Publication
Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Global | Publication | August 2019
Banking, being a part of financial service industry, has now been fully opened to foreign investment. There is no foreign shareholding restriction on the banking sector. However, wholly foreign-owned banks, joint venture banks (the WFOE/JV Bank) and branches of foreign banks (collectively the FIE Bank(s)) are still subject to separate regulations. Only the banks with foreign shareholdings acquired through acquisition or share participation are regulated in the same way as domestic banks.
The table below lists the main requirements for FIE Banks, which may not apply to domestic banks. You will notice some inconsistency between the different regulations. The application of certain requirements can vary depending on the circumstances. Please contact us should be there anything you wish to discuss.
Negative Lists1 | FIE Banks Licensing Measures (2018 Edition)2 | FIE Banks Regulations (2018 Draft Amendments)3 | |
---|---|---|---|
Is there any foreign shareholding restriction? | No | No | No |
Who can be a foreign shareholder of a FIE Bank? | N/A |
Financial institution, but the only or controlling foreign shareholder must be a commercial bank whose:
|
Same as required under the FIE Banks Licensing Measures, but no reference to the reduced threshold for HK and Macau bank shareholders |
Is a foreign bank allowed to set up a branch and a subsidiary bank at the same time? | N/A | N/A | Yes, but branches can only conduct wholesale business (for both RMB and foreign currency) |
What is the minimum capital requirement for a FIE Bank? | N/A |
For a WFOE/JV Bank: N/A For a branch: RMB200 million or forex equivalent allocated unconditionally from parent bank. |
For a WFOE/JV Bank: RMB1 billion or forex equivalent For a branch:
|
Does a FIE Bank need to wait a year before applying for RMB licence? | N/A | Yes | No, RMB licence and business opening approval can be applied at the same time. |
Guo Fa [2017] No. 574 | Shanghai FTZ Financial Service Industry Guidance (2017 Edition)5 | Shanghai FEI Banks Service Guideline (2019 Edition)6 | |
---|---|---|---|
Is there any foreign shareholding restriction? | No | No | No |
Who can be a foreign shareholder of a FIE Bank? | N/A | The only or controlling foreign shareholder of a WFOE/JV Bank and branch’s parent bank must meet certain assets thresholds. | Same as required under the FIE Banks Licensing Measures |
Is a foreign bank allowed to set up a branch and a subsidiary bank at the same time? | N/A | N/A | N/A |
What is the minimum capital requirement for a FIE Bank? | N/A | For a WFOE/JV Bank: N/A For a branch, operational fund allocated from parent bank must meet corresponding requirement. | Same as required under the FIE Banks Licensing Measures |
Does a FIE Bank need to wait a year before applying for RMB licence? | 1-year waiting period requirement has been “temporarily suspended” from May 5, 2018 for FIE Banks located in a Free Trade Zone. | N/A | Yes |
Footnotes
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Publication
On February 2, 2024, the Belgian Presidency of the Council of the European Union confirmed that the Committee of Permanent Representatives had signed the Artificial Intelligence (AI) Regulation, referred to as the AI Act. Approval by the EU Parliament followed on 13 March 2024, and the AI Act is likely to appear in the EU’s Official Journal around May 2024. The AI Act aims to establish a stringent legal framework governing the development, marketing, and utilisation of artificial intelligence within the region, thereby marking a significant advancement in the regulation of this burgeoning domain.
Publication
The EU’s Artificial Intelligence Regulation, commonly referred to as the AI Act, is expected to come into force during the summer of 2024 (the AI Act). The AI Act will be the first comprehensive legal framework for the use and development of artificial intelligence (AI), and is intended to ensure that AI systems developed and used in the EU are safe, transparent, traceable, non-discriminatory and environmentally friendly.
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