Shanghai Municipality, Encouraging the Establishment of Regional   Headquarters by Foreign Multinational Corporations Provisions

（Issued by the Shanghai Municipal People's Government on， and effective as of，7th July 2008.）

　　Article 1　Purpose and Basis

　　These Provisions have been formulated in accordance with relevant laws and regulations and in the light of the actual circumstances of Shanghai Municipality in order to further open up to the outside world， encourage multinational corporations to establish regional headquarters in Shanghai and promote economic development.

　　Article 2　Definitions

　　For the purposes of these Provisions， the term “regional headquarters of a foreign multinational corporation” means a foreign multinational corporation's only head office that， through investment or by authorization， exercises management and service functions for enterprises in a region consisting of more than one country and that is established in Shanghai.

Regional headquarters established by foreign multinational corporations may take such corporate forms as wholly-owned investment companies， wholly-owned management companies, etc which has the qualification of legal person .

Investment Company is referred to as the company which can engage in the direct investment in accordance with Establishment of Companies with an Investment Nature by Foreign Investors Provisions Promulgated by the Ministry of Commerce.

Management Company is referred to as the company established for the purpose of integrating the operation function of management, research, funds management, sales, physical distribution and sup portative services etc.

　　Article 3　Scope of Application

　　These Provisions apply to regional headquarters of foreign multinational corporations （Regional Headquarters） established in Shanghai.

　　Article 4　Administrative Departments

　　The Shanghai Municipal Commission of Foreign Investment is in charge of the recognition of Regional Headquarters and shall coordinate the associated administration and service work of the relevant departments.

　　The departments for the administration of industry and commerce， finance， taxation， foreign affairs， public security，labor security,perssonel, management of entry-exit, foreign exchange management, customs, Entry-Exit Inspection and Quarantine bureau etc.shall also duly carry out the administration and service work associated with Regional Headquarters within their respective spheres of responsibility.

Article 5　Conditions

Wholly-owned investment companies which has been established ever can be directly recognized as the Regional Headquarter.

Wholly-owned management companies which apply to be recognized as Regional Headquarters in Shanghai shall satisfy the following conditions：

　　（1） its parent company has total assets valued at not less than US$400 million；

（2） its parent company has invested in China an aggregate registered capital  amount of not less than US$10 million, and the numbers of enterprises in China and abroad which the headquarter is authored to manage by parent company can not be less than three; Or the numbers of enterprises in China and abroad which the headquarter is authored to manage by parent company can not be less than six.

(3) The registered capital of the management company can not be less than US$ 2 million.

　Article 6　Application Materials

　　To apply to be recognized as a Regional Headquarters， application shall be made to，and the following materials filed with，Shanghai Foreign Investment Commission(“SFIC”)：

　　（1） an application signed by the legal representative of the company；

　　（2） a power of attorney for the basic functions of the Regional Headquarters signed by the legal representative of the parent company；

　　（3）（photocopies of）the approval certificate, business license and Capital Verification Report of the company ；

　　（4） （photocopies of） the approval certificates and business licenses of the enterprises in China invested in by the parent company；

　　（5） a power of attorney for the proposed legal representative of the Regional Headquarters signed by the legal representative of the parent company and the résumé and relevant identification document (submission of photocopy) of the proposed legal representative of the Regional Headquarters； And

　　（6） other materials specified in laws, regulations and rules .

　　The originals of the documents specified in the preceding paragraph shall be submitted unless the submission of photocopies is specified.

　Article 7　examination

　　SFIC shall complete its examination and render its decision on whether to recognize an application within 10 days after the date of receipt of the application and the other materials. If it decides to recognize an application， it shall issue a recognition certificate.

　　Article 8　Operational， Management and Service Activities

　　Regional Headquarters may engage in the operational， management and service activities set forth below in accordance with laws,regulations and rules of Shanghai and Central government ：

　　（1） making investment and operational decisions；

（2） capital operations and financial management；

　　（3） technical support and research and development；

（4） domestic distribution, import and export;

(5)   Physical distribution operation of goods sub-distribution, etc.

（6） carry on the co-shared service of the intra-family of the company and outsourcing service of the external companies;

（7） employee’s training and management.

　If the regional headquarter need to establish the branches in Shanghai , the relevant departments of the government shall provide the facilities for the approval and registration.

Article 9　subsidies and rewards.

　　If the newly registered investment companies and management companies are recognized the Regional Headquarters, they can obtain the subsidies for the opening and tenement.

If the Regional Headquarter has the comprehensive operation functions of operation management, assets management, research, sales, logistics and supportive services, etc., and has prominent contribution to the economical development and gained good benefits, the Regional Headquarter can obtain the reward of the local government.

The higher management such as the legal representative of the Regional Headquarter can obtain the rewards of the local government in accordance with the relevant regulations.

The specific measures for the implementation for the subsidies and rewards shall be promulgated by relevant governmental departments.

Article 10　Fund Management

　　Regional Headquarters may establish centralized internal fund management systems to centrally manage their own funds. If foreign exchange capital operations are involved， such operations shall be carried out in accordance with relevant exchange control provisions. Regional Headquarters that meet the requirements may participate in the businesses of the central management of the foreign exchange capital of the multinational enterprise, external loan and other trial businesses.

The investment company may establish financial companies to provide the central fund management services for the internal invested companies in accordance with the “Administration of the Finance Companies of Enterprises Groups Procedures”.

　Article 11　Simplification of Entry and Exit Procedures

　　Personnel with Chinese nationality of Regional Headquarters will be eligible for simplified exit procedures when required to travel to Hong Kong， Macao， Taiwan or abroad for business purposes.

　　Foreign personnel of Regional Headquarters who need to frequently enter China on a temporary basis may apply for one year to five year multiple entry visitor visas that permit stays of not more than one year per visit. Foreign personnel who come to Shanghai on a temporary basis shall apply for entry visas at Chinese embassies or consulates； Those who need to travel urgently may apply to the public security department for visas at the port of entry in accordance with relevant State provisions.

Foreign personnel of Regional Headquarters who need to reside long term in Shanghai may apply for three year to five year foreigner's residence permits

The higher management such as legal representative of the Regional Headquarter may be given priority to be recommended to apply for the “permanent residence permit” in accordance with the “Measures for the Administration of Examination and Approval of Foreigners' Permanent Residence in China”.

　　Article 12　 Simplification of Employment Permit Procedures

　　Any foreigners of Regional Headquarter who need to work in Shanghai may apply to the labor security departments of Shanghai for the “Employment Permit Certificate “and “Employment Certificate”.

Article 13　Talents Introduction

The excellent internal talents who are necessarily introduced by Regional Headquarter and its research centers may be given the priority to apply for Shanghai HUKOU.

Article 14　Clearances Facilities 

The customs and Entry-Exit Inspection and Quarantine bureau shall facility the clearance for the import and export of goods of Regional Headquarters and its research centers which meet the requirements

The facilities of Supervision measures given by the departments of customs, foreign exchange, Entry-Exit Inspection and Quarantine bureau, etc.shall be provided for the   Regional Headquarters and its research centers which establish the duty-free logistics center and sub-distribution center and integrate the logistics.

　　Article 15　Application by Reference

　　The establishment of Regional Headquarters in Shanghai by multinational corporations from Hong Kong， Macao and Taiwan shall be handled with reference to these Provisions.

　　Article 16 Dates of Implementation

　　These Provisions shall be implemented as of the date of issue

“Shanghai Municipality, Encouraging the Establishment of Regional Headquarters by Foreign Multinational Corporations Tentative Provisions” issued by the Shanghai Municipal People's Government as of，20 July 2002 shall be repealed as of the date of issue.