Issue 35

Shanghai Weekly Bulletin

No. 2,March 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 Unveils Measures to Provide More Convenient Payment Services 

【Keywords: Payment Services; Convenience】

The Guidelines of the State Council on Optimizing Payment Services and Enhancing Payment Convenience, which were unveiled on March 1, 2024, lay out six major tasks, including “expanding the acceptance of bank card payments, and further enhancing the convenience of mobile payment”. The document aims to provide more convenient and efficient payment services for the elderly and foreign nationals in China. 

Source: Website of the Chinese Government

https://www.gov.cn/zhengce/content/202403/content_6937623.htm

2. MOFCOM Updates 2024 Edition of the Guide to Working and Living in China as Business Expatriates

【Keywords: Business Expatriates; Guide to Working and Living】

The Ministry of Commerce (MOFCOM) recently released the Guide to Working and Living in China as Business Expatriates (2024 Edition). The Guide includes four parts, namely Things to Note, Daily Life Services, Services for Stay and Living in China, and Relevant Services for Work in China, covering matters such as residence registration, SIM card, bank card, residence permit, work permit, social insurance, mobile payment, transportation, payment of individual income tax, and so on. It serves as a reference for business expatriates to work and live in China.

Source: MOFCOM

http://www.mofcom.gov.cn/article/zwgk/gkbnjg/202401/20240103468871.shtml

3. China to Extend Visa-free Policy to Six Additional European Countries 

【Keyword: Visa-free】

China has decided to extend the visa-free policy to six additional European countries on a pilot basis, in an effort to facilitate cross-border travels. The countries include Switzerland, Ireland, Hungary, Austria, Belgium, and Luxembourg. Between March 14 and November 30, 2024, ordinary passport holders from these countries can enter China without a visa for business, tourism, family visit and transit purposes and stay for no more than 15 days. 

Source: Consular Express

4. CEXIM Issues Document to Bolster Hongqiao International Open Hub with Policy-based Finance

【Keywords: Policy-based Finance; Hongqiao】

The Export-Import Bank of China (CEXIM) released on March 1, 2024 the Special Plan of Leveraging Policy-based Finance to Bolster Hongqiao International Open Hub. The document outlines 17 measures in five aspects, including strengthening top-level design, promoting high-level collaborative opening-up, pushing for the flow of innovation factors, improving industrial capacity, and deepening regional interconnection. The bank has also set a special credit line of 200 billion yuan for the "Greater Hongqiao" area.

Source: Export-Import Bank of China

http://www.eximbank.gov.cn/info/news/202403/t20240301_56045.html

【Shanghai】

1. Shanghai Issues Measures for the Registration of Business Entities’ Domiciles 

【Keywords: Business Entity; Domicile Registration】

Shanghai Municipal People's Government recently issued the Measures for the Registration of Business Entities’ Domiciles. With a total of 19 articles, the document makes stipulations on the domicile of business entities, the centralized registration place of enterprises, the registration place of individual businesses, one address with multiple licenses, one license with multiple addresses and other matters. It will come into effect on March 20, 2024 and remain valid until March 19, 2029.

Source: Shanghai Municipal People's Government

https://www.shanghai.gov.cn/nw12344/20240307/b5fd033b64f941b1a93ca7d8a930a7fe.html

2. Shanghai Moves Faster to Improve the ESG Capabilities of Foreign-related Enterprises 

【Keyword: ESG】

Shanghai Municipal Commission of Commerce recently issued the Three-year Action Plan on Moving Faster to Improve the Environmental, Social and Governance (ESG) Capabilities of Foreign-related Enterprises in Shanghai (2024-2026). The document sets 12 work priorities in terms of improving enterprise ESG capabilities, increasing ESG market efficiency, and optimizing ESG service system.

Source: Shanghai Municipal Commission of Commerce

https://sww.sh.gov.cn/zwgkgfqtzcwj/20240301/d4259e64a62042689879fb3901c86bef.html

3. Shanghai Issues Guidelines on Advertising Compliance in the Cosmetics Sector 

【Keywords: Cosmetics; Advertising】

Shanghai Municipal Administration for Market Regulation and Shanghai Municipal Medical Products Administration recently issued the Shanghai Guidelines on Advertising Compliance in the Cosmetics Sector. The document consists of 41 articles in seven chapters, which include General Provisions, Management System Improvement, Regulation of Efficacy Promotion, Regulation of Advertising Content and Forms, Regulation of Livestreaming Marketing and Endorsement Activities, Regulation of Product Advertising for Special Groups, and Supplementary Provisions.

Source: Shanghai Municipal Administration for Market Regulation

https://scjgj.sh.gov.cn/207/20240306/2c984a728e07910f018e12e7a4f26c49.html

One Week in Shanghai

【Latest News】

1. Shanghai Release Opens New Feature “Park Service Query”

【Keywords: Shanghai Release; New Feature】

In recent years, Shanghai has seen an increasing number of parks, which has reached 477 now. In order to make it easier for citizens to get park information, Shanghai Release recently opened a new feature “Park Service Query” under “Municipal Services”. With the feature, citizens can check which parks are pet friendly, which parks allow use of tents, which parks provide kite outing venues, and which parks are ideal for sports and fitness activities.

Source:  Shanghai Release

【Competitive Event】

1. 2024 WLA Prize Begins to Receive Global Nominations 

【Keyword: World Laureates Association Prize】

The World Laureates Association Prize (WLA Prize) announced that it has begun to receive global nominations for the "Intelligent Science or Mathematics Award" and "Life Science or Medical Science Award" in 2024. Nominations will be accepted until June 15, 2024. Nominators can log on to the website www.thewlaprize.org.cn to submit nominations.

Source:Shanghai Release

【Culture & Art】

1. Several Original Musicals to Be Staged in Shanghai

【Keyword: Musical】

Several original musicals will be staged in Shanghai this year, including the original English classic musical "Mamma Mia!", the original musical "Lady Macbeth", the original French musical "Mozart-L'opera Rock", the world classic musical "Phantom of the Opera", the original French musical "The Hunchback of Notre Dame", the original Broadway classic musical "Chicago", etc.

Source:Shanghai Release

【Corporate Activities】

1. KSB New Factory to Be Put into Production This Year

【Keyword: KSB】

The structure construction of KSB Pump's petrochemical energy-efficient pump manufacturing base was completed before the Spring Festival. It is expected to complete equipment commissioning and be delivered for operation in July 2024. This is the largest investment project since the founding of KSB Shanghai Pump Co., Ltd. Covering a total area of 8,000 square meters, the new factory will manufacture petrochemical engineering pumps and standard pumps.

Source: Minhang Today

【Training】

1. Shanghai to Hold Lecture on Carbon Footprint and Enterprise Carbon Emission Calculation Standards

【Keyword: Dual-Carbon】

In order to help foreign-invested enterprises have a better understanding of China's dual-carbon policies and promote their sustainable development in Shanghai, the Green and Low-Carbon Development Branch of the Shanghai Foreign Investment Association plans to launch eight sessions of lectures titled "Dual-Carbon Capacity Building for Foreign-invested Enterprises". The third session, which is themed on Carbon Footprint and Corporate Carbon Emission Calculation Standards, is scheduled to be held on March 22, 2024.

Source:Shanghai Foreign Investment Association

Q&A

Q1: Leaders of the People's Bank of China (PBC) answered reporters' questions at the State Council Information Office's regular briefing on policies to further improve payment services to make payment more convenient - Mobile payments have developed very rapidly in China in recent years, but at the same time, some foreign visitors feel that they face some hurdles for spending and paying during their trips in China. I would like to ask what the PBC has done to improve their payment experience and which payment options are better choices for foreigners in China?

A1: After thorough investigation and analysis, we can summarize the problem as follows: Some foreigners complain they cannot use mobile payment in China, because they cannot bind overseas bank cards with China’s mobile payment apps. Some foreigners point to poor payment experience, because sometimes they cannot make payments when their spending exceeds the payment limit. If they encounter too many problems, they will be reluctant to use the popular payment methods in China, so it's a question of "can't use it", "not easy to use" and "don't want to use it".

In response to these problems, we will guide payment institutions to launch a series of measures to make mobile payment - the most popular payment method for Chinese people - easy to use, and foreign friends will be satisfied and happy to use it. Firstly, in view of the low success rate of inbound visitors in using Alipay and WeChat to bind overseas bank cards, Alipay and Tenpay are required to optimize their business processes and improve the efficiency of card binding. Secondly, we will simplify the identity verification arrangement to make it easier for foreigners to handle a series of processes. We are also very concerned about protection of personal information. We will strictly require relevant agencies to implement the Personal Information Protection Law and other regulations to protect the security of personal information. Thirdly, we will guide major payment institutions such as Alipay and Tenpay to increase the single transaction limit for foreigners using mobile payments from US$1,000 to US$5,000 and the annual transaction limit from US$10,000 to US$50,000. I believe that through these specific and targeted measures, foreign visitors will be more satisfied with card binding other payment services. 

We always pay equal attention to development and security. In the process of promoting service improvement and market development, we focus on risk control to achieve a dynamic balance between service and security. On one hand, we support payment institutions, especially large ones, to implement differentiated risk control strategies for different transactions based on their own business realities; on the other hand, we ask them to strengthen monitoring and risk assessment, and take targeted risk control measures based on the assessment results.

Source: State Council Information Office

http://www.scio.gov.cn/live/2024/33428/tw/

Expert Perspective

Several Issues to Be Watched and Addressed by Foreign Businesses under New Company Law

By: He Kan, Chen Leyi, Gao Fangjiao, Liu Zijing, Yang Yanhua (Junhe Law Firm)

[Continuing from the Last Issue]

The new Company Law has made significant adjustments to the corporate governance structure. In terms of limited liability companies, the new law provides shareholders with considerable flexibility in choosing a corporate governance structure. In summary:

(1)The new Company Law allows a limited liability company to set up an audit committee composed of board directors to replace the board of supervisors: Article 69 of the law stipulates that a limited liability company may set up an audit committee composed of directors in accordance with the provisions of the company's articles of association to exercise the powers of supervisors, and it will not have to create the board of supervisors or the role of supervisors.

(2) A limited liability company with a smaller scale or a smaller number of shareholders can further streamline its governance structure: Article 83 stipulates that a limited liability company with a small scale or a small number of shareholders may not have a board of supervisors but only one supervisor; With the unanimous consent of all shareholders, there may be no supervisors. Taking into consideration the Article 69, we understand that if a limited liability company meets the conditions of being "small in scale or with a small number of shareholders", it does not need to set up a board of supervisors or an audit committee with the unanimous consent of all shareholders. Whether law enforcement agencies will adopt the same understanding still needs to be observed in the practice of the relevant market supervision departments in the company registration and filing process after the new Company Law takes effect.

Q3: Will the board of supervisors (including supervisors) be maintained?

The board of supervisors has long been designed to have the function of supervising the board of directors and the management team, inspecting the company's finances and preventing directors and executives from making decisions and actions that harm the company's interests. However, since the appointment, removal and funding of supervisors are usually subject to major shareholders (who also appoint most of the directors and senior executives), in practice the supervisory function of the board of supervisors can become a mere formality. For foreign-invested companies, supervisors are often appointed only to meet the registration requirements, but do not assume supervisory functions. In the scenario of establishing a joint venture, arrangements related to supervisors are usually not the priority of negotiations. The provisions related to supervisors in the joint venture contract/shareholders agreement and articles of association often follow the provisions of the Company Law.

We have noted that the new Company Law has no substantial modifications to the powers of the board of supervisors, but the duties and responsibilities of supervisors have been significantly increased (Detailed explanations below). Under this circumstance, for joint ventures, the board of supervisors will be an effective solution for both parties to seek some control of the company and protect their interests. 

In addition, for joint ventures in which a foreign-invested company has Chinese and foreign shareholders, out of considerations of reciprocity, it is often agreed to set up two supervisors, with each shareholder appointing one supervisor. The existing Company Law stipulates that a limited liability company without a board of supervisors can appoint one or two supervisors, but Article 83 of the new Company Law has scrapped the option of two supervisors. We are not sure whether the company registration authority will allow such existing joint ventures to maintain an organizational structure of two supervisors; if such joint ventures are required to adjust according to the new Company Law and both shareholders choose to maintain the board of supervisors, then for joint ventures with equal proportions, both shareholders may set up a board of at least four supervisors, with each party appointing two supervisors, and that will further increase the complexity of the governance structure and staff cost.