Hainan issues QFLP interim measures to support foreign-invested equity investment enterprises

Hainan issues QFLP interim measures to support the settlement of foreign-invested equity investment enterprises.

The Provincial Financial Supervision Bureau, Provincial Market Supervision Bureau, Haikou Central Sub-branch of the People’s Bank of China and Hainan Regulatory Bureau of China Securities Regulatory Commission jointly issued Interim Measures on Implementing Qualified Foreign Limited Partners (QFLP) Domestic Equity Investment (hereinafter referred to as the “Interim Measures”).

The Interim Measures specify the establishment procedures and business scope for foreign-invested equity investment enterprises, and put forward concrete measures to support foreign-invested equity investment enterprises to settle in Hainan from the aspects of supporting policies and risk prevention and control.

What is QFLP?

Qualified Foreign Limited Partner (“QFLP”) means that an overseas institutional investor converts overseas capital into CNY funds and invests in the domestic private equity investment market after passing the qualification examination and approval and the supervision procedures of its Foreign exchange funds.

What are the key points of the Interim Measures?

Increased convenience:

The registration is simple and efficient. There is no joint audit mechanism, and the application process for enterprises is relatively short, with fewer materials to be submitted.

Few restrictions:

The Hainan free trade port now has the lowest access requirements in the country. According to the Interim Measures, there is no minimum threshold requirement for QFLP enterprises to register. The interim measures only require two senior executives to have experience that meets the requirements specified in the interim measures. There is no restriction on the proportion of initial capital contribution, the proportion of monetary capital contribution or the period of capital contribution.

Wide Range:

Implementing the negative list management for foreign investment in a wide range of areas. The business scope of QFLP fund adopts the negative list management mode, which clarifies “seven must nots”, and any business not included in the list is free to be carried out. At the same time, a clear path is adopted to reserve space for QFLP funds to invest in secondary market stocks and some investment targets for corporate bond trading.

No difference:

Equal treatment of domestic and foreign investment. The Interim Measures have the same requirements for domestic and foreign capital QFLP management enterprises, and clearly allow the business model of “domestic capital management of foreign capital” and “foreign capital management of domestic capital”, with high flexibility.

Preferential policies:

The Interim Measures specify preferential policies from the aspects of individual income tax, supporting preferential measures and rewards for park landing.

Additionally, the Provincial Financial Supervision Bureau will promote QFLP business to be included in the catalog of encouraged industries and the catalog of industries encouraging foreign investment in the Hainan Free Trade Port, and QFLP enterprises will enjoy more tax preferences.

Interim measure Chinese text

Related article: Hainan Free Trade Port System Integration and Innovation Action Plan is released

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