On June 20, 2012, the China Securities Regulatory Commission (the “CSRC”), aiming to attract more QFII investments, published a draft Regulation Regarding Certain Issues in the Implementation of the Administrative Measures on Onshore Securities Investment by Qualified Foreign Institutional Investors (“Draft Regulation”). The deadline for public comments is July 5, 2012. This alert outlines the notable changes reflected in the Draft Regulation and identifies the major issues relevant to its implementation (once formally adopted).
1. Background
Since its launch in November 2002, the QFII pilot program has undergone successive expansions, the most notable of which was the enlargement of investment quotas from US$30 billion to US$80 billion announced this past April. However, some of the current regulations, notably the Administrative Measures on Onshore Securities Investment by Qualified Foreign Institutional Investors, and the accompanying Notice Regarding Certain Issues in the Implementation of the Administrative Measures on Onshore Securities Investment by Qualified Foreign Institutional Investors (“Current Regulation”), because of their high thresholds for market entry have been viewed as not encouraging further opening up of the capital markets and attracting more offshore medium and long term capital. The Draft Regulation published by the CSRC intends to address this situation by relaxing the market entry criteria and the operational constraints, expanding the scope of investment, and simplifying and facilitating the administrative processes.
2. Prominent Changes
(i) QFII Market Entry Criteria Lowered
The Draft Regulation substantially lowers the market entry criteria as shown in the chart below.
| Current Criteria |
Draft Regulation |
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| Fund Management Institutions |
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| Insurance companies |
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| Securities companies |
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| Commercial banks |
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| Other institutional investors (such as pension funds, charitable foundations, endowments, trust companies, sovereign wealth funds, etc.) |
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(ii) Bond Investment in the Inter-Bank Bond Market
The Draft Regulation allows QFIIs for the first time to invest in bonds traded in Inter-Bank Bond Market (“IBBM”). For illustrative purposes, the types of bond products traded in the IBBM include central government and local government bonds, central bank bonds, policy-oriented and ordinary financial bonds, subordinated bonds, mixed capital bonds, and RMB-denominated bonds issued by international development agencies (such as World Bank, Asian Development Bank) etc.
The Draft Regulation permits QFIIs to participate in the IBBM in addition to current players such as PRC commercial banks, PRC non-banking financial institutions, other Chinese institutional investors as well as approved foreign institutional investors (e.g. Chinese branches of foreign banks, foreign central banks or monetary authorities, and foreign banks participating in RMB settlement for cross-border trade). Opening the IBBM to QFIIs may not only enable QFIIs to improve their performance and attract more foreign capital by diversifying their investments, but also indirectly stimulate the IBBM.
However, quite a few issues related to QFII investments in the IBBM remain to be further clarified by authorities other than the CSRC. For example, the People’s Bank of China may need to address the following questions:
Similarly, the tax authorities may need to clarify whether or how QFIIs can enjoy current preferential treatment applicable to certain bond products traded in the IBBM. For example, interest accrued on local government bonds issued from 2009 through 2011 are exempt from income tax, and income tax is assessed on interest accrued on the Railway Construction Bonds issued from 2011 through 2013 at half the otherwise applicable tax rate. It is therefore expected that some of the current applicable rules may require amendments, or new rules may need to be enacted to govern how QFIIs can participate in the IBBM.
(iii) Shareholding Ceiling Raised
The Draft Regulation raises the ceiling for aggregate shareholdings of all foreign investors in the “A” shares of a listed Chinese company from the current 20 percent to 30 percent. The ceiling for the shareholding of a single foreign investor in the total share capital of a listed Chinese company remains at 10 percent.2
(iv) Securities Accounts3
The Draft Regulation removes the ambiguity surrounding ownership of assets held by a QFII for itself and its clients and facilitates the management of accounts by QFIIs. The Draft Regulation expressly requires a QFII to open separate segregated securities accounts for its own capital and its clients’ capital. An official explanation of the Draft Regulation points out that a QFII will be allowed to open segregated securities accounts for different clients while under the Current Regulation a QFII is required to open one securities account for all of its clients. The Draft Regulation further clarifies that assets in accounts opened for QFII clients belong to the QFII clients and are not the property of the QFII or its custodian.
The Draft Regulation also allows Chinese fund management companies to provide ad-hoc asset management services4 for QFIIs and to open corresponding accounts to facilitate QFII operations.
(v) Engagement of Multiple Securities Companies by QFIIs
QFIIs have been allowed to engage up to three securities companies to trade securities in each of Shanghai and Shenzhen Stock Exchanges. In practice, however, a QFII can only engage one security company in each Stock Exchange because (i) each QFII is only allowed to open one special RMB account and (ii) the Current Regulation requires a one-to-one correspondence of the securities account with the special RMB account. The Draft Regulation abandons this one-to-one correspondence, thereby permitting QFIIs to engage multiple securities companies.
(vi) Electronic filing
To simplify the application and administration processes, the Draft Regulation adopts electronic filing of QFII applications through the CSRC website and requires the reporting of major events to also be made by electronic filing.
3. Summary
The Draft Regulation has responded to many of the suggestions and comments made by industry players. When the Draft Regulation becomes effective, it should help to further attract and facilitate investments made by foreign capital through QFIIs.
In the meanwhile, we note that in the past, the relevant regulators, i.e., CSRC and State Administration of Foreign Exchange, have worked in close coordination with respect to legislative work and other aspects governing QFIIs. It is, however, unclear what actions will be taken by State Administration of Foreign Exchange in response to the Draft Regulation.
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Like all other China offices of international law firms, we are legally prohibited from practicing local Chinese law such as by rendering formal legal opinions on matters of PRC law.
2012年6月25日
为了吸引更多合格境外机构投资者（以下简称“QFII”）的投资，中国证券监督管理委员会（以下简称“中国证监会”）于2012年6月20日发布了《关于实施<合格境外机构投资者境内证券投资管理办法>有关问题的规定》（以下简称“《规定草案》”），向社会公开征求意见。公开征求意见的截止日期是2012年7月5日。本文概述了《规定草案》内值得注意的变化，以及《规定草案》一旦正式通过后与其实施有关的主要问题。
一、修改背景
自2002年11月中国开始QFII试点以来，QFII投资额度历经数次扩容，其中最引人注目的是今年4月投资额度由300亿美元增加至800亿美元。但是，由于现行一些法规，特别是《合格境外机构投资者境内证券投资管理办法》以及《关于实施〈合格境外机构投资者境内证券投资管理办法〉有关问题的通知》（以下简称“现行规定”），规定了较高的市场准入标准，因此被认为无助于进一步开放资本市场、吸引更多的境外中、长期资本。中国证监会发布的这一《规定草案》旨在放宽QFII市场准入标准和运作限制、扩大QFII投资范围、简化QFII运作程序和增加管理便利，以适应新的形势的变化。
二、显著的变化
1、降低QFII市场准入标准
如下表所示，《规定草案》大幅度降低了QFII的市场准入标准。
| 现行标准 |
《规定草案》下的标准 |
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| 基金管理机构 |
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| 保险公司 |
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| 证券公司 |
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| 商业银行 |
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| 其他机构投资者（养老基金、慈善基金会、捐赠基金、信托公司、政府投资管理公司等） |
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2、银行间债券市场的债券投资
《规定草案》首次允许QFII投资在银行间债券市场交易的债券。为了方便说明，在银行间债券市场交易的债券产品包括中央政府和地方政府债券、中央银行债券、政策性和普通金融债券、次级债券、混合资本债券以及国际开发机构（比如世界银行、亚洲开发银行）发行的人民币债券等。
目前，银行间债券市场的市场主体包括中国境内商业银行、中国境内非银行金融机构、中国其他机构投资者以及批准的外国机构投资者（比如外国银行在华分行、外国中央银行或货币当局以及跨境贸易人民币结算境外参加银行等）。《规定草案》允许QFII作为新的市场主体参与银行间债券市场。向QFII开放银行间债券市场，不仅可以改善QFII的市场表现，通过扩大投资范围吸引更多境外资本，而且也能间接刺激银行间债券市场的发展。
但是，与QFII投资银行间债券市场相关的诸多问题仍然有待证监会之外的监管机关进一步澄清。比如，中国人民银行可能需要解决以下问题：
同样，税务机关可能需要澄清，涉及在银行间债券市场交易的债券产品现行所适用的优惠待遇的，QFII是否或如何享受。比如，2009年到2011年发行的地方政府债券取得的利息免征所得税，2011年到2013年发行的铁路建设债券取得的利息减半征收所得税。因此，预期某些现行规章可能需要修订，或者可能需要制定新规章，对QFII参与银行间债券市场进行规范。
3、提高持股比例上限
《规定草案》将所有境外投资者对单个上市公司A股的持股比例总和的限制由现在的20%提高到30%。单个境外投资者持股比例仍然不得超过该中国上市公司股份总数的10%2。
4、证券账户3
《规定草案》解决了QFII自有资产和其客户资产所有权不清的问题，提高了QFII账户管理的便利。《规定草案》明确要求QFII应当为自有资金或管理的客户资金分别申请开立证券账户。《规定草案》的起草说明指出，QFII被允许为不同的客户开立多个证券账户，而在现行规定下，QFII只能为其所有客户开立一个证券账户。《规定草案》进一步澄清，QFII为其客户开立的账户里的资产属于QFII的客户所有，独立于QFII和托管人。
《规定草案》也允许中国基金管理公司为QFII提供特定客户资产管理服务4，并开立相应账户以便QFII运作。
5、QFII可委托多家证券公司
在现行规定下，QFII可分别在上海、深圳证券交易所委托3家证券公司。但实践中，QFII只能分别在上海、深圳证券交易所委托1家证券公司。这是因为（1）每个QFII只能被允许开立一个人民币特殊账户；（2）现行规定要求证券账户应当与人民币特殊账户一一对应。《规定草案》删除了一一对应的规定，从而允许QFII委托多家证券公司。
6、电子提交
为了简化申请和运作程序，《规定草案》要求QFII申请应当通过中国证监会网站以电子方式提交，重大事项的报告也需通过中国证监会网站以电子方式提交。
三、总结
《规定草案》回应了许多业内人士提出的建议和意见。《规定草案》生效之后，应当能够有助于通过QFII进一步吸引、促进境外资本的投资。
与此同时，我们也注意到，中国证监会和国家外汇管理局作为QFII监管机关在过去的 QFII立法工作以及其他方面都配合十分紧密。但目前尚不清楚《规定草案》发布后国家外汇管理局将采取何等行动。
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与所有其他国际律师事务所驻华代表处一样，法律禁止我们在中国法下执业（包括就中国法问题提供正式的法律意见等）。作者：叶小玮、Brian D. Beglin、王瑾、刘若珂
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Joseph-RogerSuch measures apply to banks incorporated in China. It is unclear whether tier 1 capital of foreign commercial banks will be calculated based on the above calculation method.
2 Neither the 30 percent ceiling nor the 10 percent ceiling applies to strategic investments made according to the Administrative Measures for Foreign Investors’ Strategic Investment in Listed Companies.
3 We note that securities regulators in the United States interpret the reach of their own jurisdiction broadly, including in connection with “broker-dealer” and “investment adviser” activities. In particular, the US Securities and Exchange Commission takes the position that it has jurisdiction over non-US securities firms when the firms solicit and effect transactions in debt and equity securities (including non-US securities and non-dollar denominated securities) with any US investors, or seek to provide investment advisory services to US investors, including institutional investors such as QFIIs. Therefore, to the extent that a QFII is a US institution, Chinese securities firms, custodial banks, and fund management institutions, should consult with experts in U.S. securities regulation to ensure that accounts for QFIIs are solicited and established in a manner that complies with US regulatory requirements. This is advisable under both the current standards, and the Draft Regulation.
4 Subject to relevant restrictions on investment scope set forth in QFII related regulations, such services shall be conducted according to the Trial Measures for Fund Management Companies to Provide Asset Management Services for Specific Clients.
1 根据2012年6月7日发布并将于2013年1月1日开始实施的《商业银行资本管理办法（试行）》，“一级资本”包括以下项目（作适当调整）：
1）实收资本或普通股；
2）资本公积；
3）盈余公积；
4）一般风险准备；
5）未分配利润；
6）少数股东资本可计入部分；以及
7）其它一级资本工具及其溢价。
该试行办法适用于在中国境内设立的商业银行。现在尚不清楚外国商业银行的一级资本是否会根据以上方法计算。
2 30%上限和10%上限的限制不适用于根据《外国投资者对上市公司战略投资管理办法》进行的战略投资。
3 我们注意到，美国证券监管机关对其管辖权进行广义解释，包括其对“经纪交易商”和“投资顾问”行为的管辖权。特别是，美国证券交易委员会认为，如果一家非美国证券公司就债务证券或股本证券（包括非美国的证券和非美元计价的证券）向任何美国投资者发出要约或与任何美国投资者达成交易，或者寻求向美国投资者（包括QFII在内的机构投资者）提供投资咨询服务，美国证券交易委员会即对该非美国证券公司具有管辖权。所以，如果QFII是一家美国机构，则中国境内证券公司、托管银行和基金管理公司应当向精通美国证券监管法律的专家咨询，保证其向QFII发出要约和开立QFII账户的方式符合美国监管要求。无论是根据现行标准还是《规定草案》，这一做法都是明智的。
4 以遵守QFII法规内有关投资范围限制为条件，具体服务应根据《基金管理公司特定客户资产管理业务试点办法》的规定进行。This article was originally published by Bingham McCutchen LLP.