(October 28, 2022)

SMPG D [2022] No. 17

Attention: All District People's Governments, and all Commissions, Offices and Bureaus (Administrations) of the Municipal People's Government:

We hereby issue to you the revised Provisions of Shanghai Municipality on Encouraging Multinational Corporations to Establish Regional Headquarters, and request you to implement them conscientiously.

The Several Opinions on Promoting the Development of Regional Headquarters of Multinational Corporations in This Municipality (SMPG D [2019] No. 30) and the Provisions of Shanghai Municipality on Encouraging Multinational Corporations to Establish Regional Headquarters (SMPG D [2019] No. 31) issued by Shanghai Municipal People’s Government in July 2019 shall be repealed simultaneously.

Provisions of Shanghai Municipality on Encouraging Multinational Corporations to Establish Regional Headquarters

Article 1 (Purposes and Basis)

With a view to accelerating the development of a higher level of the headquarter economy, further encouraging more multinational corporations to set up their headquarter enterprises in Shanghai (hereinafter referred to as the "headquarter enterprises"), implementing the "Headquarters' Capacity Enhancement Action", and accelerating the concrete and effective implementation of the Several Opinions on Promoting the Development of the "Five-Type Economy" ( SMPC GO G [2022] No.6) to realize a deeper, wider and stronger open-up to the outside world, these Provisions are formulated in accordance with the Foreign Investment Law of the People's Republic of China, the Implementing Rules Of the Foreign Investment Law Of the People's Republic of China, the Regulations of Shanghai Municipality on Foreign Investment and other laws and rules.

Article 2 (Definitions)

The regional headquarters of a multinational corporation (hereinafter referred to as the "regional headquarters") refers to the sole head office established in this Municipality by the overseas-registered parent company, which performs the investment, management and service functions within a country or in a region larger than a country in the form of investment or authorized management. The multinational corporation shall establish its regional headquarters in this Municipality in the form of an enterprise organization with the status of an independent legal personality.

The headquarter office of a multinational corporation (hereinafter referred to as "the headquarter office") refers to the foreign-invested enterprise (branches included) which is established in this Municipality by the parent company or foreign investment company registered abroad and which does not meet the standard of a regional headquarters, but actually performs the function of a headquarters such as the investment, management, marketing, settlement and service support within one country or in a region larger than a country.

The Global Business Unit Headquarters (hereinafter referred to as the "BU headquarters") refers to the sole head office responsible for the investment, management and service functions of the business unit in a country or in a region larger than a country in the form of investment or authorized management established in this Municipality by an overseas-registered parent company with the organizational structure of business units based on the function, business, product, name brand and service or a foreign investment company. A multinational corporation shall establish a BU headquarters in this Municipality in the form of an enterprise organization with the status of an independent legal personality.

Article 3 (Scope of Application)

These Regulations shall apply to the regional headquarters, headquarter-offices and BU headquarters established in this Municipality.

Article 4 (Department Responsibilities)

Shanghai Municipal Commerce Commission shall be responsible for the recognition of regional headquarters, headquarter-offices and BU headquarters, and coordinate with relevant departments to carry out administrative services for them.

The Municipal Development & Reform Commission, the Municipal Economy and Information Technology Commission, the Municipal Science and Technology Commission, the Municipal Education Commission, the Exit-Entry Administration Bureau of Shanghai Public Security Bureau, the Municipal Finance Bureau, the Municipal Human Resources and Social Security Bureau, the Municipal Planning and Resources Bureau, the Municipal Ecological Environment Bureau, the Municipal Housing and Urban-Rural Construction Administration Commission, the Municipal Health Commission, the Municipal Market Regulation Bureau, the Municipal Tax Bureau, the Municipal Intellectual Property Bureau, the Municipal Medical Products Administration, the Foreign Affairs Office of Municipal Government, Shanghai Customs, Shanghai Head Office of the People's Bank of China, Shanghai Branch of the State Administration of Foreign Exchange, Shanghai Office of the China Banking and Insurance Regulatory Commission and other departments and units, as well as Lin-gang New Area Administration, Shanghai Hongqiao International Central Business District Administration and all district people’s governments shall, within the scope of their respective functions and duties, do a good job in promoting services for the regional headquarters, headquarter-offices and BU headquarters.

Article 5 (Requirements for Recognition)

The application for a recognition of a regional headquarters shall meet the following requirements:

1. Being a foreign-invested enterprise with independent legal personality;

2.The direct or indirect shareholding by the overseas parent company shall not be less than 50%, and the total assets of the parent company shall be no less than 200 million U.S. dollars;

3. The registered capital shall be no less than 2 million U.S. dollars; and

4. An enterprise basically meeting the preceding requirements with a substantial contribution to the local economic development may be recognized with discretion.

The application for a recognition of a regional headquarter-office shall meet the following requirements:

1.Being a foreign invested enterprise with independent legal personality or its branch;

2.The direct or indirect shareholding by the overseas parent company shall not be less than 50%, and the total assets of the parent company shall be no less than 100 million U.S. dollars; and

3.The registered capital shall be no less than 1 million U.S. dollars. If established in the form of a branch, the operating funds allocated by the head office accumulatively in the recent 3 years shall be no less than 1 million U.S.dollars.

The application for a recognition of a BU headquarters shall meet the following requirements:

1. Meeting the requirements in Item 1 to 3 for the recognition of regional headquarters; and

2. Continuously operating in this Municipality for more than 1 year, and the proportion of the business income of the enterprise in the previous year shall be no less than 10% of the business income of the BU headquarters of the overseas parent company, and the business income of the enterprise in the previous year shall not be less than RMB 1 billion yuan.

In addition to the above requirements, the applicant enterprise must have no serious  dishonest acts within 3 years, or the dishonest acts have been repaired since the date of application.

Article 6 (Application Materials)

The application for a recognition of regional headquarters, headquarter-offices or BU headquarters shall submit the following materials:

1. An application paper signed by the legal representative of the enterprise (with official seal). The contents include: basic information of the applicant enterprise and its parent company or investment company; a description of meeting the requirements for a recognition in the light of the actual situation of the enterprise; a structure chart of the parent company’s investment management (including investment relationship and shareholding ratio, etc.); if the applicant applies for a recognition of the BU headquarters, the structure information of the business unit of the parent company shall also be provided.

2. The authorization documents issued by the parent company on authorizing the signatory to sign the basic functions of regional headquarters, headquarter-offices and BU headquarters, and the certification materials of the authorized signatory.

3. The audit report of the parent company or the investment company for the previous year. The enterprise established in the form of business unit shall also be required to provide special audit materials for its business income.

4. The business license or registration certificate (duplicate) of the domestic and foreign enterprises authorized for management.

5. If the headquarter-office is established in the form of a branch, the certificate of operating funds allocated by the general company shall also be submitted.

Article 7 (Application Procedure)

The recognition of regional headquarters, headquarter-offices and BU headquarters shall be carried out according to the following procedures:

The enterprise may apply to the competent administrative department of commerce of the district where it is registered, Lin-gang New Area Administration or Shanghai Hongqiao International Central Business District Administration and submit relevant materials;

2. The competent administrative department of commerce of each district, Lin-gang New Area Administration, Shanghai Hongqiao International Central Business District Administration shall conduct the preliminary examination of the application materials within five working days upon the application materials are complete, and submit the preliminary examination opinions to the Municipal Commerce Commission; and

3.The Municipal Commerce Commission shall complete the review within five working days upon the application materials are complete, and make a decision of approval or disapproval.

Article 8 (Dynamic Evaluation)

The Municipal Commerce Commission shall, in conjunction with relevant departments, carry out a dynamic evaluation on the recognized regional headquarters, headquarter-offices and BU headquarters, and their qualification of headquarters enterprises shall be cancelled if they no longer meet the recognition requirements according to relevant regulations in combination with the annual information reporting system of foreign-invested enterprises and enterprise credit information platform.

Article 9 (Subsidies and Rewards)

The headquarter enterprises that meet the requirements may apply for subsidies and rewards in accordance with relevant provisions. The specific procedures for the implementation of subsidies and rewards shall be separately formulated by relevant departments.

Each district may, in the light of the actual situation, grant subsidies and rewards to the recognized headquarter enterprises in accordance with relevant provisions.

Article 10 (Funds Operation and Management)

Shanghai Head Office of the People's Bank of China and Shanghai Branch of the State Administration of Foreign Exchange shall provide adaptation services for the establishment of cross-border capital pools by the headquarter enterprises. Qualified headquarter enterprises may, in accordance with relevant provisions, carry out the centralized collection, allocation, settlement, hedging, investment, financing and other businesses of local and foreign currency funds between member enterprises at home and abroad through different types of cross-border capital pools, so as to facilitate the domestic and foreign capital operation of headquarter enterprises under the framework of cross-border capital pools. High-level headquarter enterprises may carry out cash-pooling service to integrate local and foreign currency in accordance with relevant provisions, raise the efficiency of cross-border capital pooling by multinational corporations, and reduce their exchange risks and financial costs.

The qualified headquarter enterprises may directly handle the domestic payment of foreign exchange income under capital accounts (including the capital, foreign debt, repatriated funds from overseas listing, etc.) and RMB funds obtained from foreign exchange settlement with qualified banks by virtue of the Payment Order Letter on Facilitation of Payment of Foreign Exchange Income under Capital Accounts, and it is not necessary to submit the authenticity certification materials in advance for each settlement.

If the headquarter enterprises use RMB for cross-border settlement in accordance with relevant provisions, the bank may, on the basis of the "Three Principles of Business Development" and in reference to the standards of high-quality enterprises, directly handle cross-border RMB settlement for trade in goods and services for the headquarter enterprises by virtue of the "Instructions on Cross-border RMB Settlement Receipts/Payments" or the instructions on receipts and payments, and the use of RMB capital account income (including the foreign direct investment capital, cross-border financing and repatriation of funds raised by overseas listing, etc.) in China in accordance with laws and rules.

Article 11 (Trade Facilitation)

When conducting a new-type international trade with real trade background, headquarter enterprises may, in accordance with relevant provisions, directly handle relevant foreign exchange receipts and payments procedures in the bank, and the bank shall, in accordance with the current international rules, provide facilitating cross-border financial services. Qualified headquarter enterprises may apply for being included in the offshore trade "white list".

Shanghai Customs, Shanghai Branch of the State Administration of Foreign Exchange and other departments shall take facilitation supervision measures for the headquarter enterprises that set up their international trade allocation centers. The headquarter enterprises that meet the requirements may apply for an evaluation for the demonstration enterprises of Shanghai International Trade Allocation Center.

Headquarter enterprises may, in accordance with relevant provisions, carry out the maintenance business of aerospace, ships, rail traffic, construction machinery, numerical control machine tools, communication equipment, precision electronics, high-end medical equipment and other products within the Integrated Free Trade Zone, and carry out global maintenance business according to the catalogue of maintenance goods. On the premise that the risks can be controlled, qualified headquarter enterprises may carry out bonded maintenance business with high added value, high technology content and qualified environmental protection requirements outside the special Customs supervision areas.

The headquarter enterprises that meet the requirements may be assessed as the first/second class enterprises of export tax refund.

Headquarter enterprises may join the "Single Window" of China (Shanghai) International Trade, and obtain the exclusive services such as dynamic information of logistics' customs clearance, port information and financial support.

Shanghai Customs shall strengthen the Customs credit cultivation of the headquarter enterprise, and give priority to the qualified headquarter enterprise to be included in the list of key enterprises for Customs credit cultivation, which enjoys the priority of being cultivated and certified, and enjoys the facilitation of AEO (Authorized Economic Operator) Customs clearance after becoming an advanced certification enterprise. According to the latest development and demand of the headquarter enterprises, the Customs shall explore the Customs credit cultivation and certification mode based on the group type and the industrial chain and supply chain, focus on the trade facilitation, innovate the supervision system and mode, strive to raise the customs clearance efficiency, and provide personalized Customs clearance facilitation for the certified enterprise's import and export goods.

Shanghai Customs shall support the headquarter enterprise to carry out trial tariff guarantee insurance, carry out the risk assessment and classified administration over the import and export experimental materials for the headquarter enterprise, and facilitate the import and export of experimental materials for research and development.

Article 12 (Support for Scientific and Technological Innovation)

Headquarter enterprises may, in accordance with relevant provisions, apply for participating in the construction of the R&D Public Service Platform, Makerspaces and Innovation Platforms of this Municipality, for undertaking government scientific research projects, and for establishing technological innovation combinations in the professional fields jointly with universities and research institutes; and the relevant departments shall provide guidance and assistance.

The headquarter enterprises that meet the requirements may apply for being added into the "white list" of biomedical pilot enterprises and articles in this Municipality. The food and cosmetics samples used by headquarter enterprises for R&D may enjoy Customs clearance facilitation measures provided that they meet the requirements.

Article 13 (Commercial Registration)

The Municipal Market Regulation Bureau shall carry out the "Whole Process Done Online" of market registration for headquarter enterprises, and provide facilitation for applying and using of electronic business license and seal.

Article 14 (Project Investment)

This Municipality shall support the headquarter enterprises to carry out the project investment, and the projects that meet the requirements may be listed in the Shanghai Major Foreign-Funded Projects List. This Municipality and the Districts shall promote the project access, planning, land use, environmental protection, energy use, construction, import and export, foreign exchange and other related matters in an overall coordinated way, and speed up the implementation of the projects. If relevant conditions are met, a financial support shall be given.

Article 15 (Talents Introduction)

The return students who are in short supply and in urgent need hired by a headquarter enterprise may apply for this Municipality’s household registration if they meet relevant requirements. The qualified overseas talents hired by a headquarter enterprise may enjoy additional points and relevant benefits in the application for the Shanghai Overseas Talents Residence Card (B). The domestically introduced excellent talents who meet relevant requirements may apply for this Municipality’s household registration.

The overseas professionals of headquarter enterprises who meet relevant requirements may participate in the application and evaluation of the professional titles. The senior executives with outstanding contributions from headquarter enterprises may be recommended by relevant units to participate in the Magnolia Silver Award. The headquarter enterprises may be preferentially recommended by relevant units to apply for joining the International Business Leaders’ Advisory Council for the Mayor of Shanghai.

If the professionals in finance, planning, shipping and other fields who have obtained international professional qualifications or professional qualifications of some specific countries or regions provide services in headquarter enterprises after being put on record by relevant industry authorities, their overseas work experience may be regarded as domestic work experience (except for special industry requirements). The foreign talent with permanent residence status in the headquarter enterprise who take the lead in undertaking the project in the national science and technology plan may serve as the legal representative of the new-type research and development institution of this Municipality.

For the foreign senior executives working in the headquarter enterprises, the Exit-Entry Administration Bureau of Shanghai Public Security Bureau, the Municipal Health Commission, the Municipal Human Resources and Social Security Bureau and other departments shall, on the premise of conforming to relevant policies, provide facilitation for their families in terms of stay and residence, medical services, and application for talent apartments. The foreign nationality children of qualified foreign senior executives may apply for their study at local schools as international students.

Article 16 (Facilitation of Exit and Entry Procedures)

The qualified Chinese personnel of headquarter enterprises may apply for the APEC Business Travel Card. The Chinese mainland residents employed by headquarter enterprises shall be facilitated for their travel abroad for business purposes.

The foreign personnel of headquarter enterprises in need of multiple temporary entries may, in accordance with relevant provisions, apply for multiple-entry visas with validity period within five years and duration of stay within 180 days. The foreign personnel invited by headquarter enterprises who needs to enter China for urgent business may apply for port visas at the visa-issuing port authorities in accordance with relevant provisions.

The foreign personnel of headquarter enterprises in need of a long-term residence in this Municipality may apply for the Residence Permit of Foreign Personnel with validity period of three to five years.

The foreign senior executives of headquarter enterprises may be preferentially recommended to apply for a permanent residence in China in accordance with the Procedures for the Administration of Examination and Approval of Foreigners' Permanent Residence in China and other relevant provisions.

The exit and entry inspection and quarantine department of Shanghai Customs shall provide senior executives of headquarter enterprises with the green channel for processing health certificate applications.

Article 17 (Intellectual Property Protection)

The foreign-related trademarks of the headquarter enterprise that have a high reputation in the Shanghai market and are subject to many infringements and counterfeits may be recommended to be included in the Shanghai Key Trademark Protection List. The headquarter enterprise may apply to the Municipal Intellectual Property Office to carry out the rights protection in other places through the inter-regional cooperation mechanism for intellectual property administrative protection.

Article 18 (Services Support)

All district people’s governments may, in the light of the actual circumstances of their respective districts, formulate policies and measures to support the development of headquarter enterprises, and create a business environment beneficial to the development of headquarter,enterprises.

This Municipality shall set up a dual-level system of headquarters service commissioners respectively at the municipal and district level to smooth the information channels. Relying on industry organizations such as the municipal and district Associations of Foreign Investment and Associations or Chambers of Commerce in Shanghai to build a platform for government and enterprise service communication; the commissioners shall hold regular government and enterprise round-tables to timely understand the needs of headquarter enterprises and coordinate to solve the problems encountered in the development of headquarter enterprises.

Article 19 (Reference for Application)

The investors from Hong Kong, Macao and Taiwan regions of China to establish regional headquarters, headquarter-offices and BU headquarters in this Municipality shall be governed with reference to these Provisions.

Article 20 (Effective Date and Validity Period)

These Provisions shall be effective as of November 1, 2022 and be valid until October 31, 2027.