Issue 32

Shanghai Weekly Bulletin

No. 2, February 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. China and Brazil Agree to Grant 10-year Multiple-entry Visas to Each Other’s Nationals 

【Keywords:Brazil; 10-year Multiple-entry Visa】

China and Brazil have agreed to grant 10-year multiple-entry visas to their nationals for business, leisure trips and family visits, effective on February 19, 2024. The ten-year visas allow multiple entries to China or Brazil by Chinese and Brazilian before expiration, who can stay up to 90 days for a single visit. The expiration dates of the visas can be extended if necessary, but the total stay should be no more than 180 days during the 12 months of the first entry. 

Source:Consulate Express

2. NFRA Issues Three Sets of Measures to Improve Credit Management in Banking Financial Institutions  

【Keywords:Banking Financial Institutions; Credit Management】

The National Financial Regulatory Administration (NFRA) recently released three sets of measures, namely the Measures for the Management of Fixed Assets Loans, the Measures for the Management of Working Capital Loans, and the Measures for the Management of Personal Loans, which revise the Interim Measures for the Management of Fixed Assets Loans and other three credit management rules. The main revisions of the documents include appropriately expanding the usage of fixed assets loans and working capital loans and the scope of their borrowers, and improving the estimation of working capitals to meet the actual demands in the credit markets. They are scheduled to take effect on July 1, 2024. 

Source: NFRA

https://www.cbirc.gov.cn/cn/view/pages/ItemDetail.html?docId=1151058&itemId=915

3. SAMR Calls for Improving the Anti-monopoly Compliance Risk Warning Mechanism for Concentration of Undertakings

【Keywords:Concentration of Undertakings; Anti-monopoly】

The State Administration for Market Regulation (SAMR) recently issued the Circular on Improving the Anti-monopoly Compliance Risk Warning Mechanism for Concentration of Undertakings. It proposes to enrich the warning scenarios and enhance the accuracy of warning, strengthen policy guidance and promote online and offline integration, and enhance data integration and tap the potential of digital empowerment to serve the compliance of business entities and prevent monopolistic behaviors from the source. 

Source: SAMR

https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/fldzfes/art/2024/art_9ad83b67440a494c9ad0c1d32fce8773.html

【Shanghai】

1. Shanghai Issues Action Plan for World-class Business Environment

【Keywords:Business Environment Improvement】

Shanghai Municipal People’s Government recently released the Action Plan of Shanghai to Adhere to Benchmarking Reform and Create a World-Class Business Environment. It highlights such measures as including benchmarking reform and enhancement actions, enterprise service improvement actions, quality improvement actions for law enforcement, regional benchmark innovation actions, and coordinating efforts to build a business-friendly environment. It aims to better serve Shanghai’s “Five Centers” development and core urban function enhancement, and create a world-class business environment featuring great trade and investment facilitation, highly efficient administration, standardized government services, and a full-fledged legal system. 

Source: International Services Shanghai

https://english.shanghai.gov.cn/en-PolicyInsights/20240218/0c81c80bc70545999da14ee71dd7530f.html

2. Shanghai Issues Document for High-level Institutional Opening-up at the FTZ

【Keywords:Pilot Free Trade Zone; Institutional Opening-up】

Shanghai Municipal People's Government recently released the Implementation Plan for Shanghai to Implement the Overall Plan for Aligning with International High-Standard Economic and Trade Rules to Promote High-level Institutional Opening-up of the China (Shanghai) Pilot Free Trade Zone. The Plan proposes 117 measures in eight aspects. On one hand, it further improves the “at-the-border” measures to promote the circulation of goods and factors of production, and on the other hand, it seeks to align with the “after-the-border” measures to deepen the institutional opening-up.

Source: Shanghai Municipal People's Government

https://www.shanghai.gov.cn/nw12344/20240205/2af907af61cf4977866b7d377baf5d1d.html

3. Shanghai Publishes Forest Management Rules

【Keywords:Forest Management】

The Shanghai Municipal Forest Management Rules was recently published and will come into effect on May 1, 2024. With a total of 32 articles, the rules aim to practice the idea that lucid waters and lush mountains are invaluable assets. They also stress efforts to protect, cultivate and rationally utilize the city's forest resources, accelerate land greening, safeguard forest ecosystem, and advance ecological progress.

Source: Shanghai Municipal People's Government

https://www.shanghai.gov.cn/nw12344/20240208/6a4efe13cbde4581991bb4b211ac31c4.html

4. Shanghai Issues Revised Measures for the Management of Funds for the Development of Regional Headquarters of Multinational Companies 

【Keywords:Multinational Companies; Headquarters Development Funds】

Shanghai Municipal Commission of Commerce and Shanghai Municipal Finance Bureau recently released the revised Shanghai Measures for the Management of Funds for the Development of Regional Headquarters of Multinational Companies. The revised document, which has a total of 12 articles, clarifies that eligible recipients of the development funds are regional headquarters of multinational companies, division headquarters of multinational companies and global R&D centers, and qualified entities would be provided with start-up subsidies, rental subsidies, high-capacity rewards, operation rewards, and capital increase rewards. The document took effect on February 1 ,2024 and will remain effective until January 31, 2029. 

Source: Shanghai Municipal Commission of Commerce

https://sww.sh.gov.cn/zwgkhsgwj/20240205/07af281937144d9ba83d28339368b7b6.html

5. Shanghai Issues Document to Improve the Quality and Efficiency of IP-related Financial Services

【Keywords:Sci-tech Innovation; Service Guarantee】

Shanghai Intellectual Property Administration and other four departments recently issued the Guidelines on Improving the Quality and Efficiency of Intellectual Property-related Financial Services in Shanghai, which propose ten measures in three aspects, including increasing the supply of intellectual property (IP) financial resources, strengthening credit policy support, and reinforcing efforts on IP financial services.

Source: Shanghai Intellectual Property Administration

https://sipa.sh.gov.cn/zwgk_zxxxgk/20240206/e15f4e0a334740498982f69d7f2915b7.html

6. Shanghai Issues Guidelines for the Green Ecological Planning and Development of Five New Towns 

【Keywords:Green Ecology】

Shanghai Municipal Commission for Housing and Urban-Rural Development and the Bureau of Planning and Resources have jointly issued the Guidelines for Green Ecological Planning and Development in response to building green ecosystems in five new towns. The Guidelines consist of seven chapters, aiming to guide new towns in building resilient and safe facilities, developing healthy and vibrant space and environment, building low-carbon and green buildings and transportation, exploring efficient use and conservation of energy and resources, and introducing smart and innovative management.

Source: Shanghai Municipal Commission for Housing and Urban-Rural Development

https://zjw.sh.gov.cn/gzdt/20240205/05c28b59e5c04d139f368fbad3f4d99c.html

One Week in Shanghai

【Latest News】

1. Shanghai Accomplishes 208 Business Environment Improvement Tasks for 2023

【Keywords:Business Environment Improvement】

Shanghai has accomplished 208 business environment improvement tasks, as set in its Action Plan 6.0 for Business Environment Improvement in 2023. They involve market access, labor and employment, cross-border trade, government affairs and service, and administrative law enforcement, as well as Pudong New Area, Lin-gang Special Area and other key areas. 

Source: International Services Shanghai

https://english.shanghai.gov.cn/en-Editorspick-DoBusiness/20240219/bc479033c014438582c994750313a12e.html

2. French Version of the International Services Shanghai Brochure Launched

【Keywords:French Version; International Services Shanghai Brochure】

Since its launch in September last year, the English version 1.0 of the International Services Shanghai brochure has been distributed in the city's major ports of entry, foreign-related service windows, important international exhibitions and foreign-related activities, and received very good response. Its French version was released on January 27, 2024 to mark the 60th anniversary of the establishment of diplomatic relations between China and France. The release aims to improve the service for foreign nationals visiting and staying in Shanghai.

Source:Shanghai Foreign Affairs Office

3. Association of Banking and Financial Executives of Hellenic Shipping Opens Representative Office in Pudong

【Keywords:Association of Banking and Financial Executives of Hellenic Shipping】

The Association of Banking and Financial Executives of Hellenic Shipping recently opened a representative office in Pudong. The Association will leverage its own platform and influence to introduce more high-quality shipping companies to Pudong New Area and promote global business cooperation. It is the first overseas economic organization established in the FTZ that takes the FTZ  Administration as its business supervisory unit, a result of institutional innovation in the zone.

Source:Pudong Release

【Competitive Event】

1. CFA Releases 2024 CSL Fixtures

【Keywords:Chinese Super League】

The Chinese Football Association (CFA) released on February 8 the Fixtures for the 2024 Chinese Super League (CSL). The new season will kick off on March 1. According to the Fixtures, in the first round, Shanghai Haigang will play with Wuhan Three Towns at its home turf, while Shanghai Shenhua will challenge Meizhou Hakka as a guest. The first leg of the Shanghai Derby will be played at the SAIC Pudong Football Stadium on April 27. In the 23rd round held on August 17, Shanghai Shenhua and Shanghai Haigang will compete with each other at the Shanghai Stadium.

Source:Shanghai Release

【Culture & Art】

1. Exhibition of Ancient Shu Civilization of Sanxingdui and Jinsha Opens in Shanghai

【Keywords:Sanxingdui】

The exhibition of Ancient Shu Civilization of Sanxingdui and Jinsha opened at the Shanghai Museum East on February 2, 2024. It is open to the public free of charge and will last until May 20. This exhibition displays a total of 363 pieces/sets of important ancient cultural relics. About one-third of the exhibits are from the latest archaeological discoveries. It also brings together the latest archaeological restoration results and cultural relics exhibited outside the province for the first time, showing the latest exploration of Chinese civilization. It is by far the largest, highest-standard, and most comprehensive lineup of archaeological relics from the ancient Shu civilization.

Source:Shanghai Museum

2. Fantastic Visions: 100 Years of Surrealism from the National Galleries of Scotland

【Keywords:National Galleries of Scotland】

The first heavyweight exhibition of this year at the Museum of Art Pudong - Fantastic Visions: 100 Years of Surrealism from the National Galleries of Scotland - opened on February 2, 2024. This exhibition, drawn entirely from the collection of the National Galleries of Scotland, contains over 100 major works by about 50 artists, including some of the world's most important surrealists like Salvador Dali, Rene Magritte, Max Ernst, Joan Miro, Leonora Carrington, and Dorothea Tanning. The exhibition will last until August 31, 2024. 

Source: Museum of Art Pudong

Q&A

Q1: Leaders of the Shanghai Municipal Commission of Commerce answered questions at a press conference on the implementation of the Overall Plan for Aligning with International High-Standard Economic and Trade Rules to Promote High-level Institutional Opening up of the China (Shanghai) Pilot Free Trade Zone - The introduction mentioned some measures taken by China (Shanghai) Pilot Free Trade Zone’s "Single Window" for international trade in improving the liberalization and facilitation of cargo trade and implementing high-standard digital trade rules. Can you introduce these measures in detail?

A1: As a measure to innovate the trade supervision system of the Shanghai Pilot Free Trade Zone (Shanghai FTZ), the Shanghai International Trade "Single Window" has developed 16 functional sections such as "Supervision plus Service" and "Customs Clearance plus Logistics", with 66 characteristic applications that are connected to 22 departments and serve more than 660,000 enterprises. These services and applications have enabled full coverage of customs clearance supervision and full inclusion of international trade-related business processing. The successful experience of "Single Window" has been replicated and promoted across the country.

There are three tasks related to the "Single Window" in the Overall Plan. The first is to support the Shanghai International Trade "Single Window" to build a cross-border data exchange system and adopt international standards and open standards to strengthen system compatibility and interoperability. The second is to share information, experience and best practices in the field of data exchange system development and management through international cooperation, and jointly develop data exchange system pilot projects. The third is to enhance the cross-border interactivity of electronic invoices, encourage the sharing of best practices, and carry out international cooperation; and promote the application of electronic bills. In the next stage, we will accelerate implementation of "Single Window" related tasks in accordance with the requirements of the Overall Plan and the city's implementation plan.

In terms of building a cross-border data exchange system and strengthening system compatibility and interoperability, we have combined domestic and foreign standards to build a unified cross-border data exchange standard system to enhance system compatibility and interoperability. In addition to supporting traditional EDI (Electronic Data Interchange) or API (Application Programming Interface) methods, we also consider supporting cross-chain blockchain to build a data exchange system and further support the "Single Window" international trade document exchange and hub construction. On January 31, Shanghai's "Single Window" signed contracts with Shanghai Airport, COSCO Shipping, Eastern Silk Road, Sinosure Shanghai and SIPG to enrich the application scenarios of the "Single Window" international trade document exchange hub.

In terms of strengthening international cooperation and sharing information, experience and best practices in the field of data exchange system development and management, we will take "one declaration, bilateral customs clearance" as the starting point to improve functions, form best practice cases, and deepen cooperation with Singapore and expand our connections with Malaysia and Thailand. We will continue to expand the application of cross -border commodity traceability, from gems to medicines and other high-value imported goods, and provide cross-border product traceability and certification services for regulatory agencies, upstream and downstream companies and consumers. 

In terms of enhancing cross-border interaction of electronic invoices and promoting the application of electronic bills such as electronic bills and electronic warehouse orders, we will carry out related work in the DEPA (Digital Economic Partnership Agreement) member economies. In terms of electronic invoices, we will explore new and apply new scenarios, such as providing electronic invoices and authentication services based on blockchain functions, promoting the application of electronic invoices in goods trade and service trade, and formulating cross-border electronic invoice standards. In terms of electronic bills, we will promote the interconnection of GSBN and shipping trade number chain (the shipping trade chain is backed by the Shanghai Pujiang digital chain infrastructure) to promote efficient data flow in the upstream and downstream trade activities; we will cooperate with domestic and foreign financial institutions to explore blockchain-based electronic financial services; we plan to explore the application of railway electronic bills on the Shanghai -Europe Train. At the same time, we intend to join hands with financial institutions and push for the comprehensive application of digital trade documents such as electronic bills and electronic invoices in fresh grocery import business.

Besides, with the support of the State Port Office and relevant ministries and commissions, we will study and introduce measures of "Single Window" public data authorization operations, and explore the establishment of secure and credible data authorization, processing, service and usage mechanism under the "Single Window" system. We aim to publish an open dataset directory to provide business entities with open data sets based on open data products and services, empower the shipping trade ecosystem, cultivate digital service providers in the shipping trade industry, and promote high -quality development of cross-border trade.

Source:Shanghai Release

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]

Fourth point: Duty of Loyalty and Duty of Care

1. Duty of Loyalty and Duty of Care

The duty of loyalty was stipulated in the Company Law when it was first made in 1993. The duty of care was later added in the amendment in 2005. As until the 2018 Company Law, events that constitute violations of the duty of loyalty are expressly prescribed by law, but the standard of duty of care is still absent (in practice courts usually adopt a reasonable care standard when adjudicating duty of care cases).

Under the New Company Law: 

· For the duty of loyalty, on top of the events already stipulated as violations of law, the New Company Law further prescribes the followings:

(1) restrictions on related party transactions, which require BoD and/or shareholders approval for dealings between directors, senior officers or supervisors, their immediate relatives, enterprises directly or indirectly controlled by the foregoing persons, on one hand, and the Company on the other hand; and

(2) prohibition on usurpation by directors, senior officers or supervisors of the company’s business opportunities.

·For the duty of care, it now expressly stipulates reasonable care to the best interest of company as the standard.

It is noteworthy that the scope of obligors has also been extended under the New Company Law, where the controlling shareholder and ultimate beneficial owner who is not a director but manages the affairs of the company is also on the hook for the foregoing duties.

2. Director Insurance

While the New Company Law places substantial duties on directors, it also provides for a right of the company to purchase insurance for directors. This is a common practice in foreign jurisdictions but is only adopted by a few public companies in China so far. Now after this is written into the law for the first time, more companies may choose to adopt the practice to offset potential risks for their directors.   

Llinks observation

Directors, officers, and even shareholder now must act with diligence and prudence. To limit their exposure to the duty of care, FIEs may consider indemnification by the company, the directors insurance mentioned above, and waivers of liability.