Issue 44

Shanghai Weekly Bulletin

No. 2, May 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 Extends Visa-free Policy for France and Other 11 Countries 

【Keywords: France; Visa-fee】

To promote exchanges between Chinese and foreign nationals, China has decided to extend the visa-free policy for France, Germany, Italy, the Netherlands, Spain, Malaysia, Switzerland, Ireland, Hungary, Austria, Belgium, and Luxembourg until December 31, 2025.

Source: Consular Express

 

2. China Issues Document to Tackle Unfair Competition in the Internet Sector

【Keyword: Internet; Anti-unfair Competition】

The State Administration for Market Regulation (SAMR) released on May 11, 2024 the Interim Provisions on Tackling Unfair Competition in the Internet Sector. Consisting of 43 articles in five chapters, the document clarifies various forms of unfair competition behaviors in the Internet sector. It will take effect on September 1, 2024.

Source: SAMR

 

3. China Unveils Measures to Promote Regulated and Healthy Development of the Tendering and Bidding Market

【Keyword: Tendering and Bidding】

The State Council released on May 2, 2024 the Guidelines on Innovating and Improving Systems and Mechanisms to Promote Regulated and Healthy Development of the Tendering and Bidding Market. The document outlines 20 supporting measures in eight aspects, including improving systems and rules, seeing tenderees fulfill the main responsibilities, refining the bidding evaluation mechanisms and the criteria for winning bids, promoting digital and intelligent transformation and upgrading, and enhancing synergized supervision and administration.  

Source: Website of the Chinese Government 

 

【Shanghai】 

1. Shanghai Revises Implementation Measures on Single-purpose Prepaid Cards 

【Keyword: Prepaid Cards】

Shanghai Municipal People's Government recently issued the revised Implementation Measures of Shanghai on Single-purpose Prepaid Cards, which took effect on May 1, 2024 and will remain valid until April 30, 2029. The document consists of 25 articles in four chapters, including general provisions, information management, management of the balance of funds received in advance, as well as supervision and administration.

Source: Shanghai Municipal People's Government

 

2. Shanghai Releases Action Plan to Improve Business Environment

【Keyword: Business Environment】

Shanghai Municipal Human Resources and Social Security Bureau recently issued the Action Plan for Benchmarking Reform Goals and Improving Business Environment. The plan outlines work priorities in five areas, including deepening the comprehensive reform, redoubling efforts to drive high-quality and full employment, optimizing services to benefit enterprises and the people, improving labor governance, and strengthening institutional guarantees for reform and innovation.

Source: Shanghai Municipal Human Resources and Social Security Bureau

 

 

One Week in Shanghai

【Competitive Event】

1. 2024 Shanghai Silk Road E-commerce Carnival Kicks off

【Keyword: Shanghai Silk Road E-commerce Carnival】

The 2024 Shanghai Silk Road E-commerce Carnival kicked off on May 7 and will last until May 17. Featuring over 50 online and offline consumer promotion activities, the event has attracted the participation of some major e-commerce platforms, import & export enterprises, livestreaming studios, shopping malls, Silk Road e-commerce national pavilions, and trade promotion agencies from countries along the Belt and Road Initiative. 

Source: Shanghai Municipal Commission of Commerce

 

【Forum & Exhibition】 

1. First Batch of Supporting Activities During CSITF Announced 

【Keywords: CSITF; Supporting Activities】

The 10th China (Shanghai) International Technology Fair will adopt a "1+3+X" model for event organization. During the exhibition, organizers plan to hold about 30 activities such as theme day events, special conferences, business matching, and research paper releases. The first batch of 10 supporting activities have been announced and will be held in mid-June.

Source: CSITF Promotion Center

 

2. 2024 International Science, Technology and Innovation Think Tank Forum to Open Soon

【Keyword: Pujiang Innovation Forum】

Pujiang Innovation Forum - 2024 International Science, Technology and Innovation Think Tank Forum will be held on May 30-31 at the Hengshan Garden Hotel in Shanghai. With the theme "Science of Science in the New Era", the forum will invite think tank experts, scientists, and policymakers to discuss topics such as how to understand scientific laws, serve scientific activities, and promote scientific development.

Source: Shanghai Municipal Commission of Science and Technology

 

【Culture & Art】 

1. Wallace Chan: Half a Century to Debut on July 3

【Keyword: Wallace Chan】

Wallace Chan: Half a Century, the inaugural showcase of the Shanghai Museum’s Drawing Inspiration from the Past: Masters of Modern and Contemporary Art series, will be held at the Bright Dairy & Food Exhibition Gallery, Shanghai Museum East, from July 3 to October 7, 2024. The exhibition is divided into three distinct sections, namely "Sculpture and Carrier", "Chaos and Magic" and "Wisdom and Power". Over 200 masterpieces will be displayed to create an aesthetic feast for visitors.

Source: Shanghai Tourism

 

2. Dance Drama "Thunderstorm" to Be Premiered in July 

【Keyword: Thunderstorm】

The dance drama "Thunderstorm", created by Shanghai Oriental Art Center, will have its world premiere on July 25. "Thunderstorm", which was written in 1934, is a well-known literary classic in China. It will be the first time that the story will be completely put on the stage in the form of dance in a 90-minute performance, and all actors and actresses will use body expressions to tell the story of a thunderstorm night.

Source: Shanghai Oriental Art Center

 

3. Attractions in Shanghai to Offer Half-priced Tickets on China Tourism Day

【Keyword: China Tourism Day】

The 14th China Tourism Day will fall on May 19. On the day, 62 tourist destinations in Shanghai, including Shanghai Oriental Pearl TV Tower, Shanghai Wild Animal Park, Shanghai Haichang Ocean Park, Shanghai Happy Valley and others, will offer half-priced tickets.

Source: Shanghai Tourism

 

【Corporate Activities】

1. Asahi Kasei Shanghai Technology Center to Be Settled in Waigaoqiao

【Keyword: Asahi Kasei】

Asahi Kasei Plastics (Shanghai) Co., Ltd. and Shanghai Waigaoqiao Free Trade Zone New Development Co., Ltd., a subsidiary of Waigaoqiao Group, have signed a contract. Asahi Kasei Shanghai Technology Center will be settled in the Waigaoqiao Xin Park. With a total building area of 3,600 square meters, the Center will be mainly engaged in benchmarking business in the field of materials, from product design to product performance evaluation and testing.

Source: Pudong Release

 

Q&A

Q1: Officials of the National Financial Regulatory Administration (NFRA) answered reporters' questions on the Guidelines for Banks and Insurers to Conduct Effective Work in the Areas of Technology Finance, Green Finance, Inclusive Finance, Pension Finance and Digital Finance - In the next stage, what are the NFRA's work priorities?

A1: The first is to strengthen regulatory leadership. The NFRA will continue to improve the policy system, formulate implementation plans, and establish a sound statistical system. Regulatory departments at all levels must strengthen supervision and guidance, carry out timely evaluation and inspection, and correct problems such as insufficient and incorrect policy implementation. The NFRA will oversee and assess the job performance of regulatory bureaus, banking and insurance institutions, and push for tangible outcomes on the work.

The second is to promote the improvement of external environment. All regulatory bureaus must strengthen cooperation with local governments, improve risk-sharing mechanism, and unblock collateral disposal channels. We would strive to improve the credit evaluation system for enterprises and individuals, support local governments in establishing and improving credit service platforms, effectively integrate information in various fields and share it with banking and insurance institutions.

The third is to strictly prevent unlawful financial activities. We would crack down on illegal activities and financial crimes carried out in the name of the "Five Big Chapters". We would strengthen monitoring and early warning, and improve the ability of early prevention, early disposal, and targeted treatment. We encourage members of the public to report clues and develop a sound situation of mass prevention and treatment.

The fourth is to encourage the exchange of good experiences and mutual learning. We support eligible regions to carry out targeted pilot demonstrations of the "Five Big Chapters" based on their economic and financial development needs. Regulatory departments should strengthen investigations and research, organize communication and exchanges between banking and insurance institutions, and summarize good practices, opinions and suggestions. We would step up publicity of good experience and spread successful practices that can be replicated elsewhere.

Source: National Financial Regulatory Administration

 

 

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]

Q12: Changes in shareholders' capital contribution obligations (II)

If shareholders are unable to complete the payment within the time limit stipulated in the New Company Law, Articles 49-54 also stipulate a series of new provisions on the consequences of capital contribution defaults, which will become a powerful tool to consolidate shareholders' capital contribution obligations:

1) Shareholder responsibilities. New shareholders who fail to pay their capital contributions in full on time shall be liable for the losses caused to the company. Article 28 of the current Company Law stipulates that they shall be liable for breach of contract "to shareholders who have paid their capital contributions in full and on time". However, in the case of a one-person limited company, this provision has no practical use. The provisions of the New Company Law will have stronger deterrent effect. In addition, other shareholders at the time of establishment and shareholders who have not paid in full capital contributions shall bear joint and several liability within the scope of insufficient capital contribution. How to set up an effective mechanism in the joint venture contract/shareholders agreement and articles of association to ensure that all shareholders complete their capital contributions simultaneously and avert a phenomenon that shareholders who have contributed capital according to the contract are implicated by shareholders who have breached the contract, which is an issue that transaction lawyers need to address;

2) Responsibilities of directors, supervisors and senior executives. A new call system has been introduced. Directors have the obligation to verify capital contributions and issue call notices by the company. If losses are caused by failure to perform these obligations in a timely manner, the responsible director shall be liable for compensation. In the event that a shareholder withdraws capital, responsible directors, supervisors and senior executives should also bear joint liability for compensation;

3) A new "shareholders' loss of rights" system is introduced. If a shareholder fails to make actual payment after the expiration of the grace period of the call letter, the equity of the unpaid capital contribution shall be transferred in accordance with the law, or the registered capital shall be reduced accordingly and the equity shall be canceled;

4) Provisions for accelerated expiration of capital contributions are added. "If the company cannot pay off its due debts, the company or its creditors have the right to require shareholders who have subscribed for capital contributions but have not made payments to pay their capital contributions in advance." The current law only provides for the accelerated maturity system of shareholder capital contributions in bankruptcy, and the New Company Law supplements the legislative gaps in non-bankruptcy situations.

How to impose the consequences of capital contribution default may require a stage of practical exploration. However, from the perspective of foreign-funded companies, they have to be more cautious when setting the amount of registered capital. On one hand, they should ensure that the company has sufficient reserve capital to meet the company's continued operational needs; on the other hand, the amount of registered capital should not be too high to avoid the trouble of subsequent capital reductions. From the perspective of M&A transactions, foreign-funded companies should pay special attention to the paid-in status of the registered capital of the takeover target. They are not limited to checking whether the paid-in complies with the provisions of the articles of association, but should try their best to require the counterparty to complete the unpaid portion of the registered capital before completing the transaction.