The English version is for reference only. If there is any inconsistency or conflict between the English and Chinese version, the Chinese version shall prevail.

(Order No. 7 of Shanghai Municipal People’s Government)

The Measures for Administration of the China (Shanghai) Pilot Free Trade Zone have been adopted at the 24th executive meeting of Shanghai Municipal Government on September 22, 2013, and are hereby promulgated for implementation as of October 1, 2013.

Mayor Yang Xiong

29.09.2013

Measures for Administration of the China (Shanghai) Pilot Free Trade Zone

(Promulgated by Order No. 7 of the Shanghai Municipal People’s Government on September 29, 2013)

Chapter 1 General Provisions

Article 1 (Purpose and Basis)

For the purposes of boosting the establishment of the China (Shanghai) Pilot Free Trade Zone, these Measures are formulated in accordance with the Decision of the NPC Standing Committee on Authorizing the State Council to Temporarily Adjust the Administrative Approval under relevant Laws in China (Shanghai) Pilot Free Trade Zone, the Framework Plan for the China (Shanghai) Pilot Free Trade Zone and other relevant laws and regulations.

Article 2 (Scope of Application)

These Measures shall apply to the China (Shanghai) Pilot Free Trade Zone to be established with the approval of the State Council (hereinafter “FTZ”), which covers Shanghai Waigaoqiao Bonded Zone, Shanghai Waigaoqiao Bonded Logistic Zone, Yangshan Bonded Port and Shanghai Pudong Airport Free Trade Zone with a total area of 28.78 square kilometers.

Article 3 (Functions)

The FTZ will boost the opening up of the service industry and reform of investment management systems, promote trade transition and upgrading, deepen the opening up of the financial sector, innovate supervision service modes, explore the establishment of an administrative system that adapts to the system of international investment and trade rules, fosters an internationalized and law-based environment for business operations, and plays an incentive and exemplary role in serving China nationwide.

Chapter 2 Administrative Authority

Article 4 (Administrative Authority)

The China (Shanghai) Pilot Free Trade Zone Administrative Committee (hereinafter “Committee”) will be established in Shanghai. The Committee is an authority appointed by the Shanghai Municipal Government, which will implement reform in the FTZ, and administer and coordinate administrative affairs in relation to the FTZ.

The relevant municipal authorities shall strengthen their coordination with Pudong New Area Government and other county or district governments, so as to support the Committee in its works.

Article 5 (Duties of Committee)

The Committee shall perform the following duties in accordance with these Measures:

Boost the implementation of various pilot reforms in the FTZ, study, recommend and organize the implementation of plans, policies and measures for the development of the FTZ, and formulate the relevant administrative systems in the FTZ;
Undertake administration in investment, trade, financial services, land planning, construction, greening the urban environment, environment protection, labor and personnel, food and drug regulation, intellectual property rights, culture, health, statistics and other sectors in the FTZ;
Take the lead in administration by industry and commerce, quality supervision, tax and public security authorities in the FTZ, and coordinate the administration by Customs, inspection and quarantine, maritime affairs and financial authorities in the FTZ;
Undertake works in connection with security review and anti-monopoly review;
Undertake comprehensive enforcement in the FTZ, and organize the administrative enforcement in urban administration, culture and other sectors in the FTZ;
Undertake comprehensive services in the FTZ, and provide guidance, consultation and services to enterprises and relevant institutions in the FTZ;
Undertake information construction in the FTZ, organize the establishment of the FTZ supervision information sharing systems and platforms and release public information in a timely manner;
Coordinate and guide the planning, development and construction of industries in the FTZ, and coordinate and boost the key investment projects in the FTZ;
Undertake other duties assigned by the Shanghai Municipal Government.

All relevant administrative affairs previously undertaken by Shanghai Waigaoqiao Bonded Zone Administrative Committee, Yangshan Bonded Port Administrative Committee and Shanghai Free Trade Zone Administrative Committee respectively will be undertaken by the Committee.

Article 6 (Comprehensive Enforcement)

The Committee’s comprehensive enforcement authority shall perform the following duties in accordance with laws:

Exercise in a centralized manner the authority of administrative penalty, right of compulsory administrative measures and the authority of administrative inspections in connection therewith in urban management and culture sectors;
Exercise in a centralized manner the authority of administrative penalty, right of compulsory administrative measures and the authority of administrative inspections in connection therewith previously exercised by Shanghai land planning, construction, house support and building administration, environment protection, civil defense, labor and social security, intellectual property rights, food and drug regulation and statistics authorities in accordance with laws, regulations and rules;
Exercise other powers of administrative penalty determined by the Shanghai Municipal Government.

Article 7 (Location for Centralized Services)

The Committee shall, according to the regional planning of and the requirements of enterprises in the FTZ, establish a location to provide centralized administrative services and management.

Article 8 (Authorities to be Located in the FTZ)

Customs, inspection and quarantine, maritime affairs, industry and commerce, quality supervision, tax, public security and other authorities shall establish branches in the FTZ, and perform duties in connection with supervision and administration in the FTZ in accordance with laws.

Article 9 (Other Administrative Affairs)

The relevant municipal authorities and Pudong New Area Government shall undertake other administrative affairs in the FTZ in accordance with their respective functions and duties.

Chapter 3 Investment Management

Article 10 (Opening Up of Service Industry)

In accordance with the Framework Plan for the China (Shanghai) Pilot Free Trade Zone, the FTZ will suspend or cancel access restrictions such as requirements concerning the qualification of investors, limitations on foreign participation in equity ratio, restrictions concerning business scope, etc., for the further opening up of financial services, shipping services, commercial and trade services, professional services, cultural services, public services and other sectors.

The FTZ will, based on the outcome of the trials and experiments and needs of industrial development, continuously explore the sectors to be opened up, contents of experiments and the corresponding innovative administrative measures.

Article 11 (Administrative Mode of Negative List)

The FTZ will apply the pre-access national treatment for foreign investment and implement the administrative mode of special administrative measures for foreign investment establishment (negative list).

With regard to sectors not stated in the special administrative measures for the access of foreign investment establishment (negative list), foreign investors and domestic investors will receive the same treatment, by going through filing procedures instead of approval requirements (with the exception of areas specifically defined by the State Council), and the approval of articles of association of foreign-invested enterprises shall be replaced by the filing administration.

The special administrative measures for the access of foreign investment establishment (negative list) in the FTZ will be disclosed by the Shanghai Municipal Government. The measures for filing of foreign-invested projects and foreign-invested enterprises will be formulated by the Shanghai Municipal Government.

Article 12 (Filing System for Overseas Investment)

Where the enterprises in the FTZ invest in and establish enterprises overseas, the filing system shall be implemented as the major administrative mode, and the filing system shall apply to the general overseas investment projects.

The administrative measures of filing of enterprises invested and established overseas and projects invested overseas will be formulated by Shanghai Municipal Government.

Article 13 (Subscription Registration System for Registered Capital)

The subscription registration system for registered capital shall be implemented in the FTZ, with the subscribed capital contribution, capital contribution method and capital contribution time limit agreed autonomously among shareholders (originators) of the company and set forth in the articles of association of the company, unless otherwise provided for in laws or administrative regulations for the registered capital registration of particular enterprises.

The shareholders (originators) of the company shall be responsible for the authenticity and legitimacy of the capital contribution, and shall undertake responsibilities for the company according to law with their subscribed capital contribution or subscribed shares.

Article 14 (Business License and Operation Permit)

Any enterprise that has obtained a business license in the FTZ may be engaged in general production and operation activities, and any enterprise that is intended to be engaged in production and operation for which a permit is required may apply to the competent authorities after the business license is obtained.

Any enterprise for the establishment of which filing for approval is necessary as required by laws and administrative regulations shall complete the approval procedures according to law prior to its business license application.

Chapter 4 Trade Development and Facilitation

Article 15 (Trade Transformation and Upgrading)

The FTZ will actively develop the central economy, encourage multinational companies to establish their Asia-Pacific headquarters in the FTZ, and establish an operation centre integrating trade, logistics, settlement and other functions.

The FTZ will promote the transformation and upgrading of international trade, storage and logistics, processing and manufacturing and other underlying businesses, and develop offshore trade, international trade settlement, international bulk commodity trade, finance lease, bonded delivery of futures, cross-border e-commerce and other innovative trade businesses.

The FTZ will encourage enterprises to coordinate in international and domestic trade, and achieve integrated development of domestic and international trade.

Article 16 (Functions as a Shipping Hub)

The FTZ will leverage the Waigaoqiao Port, Yangshan Deep-Water Port and Pudong International Airport, and strengthen concerted development with shipping industry clusters outside the FTZ.

The FTZ will develop shipping finance, international shipping, international ship management, international crew management, international ship brokerage and other industries, and develop freight index derivatives trading business. The FTZ will develop the international transit of cargo and post, and further open up air routes and traffic rights.

The FTZ will apply a competitive international vessel registration policy and establish an efficient vessel nationality registration system. Enterprises in the FTZ may engage in international shipping business with their vessels registered with “Yangshan Port, PRC” as the vessel nationality.

Article 17 (Innovations in Entry and Exit Supervision System)

With regard to commodities transported between the FTZ and overseas, enterprises in the FTZ will be allowed to transport commodities into the FTZ against the import manifest before import filing procedures are completed. With regard to commodities transported between the FTZ and domestic sites outside the FTZ, an intelligent Customs and e-information network administration mode will apply, and the supervision system of record lists crosscheck, accounting books management and physical verification at Customs will be improved.

Enterprises in the FTZ will be allowed to apply for inspection at any time as their own option prior to commodities being transported outside the FTZ.

The FTZ will promote a categorized supervision model based on the status of commodities. Commodities under bonded storage or processing in the FTZ will be supervised as bonded commodities, commodities through ports in the FTZ for import, export or international transit will be supervised as port commodities, and specific domestic trading commodities entering the FTZ will be supervised as non-bonded commodities.

Article 18 (Facilitation of Entry and Exit Supervision Services)

The FTZ will promote an innovative trial in innovative business supervision, and establish a supervision mode that is suitable for the development of service trade, offshore trade and innovative trade businesses.

The FTZ will proactively develop international transit, LCL and distribution businesses, and promote the mode of “one declaration, one inspection and one clearance”.

The procedures for commodities circulation within the FTZ will be streamlined, and the commodities circulation between enterprises within the FTZ will be encouraged by “centralized declaration and self-supported transportation”.

Inspection and appraisal institutions for imported and exported commodities will be encouraged to be set up. A system to accept appraisal results by third-party inspection and appraisal institutions will be established.

Chapter 5 Financial Innovation and Risk Control

Article 19 (Financial Innovation)

System innovations, trials and experiments will be conducted in the financial sector in the FTZ, and a mechanism will be established to associate financial reforms in the FTZ and Shanghai's development into an international financial center.

Article 20 (Capital Account Convertibility)

Capital accounts convertibility will be implemented in the FTZ, and an innovative business and management mode will be created under proper risk controls through separate accounting.

Article 21 (Interest Rate Liberalization)

An independent pricing mechanism of financial institutions will be established in the FTZ that is in conformance with real economic development, and the reform of interest rate liberalization will be gradually promoted.

Article 22 (Cross-Border Use of RMB)

The cross-border RMB settlement business of institutions in the FTZ will be disconnected from the prior approval procedures. Enterprises in the FTZ may conduct innovative cross-border RMB business pursuant to their own operational needs, so as to facilitate the cross-border use of RMB.

Article 23 (Foreign Exchange Administration)

A foreign exchange administrative mechanism will be established that is suitable for the development of the FTZ, so as to facilitate trade and investment.

Article 24 (Development of Financial Institutions)

In accordance with the needs of the FTZ and as approved by the PRC financial administrative authorities, financial institutions of various levels, functions and types will be allowed in the FTZ, and platforms for international transactions will be allowed to be established in the FTZ by financial markets, so as to provide financial services at all levels and dimensions.

Article 25 (Risk Control)

Shanghai will enhance the coordination with PRC financial administrative authorities, and cooperate with PRC financial administrative authorities to establish a supervision and risk control mechanism in the FTZ that is suitable for the development of financial businesses.

Chapter 6 Comprehensive Administration and Services

Article 26 (Administration Optimization)

The FTZ will establish an efficient and convenient administrative and service mode to facilitate investment and trade pursuant to the internationalized and law-based requirements.

Article 27 (Disclosure of Administrative Information)

Policies, administrative regulations, procedures, rules and other information prepared or obtained by the Committee and relevant authorities in their duties shall be public, transparent and expediently accessible to enterprises.

Opinions shall be actively solicited from enterprises in the FTZ in the formulation and adjustment of relevant policies, measures, systems and norms in relation to the FTZ.

Article 28 (One-Off Acceptance Mechanism)

The mechanism of “one form application and one-off acceptance” for foreign invested project approval (filing) and enterprise incorporation (change) will be established by the industrial and commercial administrative authorities together with tax, quality supervision and other authorities and the Committee in the FTZ. Application materials submitted by applicants will be received and relevant documents will be delivered to applicants by the industrial and commercial administrative authorities in a unified manner.

The mechanism of “one form application and one-off acceptance” for overseas investment by enterprises in the FTZ will be established by the Committee, which shall receive application materials submitted by applicants and deliver relevant documents to applicants in a unified manner.

Article 29 (Improvement of Supervision)

The Committee and relevant authorities shall implement dynamic supervision focusing on mid-event and follow-up supervision and optimize administrative procedures and administrative systems pursuant to the requirements for reform in the FTZ.

Results of enforcement inspections in the FTZ shall be disclosed in a timely manner in accordance with laws. Where the enforcement inspections involve food and drug safety, public health, environmental protection or production safety, the handling progress shall also be disclosed together with necessary information, such as warnings and recommendations for prevention.

Article 30 (Security Review and Anti-Monopoly Review)

Relevant security review and anti-monopoly review mechanism will be established in the FTZ.

Where the invested project or enterprise is subject to security review or anti-monopoly review, the Committee shall request for the security review or anti-monopoly review in a timely manner.

Article 31 (Protection of Intellectual Property Rights)

Protection of intellectual property rights will be enhanced in the FTZ, and professional institutions will be encouraged and supported to provide mediation, assistance in rights safeguarding and other services for intellectual property rights.

The Committee will be responsible for the administrative mediation and settlement of patent disputes in the FTZ.

Article 32 (Publication of Annual Reports of Enterprises)

The publication system of annual reports of enterprises in the FTZ will be implemented. Enterprises in the FTZ shall submit an annual report to the industrial and commercial administrative authorities. which shall be disclosed to the public, except for those in connection with trade secrets. Enterprises shall be responsible for the veracity and legality of their annual reports.

Measures for publication of annual reports of enterprises in the FTZ will be formulated separately.

Article 33 (Credit Information System)

A system to record, disclose, share and use credit information of enterprises in the FTZ will be established, and the mechanism will be implemented to associate rewards for good credit and punishments for bad credit.

Article 34 (Sharing of Supervision Information)

The Committee will organize the establishment of a supervision information sharing mechanism and platform in the FTZ, and realize the communication, exchange and sharing of supervision information among Customs, inspection and quarantine, maritime affairs, financial, development and reform, commercial, industrial and commercial administrative, quality supervision, finance, tax, environmental protection, production safety supervision, port and shipping and other authorities, and provide assistance to optimize administrative procedures, provide efficient and convenient services and enhance mid-event and follow-up supervision.

Article 35 (Comprehensive Appraisal)

Shanghai will establish a comprehensive appraisal system to track, supervise and collect industrial information in the FTZ.

Shanghai development and reform authorities will establish a mechanism together with relevant municipal authorities and the Committee to conduct a comprehensive appraisal for the experiments and risk control of the industry as a whole and of enterprises in the industry, submit relevant appraisal reports, promote and improve the opening up of sectors, trials and innovation of administrative measures.

Article 36 (Administrative Reconsideration and Litigation)

Where an involved party is dissatisfied with the specific administrative activity of the Committee or the relevant authorities, it may apply for an administrative reconsideration or bring an administrative litigation pursuant to the Administrative Reconsideration Law of the People’s Republic of China or the Administrative Litigation Law of the People’s Republic of China.

Article 37 (Commercial Dispute Resolution)

Enterprises in the FTZ may bring a law suit to the People’s Court or apply for arbitration or commercial mediation as agreed in case of any commercial dispute.

The arbitration institutions in Shanghai will be supported to improve the arbitration rules and increase the professional levels and degree of internationalization in commercial dispute arbitration in the FTZ in accordance with laws, regulations and international practices.

The professional institutions for commercial dispute mediation will be supported to settle commercial disputes in the FTZ with various methods in accordance with international practices.

Chapter 7 Supplementary Provisions

Article 38 (Schedule)

The issues subject to the administrative approval by the Committee, specific issues to be administered by the Committee and the power of administrative penalty to be exercised by the Committee’s comprehensive enforcement authority will be expressly specified by the Schedule to these Measures.

Article 39 (Effective Date)

These Measures shall become effective as of October 1, 2013.

Attachment

1. Issues Subject to the Administrative Approval by the Committee

(1) Approval of enterprise investment projects as appointed by administrative authorities in investment;

(2) Approval of establishment and change of foreign-invested enterprises and approval of enterprises invested and established overseas as appointed by administrative authorities in commerce;

(3) Approval of construction project location opinions, approved planning conditions, construction land planning permits, construction project planning and design plans and construction project planning permits and acceptance of construction project completion and planning as appointed by administrative authorities in planning;

(4) Construction project land preview such as allocation and transfer of state-owned land use right as appointed by administrative authorities in land, except for newly added construction land;

(5) Construction project application permits, approval of preliminary construction project designs, construction project construction permits, permits for occupation of urban roads and pavements for setting various facilities, permits for temporary occupation of public roads and land for public roads, permits for construction in bridge safety protection area, permits for road excavation, approval for pipelines laid under the land for roads and through or across roads, permits for addition or alteration of level crossing, permits for overloaded vehicles, and qualification approval of foreign-invested enterprises with maiden application of construction project designing and construction enterprises as appointed by administrative authorities in construction;

(6) Approval and completion acceptance of greening plans associated with construction project, permits for temporary use of greenland (including public green land), permits for relocation or felling of trees (except for ancient and historic trees), permits for adjustment of internal layout and supportive facilities in public green land, permits for setting outdoor advertising facilities or posting or hoisting promotional materials or posters, approval for setting non-advertising outdoor facilities, approval and completion acceptance of planning and designing plans of environmental hygiene facilities associated with construction as appointed by administrative authorities in greening and urban environment;

(7) Approval of environmental impact appraisal, commissioning and completion acceptance of construction project, approval of night construction at construction site, and approval for suspension or removal of pollutant treatment facilities as appointed by administrative authorities in environment protection;

(8) Approval of civil defense works associated with construction and review of construction drawings, review of imposition, reduction and exemption of construction charges for civil defense works, completion acceptance of civil defense works, and approval of demolition of civil defense works as appointed by administrative authorities in civil air defense;

(9) Preliminary review of high-tech enterprise certification as appointed by administrative authorities in science and technology;

(10) Approval for implementation of non-standard work hours by enterprises, approval for employment of foreigners in Shanghai, approval for employment of people from Taiwan, Hong Kong and Macau in Shanghai, ratification for employment of Chinese citizens residing abroad in Shanghai, permit for employment of foreign experts in Shanghai, and issuance of Shanghai Residence Certificates categorized in type B as appointed by administrative authorities in labor and social security;

(11) Approval of temporary water supply suspension or water pressure reduction, and issuance of water discharge permit as appointed by administrative authorities in water affairs;

(12) Preliminary review of application from patent agencies and issuance of patent advertisement permit, registration of contract for publication of foreign books, registration of contract for authorized copyright in copies of foreign audio or video products, and filing for printing imported books in Shanghai as appointed by administrative authorities in intellectual property rights;

(13) Approval for performances organized by performance agencies in the FTZ as appointed by administrative authorities in culture;

(14) Preventive hygiene review of construction projects as appointed by administrative authorities in health and birth control;

(15) Permit for establishment or change of pharmaceutical retailers, permit for catering services, and approval for enterprises of online drug transactions as appointed by food and drug regulators.

2. Specific Issues to be Administered by the Committee

(1) Preparation and submission for approval pursuant to the legal procedures of specific regulatory plans, land transfer plans and all other special planning in the region, approval of adjustment of specific regulatory planning quota for industrial land in the region, supervise the land use in the region and etc.;

(2) Registration of bidding process in construction projects, review of designing documents, acceptance of construction project planning commencement and layout, registration of underground construction (±0.000) and structural topping, adjustment of specifications in construction project planning (including floor area ratio less than 2.0, greening rate, building density, building height, and conversion, separation and merger of industrial, storage and RD land), safety supervision and inspection of construction project quality, construction completion registration, acceptance of construction project files and other administrative works for construction projects;

(3) Administration of reporting of construction waste and construction debris treatment, administration of reporting of domestic waste classification and treatment, safety and quality supervision reporting and on-site supervision and administration of professional greening engineering, and determination and adjustment of green land boundaries;

(4) Safety and quality supervision reporting and supervision and inspection of civil defense works, supervision and inspection of maintenance and secure use of civil defense works, and comprehensive coordination for the secure use and administration of underground space;

(5) Preparation and submission for approval pursuant to the prescribed procedures of environmental impact assessment and the follow-up assessment of regional planning, organization of monitoring and supervision of environment and sources of pollution in the region, and emergency response to pollution accidents;

(6) Supervision and inspection of production safety;

(7) Daily supervision of performance agencies, cultural and recreational venues, and gaming and recreational equipment manufacturers;

(8) Daily supervision of production and business activities of food, drug, medical equipment, health food and cosmetics;

(9) Administration, coordination, supervision and inspection of statistics.

3. Power of Administrative Penalty to be Exercised by the Committee’s Comprehensive Enforcement Authority

Power of administrative penalty set forth in the Interim Measures of Shanghai Municipality for the Relatively Centralized Power of Administrative Punishments concerning City Management, the Determination by Shanghai Municipal People’s Government to Widen the Scope of the Relatively Centralized Power of Administrative Punishments concerning City Management in Pudong New Area and the Measures of Shanghai Municipality for Relatively Centralizing the Power of Administrative Punishments in Cultural Sector;
Power of administrative penalty exercised by administrative authorities in land planning in accordance with laws, regulations and rules against violations concerning land planning;
Power of administrative penalty exercised by administrative authorities in construction in accordance with laws, regulations and rules against violations concerning construction;
Power of administrative penalty exercised by administrative authorities in house support and building administration in accordance with laws, regulations and rules against violations concerning house support and building administration;
Power of administrative penalty exercised by administrative authorities in environment protection in accordance with laws, regulations and rules against violations concerning environment protection;
Power of administrative penalty exercised by administrative authorities in civil defense in accordance with laws, regulations and rules against violations concerning use of civil defense works and underground space;
Power of administrative penalty exercised by administrative authorities in labor and social security in accordance with laws, regulations and rules against violations concerning labor and social security;
Power of administrative penalty exercised by administrative authorities in intellectual property rights in accordance with laws, regulations and rules against violations concerning copyright and patent right;
Power of administrative penalty exercised by administrative authorities in food and drug regulation in accordance with laws, regulations and rules against violations concerning food, drug, medical equipment, health food and cosmetics regulation;
Power of administrative penalty exercised by administrative authorities in statistics in accordance with laws, regulations and rules against violations concerning statistics.

Provided by Lawyers Working Committee of Pudong New Area