talking about further opening-up of securities industry to foreign-funded companies, Zhang Xiaojun, spokesperson of China Securities Regulatory Commission(CSRC), said that Chinese mainland allows Hong Kong- and Macao-funded companies which qualify the foreign capital participation conditions to build a new securities company with Hong Kong or Macao’s license within the approved reformation zones. The consolidated shareholding proportion of the Hong Kong- or Macao-funded company in the full-license security joint venture(JV) should not exceed 49%.

 

In accordance with relevant regulations, establishment of securities companies and securities investment consulting agencies in Chinese mainland will be further opened to Hong Kong- and Macao-based companies. 

 

First, qualified Hong Kong- or Macao-funded financial institutions are allowed to establish full-license security JVs in Shanghai, Guangdong Province (excl. Shenzhen) and Shenzhen (one for each) with a shareholding proportion up to 51% in accordance with relevant regulations of Chinese mainland. No shareholding restrictions are set for shareholders from Chinese mainland.

 

Second, Hong Kong- or Macao-funded financial institutions qualifying conditions for foreign capital participation in securities companies are allowed to establish a full-license security JV in the pilot zones approved for first financial reforms by the government with a shareholding proportion up to 49% in accordance with relevant regulations of Chinese mainland. No shareholding restrictions are set for shareholders from Chinese mainland.

 

Third, Hong Kong- or Macao-funded securities companies are allowed to have a shareholding proportion up to 51% in the investment consulting JV within the in the pilot zones approved for first financial reforms by the government.

 

In addition, when submitting application for establishing a securities JV to CSRC, a Hong Kong-funded financial institution should qualify the following requirements besides relevant regulations of CSRC on foreign capital’s participation of a securities company.

 

First, the applicant is a licensed financial institution or financial holding company registered and headquartered in Hong Kong.

 

Second, if the controlling shareholder or actual controller of the applicant is a financial holding company or a financial institution, one of the three conditions below should be qualified: a) the applicant’s controlling shareholder should be registered and headquartered in Hong Kong; b) the applicant issues public shares in Hong Kong and is listed in the market with 50% or above of its pre-tax profit from Hong Kong or 50% or above of its managements from permanent Hong Kong residents; and c) the controlling shareholder or actual controller of the applicant issues public shares in Hong Kong and is listed in the market with the applicant’s business revenue or pre-tax profit accounting for 50% or above of the listed company.

 

Macao-fund financial institutions may refer to the said conditions for Hong Kong when submitting application for establishing a securities JV to CSRC.

 

Source: news.sohu.com, Aug. 21, 2015