CSRC Allows Foreign Control of Joint-venture Securities Firms
China’s securities regulator has announced that it will permit foreign parties to acquire controlling equity stakes in joint-venture securities companies as part of broader efforts to open up the Chinese financial sector.
The China Securities Regulatory Commission issued the “Administrative Measures on Foreign Investment in Securities Companies” (外商投资证券公司管理办法) on 29 April, coming into effect upon the date of their release.
Chief amongst the changes introduced by the Measures is allowing foreign investors to obtain controlling equity stakes in joint-venture securities companies – a move previously flagged by central bank governor Yi Gang at the 2018 Boao Forum for Asia.
A spokesperson for CBRC said that investment in fund management companies will also be further opened up, with foreign investors permitted to obtain equity stakes of up to 51%.
The Measures detail specific requirements for the foreign shareholders in joint-venture securities firms, mandating that they be financial institutions, possess an excellent international reputation and business record, be at the “international forefront” in terms of business scope, revenue and profits for the past three years, as well as possess strong long-term credit over the past three years.
They also outline the gradual opening of the business scope for joint-venture securities companies, and unify the equity percentage threshold for both listed and non-listed securities firms.