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2009-10-27 11:37:45

(Order No. 52 of China Securities Regulatory Commission on December 28, 2007)

I. Article 2 shall be amended as: “The “foreign-shared securities companies” as mentioned in these Rules refers to:

1. The securities companies that are jointly contributed and established by the overseas and domestic shareholders; and

2. The securities companies that are changed from domestic-funded securities companies through assignment or purchase of shares of domestic-funded securities companies by overseas shareholders.”

II. Article 4 shall be amended as: “The name, form of organization, registered capital, establishment and duties of the departments of a foreign-shared securities company shall comply with the relevant provisions of the Company Law, the Securities Law and the CSRC.”

III. Article 5 shall be amended as: “A foreign-shared securities company may engage in the following businesses:

1. Underwriting and sponsoring of stocks (including RMB common stocks and foreign shares) and bonds (including government bonds and corporate bonds);

2. Brokerage of foreign shares;

3. Brokerage and proprietary trading of bonds (including government bonds and corporate bonds); and

4. Other businesses approved by the CSRC.”

IV. Item (1) of Article 6 shall be amended as: “The registered capital is in compliance with the provisions of the Securities Law”, Item (3) shall be amended as: “Having no less than 30 employees with practice qualification certificate for securities business according to the provisions of the CSRC, and having necessary professionals for accounting, legal affairs, and computing”, and Item (5) shall be amended as: “Having business premises that meet the requirements and qualified business facilities.”

V. Article 7 shall be amended as: “The overseas shareholders of a foreign-shared securities company shall meet the following conditions:

1. Their home countries or regions have a sound securities legal and regulatory system, and their securities regulatory bodies have signed memorandum of understanding on securities regulation cooperation and kept an effective cooperative relation with the CSRC or the institutions accepted by the CSRC;

2. Lawfully formed in their home countries or regions, at least one of them is such an institution that has the lawful financial business license; and not allowed to transfer their equities in the foreign-shared securities company within three years after acquiring these equities;

3. Having more than five years of continuous operation record, and have not been imposed major punishment by the securities regulatory body, the administrative or justice departments of their respective home countries or regions in the last three years;

4. All of their financial indicators in the last three years are in compliance with the provisions of relevant laws and the rules of their securities regulatory bodies of their respective home countries or regions ;

5. Having a sound internal control system;

6. Having a good reputation and performance result; and

7. Other prudential conditions as  stipulated by the CSRC.”

VI. Paragraph 2 of Article 8 shall be amended as: “, At least one of the shareholders of a foreign-shared securities company shall be a domestic-funded securities company, except that the foreign-shared securities company is changed from a domestic-funded securities company.”

VII. Paragraph 1 of Article 10 shall be amended as: “Overseas shareholding ratio (including both directly holding and indirectly controlling) in a foreign-shared securities company shall not exceed one-third.”

VIII. Article 11 shall be amended as: “Directors, supervisors and senior managers of a foreign-shared securities company shall meet the post-holding qualification requirements as provided for by the CSRC.”

IX. Item (3) of Article 12 shall be amended as: “Explanatory documents on the competence of nominated candidate for principal senior management by the foreign-shared securities company”, Item (4) shall be amended as: “Copies of business license or registration certificates, and securities business license of the shareholders”, Item (5) shall be amended as: “Audited financial statements of the foreign and domestic shareholders for the three years prior to the application”, Item (6) shall be amended as: “Explanatory letters issued by the securities regulatory bodies or other institutions accepted by the CSRC of overseas investors’ home countries or regions on whether these shareholders have met the conditions as provided for in Items (2) up to (4) of Article 7 of the Rules”, Article (7) shall be amended as: “Legal opinions issued by domestic law firms”, and an new item shall be added after Item (7) of Article 12 as Item (8): “Other documents as required by the CSRC.”

X. Article 13 and Article 20 shall be amended as: “The CSRC shall, according to the relevant laws, administrative regulations and these Rules, examine the application documents as provided for in the preceding article, make the decision within the stipulated time limit on whether to approve the application, and inform the applicant in written form. For those not approved, reasons shall be provided in written form.”

XI. Article 14 shall be amended as: “The shareholders shall, within six months from the day of approval issued by the CSRC, contribute the capital in full amount or provide the cooperative conditions agreed upon, elect directors and supervisors, appoint senior management, and apply to the administration for industry and commerce for registration of establishment and get the business license.”

XII. Item (4) of Article 15 shall be amended as: “Name list, copies of post-holding qualification certificates and practice qualification certificates for securities business of directors, supervisors, senior management and principal business staff”, Item (6) shall be amended as: “Explanatory documents about the business premises and business facilities”, and an item shall be added after Item (6) of Article 15 as Item (7): “Other documents as required by the CSRC.”

XIII. Item (5) of Article 19 shall be amended as: “Name list and resumes of the persons nominated by the overseas investors to take position in the securities company, and their corresponding practice qualification certificates and post-holding qualification certificates”, Item (6) shall be amended as: “Copies of business licenses or registration certificates and securities business license of the overseas shareholders”, Item (7) shall be amended as: “Audited financial statements of the overseas shareholders for the three years prior to the application”, Item (8) shall be amended as: “Explanatory letters issued by the securities regulatory bodies or other institutions accepted by the CSRC of the home countries or regions of the overseas shareholders on whether these shareholders have met the conditions as provided for in Items (2) up to (4) of Article 7 of the Rules”, Item (10) shall be amended as: “Legal opinions issued by domestic law firms”, and an new item shall be added after Item (10) of Article 15 as Item (11): “Other documents as required by the CSRC.”

XIV. Item (6) of Article 22 shall be amended as: “Legal opinions issued by domestic law firm and verification report issued by accounting firm with securities business license on the aforesaid business settlements ”, and a new item shall be added after Item (6) of Article 22 as Item (7): “Other documents as required by the CSRC.”

XV. An new article shall be added after Article 24 as Article 25: “Overseas investors may hold shares of a listed domestic-funded securities company, with its approved business scope unchanged, through securities trading at the stock exchanges, or through establishing a strategically cooperative relation with the listed domestic-funded securities company upon approval from the CSRC. Where the controlling shareholder is a domestic one, the listed domestic-funded securities company shall not be subject to the provision that the shareholding ratio of at least one domestic shareholder is no less than one-third.

Where an overseas investor holds through securities trading at the stock exchanges or jointly holds with others through agreements or any other arrangements more than 5 percent of the shares of a listed domestic-funded securities company the investor shall be subject to the conditions as provided for in Article 7 of the Rules, and abide by Article 129 of the Securities Law.

The shareholding ratio of a single overseas investor for a listed domestic-funded securities company (including both directly holding and indirectly controlling) shall not exceed 20 percent; and the shareholding ratio of all overseas investors for a listed domestic-funded securities company (including both directly holding and indirectly controlling) shall not exceed 25 percent.”

XVI. The original Article 25 shall be changed as Article 26, and Paragraph 1 shall be amended as: “The application documents submitted to the CSRC and the materials reported to the CSRC according to the Rules shall be in Chinese. Where the documents and materials issued by overseas shareholders and their home countries or regions securities regulatory institutions or other overseas institutions recognized by the CSRC are in foreign languages, the Chinese versions that are consistent with the original documents shall be attached.”

This Decision shall come into force as of January 1, 2008.

The Rules for the Establishment of Foreign-share Securities Companies shall be correspondingly amended according to this Decision, and be re-promulgated.

(This English version by China Securities Investor Protection Fund Co., Ltd. is for your reference only. In case any discrepancy exists between the Chinese and English context, the Chinese version shall prevail.)

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