Article 16 The CSRC shall, according to the relevant laws, administrative regulations and these Rules, examine the application documents as provided for in the preceding article, and shall make its decision within 15 workdays from the day on which the application documents meeting the requirements are received. For those meeting the conditions, the License for Securities Business shall be granted; for those not meeting the conditions, the license shall not be granted and reasons shall be explained in written form.
Article 17 A securities company with foreign shareholders that hasn’t obtained the License for Securities Business as granted by the CSRC may not start business or engage in the securities business.
Article 18 Where a domestic-funded securities company applies for changing into a securities company with foreign shareholders, the conditions as provided for in Article 6 of these Rules shall be met.
The foreign shareholders purchasing or holding shares of domestic-funded securities companies shall meet the conditions as provided for in Article 7 of these Rules, and the proportion of the purchased shares or the capital contribution thereof shall meet the provisions of Article 10 of these Rules.
Article 19 A domestic-funded securities company applying for changing itself into a securities company with foreign shareholders shall submit the following documents to the CSRC:
1. Application form signed by the legal representative;
2. Decision of the shareholders’ meeting on changing itself into a foreign-shared securities company;
3. Draft of company’s bylaw;
4. Share transfer or capital contribution agreements (share purchasing agreement);
5. Name list and resumes of the persons appointed by the foreign investors to take position in that securities company, and their corresponding business qualification certificates and position qualification certificates;
6. Copies of business licenses or registration certificates and securities business qualification certificates of the foreign shareholders;
7. Audited financial statements of the foreign shareholders for the three years prior to the application;
8. Explanatory letters issued by the securities regulatory bodies of the home countries or regions of the foreign shareholders or the foreign institutions accepted by the CSRC on whether these shareholders have met the conditions as provided for in Items (2) up to (4) of Article 7 of these Rules;
9. Plans for the business settlements that cannot be conducted by securities company with foreign shareholders according to law;
10. Legal opinions issued by the law firms within the territory of China; and
11. Other documents required by the CSRC.
Article 20 The CSRC shall, according to the relevant laws, administrative regulations and these Rules, examine the application documents proscribed by the preceding article, make the decision to approve or disapprove the application within the stipulated time limit, and notify the applicant in written form. For those not approved, the reasons shall be explained in written form.
Article 21 The securities companies that receive approvals for changes shall, within six months from the day when the CSRC issued the document of approval, handle the matters of shares transfer or capital increase, clean up the business that cannot be operated by securities company with foreign shareholders, and shall apply to the Administration for Industry and Commerce for the registration of business alteration and obtain the new business license by turning in the original one.
Article 22 A securities company that receives approvals for change shall, within 15 workdays from the day of the registration of change, submit the following documents to the CSRC and apply for a new License for Securities Business:
1. Duplicate copies of the business license;
2. The bylaw of the foreign-shared securities company;
3. The original license for securities business and its duplicate copies;
4. Capital verification report issued by the accounting firm resided in the territory of China and qualified for securities-related business;
5. Report on the business settlements that can’t be operated by foreign-shared securities companies according to law;
6. Legal opinions and verification report on the aforesaid business settlements issued by the law firm resided in the territory of China and the accounting firm qualified for securities-related businesses; and
7. Other documents required by the CSRC.
Article 23 The CSRC shall, according to the relevant laws, administrative regulations and these Rules, examine the application documents prescribed in the preceding article, and shall make the decision on whether to approve it within 15 workdays from the day when the application documents meeting the requirements are received. For those meeting the conditions, the new License for Securities Business shall be granted to them; and for those not meeting the conditions, no new license may be granted, and reasons shall be explained in written form.
Article 24 A securities company newly established or continuing to exist after the merger of foreign-shared securities companies or the merger of securities companies with foreign shareholders and domestic-funded securities companies shall meet the conditions for establishment of securities company with foreign shareholders prescribed in these Rules; its business scope, the proportion of the shares or equities held by foreign shareholders shall be in compliance with the provisions of these Rules.
Where there are foreign shareholders in a securities company established upon the split-up of a securities company with foreign shareholders, its business scope and the proportion of the shares or equities held by the foreign shareholders shall be in compliance with the provisions of these Rules.
Article 25 Foreign investors may legally hold the shares in a listed domestic-funded securities company through securities trading on a stock exchange or hold shares in a listed domestic-funded securities company with the approval of the CSRC by establishing a strategic partnership with the listed domestic-funded securities company, and the approved business scope of the listed domestic-funded securities company shall remain unchanged. The restriction that the shareholding of one domestic shareholder at a minimum shall not be lower than 49% shall not apply to the listed domestic-funded securities company provided that its controlling shareholder is a domestic shareholder.
Where a foreign investor holds 5% or more of the shares of a listed domestic-funded securities company through purchasing securities from the stock exchanges or holding shares jointly with others by entering agreements or any other arrangements, the investor shall comply with the conditions provided for in Article 7 of these Rules, and abide by Article 129 of the Securities Law.
The proportion of the shares of a listed domestic-funded securities company held (including both directly held and indirectly controlled) by a single foreign investor shall not be more than 20%; and the proportion of the shares of a listed domestic-funded securities company held (including both directly held and indirectly controlled) by all the foreign investors shall not be more than 25%.
Article 26 The application documents submitted to the CSRC and the materials reported to the CSRC according to these Rules shall be in Chinese. Where the documents and materials of the foreign shareholders and those issued by the securities regulatory bodies of their home countries or regions or the foreign institutions accepted by the CSRC are in foreign languages, the Chinese versions that are consistent with the original documents shall be attached.
Where the documents and materials submitted by the applicant fail to sufficiently explain the situation of the applicant, the CSRC may ask the applicant to make supplementary explanations.
Article 27 Where investors from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Area hold shares in securities companies, these Rules shall apply mutatis mutandis, except as otherwise required by any state provisions.
Article 28 The establishment, alteration, termination, business activities, supervision and management of securities companies with foreign shareholders shall be governed by other relevant provisions of the CSRC if there is no such provisions in there Rules.
Article 29 These Rules shall come into force from July 1, 2002.
