Financial institutions to raise the ratio of foreign shareholding

In August 2017, the State Council promulgated the “Notice on Several Measures for Promoting the Growth of Foreign Investment”. In order to deepen the supply-side structural reform, China will further lift admittance restrictions on foreign investment, expand the scope of market access and promote the opening up of banking, securities and insurance industries to the outside world, and clarify the opening-up schedule and road map.

At a briefing on the economic outcome of the Beijing Summit of Heads of China and the US held on 10 November 2017, Zhu Guangyao, the vice minister of finance, further clarified the specific information for further opening up of China’s financial industry: (1) to relax the restrictions on the proportion of single or multiple direct or indirect foreign investment in securities, fund management, futures companies to 51%, which, three years after the implementation of the above measures, will be limited no longer; (2) to cancel the restrictions that the foreign capital shall not hold more than 20% of shares of Chinese-funded banks and financial asset management companies individually and 25% collectively so as to implement the rule of consistent domestic and foreign banking equity investment ratio; (3) to relax the proportion of investment by a single or multiple foreign investors in the establishment of insurance companies carrying out personal insurance services in China to 51% three years later, which, five years later, shall not be limited any longer.

Previously, other than the arrangements for Hong Kong or Macau-funded financial institutions, financial institutions in mainland China have the following admittance restrictions on foreign investment according to regulatory requirements.

Jennifer Zhang is a partner and Hu Anran is a trainee at East & Concord Partners