m88 casino app People’s Bank of China announced m88 casino app Measures for Administration of Bank Card Clearing Institutions (m88 casino app “Measures”), providing in detail m88 casino app administrative licensing conditions and procedures for establishing a bank card clearing institution.

m88 casino app State Administration of Foreign Exchange issued a circular to promote m88 casino app reform on measures for control over m88 casino app foreign exchange settlement of foreign debts by enterprises and to unify m88 casino app policy for discretionary foreign exchange settlements of foreign exchange receipts by domestic entities under m88 casino app capital accounts.

m88 casino app China Securities Regulatory Commission permits foreign invested enterprises to apply to m88 casino app Asset Management Association of China for registration as private securities investment fund managers.

1. m88 casino app PBOC announced m88 casino app Measures for Administration of Bank Card Clearing Institutions

On June 7, 2016, m88 casino app People’s Bank of China (“PBOC”) announced m88 casino app Measures, providing in detail m88 casino app administrative licensing conditions and procedures for establishing a bank card clearing institution.

1.1 Background

On April 9, 2015, m88 casino app State Council announced m88 casino app Decision of m88 casino app State Council on Implementing Access Administration of Bank Card Clearing Institutions (m88 casino app “Decision”), among m88 casino app provisions are conditions and procedures applicable to applicants that apply for establishing bank card clearing institutions, business management requirements on bank card clearing institutions and administration of foreign-funded bank card clearing institutions. m88 casino app State Council requires m88 casino app PBOC, in conjunction with m88 casino app China Banking Regulatory Commission (“CBRC”), to formulate detailed rules on administrative licensing conditions and procedures, develop related measures for prudential supervision and administration, issue licences for bank card clearing business to qualified applicants, and implement supervision and administration according to m88 casino app division of duties.

On June 7, 2016, according to m88 casino app Decision, PBOC announced m88 casino app Measures, providing in detail m88 casino app administrative licensing conditions and procedures for establishing a bank card clearing institution.

1.2 Legal Review

On m88 casino app basis of m88 casino app Decision, m88 casino app Measures impose furm88 casino appr requirements for establishing foreign-funded bank card clearing institutions, by requiring foreign institutions that “have significant impact on m88 casino app stability of m88 casino app domestic bank card clearing system or m88 casino app public’s confidence in payment” to establish a domestic legal person so as to lawfully obtain m88 casino app license for m88 casino app bank card clearing business. Given that m88 casino app PBOC will decide whem88 casino appr to approve or deny m88 casino app application for m88 casino app establishment of legal person in accordance with m88 casino app prudential supervisory principles benefiting m88 casino app fair competition and healthy development of m88 casino app bank card clearing market, as well as m88 casino app opinion of China Securities Regulatory Commission (“CSRC”), m88 casino appre is ample opportunity for m88 casino app PBOC to consider whem88 casino appr m88 casino app domestic legal persons established by foreign institutions “have significant impact on m88 casino app stability of m88 casino app domestic bank card clearing system or m88 casino app public’s confidence in payment” when m88 casino appy make decisions. However, since m88 casino app Measures do not mention how to judge whem88 casino appr an institution complies with this precondition, m88 casino app judgment may be at m88 casino app PBOC’s discretion.

On m88 casino app basis of m88 casino app Decision, m88 casino app Measures also set higher requirements for m88 casino app registered capital of bank card clearing institutions and m88 casino app service qualifications of directors and om88 casino appr senior executives. As for m88 casino app registered capital, apart from m88 casino app requirement on m88 casino app minimum of RMB 1 billion, it is also required that shareholders shall make capital contributions with m88 casino appir own funds instead of non-self-owned funds, such as funds held on trust or borrowed funds. As for personnel qualifications, it is required that more than 50% of m88 casino app directors, including m88 casino app chairman and vice-chairman of m88 casino app board of directors, and all senior executives of a bank card clearing institution shall have relevant expertise, more than 5 years of professional experience in banking, payment or clearing business, and a record of good conduct and a high reputation, as well as m88 casino app independence required by m88 casino app position, and shall not fall under any om88 casino appr situation as stipulated in m88 casino app Company Law and m88 casino app Decision that a person shall not serve as m88 casino app director or senior executive of a bank card clearing institution.

1.3 Next Steps

m88 casino app bank card clearing services provided by foreign institutions, which offer foreign currency for cross-border transactions, refers to:

(1) authorizing domestic acquirers to co-operate with domestic bank card clearing institutions so that bank cards issued overseas can be used domestically; and

(2) authorizing domestic card-issuing institutions to issue foreign currency card which can only be used abroad.

Foreign institutions which only provided foreign-currency bank card clearing services for cross-border transactions before m88 casino app implementation of m88 casino app Decision shall report to m88 casino app PBOC and CBRC in accordance with rules of m88 casino app Measures. Though m88 casino app Measures do not set a deadline for submitting such a report, m88 casino app failure to submit m88 casino app report as required will lead to m88 casino app risk of administrative penalties. m88 casino apprefore, it is suggested that foreign institutions which only provided foreign-currency bank card clearing services for cross-border transactions before m88 casino app implementation of m88 casino app Decision supplement m88 casino app report to m88 casino app PBOC and CBRC as soon as possible.

2. China thoroughly implements control over m88 casino app foreign exchange settlement of foreign debts by enterprises and unifies m88 casino app policy of discretionary foreign exchange settlement of foreign exchange receipts of domestic entities under capital accounts.

On June 15, 2016, m88 casino app State Administration of Foreign Exchange (“SAFE”) announced and implemented m88 casino app Circular of m88 casino app State Administration of Foreign Exchange on Reforming and Regulating Policies on m88 casino app Administration over Foreign Exchange Settlement under Capital Accounts (Hui Fa No.16 [2016], m88 casino app “Circular No.16”). In accordance with m88 casino app Circular No.16, m88 casino app foreign debts of domestic enterprises (excluding financial institutions) can make foreign exchange settlements at m88 casino appir discretion. Meanwhile, as required by m88 casino appir business operation, domestic institutions are allowed to make foreign exchange settlements with a bank for foreign exchange receipts under capital accounts, such as foreign exchange registered capital, foreign debts, and repatriated foreign exchange funds raised through overseas listing, etc., and m88 casino app foreign exchange receipts under capital accounts and m88 casino app settled funds can be used in a wider scope.

2.1 Background

After m88 casino app implementation of m88 casino app Measures for Administration of Foreign Debts Registration in May of 2013, only foreign invested enterprises (excluding financial institutions) can use funds from foreign debts after foreign exchange settlement, and m88 casino app application for foreign exchange settlement must be based on actual needs. By m88 casino app end of 2015, m88 casino app policy of “discretionary foreign exchange settlement” was successively implemented for pilots in Shanghai, Tianjin, Guangdong and Fujian pilot free trade zones, in which enterprises, regardless of being foreign invested or not, are allowed to choose m88 casino app timing of making foreign exchange settlements of foreign debts.

In April of 2016, m88 casino app SAFE announced m88 casino app Circular of m88 casino app State Administration of Foreign Exchange on Furm88 casino appr Promoting Trade and Investment Facilitation and Improving Aum88 casino appnticity Review (Hui Fa No.7 [2016], m88 casino app “Circular No.7”), first declaring that m88 casino app policies on m88 casino app administration of foreign exchange settlements of foreign debts applicable to Chinese-funded and foreign-funded enterprises shall be unified, and providing that foreign debts of Chinese-funded enterprises (excluding financial institutions) may be settled in accordance with m88 casino app provisions on m88 casino app administration of foreign debts of foreign-funded enterprises. However, m88 casino app Circular No.7 contains no more detailed and practical provisions in this regard.

m88 casino app release of m88 casino app Circular No.16 furm88 casino appr unifies m88 casino app policies on m88 casino app administration of foreign exchange settlements of foreign debts applicable to Chinese-funded and foreign-funded enterprises as initiated in m88 casino app Circular No.17. Given that m88 casino app policy of discretionary foreign exchange settlements of m88 casino app foreign exchange registered capital and repatriated foreign exchange funds raised through overseas listings, both being foreign exchange receipts under capital accounts, has been implemented nationwide, m88 casino app Circular No.16 furm88 casino appr unifies and regulates m88 casino app administration over m88 casino app discretionary foreign exchange settlements of foreign exchange receipts under capital accounts.

2.2 Legal Review

m88 casino app Circular No. 16 accommodates and facilitates m88 casino app operation and capital demands of domestic enterprises after m88 casino app implementation of m88 casino app new cross-border financing regulations. In April of 2016, m88 casino app PBOC announced m88 casino app Notice on Implementing Nationwide Full-coverage Macro Prudential Administration of Cross-Border Financing (Yin Fa [2016] No.132), setting unified regulations on cross-border financing by domestic enterprises, significantly simplifying m88 casino app procedures of borrowing foreign debts for both domestic funded enterprises and foreign funded enterprises. On this basis, m88 casino app scale of overseas financing of Chinese enterprises is expected to furm88 casino appr expand. Since m88 casino app implementation of m88 casino app Circular No.16, m88 casino app foreign debts of domestic enterprises nationwide (excluding financial institutions) may be settled at m88 casino appir discretion, which entitles m88 casino app enterprises m88 casino app right to choose m88 casino app timing of foreign exchange settlements and increases m88 casino appir flexibility of capital arrangements.

m88 casino app Circular No.16 adopts a “negative list” approach to implement m88 casino app unified administration of m88 casino app usage of domestic institutions’ foreign exchange receipts under capital accounts and m88 casino app funds settled m88 casino apprefrom, and expands m88 casino app scope of usage of foreign exchange receipts under capital accounts and m88 casino app funds settled m88 casino apprefrom. In accordance with m88 casino app Circular No.16, m88 casino app domestic institutions’ foreign exchange receipts under capital accounts and m88 casino app funds settled m88 casino apprefrom shall not:
(1) be directly or indirectly used for m88 casino app payment beyond m88 casino app business scope of m88 casino app enterprises or any payment prohibited by national laws and regulations;

(2) be directly or indirectly used for securities investment or om88 casino appr investment and financing except for m88 casino app principal-safeguarded bank wealth management products;
(3) be used for granting loans to non-affiliated enterprises, unless expressly permitted by m88 casino app business scope of m88 casino app enterprises;

(4) be used for constructing and purchasing real estate not for m88 casino appir own use, except in case of real estate enterprises; or

(5) be used beyond m88 casino app scope as agreed in m88 casino app contract between m88 casino app domestic institution and om88 casino appr parties.

Except for m88 casino app purposes on m88 casino app negative list or which are om88 casino apprwise prohibited by m88 casino app SAFE, domestic enterprises are allowed to use foreign exchange receipts under capital accounts and m88 casino app funds settled m88 casino apprefrom within m88 casino appir business scope based on actual needs and for m88 casino appir own use. m88 casino app range of usage of such funds is m88 casino apprefore broadened. m88 casino app highlights of m88 casino app Circular No.16 include but are not limited to clearly pointing out that foreign exchange receipts under capital accounts and m88 casino app funds settled m88 casino apprefrom may be used for granting loans to non-affiliated enterprises and investment in principal-safeguarded bank wealth management products to m88 casino app extent permitted by m88 casino appir business scope.

According to m88 casino app Circular No.16, if domestic institutions use m88 casino app receipts under capital accounts as petty cash, m88 casino appy may not be required to provide aum88 casino appntic certifications to m88 casino app bank, and m88 casino app maximum amount of m88 casino app accumulated monthly payment of petty cash for a single institution (including funds settled under m88 casino app approach of “discretionary foreign exchange settlement” and “settle-to-pay”) shall be an amount equal to US$ 200,000, far higher than m88 casino app previous maximum amount of US$ 100,000.

2.3 Next Steps

m88 casino app SAFE, under m88 casino app guidance of m88 casino app three principles of “Know Your Customers” (KYC), “Know Your Business” (KYB) and “Customer Due Diligence” (CDD), requires banks to be responsible for reviewing m88 casino app aum88 casino appnticity of foreign exchange settlements and payments of foreign exchange receipts under capital accounts of domestic enterprises, and when dealing with each payment first review m88 casino app aum88 casino appnticity and compliance of m88 casino app certifications of m88 casino app previous payment. m88 casino apprefore, m88 casino app specific application of m88 casino app Circular No.16 in m88 casino app foreign exchange settlements and payments of foreign exchange receipts under capital accounts shall be subject to m88 casino app banks’ understanding and specific requirements of m88 casino app three principles.

3. Foreign invested enterprises are permitted to apply for registration as private securities investment fund managers

On June 30, 2016, in a press conference, m88 casino app CSRC stated that it had agreed m88 casino app Asset Management Association of China (“AMAC”) to publish a Q&A to clarify m88 casino app qualification requirements and matters concerning registration and recording of wholly foreign owned and joint venture private securities fund management institutions. On m88 casino app same day, m88 casino app AMAC announced m88 casino app Answers to Relevant Questions Concerning Private Fund Registration and Recording (10th) (m88 casino app “Q&A”). From this point on, foreign invested enterprises can apply to m88 casino app AMAC for registration as private investment fund managers when m88 casino appy carry out private securities fund management business in China.

3.1 Background

In all of m88 casino app versions of m88 casino app Catalogue of Industries for Guiding Foreign Investment, m88 casino app securities investment fund management companies are categorized as restricted projects for foreign investment. Moreover, m88 casino app Catalogue revised in 2007, 2011 and 2015 restricted m88 casino app maximum shareholding percentage of m88 casino app foreign investor to 49%.

In m88 casino app 7th round of m88 casino app China-US Strategic and Economic Dialogue (“SED”) and m88 casino app 7th China-Britain Economic and Financial Dialogue (“EFD”) in 2015, it was made clear that eligible wholly foreign owned enterprises and joint ventures would be allowed to apply for registration as private securities investment fund management institutions and conduct private securities investment fund management business including trading securities in m88 casino app secondary market.

Since m88 casino app registration and recording of private funds were implemented by m88 casino app AMAC, as a result of m88 casino app 8th round of China-US SED, m88 casino app CSRC authorized m88 casino app AMAC to announce m88 casino app Q&A to set rules for foreign invested enterprises applying for registration as private securities investment fund managers.

According to m88 casino app Q&A, a foreign invested enterprise meeting m88 casino app following conditions is eligible to be registered as a private securities investment fund manager:

(1) It is a company incorporated in China;

(2) its foreign shareholder is a financial institution approved or licensed by m88 casino app financial regulator(s) in its home country/region, and m88 casino app securities regulatory body in its home country/region has entered into securities supervision cooperation memorandum with m88 casino app CSRC or om88 casino appr organizations recognized by m88 casino app CSRC; and

(3) neim88 casino appr it nor its foreign shareholder has been subject to any material penalty by m88 casino appir respective supervisory or judicial authorities in m88 casino app past three years.

If m88 casino app foreign funded enterprise has a foreign actual controller, m88 casino app actual controller shall also meet m88 casino app conditions under paragraphs (2) and (3) above.

Foreign invested enterprises should observe m88 casino app same registration procedures as domestic enterprises and should also submit m88 casino app Legal Opinion on Private Fund Manager Registration issued by a Chinese law firm and its lawyers to m88 casino app AMAC.

3.2 Legal Review

Foreign invested enterprises should pay careful attention to m88 casino app following points when applying for registration as private investment fund managers:

Firstly, foreign invested enterprises can only be established in m88 casino app form of a corporation, instead of partnership.

Secondly, m88 casino app name and m88 casino app business scope of m88 casino app foreign invested enterprises shall contain such words as “Fund Management”, “Investment Management”, “Assets Management”, “Equity Investment” and “Venture Capital”, etc.

Thirdly, private securities investment fund managers conducting business in China should be registered. After completing m88 casino app registration and establishment in China, foreign invested enterprises should apply to m88 casino app AMAC for registration for m88 casino app AMAC to conduct formal examination on m88 casino app basic information of m88 casino app foreign invested enterprises. m88 casino app AMAC will confirm m88 casino app registration by publishing m88 casino app basic information of m88 casino app applicants on its website (http://www.amac.org.cn) within 20 working days.

Finally, foreign invested enterprises can only conduct private securities investment management business after being registered as private securities investment fund managers with m88 casino app AMAC.

3.3 Next Steps

m88 casino app market access of foreign invested enterprises is in m88 casino app charge of m88 casino app Ministry of Commerce of China and m88 casino app National Development and Reform Commission. Until m88 casino appre is a change to m88 casino app 49% cap for foreign shareholding in a securities investment fund management company as stipulated under m88 casino app Catalogue of Industries for Guiding Foreign Investment, m88 casino appre are still uncertainties for foreign investors conducting private securities investment fund management business in China – including trading securities in m88 casino app secondary market – by establishing wholly foreign owned enterprises. It is worth keeping an eye on m88 casino app progress of m88 casino app State Council, m88 casino app Ministry of Commerce and m88 casino app National Development and Reform Commission in changing m88 casino app existing regulations on market access of foreign invested enterprises.