Administrative Measures Released for Shanghai Free Trade Zone

By Dezan Shira & Associates

Posted: 31st October 2013 09:15

The Shanghai Municipal People’s Government released the “Administrative Measures for the Shanghai Free Trade Zone (hereinafter referred to as the ‘Measures’)” on September 29, which list out the administrative measures for the Shanghai Free Trade Zone (Shanghai FTZ) in the following four areas:
  Detailed information can be found below.
Main Function

According to the Measures, the main functions of the Shanghai FTZ are as follows:
  Administrative Body

The Shanghai government has set up the Shanghai Free Trade Zone Administration Committee to manage and coordinate relevant administrative affairs relating to the zone.
Investment Management

Expanding the Opening-Up of the Service Industry

The Shanghai FTZ will deepen the opening-up level in the following areas:
  Moreover, the Shanghai FTZ will suspend or cancel the entry requirements on investors’ qualifications, as well as restrictions on shareholding proportions and business scope.
Negative List Management Mode

The Shanghai FTZ will implement a “Negative List” approach towards foreign investment management. Foreign investment projects in the sectors not covered under the negative list only need to go through record-filing procedures.
Capital Registration System

The Shanghai FTZ will implement a capital registration system. Shareholders of enterprises in the zone shall agree upon the contributing amount, forms and period independently, and record such in the company’s articles of association. The shareholders shall be liable for the authenticity and legality of the capital contribution.
Business Licensing

Enterprises in the Shanghai FTZ may commence normal production and operation activities after obtaining the business license. Enterprises engaged in businesses which require administrative approval may file an application with the competent authorities for the approval items after obtaining the business license.
Trade Development and Facilitation

The Shanghai FTZ will encourage multinationals to establish Asia-Pacific headquarters and operating centers with trade, logistics and settlement functions in the zone.
Moreover, the Shanghai FTZ will facilitate the transformation and upgradation of the following businesses:
  Shipping Hub

The Shanghai FTZ will also facilitate the development of the following shipping businesses:
Shipping finance;
  Financial Innovation and Risk Control

Financial Innovation

The Shanghai FTZ will innovate the financial system and establish a coordinated system between the financial reform innovation and construction of an international financial center.
RMB Convertibility under Capital Account

Under a controllable risk level, the Shanghai FTZ will implement a trial program of RMB convertibility under the capital account, and innovate business and management modes through separate accounting.
Interest Rate Liberalization

The Shanghai FTZ will cultivate an independent pricing mechanism in line with the development of the real economy, and gradually promote the reform of interest rate liberalization.
RMB Cross-border Usage

Enterprises in the Shanghai FTZ may innovate cross-border RMB businesses based on their actual situation, thereby to facilitate the cross-border usage of RMB.
Foreign Exchange Management

The Shanghai FTZ will set up a foreign exchange management system to facilitate trade investment.
Comprehensive Management and Services

Intellectual Property Protection

The Shanghai FTZ will strengthen intellectual property protection and encourage professional institutions to provide intellectual property protection and mediation services in the zone.
Commercial Dispute Settlement

For handling of commercial disputes, enterprises in the Shanghai FTZ may bring a lawsuit to the people’s court or apply for arbitration or commercial meditation based on mutual agreements.
This article was first published on China Briefing.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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