To: Finance Departments (Bureaus) of all provinces, autonomous regions and centrally-administered municipalities, and Shenzhen Finance Committee

    In order to seriously implement the "Decisions of the Central Committee of the Communist Party of China on Several Major Issues in Comprehensively Deepening the Reform" and "Notice of the State Council on Promulgation of the General Plan for China (Shanghai) Pilot Free Trade Zone" (Guo Fa [2013] No. 38), and to promote CPA profession to seize opportunities and accelerate development, we hereby notify the relevant issues on further expanding the opening up, as well as supporting the accounting firms to establish branches in China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as SFTZ).

     1. Support the accounting firms, which are in the form of partnership or have transformed to special general partnership that last for at least a year (calculated from the date on which the finance authorities approved the transformation to the date when a written application for establishing a branch in SFTZ was filed), whose internal integration is well done, and which are running stably, to establish a pilot branch in the SFTZ; the branch may use a name containing the wording "Shanghai Free Trade Pilot Zone"; the standard name is "Shanghai Free Trade Pilot Zone Branch of XX Accounting Firm" or "Free Trade Pilot Zone Branch of Shanghai XX Accounting Firm".

    2.  The establishment of a branch in SFTZ shall be subject to the approval of trans-provincial establishment of a branch for now. To establish a branch in SFTZ, an accounting firm shall concurrently satisfy conditions provided in Article 23 and Article 24 of the "Interim Procedures for Approval and Supervision of Accounting Firms" (Decree of Ministry of Finance No. 24), in Article 3 of the "Interim Procedures for Administration of Branches of Accounting Firms" (Cai Kuai [2010] No.2), and in Article 3 of the "Notice of Ministry of Finance and China Securities Regulatory Commission on the Adjustment of Requirements of Application for Accounting Firms with Securities Competence" (Cai Kuai [2012] No. 2). The relevant provisions of the abovementioned three documents are applicable as a reference to application materials and approval procedures.

    3. For an accounting firm whose headquarters is incorporated in Shanghai, its Shanghai Free Trade Zone branch shall be under the headquarters' centralized management. For an accounting firm whose headquarters is incorporated in a province (or autonomous region or centrally-administered municipality) other than Shanghai, which has set up a branch in Shanghai, its Shanghai Free Trade Zone branch shall be directly managed by the Shanghai branch; the persons in charge of the Shanghai branch shall be concurrently appointed as the head of the Shanghai Free Trade Zone branch. For an accounting firm whose headquarter is incorporated in a province (or autonomous region or centrally administered municipality) other than Shanghai, and which has not set up a branch in Shanghai before this Notice enters into force, if it applies for establishing Shanghai Free Trade Zone branch, its application for establishing a Shanghai branch shall be rejected.

    4. Accounting firms that propose to establish a branch in SFTZ shall apply to the Shanghai Municipal Finance Bureau, and accept its examination according to law. Former Sino-foreign cooperative accounting firms which apply for establishing a Shanghai Free Trade Zone branch during the localization transformation period (before 31 December 2017) according to the requirements of the "CPA Law" and the "Localization Transformation Scheme for Sino-foreign Cooperative Accounting Firms" (Cai Kuai [2012] No. 8) shall apply to both the Ministry of Finance and the Shanghai Municipal finance Bureau; the application materials shall be reviewed by the Shanghai Municipal Finance Bureau and reported to the Ministry of Finance for its approval.

    If an accounting firm applies for establishing Shanghai Free Trade Zone branch, the principal partner of the accounting firm shall issue a written commitment to undertake the management of  Shanghai Free Trade Zone branch in "five aspects in a unified way", including personnel, finance, standards of practice, quality control and information management. The written commitment shall be confirmed by the principal partner with his/her signature and disclosed to the public together with other application materials by the approval authority.

    5. Accounting firms should seize the opportunity to set up a branch in SFTZ, on the one hand focusing on their internal governance and quality control, on the other hand making great efforts to develop talent pool and business; they should actively carry out top-tier, comprehensive, outbound and international businesses, promote the "going abroad" of their businesses and talent, and constantly enhance the competitiveness and influence of China's CPA profession.

    6. An accounting firm shall enhance management of its Shanghai Free Trade Zone branch in "five aspects in a unified way" and independently describe the business development of the Shanghai Free Trade Zone branch in its annual report and filing; the relevant requirements shall be separately provided by the Ministry of Finance in the arrangement of the annual report and filing work.

    It is prohibited to attract or allow practitioners to affiliate to a firm or implement loose management against the requirements of managing "five Aspects in a unified way" in the name of establishing a branch in SFTZ. A Shanghai Free Trade Zone branch which violates the requirements of managing "five aspects in a unified way" in management and business development shall be ordered to make rectification. If rectification is ineffective, the permit of the branch shall be withdrawn according to law. Other problems found shall be promptly handled and reported to us.

Ministry of Finance

4 April 2014