Regulations on Encouraging Multinational Corporations to Establish Regional Headquarters in Shanghai (2022)

Shanghai’s 2022 policy outlines incentives to establish multinational corporation regional headquarters, aiming to boost the city’s headquarters economy by offering identification conditions, application procedures, dynamic assessments, subsidies, fund management, trade facilitation, innovation support, talent attraction, and comprehensive service support until 2027.

Article 1 (Purpose and Basis)

To accelerate the development of a higher-level headquarters economy, to further encourage more multinational corporations to set up headquarters-oriented enterprises (hereinafter referred to as “headquarter enterprises”) in Shanghai, implement the “Headquarters Empowerment Action,” speed up the implementation effect of “Several Opinions on Promoting the Development of the ‘Five-Type Economy'” (Hu Committee Office [2022] No. 6), and achieve openness with deeper levels, wider areas, and greater intensity; following the “Foreign Investment Law of the People’s Republic of China,” “Implementing Regulations of the Foreign Investment Law of the PRC,” “Shanghai Foreign Investment Regulations,” and other laws and regulations, these Regulations are formulated.

Article 2 (Definition)

(A) Regional Headquarters of Multinational Corporations (hereinafter referred to as “regional headquarters”) refers to the sole general institutions established by a parent abroad in our city, performing the functions of investment, management, and services within the scope of a region of one country or above in the form of investment or authorized management. Multinational corporations must establish regional headquarters in our city in the form of a corporate organization with independent legal person status.

(B) Headquarter-type Institutions of Multinational Corporations (hereinafter referred to as “headquarter-type institutions”) refer to foreign-invested enterprises (including branches) that are set up by parent companies registered abroad or foreign-invested companies in our city, which perform the functions of investment, management, marketing, settlement, support services, etc., within the scope of a region of one country or above, but have not reached the standards of regional headquarters.

(C) Business Division Headquarters of Multinational Corporations (hereinafter referred to as “business division headquarters”) refers to the sole general institutions that are established by a parent company registered abroad or a foreign-invested company in our city, responsible for the functions of investment, management, and services of the business division within a region that spans one country or above, based on the functional, business, product, brand, service, etc., organizational structure of the business division system. Multinational corporations must establish business division headquarters in our city in the form of a corporate organization with independent legal person status.

Article 3 (Scope of Application)

These Regulations apply to regional headquarters, headquarter-type institutions, and business division headquarters established within the city.

Article 4 (Department Responsibilities)

The Municipal Commerce Commission is responsible for the identification of regional headquarters, headquarter-type institutions, and business division headquarters, coordinating relevant departments to provide management services for them. Departments including the Municipal Development and Reform Commission, the Municipal Economic and Information Commission, the Municipal Science and Technology Commission, the Municipal Education Commission, the Exit-Entry Administration of the Municipal Public Security Bureau, the Municipal Finance Bureau, the Municipal Human Resources and Social Security Bureau, the Municipal Planning and Resources Bureau, the Municipal Ecological Environment Bureau, the Municipal Housing, Urban-Rural Development Commission, the Municipal Health Commission, the Municipal Market Supervision Bureau, the Municipal Taxation Bureau, the Municipal Intellectual Property Bureau, the Municipal Drug Administration Bureau, the Municipal Foreign Affairs Office, Shanghai Customs, the Shanghai Headquarters of the People’s Bank of China, the Shanghai Branch of the State Administration of Foreign Exchange, the Shanghai Banking and Insurance Regulatory Bureau, as well as the Lingang New Area Management Committee, the Hongqiao International Central Business District Management Committee, and the governments of all districts, are to provide service promotion for regional headquarters, headquarter-type institutions, and business division headquarters within their respective responsibilities.

Article 5 (Identification Conditions)

Applicants for recognition as regional headquarters must meet the following conditions:
1) Independently legally incorporated foreign-invested enterprise;
2) At least 50% directly or indirectly held by the overseas parent company, with the parent company’s total assets being no less than USD 200 million;
3) Registered capital of no less than USD 2 million;
4) Basic compliance with the aforementioned conditions and having made outstanding contributions to the economic development of the region can be considered for identification on a case-to-case basis.

Applicants for headquarter-type institutions must meet the following conditions:
1) Independently legally incorporated foreign-invested enterprise or its branch;
2) At least 50% directly or indirectly held by the overseas parent company, with the parent company’s total assets being no less than USD 100 million;
3) Registered capital of no less than USD 1 million; if it is established in the form of a branch, the total company’s cumulative operating funds allocated over the past 3 years should be no less than USD 1 million.

Applicants for business division headquarters must meet the following conditions:
1) Compliance with conditions (1) through (3) for regional headquarters recognition;
2) Continuously operated in the city for more than one year, with the enterprise’s previous year’s business income making up no less than 10% of the overseas parent company’s business income for the division, and the enterprise’s business income in the previous year being no less than RMB 1 billion.

In addition to the above conditions, the applying enterprise must not have committed serious acts of dishonesty within 3 years, or if there were acts of dishonesty, they have been rectified as of the date of application.

Article 6 (Application Materials)

The following materials must be submitted when applying for the identification of regional headquarters, headquarter-type institutions, and business division headquarters:
1) An application letter (sealed with a corporate seal) signed by the statutory representative of the company, including basic information about the applying enterprise and its parent or investing company, an explanation of compliance with the conditions for recognition combined with the enterprise situation, and an investment management structure diagram of the parent company (including investment relationships and equity proportions). For applications to identify business division headquarters, information on the parent company’s business division setup must also be provided.
2) An authorization document for the basic functions of regional headquarters, headquarter-type institutions, and business division headquarters signed by the authorized signatory of the parent company, and proof materials for the authorized signatory.
3) The most recent annual audit report of the parent company or investing company. For enterprises established in the form of a business division, special audit materials for business income must also be provided.
4) Business licenses or registration certificates (copies) of domestic and foreign enterprises under authorized management.
5) For headquarter-type institutions that are branches, proof documents for the operating funds allocated by the headquarters must also be provided.

Article 7 (Application Procedure)

Identification of regional headquarters, headquarter-type institutions, and business division headquarters shall be carried out according to the following procedure:
a) Enterprises may apply to the commercial authorities in the district of registration, the Management Committee of the Lingang New Area, or the Management Committee of the Hongqiao International Central Business District, and submit relevant materials;
b) The aforementioned authorities must, within 5 working days of receiving the complete application materials, conduct a preliminary examination and submit their opinion to the Municipal Commerce Commission;
c) The Municipal Commerce Commission shall complete the review within 5 working days of receiving the complete application materials and decide whether to recognize or not.

Article 8 (Dynamic Assessment)

The Municipal Commerce Commission, together with related departments, will perform dynamic assessments of the identified regional headquarters, headquarters-type institutions, and business division headquarters. Based on the annual information report system of foreign-invested enterprises and the corporate credit information platform, headquarters enterprises that no longer meet the identification conditions will have their status revoked according to relevant regulations.

Article 9 (Subsidies and Rewards)

Qualified headquarters enterprises can apply for subsidies and rewards according to relevant regulations. Specific measures for the implementation of subsidies and rewards shall be formulated separately by the relevant departments.
Each district may, following actual conditions and according to relevant regulations, provide subsidies and rewards to recognized headquarters enterprises.

Article 10 (Funding Operations and Management)

The Shanghai Headquarters of the People’s Bank of China and the Shanghai Branch of the State Administration of Foreign Exchange will provide matching services to headquarters enterprises to establish cross-border fund pools. Qualified headquarters enterprises may, following relevant regulations, centrally carry out RMB and foreign currency fund collection, allocation, settlement, hedging, investment, financing, and other operations among domestic and foreign member enterprises using different types of cross-border fund pools. High-level headquarters enterprises may carry out integrated RMB and foreign currency fund pool operations according to relevant regulations, improve the efficiency of multinational corporations in allocating funds across borders, and reduce their exchange risks and financial costs.

Qualified headquarters enterprises are allowed to handle capital account foreign exchange earnings (including capital funds, external debt funds, overseas listing call-back funds, etc.) and their conversion into RMB funds for domestic payments in banks that meet conditions, without the need to submit proof materials for individual transactions in advance.

Headquarter enterprises carrying out cross-border RMB settlement following relevant regulations may, based on the “three principles of exhibition operations,” be directly handled by banks for the cross-border RMB settlement of goods and service trade, as well as the lawful and compliant use of capital project RMB earnings (including foreign direct investment capital funds, cross-border financing, and overseas listing fundraising, etc.) within China.

Article 11 (Trade Convenience)

Headquarter enterprises engaged in new types of international trade with real trade backgrounds may handle the relevant foreign exchange income and expenditure procedures directly at banks according to relevant regulations, and banks will provide convenient cross-border financial services according to international practice. Qualified headquarters enterprises may apply to be included in the “white list” for offshore trade.

Headquarters enterprises that establish international trade distribution centers will receive facilitative supervisory measures from Shanghai Customs and the Shanghai Branch of the State Administration of Foreign Exchange. Qualified headquarters enterprises may apply for evaluation as Shanghai International Trade Distribution Center demonstration enterprises.

Headquarters enterprises may carry out maintenance services for aerospace, shipbuilding, rail transit, construction machinery, CNC machine tools, communication equipment, precision electronics, high-end medical equipment, and other products in comprehensive bonded areas, as per relevant regulations, and carry out global repair services according to the repair goods catalog. Under the premise of controllable risks, qualified headquarters enterprises may carry out bonded repair services with high added value, high technology content, and environmental protection requirements outside the special customs supervision zones.

Qualified headquarter enterprises can be rated as Class I or II export tax refund enterprises.

Headquarters enterprises may participate in Shanghai’s international trade “single window” to access exclusive services for customs clearance, logistics dynamics, port information, and financial support.

Shanghai Customs strengthens the cultivation of customs credit for headquarters enterprises, prioritizes the inclusion of qualified headquarters enterprises into the list of key enterprises for customs credit cultivation, and provides priority cultivation and certification. After becoming an advanced certified enterprise, they enjoy AEO (Authorized Economic Operator) customs clearance convenience. In light of the latest development and needs of headquarter enterprises, customs will explore group-based, industry-chain, and supply-chain customs credit cultivation certification models, focusing on trade facilitation, innovating supervisory systems and models, striving to improve clearance efficiency, and providing personalized customs convenience for their import and export goods.

Shanghai Customs supports headquarters enterprises in carrying out tariff guarantee insurance pilot programs. For materials imported and exported for testing by headquarters enterprises, the relevant departments carry out risk assessment and classified management to promote the facilitation of the import and export of materials used for research and development/testing.

Article 12 (Support for Technological Innovation)

Headquarter enterprises may, according to relevant regulations, apply to participate in the construction of municipal R&D public service platforms, maker spaces, innovation platforms, etc., apply to undertake government research projects, establish professional technology innovation consortia with universities and research institutes, and receive guidance and assistance from relevant departments.

Qualified headquarters enterprises may apply to join the “white list” for pilot enterprises and goods in the municipal biomedicine industry. Headquarters enterprises can enjoy customs facilitation measures for the use of food and cosmetic samples for R&D, provided they meet the required conditions.

Article 13 (Commercial Registration)

The Municipal Market Supervision Bureau will facilitate the entirety of market registration processes online for headquarters enterprises and ease the application and use of electronic business licenses and electronic seals.

Article 14 (Project Investment)

The city supports headquarters enterprises in carrying out project investments. Projects that meet the criteria can be included in the list of major foreign investment projects of the city. The city and districts will coordinate to promote project access, planning, land use, environmental protection, energy use, construction, import and export, foreign exchange, and other related matters, to accelerate the implementation of the project; funding support will be provided where relevant conditions are met.

Article 15 (Talent Introduction)

Headquarters enterprises hiring overseas Chinese returning from study with urgently needed skills and meeting relevant conditions can apply for Shanghai hukou. Employment of qualified foreign talents by headquarters enterprises for the Shanghai Overseas Talents Residence Permit (B Permit) can enjoy additional points and related benefits. If introducing outstanding domestic talents, applicable applicants can be handled for Shanghai hukou as well.

Foreign professional talents hired by headquarters enterprises can participate in the application for professional title evaluations if they meet the relevant conditions. Senior management personnel of headquarters enterprises with significant contributions can be recommended by relevant units to be evaluated for the Magnolia Friendship Award. Headquarters enterprises can be given priority recommendations by relevant units to apply to join the Mayor of Shanghai’s International Business Advisory Council.

Professionals in finance, planning, shipping, and other fields with international professional qualifications or professional qualifications from specific countries and regions, who provide services in headquarters enterprises after being filed by the relevant industry authority, can have their overseas work experience considered equivalent to domestic work experience (except where there are special industry requirements). Foreign talents in headquarters enterprises who have obtained permanent residency status and lead national science and technology projects can act as legal representatives of new R&D institutions in the city.

For foreign senior management personnel working in headquarters enterprises, the Exit-Entry Administration of the Municipal Public Security Bureau, the Municipal Health Commission, the Municipal Bureau of Human Resources and Social Security, and other departments will provide conveniences for their family members in terms of residence, medical services, and application for talent apartments, provided they meet the relevant policies. Children of qualified foreign senior management personnel can apply to local schools as international students.

Article 16 (Entry and Exit Convenience)

Chinese nationals from headquarter enterprises that meet the criteria can apply for the APEC Business Travel Card. Business trip convenience for Mainland Chinese residents employed by headquarters enterprises is supported.

Foreign nationals who require multiple temporary entries for headquarters enterprises may apply for multi-entry visas valid for no more than 5 years and with a stay period of no more than 180 days. Foreign nationals invited by headquarters enterprises who need urgent business entry may apply for port visas at the port visa authorities.

Foreign nationals employed by headquarters enterprises who need long-term residence in the city can apply for 3 to 5-year valid foreigner residence permits as per regulations.

Foreign senior management personnel of headquarters enterprises can be given priority for permanent residence in China as per the relevant regulations of “Procedures for the Administration of the Approval of Foreigners’ Permanent Residence in China.”

Shanghai Customs (Entry-Exit Inspection and Quarantine Department) provides a green channel for foreign senior management personnel of headquarters enterprises to handle health certificates.

Article 17 (Intellectual Property Protection)

Headquarters enterprises in Shanghai with a high degree of market recognition and subject to a high rate of counterfeiting and infringement can be recommended to be included in the “Shanghai Key Trademark Protection List.” Headquarters enterprises can apply to the Municipal Intellectual Property Bureau to rely on the cross-regional intellectual property administrative protection cooperation mechanism to carry out rights protection in other locations.

Article 18 (Service Support)

District governments may formulate policies that support the development of headquarters enterprises according to their actual conditions, creating a favorable business environment for the development of headquarters enterprises.

The city establishes city and district-level headquarters service commissioners to ensure smooth channels of information. Relying on municipal foreign investment associations Shanghai-based commerce associations and other industry organizations, a government-enterprise service communication platform is built. Regular round-table meetings between government and enterprises are held to understand the needs of headquarters enterprises promptly and to coordinate the resolution of problems encountered in the development of headquarters enterprises.

Article 19 (Reference Application)

Investors from Hong Kong, Macao, and Taiwan regions establishing regional headquarters, headquarter-type institutions, and business division headquarters in the city shall follow these Regulations by reference.

Article 20 (Date of Implementation and Validity)

These Regulations shall be implemented from November 1, 2022, and remain valid until October 31, 2027.

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Disclaimer: The regulation of company registration in China is translated by GWBMA for reference only. There may be different interpretations of the Chinese version.

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