Shanghai is to adjust the standards for defining the regional headquarters of multinational corporations to encourage their development and aggregation.

The standards for defining regional headquarters of multinationals will be relax in three aspects:

• Lowering the requirement for total assets of the parent company to US$200 million (for organizations acting as headquarters, the requirement was reduced to US$100 million);
• Removing the restrictions on actual registered capital and the number of authorized management organizations of regional headquarters; and
• Canceling the current restriction that regional headquarters and organizations acting as headquarters of multinationals must be wholly foreign-owned enterprises.

Much more freedom and convenience will be also given to the multinationals in the use of funds with 13 new supportive measures.

• Regional headquarters and organizations acting as regional headquarters may conduct the centralized operation of cross-border funds through the primary multi-currency (including yuan) account of domestic funds, and cross-border transactions are encouraged to be settled in yuan.

There will be no restrictions on the number of cooperative banks for cross-border capital pool business and the number of the primary domestic capital accounts. 

• It is supported that the qualified regional headquarters and organizations acting as regional headquarters to finance by issuing bonds and stocks, or to enter Shanghai's gold market and conduct gold business.

• There are also measures on improving convenience for regional headquarters of multinational corporations in trade and logistics. For instance, the chain enterprises affiliated to regional headquarters (or organizations acting as regional headquarters) in some pilot areas may share the same business license with multiple business addresses. 

• As for research and development, the city will strengthen the administrative protection of intellectual property and optimize the service system.

This new regulation will take effect from 1^st September 2019 to 31^st August 2024.

An enterprise applying for recognition as a regional headquarters shall meet the following conditions:

• The enterprise is a wholly foreign-owned enterprise with the status of independent legal person;
• It is authorized by the parent company, and assumes several functions, such as management decision-making, capital management, procurement, sales, logistics, settlement, research and development and training in the region consisting of more than one country;
• The registered capital thereof is no less than USD2 million;
• If the company basically meets the aforesaid conditions and makes outstanding contributions to the local economic development, the recognition may be discretionally taken into consideration.

An enterprise applying for recognition as a headquarter institution shall meet the following conditions:

• The enterprise is a wholly foreign-owned enterprise or a branch thereof with the status of independent legal person;
• The parent company thereof has total assets of no less than USD100 million;
• It is authorized by the parent company, and assumes several functions, such as management decision-making, capital management, procurement, sales, logistics, settlement, research and development and training in the region consisting of more than one country;
• The enterprise has the registered capital of not less than USD1 million; if the enterprise is established in the form of a branch, the enterprise has operation funds appropriated by the headquarters of no less than USD1 million.

A regional headquarters may obtain business startup and lease subsidies, according to the relevant provisions.
Regional headquarters possessing such comprehensive operational functions as operation management, capital management, research and development, purchase, sales, logistics and supporting services, making outstanding contributions to local economic development and achieving good effects and efficiency, are entitled to awards according to the relevant provisions.
Asian, Asian-Pacific or ever larger headquarters established by multinational companies are entitled to subsidies according to the relevant provisions, provided that they meet relevant conditions.
Specific implementing measures for subsidies and awards shall be separately formulated by the departments concerned.

If you have any question, please contact me.

Mr. Mike Chang

TEL: 0086-21-68868321 / FAX: 0086-21-68868021