Issue 30

Shanghai Weekly Bulletin

No. 5, January 2024

Shanghai Weekly Bulletin is an information service presented by the Foreign Affairs Office of Shanghai Municipal People's Government in collaboration with Wolters Kluwer to foreign-funded enterprises, foreign-related institutions as well as people from overseas living in Shanghai. Covering major national and Shanghai foreign-related news, event information, policy Q&A and interpretations in the past week, it keeps you up-to-date with the latest foreign-related policies and developments in Shanghai.

Laws and Regulations

【National】

1. MOFCOM Issues Guidelines for Foreign Businessmen to Live and Work in China (2024 Version) 

【Keywords: Foreign Businessmen, Living and Work Guidelines】

The Ministry of Commerce (MOFCOM) released on January 25, 2024 the Guidelines for Foreign Businessmen to Live and Work in China (2024 Version). The document includes four parts, namely Points for Attention, Services for Life, Services for Stay and Living in China, and Social Services. 

Source: MOFCOM

http://images.mofcom.gov.cn/wzs/202401/20240125094949758.pdf 

2. China and Singapore Sign Mutual Visa Exemption Agreement 

【Keywords: Singapore,Visa】

China and Singapore signed on January 25, 2024 the Mutual Visa Exemption Agreement Between the Government of the People's Republic of China and the Government of the People's Republic of Singapore in Beijing. The Agreement will officially take effect on February 9, 2024, from which ordinary passport holders in Singapore and China can travel between the two countries without a visa, with a maximum stay of 30 days. 

Source：Consular Express

3. China to Support Overseas Institutional Investors in Repurchasing Bonds 

【Keywords: Overseas Institutional Investors, Bond Repurchase Business】

The People's Bank of China (PBC) and the State Administration of Foreign Exchange (SAFE) recently released the Announcement on Supporting Overseas Institutional Investors in Carrying out Bond Repurchase Business in the Interbank Bond Market (Exposure Draft) to solicit public opinions until February 23, 2024. With 12 articles, the document specifies the scope of overseas institutional investors, and supports the alignment of bond repurchase business in the interbank bond market with the internationally accepted practice. It also clarifies the obligations of responsible parties, and stresses infrastructure services, industrial self-discipline, regulatory measures and administrative penalties. 

Source: PBC

http://www.pbc.gov.cn/tiaofasi/144941/144979/3941920/5217355/index.html

 

【Shanghai】

1. Shanghai Starts a New Round of High-standard Opening-up for Cross-Border Trade and Investment

【Keyword: Cross-border Trade and Investment】 

The State Administration of Foreign Exchange, Shanghai Branch recently issued the Circular of the State Administration of Foreign Exchange, Shanghai Branch on Carrying out High-Standard Pilot Opening up for Cross-Border Trade and Investment. The document introduces measures in eight aspects, including further facilitating receipts and payments of foreign exchange funds under current account, supporting banks in improving the settlement methods for new types of international trade, and expanding the scope of net settlement of payment balance in trade. The document is also attached with five sets of implementation rules.  

Source: State Administration of Foreign Exchange, Shanghai Branch

https://www.safe.gov.cn/shanghai/2024/0123/2068.html

2. Lin-gang Special Area Introduces Policies to Support High-quality Development of Intellectual Property Rights

【Keyword: Intellectual Property Rights】

Several Policies to Support the High-Quality Development of Intellectual Property Rights in the China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area were released on January 22, 2024. The document proposes 15 measures in four aspects, including supporting comprehensive improvement of the quality of intellectual property rights, promoting innovative expansion of intellectual property application capabilities, promoting continuous optimization of the intellectual property protection system, and pushing for continuous improvement of intellectual property services.

Source: China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area 

https://www.lingang.gov.cn/html/website/lg/index/government/file/1749858284517494785.html

3. Shanghai Assesses Performance of Social Training Evaluation Organizations

【Keyword: Social Training】 

Shanghai Municipal Human Resources and Social Security Bureau released on January 22, 2024 the Circular on Carrying out Performance Assessment of Social Training Evaluation Organizations, which aims to further standardize the determination of professional skill levels of social training evaluation organizations and push for their healthy and orderly development. 

Source: Shanghai Municipal Human Resources and Social Security Bureau

https://rsj.sh.gov.cn/tjypx_17737/20240125/t0035_1420866.html

 

One Week in Shanghai

【Latest News】

1. Mayor of Shanghai Answers Reporters' Questions at Press Conference 

【Keyword: Press Conference】

Gong Zheng, mayor of Shanghai, attended the Press Conference of the Shanghai Municipal People's Government held on January 27, 2024 after the conclusion of the second session of the 16th Shanghai Municipal People's Congress. During the press conference, the mayor answered questions from domestic and foreign news agencies, with remarks highlighting economic growth, the building of "five centers", urban renewal, practical work for the people and other hot topics. 

Source：Intl Services Shanghai 

2. Shanghai Publishes Statistical Bulletin of Shanghai's Economy for 2023

【Keyword: Economy】

Shanghai Bureau of Statistics, together with the Survey Office of the National Bureau of Statistics in Shanghai, recently released the Statistical Bulletin of Shanghai's Economy in 2023. According to a unified calculation, the gross domestic product (GDP) of Shanghai in 2023 was 4,721.866 billion yuan, an increase of 5.0 percent over the previous year at constant prices. The added value of the primary industry was 9.609 billion yuan, down by 1.5 percent; the secondary industry 1,161.297 billion yuan, up by 1.9 percent; and tertiary industry 3,550.960 billion yuan, up by 6.0 percent.  

Source: Shanghai Release 

3. "Shanghai International Trade Single Window" Enables Checking of Laboratory Testing Status 

【Keywords: International Trade, Single Window】

The "Shanghai International Trade Single Window" recently launched a model that enables users to check the laboratory testing status through its web version or WeChat public account "Tongguanbao". Its client version has also added a new customized function on laboratory testing status.

Source：Shanghai Customs Hotline 12360

 

【Forum & Exhibition】

1. 24th China International Industry Fair - New Material Industry Show Issues Invitation to Prospective Participants 

【Keywords: China International Industry Fair, New Material Industry Show】

Shanghai Municipal Commission of Economy and Informatization issued a circular on January 22, 2024 to invite Chinese and foreign enterprises and institutions, industry associations and industry authorities to participate in the 24th China International Industry Fair - New Material Industry Show. The Fair will be held at the National Convention and Exhibition Center (Shanghai) on September 24-28, 2024. It will include nine professional exhibitions with a total exhibition area of 300,000 square meters. Some 3,000 exhibitors are expected to participate in the exhibition along with more than 200,000 Chinese and foreign professional visitors.

Source: Shanghai Municipal Commission of Economy and Informatization

https://www.sheitc.sh.gov.cn/cyfz/20240124/1e34bce725c84fd9beaa69e428ee127f.html

 

【Culture & Art】

1. Shanghai Symphony Orchestra Kicks off 2024 New Year Performance Season

【Keyword: Shanghai Symphony Orchestra】

Shanghai Symphony Orchestra has kicked off the 2024 New Year Performance Season, which will begin with a New Year concert and two indoor music performances. 

Source：Shanghai Tourism

2. Shanghai Yuyuan Lantern Festival Begins Lighting 

【Keyword: Yuyuan Lantern Festival】

The 2024 Yuyuan Folk Art Lantern Festival kicked off on January 21. The lantern festival will last for 40 days, and will present unique cultural and performing arts activities from time to time. 

Source: Shanghai Huangpu

3. "Riverside Scene During Qingming Festival" National Tour Exhibition Comes to Shanghai

【Keyword: Riverside Scene During Qingming Festival】

A multimedia art exhibition that fully integrates the latest technologies and also adds a variety of interactive experiences - "Riverside Scene During the Qingming Festival" national tour exhibition came to Shanghai on January 20, 2024, and it was launched in the "No Space" at Xiu 709 Media Park, Jing'an district. The exhibition features four unique exhibition areas, allowing citizens to increase their knowledge and interactive experience during the exhibition, and feel the charm of Chinese traditional culture and technological development. The exhibition will last until March 31, 2024.

Source：Shanghai Jing'an

 

【Corporate Activities】

1. Agilent Expands and Upgrades Shanghai Manufacturing Center

【Keywords: Foreign Businessmen; Living and Work Guidelines】

Agilent Technologies recently held an inauguration ceremony for its Shanghai Manufacturing Center and smart factory in Waigaoqiao New Development Park. The Shanghai Manufacturing Center is Agilent's largest gas chromatography production base in the world. It has completed a new round of expansion and upgrading, and the production area has been significantly expanded, making full preparations for future production capacity upgrades.

Source: Pudong Release

2. Well-known Singaporean Law Firm Establishes First China Representative Office 

【Keywords: Singapore, Allen & Gledhill】

The Shanghai representative office of Singapore's Allen & Gledhill Law Firm opened in Lujiazui on January 24, 2024. This is the law firm's first representative office in China. With the new office, the firm can leverage its significant influence and understanding of key regional markets to advise on Chinese investments in ASEAN and provide clients with advice and guidance on key transactions in China.

Source: Pudong Release

 

Q&A

Q1: Shanghai municipal leaders answered reporters' questions at a press conference held by the State Council Information Office on promoting the comprehensive pilot reform of Pudong New Area - the Pudong comprehensive pilot reform is a major national reform initiative. What fundamental and favorable conditions does Shanghai have to help it accomplish this important task? 

A1: Shanghai has three fundamental and favorable conditions to fulfill the tasks of the comprehensive pilot reform of Pudong New Area.

First, Shanghai's urban capacity and core competitiveness continue to improve, providing a favorable development foundation for the comprehensive pilot reform. In 2023, Shanghai's economy has continued to recover, and it has retained the status as China's economic powerhouse. Specifically, Shanghai has redoubled efforts in the building of the "Five Centers", and achieved new breakthrough in lifting the city's international status as an economic center, enhancing internationalization of the financial center, strengthening the hub function of the trade center, improving resource allocation of the shipping center, and reinforcing the source function of the sci-tech innovation center. Continued improvement of Shanghai's urban capacity and core competitiveness will also provide strong support for Pudong to carry out comprehensive pilot reform. Shanghai municipal government will continue to support Pudong in venturing, experimenting and making independent reforms, striving to produce a number of landmark institutional innovation results as soon as possible.

Second, Shanghai has undertaken a number of major national strategies and provided abundant practical scenarios for Pudong's comprehensive pilot reform. Since the 18th National Congress of the Communist Party of China, the CPC Central Committee and the State Council have launched a large number of major national strategies in Shanghai, such as the China International Import Expo, Shanghai Pilot Free Trade Zone and Lin-gang Special Area, to provide Shanghai with a broad stage to comprehensively deepen reforms and expand high-level opening up to the outside world. The Pudong comprehensive pilot reform plan also integrates a large number of reform matters assigned by national authorities. We can fully leverage multiple national strategies and functional platforms to amplify the linkage and overlapping effects, and play a breakthrough and leading role in the overall reform.

Third, the Shanghai People's Congress's mechanism for formulating Pudong laws and regulations is increasingly improving, providing a strong legal guarantee for Pudong's comprehensive pilot reform. In 2021, the National People's Congress authorized the Shanghai Municipal People's Congress and its Standing Committee to formulate regulations for the Pudong New Area. In 2023, the National People's Congress has also included the formulation of Pudong regulations in the revised Legislation Law. Up to now, the Shanghai Municipal People's Congress has formulated a total of 18 regulations for Pudong New Area, covering such areas as "commercial registration confirmation", "market entities' quasi-business commitments", "green finance", "financial leasing", "high-level property rights protection", etc. These regulations have effectively solved some of the difficulties and pain points in economic and social development and reform and opening up, and have produced good results.

In the next stage, Shanghai will continue to make good use of the legislative power granted to Pudong, and draft more regulations to address some critical issues in business operations, industry development, and industrial upgrading, and further improve the legal guarantee system and regulatory system that are essential for the sound implementation of the pilot reform tasks.

Source: State Council Information Office

http://www.scio.gov.cn/live/2024/33277/tw/

 

Expert Perspective

With the implementation of the new Company Law, what do foreign investors need to know? 

By: An Suiyi, Sol Zhang（Llinks Law Offices）

[Continuing from the last issue]

Second Highlight: Capital Contribution

1. The Five-Year Requirement

During the past decade, the Company Law allowed a subscription regime for registered capitals in limited liability companies (“LLC”), where the time for capital contribution is freely determined by shareholders. Under such regime the shareholders may choose to accomplish their contribution within the term of business of the company, which could be extended to an indefinite term. 

The New Company Law reshapes the foregoing regime, where Shareholders of LLCs now must accomplish the entire capital contribution no later than five years from the incorporation, failing which, the defaulting shareholders will lose their rights and benefits attached to the unpaid capital. 

In the meantime, the New Company Law requires companies already incorporated to adjust the deadline of capital contribution by their shareholders if it surpasses the foregoing five-year requirement. However, no clear time table is set for such adjustment.

In addition, the New Company Law adds an obligation on the directors to oversee the status of capital contribution by shareholders and call up the unpaid capital, failing which, the responsible director(s) will also become personally liable.

Llinks observation

The existing subscription regime came into force in 2013, when China was promoting its Mass Entrepreneurship and Innovation Initiative, which invoked the need for flexibility on capital contribution for companies. The New Company Law signifies a shift at the policy level, where the legislators appear to require capital abundance and thus creditworthiness for companies when a certain level of flexibility is still retained.

However, the new regime caught wide attention immediately and sparked heavy discussion or even debates among the public. There are still question marks on when and how existing companies should comply with the five-year contribution requirement. In such case, it cannot be ruled out as a possibility that FIEs may be required by local company registration authority to accomplish the adjustment relating to the five-year requirement on capital contribution, especially when they apply for any registration concerning other corporate matters with the authority.

2. Joint and Several Liability among Shareholders for Capital Contribution upon Incorporation

Under the Company Law (with the latest amendment in 2018, the "2018 Company Law"), upon the incorporation of the company, a shareholder is liable to the company and other shareholders if it is in default of its capital contribution obligation.

Under the New Company Law, if, after the company is incorporated, any shareholder fails to make capital contribution required by the articles of association, or the value of its contribution in-kind is significantly lower than the amount of the registered capital it subscribed for, the other shareholders are jointly and severally liable to the company for the shortfall.

Llinks observation

This is a fundamental change in terms of capital contribution obligations. Now, for the foreign investor in joint venture deals, it is important to require in the relevant transaction documents an indemnity from the other shareholder(s) against losses the foreign investor may suffer for its joint and several liability (the foreign investor may have a claim against the other shareholder(s) by default under the Civil Code, but an explicit clause of indemnity would certainly help to eliminate any uncertainty).

 

[To be continued]