Shenzhen Releases Revised QFLP Measures
The revised Pilot Measures for Foreign Invested Equity Investment Enterprises in Shenzhen (hereinafter referred to as QFLP Measures) was released by Shenzhen Financial Services Office on 19 January 2021, which will come into force on 8 February 2021 and be valid for three years.
Compared with the 2017 version, the main changes of the newly revised version are as follows:
- The requirements on the minimum registered capital, the proportion of initial investment and the investment period have been deleted.
- The qualification requirements for domestic and overseas shareholders or partners have been deleted.
- The qualification requirements for senior management have been removed.
- The name of the enterprises shall be marked with the word "private placement" and meet the naming requirements of the relevant regulatory authorities.
- Foreign invested equity investment enterprises are allowed to invest in domestic private equity funds and venture capital funds.
- Foreign invested equity investment enterprises are allowed to invest in non-publicly issued and traded common stocks of listed companies, including directional issuance of new shares, block trading, agreement transfer, and so on.
- Foreign invested equity investment enterprises are allowed to participate in the rights issue as the original shareholders of listed companies.
- The restrictive provision on the capital contribution cap of 50% when the general partner and the limited partner of a foreign invested equity investment enterprise are under the same controller has been deleted.
- Make it clear that the establishment and registration of foreign invested equity investment management enterprises and foreign invested equity investment enterprises shall comply with the Foreign Investment Law of the PRC and the Interim Measures for the Supervision and Administration of Private Investment Funds.
Based on the publicly released provisions, the revised QFLP Measures lower the threshold for establishing foreign invested equity investment enterprises in Shenzhen. However, it is not clear that whether Shenzhen Financial Services Office will greatly relax the approval requirements on the establishment of foreign invested equity investment enterprises in the following practical stages. Further clarification and confirmation are needed when the new measures take effect.
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