Market Profiles

China B shares

RBC IS operates a segregated account structure in this market.

Whilst no documents are required in this market, it is prudent to hold on record client documents to show the legal existence of the client in case the agent or the country regulator requests it.

For further information or support around accessing this market, please contact your RBC IS representative.

Shanghai Stock Exchange (SSE)
Currently, there are two stock exchanges in mainland China: the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE). The two exchanges are not cross-linked and the stocks listed at the two exchanges are mutually exclusive. The SSE was inaugurated in November 1990 and is wholly state-owned. It began operations in December 1990. In 1991, the Municipal Government in Shanghai introduced regulations that allowed listed companies in Shanghai to issue B-shares to attract foreign investments. The first B-share issue was launched by Shanghai Vacuum in February 1992. 

At present, the SSE has tradable equities, including A and B-shares, funds, close-ended funds, exchange traded funds (ETFs), treasury bonds, financial bonds, corporate/enterprise bonds, and warrants. All these instruments are operated in a scripless environment. The B-share market is open to foreign investors and domestic individual investors while A shares, funds, close-ended funds, exchange traded funds (ETFs), treasury bonds, corporate/enterprise bonds, bond repos, and warrants are open to domestic institutional/individual investors, residents of Hong Kong, Macao and Taiwan living in the mainland, RMB qualified foreign institutional investors (RQFII) and Qualified Foreign Institutional Investors (QFII). According to the amendments to Measures for the Administration of Securities Registration and Settlement and Measures for the Administration of Equity Incentives of Listed Companies released by the China Securities Regulatory Commission (“CSRC”) on 15 August 2018, the following 2 types of foreign individual investors are allowed to open securities accounts to lawfully invest in China A-share market: 1) foreign individuals who work onshore; 2) foreign employees of A-share listed companies who work offshore and participate in the company’s equity incentive compensation plans. Bond repos currently are only allowed to be traded by domestic institutional/individual investors.

(R)QFIIs can participate in Primary Market (through initial public offerings) as well as Secondary Market trading. Each (R)QFII must appoint a domestic securities company to execute trades on their behalf. Up to three domestic securities companies per market (Shanghai and Shenzhen) per (R)QFII may appoint. However, due to current system constraint of the Stock Exchange, one (R)QFII investor ID can only appoint one broker in each market.

All trading orders are processed through a computerised automatic matching system operated by the stock exchanges, which effects each transaction based on the principle of price and time priority. Trading information is transmitted electronically from stock exchange’s computer terminal to the member broker’s trading terminal.

Trades are executed on the trading floor or off-floor via computer terminals linked to brokers. 

For B share transactions, a foreign investor located in the People's Republic of China (PRC) may place buy or sell orders directly with an authorised domestic broker. If the foreign investor is based outside the PRC, they need to place the buy/sell orders with a foreign broker who holds a special seat in the exchange, or through an approved foreign broker who will relay the order to the authorised domestic broker for execution. 

For A share transactions, a (R)QFII may place buy or sell orders directly with a domestic broker.

For each transaction, the broker will issue a sale or purchase confirmation to the investor.

In A shares market, there is no trading or settlement on PRC public holidays.

In Shanghai B shares market, there is no trading and settlement on PRC public holidays, and settlement would be postponed on US public holidays.

ISIN (International Securities Identification Numbering): CSRC introduced new ISIN codes to the China market effective from October 12, 2007. The China Securities Depository and Clearing Corporation Limited (CSDCC) is responsible for numbering ISIN codes to the securities listed in China. ISIN codes are used by many overseas institutional investors but are not officially recognised. 

Other: the SSE uses local codes.

The People’s Bank of China (PBOC): the central bank of China. Its responsibilities include: formulating and implementing monetary policies; issuing Renminbi, China's currency, and managing its circulation; holding, managing and operating state foreign exchange reserves and gold reserves; operating the state treasury; safeguarding the normal operation of payment and clearing systems; compiling financial statistics, conducting financial investigations and making forecasts; and engaging in domestic and international financial operations. 

The State Administration of Foreign Exchange (SAFE): responsible for the administration of foreign exchange, balance of payment, external credit and debt, cross-border capital flows, other matters as assigned by the State Council and the People's Bank of China..

The China Banking and Insurance Regulatory Commission (CBIRC): CBIRC merged by former China Banking Regulatory Commission (CBRC) and China Insurance Regulatory Commission (CIRC) was formally established in April 2018. The new commission will enhance oversight of both banking and insurance industries by combining responsibilities of supervising the banking and insurance industries, preventing and dissolving financial risks, and protecting financial product consumers’ rights.

The China Securities Regulatory Commission (CSRC): the direct regulator for the mainland China securities market and the SSE and oversees the entire securities industry in mainland China. As an independent regulator, it is responsible for enacting and examining all securities-related rules and regulations, approving new issuances and corporate actions as well as safeguarding the interests of investors in mainland China by mitigating any illegal, dishonourable or improper conduct in relation to securities trading. The CSRC does not fund the operations of the SSE.

The CSRC Shanghai Office: acts as coordinator and helps the CSRC regulate the operations of the SSE, implement market rules and regulations, and investigate any irregularities identified.

Securities are traded in a scripless environment, in a registered form.

Equities: 100 shares constitute a board lot. Odd lots can be sold through the same trading procedures as a normal trade, however cannot be purchased.
Bonds: RMB 1,000 par value is the minimum lot size for both bids and offers.
Funds and warrants: 100 units constitute a bid lot. Odd lots can be sold through the same trading procedures as a normal trade, however cannot be purchased.

The minimum tick price of Shanghai A shares and bonds is RMB 0.01, and RMB 0.001 for funds and warrants. The minimum tick price of Shanghai B shares is USD 0.001.

Daily price fluctuation limit is +/-10% on closing price of previous day for A shares and funds, while stocks under special treatment (ST shares or *ST shares) are subject to a price limit of 5%. The daily price fluctuation limits of warrant is set at:

Warrant upper limit price on trade day (T day) = (Warrant closing price on T-1) + [(The upper limit price of the
underlying stock on T) – (The closing price of the underlying stock on T-1)] × 125% × Warrant exercise ratio
Warrant lower limit price on trade day (T day) = (Warrant closing price on T-1) - [(The closing price of the
underlying stock on T-1) - (The lower limit price of the underlying stock on T)] × 125% × Warrant exercise ratio

For securities with a ST and *ST sign and S stocks (i.e. stocks of companies that have not completed the non-floatable share reform), daily price fluctuation limit is +/-5% on closing price of previous day.

* Shanghai B-shares, which settle in USD, continue to trade on USD holidays but settlement is deferred until the next working day.

A shares- RMB, B shares- USD

The shares of delisted companies are compulsorily moved to the over-the-counter (OTC) market for trading. A new local stock code is issued for the delisted stock, however, all the issued shares of the listed companies will continue to be safe-kept in CSDCC after being delisted. 

Daily price fluctuation limit is restricted to 5% above or below the closing price of the previous transfer day and first bidding price is based on the last closing price before delisting, with an upper limit at 5% and no bottom limit. 

Trading hours: the OTC shares can normally be transferred every Monday, Wednesday and Friday (09:30 -11:30 and 13:00 -15:00). Furthermore, the OTC shares can be transferred five days a week from Monday to Friday (09:30 -11:30 and 13:00 -15:00), if the delisted company meets the following requirements:
1. fulfil the information disclosure requirement
2. the net assets of the company traded are positive or they are making a profit
3. CPA has no qualifications or comments in the company's latest annual report.

A share market for (R)QFIIs:

Equity Settlement
A shares are traded and settled in RMB. All A shares and exchange-traded equities are settled on trade date (T) with cash settlement on T+1. CSDCC acts as the central counterparty and guarantees securities and cash settlement. On T, (R)QFII places an order with its designated local broker at the SSE (each (R)QFII can deal through up to three brokers in the SSE. However, due to current system constraint of the Stock Exchange, one (R)QFII investor ID can only appoint one broker in each market.)

Prior to market opening on T, the broker will check the availability of securities (or cash) with the custodian bank. In the case of a sale instruction, the trading system also checks whether securities are available in the account of the (R)QFII at the depository to prevent overselling or short selling. At the end of the trade day, the CSDCC will transfer the securities from the seller's to the buyer's account according to trade data provided by the exchanges. Shares purchased are automatically registered in the name of the buyer.

At the end of the day, the CSDCC reconciles its positions with the stock exchange and sends the custodian bank a settlement confirmation notification around 18:00 on T. Once the confirmation is received from the CSDCC, the custodian bank will reconcile the details with settlement instructions received from the client. Whenever there is unmatched, missing instruction or incomplete information, the custodian will inform (R)QFII and the (R)QFII’s designated broker for settlement in accordance with tripartite agreement reached among them. If there is no discrepancy, the custodian bank will settle the trade and send the settlement confirmation to clients. Otherwise, the custodian bank will contact the broker and/or (R)QFII/Global Custodian Bank with the difference, and the pre-agreed error rectification procedure will be activated. Clients will be informed of the difference in trade amounts between the broker execution report and the CSDCC amount. If no change on the settlement amount is agreed by (R)QFII and its broker, the custodian bank will settle the trade as per CSDCC's record received on T. The CSDCC will notify the expected net cash payment by the end T, payable on T+1.

A custodian with a net payable position must transfer funds to its Clearing Account with its domestic clearing bank by noon on T+1. The clearing bank will transfer funds from this account to the custodians Clearing Reserve Account with the CSDCC by 15:00 on T+1. The CSDCC will credit the custodian's clearing accounts with net receivable positions before 16:00 on T+1. 

The following flow chart shows an overview of the A-share settlement cycle:



Cash settlement procedure for (R)QFII
While securities are settled on a trade-by-trade basis at the (R)QFII level, cash is settled on a net basis at local custodian level. The (R)QFII custodian bank must maintain one clearing account with one of the CSDCC's designated cash clearing banks and one clearing reserve account with the CSDCC. Cash is netted at the custodian level with the CSDCC's authorised clearing bank.

The custodian opens a clearing account with the Clearing Bank of CSDCC for the cash settlement. The custodian is pre-notified by the CSDCC of cash settlement on T day, detailing their clearing reserve account's net payables or receivables. Assuming that the account has a net receivable position with CSDCC at 09:30 on T+1, client's ledger balances will be updated in the RMB cash account. CSDCC will then transfer funds from the CSDCC reserve account to the custodians clearing account later in the day for their net receivable position. CSDCC will then update all its settlement records in its system at about 17:00 the same day.

Fixed Income Settlement
Currently the following fixed income instruments are available in China A-share market:

• Convertible bond
• Government bond
• Policy financial bond
• Local government bond
• Enterprise bond
• Corporate bond
• Detachable bond
• Exchangeable bond
• Private placement bond
• Bond repurchase agreements (repos) (currently (R)QFIIs are not allowed to engage in repo transactions).

Shanghai Market

Purchase of bonds
The settlement process of convertible bond is same as that of A shares.

The other types of bonds matching the criteria of netting settlement are settled on rolling basis and final at 16:00 T+1. The settlement date for receivables of these bonds depends on the net cash settlement position at the level of local custodian. 

For local custodians with net cash receivable position or its reserve account has sufficient fund to cover the net payable position on T day, the CSDCC will settle the bonds at the end of T day and send the settlement confirmation to the custodian at around 18:00. 

If the local custodian’s reserve account does not have sufficient fund for the net payable amount on T day, the CSDCC will withhold the net receivable bonds in the custodian's underlying (R)QFIIs' accounts, on a "last buy, first withhold" basis, until the total withheld amount equals the custodian's net payable amount, or until all net receivable bonds are withheld. After the withholding of appropriate bonds, CSDCC will settle the rest bonds on T day, which can be traded on T+1. The custodian will settle the bonds upon receipt of CSDCC's settlement confirmation at the end of T day. The custodian should pay the funds to CSDCC by 16:00 on T+1 and CSDCC will release the withheld bonds to (R)QFIIs' accounts. The bonds being withheld on T day can still be traded on T+1. The custodian will conduct settlement for these bonds according to CSDCC's confirmation at the end of T+1.

Other kinds of debt instruments which are not applicable to netting settlement fall into non-guarantee settlement.  Settlement of both securities and cash take place on T+0 if it’s Real Time Gross Settlement. CSDCC will not handle nor shall guarantee cash settlement and (R)QFIIs be responsible for making their own credibility evaluation of market maker for controlling counterparty and settlement risks.  If settlement instructions cannot reach custodian by 12:00pm on T day or there is shortage of fund in (R)QFIIs’ corresponding cash account, we will not settle the transactions which will then be failed.

Sale of bonds
For all kinds of debt instruments applicable to netting settlement, securities are settled on T and cash is moved on T+1 (same as that of A shares). 

Other kinds of debt instruments which are not applicable to netting settlement fall into non-guarantee settlement.   Settlement of both securities and cash take place on T+0 if it’s Real Time Gross Settlement.  CSDCC will not handle nor shall guarantee cash settlement and (R)QFIIs be responsible for making their own credibility evaluation of market maker for controlling counterparty and settlement risks.

Settlement procedure for B shares:
Shanghai B shares are traded, listed and settled in USD. All B shares are automatically registered under the name of the investor ID holder upon settlement by the CSDCC Shanghai branch's computer system. Registration in nominee names is allowed, however, street name holdings are not allowed.

B shares are settled on a T+3 (where T = trade date) settlement cycle and on a trade-by-trade basis. Turnaround transactions, for example buying on trade day (T), but selling on T+1 or T+2, are possible in Shanghai and are settled on a first in, first out basis. The settlement cycle is the same as for a normal trade (T+3). 

Shares from sellers are earmarked pending settlement. CSDCC Shanghai branch acts as the settlement counterparty with settlement made between the delivering party and the CSDCC Shanghai branch and between the CSDCC Shanghai branch and the receiving party. The CSDCC Shanghai branch has opened a clearing account with Citibank New York. All clearing participants receive and deposit settlement funds through this account.

T
A buy or sell order from a foreign investor is communicated via an approved foreign broker to a domestic broker or a foreign broker with special trading seat for execution. The shares are traded through the SSE electronic trading system. The CSDCC Shanghai branch provides daily settlement notifications electronically to custodians at the end of day to enable them to match trades with their clients.

T+1/T+2
The custodian and brokers match the transaction as stated in the CSDCC Shanghai branch's daily settlement notifications with customers' instructions. Any discrepancies will be advised to customers on the same day.

T+2
If the custodian bank does not receive the instruction by 11:00am on T+2, then it will be unable to provide settlement details to the CSDCC Shanghai branch for pre-matching, and the CSDCC Shanghai branch will then require the broker that initiated the transaction to settle the trade. The pre-matching report produced by the CSDCC Shanghai branch will be sent electronically to the custodian bank in the afternoon. Any problems in the pre-matching process will be advised to the clients by the custodian bank that day.

T+3
Actual overdraft is not allowed in China B-share market as banks cannot offer financing to clients for securities trading or settlement purpose. Therefore, good USD funds must reach the custodian bank's designated account by 22:30 (Shanghai time) on T+2 by telegraphic transfer.

Amended/cancelled instructions from customers should reach the custodian bank before 10:00 on T+3.

Trades will be settled if instructions are matched and funds are in the account. The CSDCC Shanghai branch will update the stock and cash positions of the investors and a settlement confirmation will be forwarded to the participants on the same day.All settlement with the CSDCC Shanghai branch is on an ‘against payment' basis. However, from the custodian bank's perspective, settlement can also be 'against free of payment', in which case the cash will be settled between the buying and selling brokers through the CSDCC Shanghai branch. 

While CSDCC Shanghai branch handles the local clearing and settlement under the principle of delivery-versus-payment (DVP), trades are not settled on a true DVP basis due to the time difference between Shanghai and New York. Payment is made by telegraphic transfer between the clearing participants. 

Actual payment is made by telegraphic transfer between the clearing participants' accounts in USD. However, as the actual USD paid by the CSDCC Shanghai branch's clearing bank in 'good funds' in New York is some 12 or 13 hours behind Shanghai time, default by the CSDCC Shanghai branch will not be detected until early SD+1 Shanghai time.

The CSDCC Shanghai branch transfers stocks between accounts electronically in its records on settlement day pending receipt of funds with 'good value' from participants on the day following settlement day. DVP is therefore on clearing participant level with intra-day cash risk. The settlement period will be extended accordingly if it falls on a public holiday in either mainland China or the United States. Normally, on a mainland Chinese public holiday, trading will be stopped with settlement postponed to the next working day. On a US holiday, trading will not be affected but settlement will be postponed. For example, if a trade is carried out on Monday and there is a US holiday on Tuesday, settlement will take place on Friday instead of Thursday.

A-share market
Covered short selling is not permissible to QFIs in A-share market collective biding system. Stock Exchange trading system will automatically reject the trading order if there’s no sufficient stock in the account. 

B-share market 
Short selling is not allowed in B-share market. 

In SSE, the position will be checked automatically by the system before trade execution. The stock exchange trading system will reject sales orders where the investor does not have sufficient share in their account.

Turnaround transactions, for example buying on trade day (T), but selling on T+1 or T+2, are possible in Shanghai B share market and are settled on a first in, first out basis.

Same-day turnaround trades in the A-share market have been prohibited by the CSRC since December 1, 2001. However, same-day turnaround trades for bond ETFs, exchange Money Market Funds (MMF), bonds (excluding convertible bonds) and warrants are allowed.

Same-day turnaround trades for B share are not allowed.

CSDCC – Shanghai Branch: The CSDCC acts as a central depository, clearing house and registrar for equities including A and B-shares, funds, closed-end funds, exchange traded funds (ETFs), treasury bonds, financing bonds, convertible bonds, corporate/enterprise bonds, bond repos, and warrants in the Shanghai market. All securities are dematerialised at the CSDCC Shanghai branch and the use of the central depository is mandatory in mainland China.

CSDCC – Shanghai Branch: The CSDCC is a state-owned, non-profit entity that was established on March 30, 2001. The CSDCC is the result of a merger of the previous central depositories, the Shanghai Securities Central Clearing and Registration Corporation (SSCCRC), established in March 1993, and the Shenzhen Securities Central Clearing Co Ltd (SSCC), established in September 1995.

With effect from October 1, 2001, the legal title of the SSCCRC and the SSCC has been changed to the CSDCC Shanghai and CSDCC Shenzhen respectively as two branches of the CSDCC.

The CSDCC head office is based in Beijing. It reports to and is directly supervised by the CSRC headquarters. The former two securities clearing companies affiliated to the SSE and SZSE have been integrated with the merged company being jointly funded by the SSE and SZSE.

Under Chinese securities law, for both Shanghai and Shenzhen markets, the prime record of ownership of dematerialised securities is held by the CSDCC. CSDCC provides a daily transaction report and holdings report after settlement to the custodian as evidence of title for the beneficial owner holding shares in the depository. All shares are automatically registered under the name of the investor ID holder upon settlement by the CSDCC Shanghai branch's computer systems.

In the Shanghai market, the transfer fee levied by the CSDCC is 0.001% for A share payable by the both buyer and the seller upon settlement. Transfer fee for preferred shares have been removed.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

China B Share settlement follows BIS Model 1: a system in which there is a simultaneous transfer of securities and associated funds from the buyer to the seller. All transfers occur on a trade-by-trade (gross) basis with all transfers made via book entry. All transfers are final.

China A Share settlement follows BIS Model 2: a system that settle securities transfer instructions on a gross basis, with final transfer of securities from the seller to the buyer (delivery) occurring throughout the processing cycle, but settle funds transfer on a net basis, with final transfer of funds from the buyer to the seller (payment occurring at the end of the processing cycle).

Book-Entry: A and B shares are lodged with the CSDCC Shanghai and are registered automatically in the name of the investor ID holder on settlement. Street name is not allowed while nominee registration is permitted for B shares. Depository records form the registration record. The registration process has no impact on the availability of the shares.

Physical: Not applicable

CSDCC Shanghai Branch.

Registration takes place automatically upon settlement.

Shareholdings in this market may be required to be disclosed by the beneficial owner, particularly when such shareholdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Failure to comply with the reporting requirements in this market may lead to penalties and / or other sanctions.

A shareholder and its concerted party owning more than 5% of the total listed shares (e.g. A, B, H shares and convertible securities), of a company must submit a report within three working days to the CSRC, and the SSE, notify the listed company, and make a public announcement. During the reporting period, trading of that listed company’s equities is prohibited. Any subsequent increase or decrease of 5% must also be reported.

According to Article 47 of the Securities Law, where any director, supervisor and senior manager of a listed company or any shareholder who holds more than 5% of shares of a listed company, sells the stocks of the company as held within six months after purchase, or purchase any stock as sold within six months thereafter, the profits generated from the sale shall be incorporated into the profits of the relevant company.

If a director, supervisor, senior manager of a listed company or shareholder holds more than 5% of the shares of a listed company and violates the provisions of Article 47 of the Securities Law, they will be given a warning and be concurrently imposed a fine of RMB 30,000 to RMB 100,000, according to Article 195 of the securities law.

Furthermore, in the event of the following situations, (R)QFIIs, as the eligible convertible bonds investors, must file the report to CSRC and stock exchanges, inform the listed company, and make a public announcement within three working days:

• when an investor’s holding of convertible bonds (CB) reaches or exceeds 20% of the total CB issued by a listed company
• when an investor’s holding of CB reaches or exceeds 20% of the total CB issued by a listed company and the investor subsequently changes his holding by another 10% of the CB issued by the same listed company.

During the reporting period, and within two days of reporting and making the public announcement, the investor cannot buy CB or stock of the listed company.

In addition, according to the Provisional Measures on Administration of Commercial Banks Shareholding (hereinafter referred to as “Provisional Measures”) promulgated on 5 January 2018, Notice on the Implementation of the Relevant Work Concerning the “Provisional Measures on Administration of Commercial Banks Shareholding” (CBRC [2018] No.48) and Notice on the Governing of Commercial Banks Shareholder Reporting (CBRC [2018] No.49) promulgated on 9 March 2018 by China Banking Regulatory Commission (CBRC), shareholders of commercial banks shall follow the notices to obtain approval from CBRC or report to CBRC according to the reporting requirements as stipulated therein. Key highlights are as below. Foreign investors shall consult their external legal advisors for the detailed requirements and relevant impact.

• The investor and its affiliates and concerted parties, individually or jointly, for the first time plan to hold or to increase shareholding to reach five per cent (or more) of the capital/issued shares of a commercial bank, shall obtain the pre-approval from CBRC or local branch of CBRC. In case where the five per cent (or more) shareholding is acquired through onshore/offshore securities market, the validity of the approval is six months. The detailed requirements and process of approval shall follow the relevant CBRC rules.
• The investor and its affiliates and concerted parties, individually or jointly, hold one per cent to five per cent of the capital/issued shares of a commercial bank, shall report to CBRC or local branch of CBRC within 10 working days of acquiring the shareholding. The detailed requirements and process of the report shall follow the relevant CBRC rules.

The shareholding held by the investor and its affiliate and concerted parties shall be aggregated when making calculation of shareholding percentage.

QFII/RQFII license holder who invested in list insurance company or securities company need complies with < Measures for the administration of equity rights of insurance companies > and < Measures for the administration of foreign-invested securities companies >.

On 26 May 2017, China Securities Regulatory Commission (“CSRC”) issued the revised rules (CSRC [2017] No.9) for controlling shareholders and shareholders holding shares of 5% or above (referred as “substantial shareholders” thereafter), listed companies’ directors, supervisors and senior executives, and other shareholders who are reducing the holdings of pre-IPO shares and non-public offering of a listed company on reducing holdings.

On 27 May 2017, Shanghai Stock Exchange and Shenzhen Stock Exchange also released relevant implementation details (collectively “Stock Exchange Implementation Details”).

Key highlights of CSRC [2017] No. 9 are as below:

1. When the holdings are reduced via block trading, both the transferor and transferee shall comply with the relevant Stock Exchange Implementation Details regarding quantity of holdings reduction, holding period, etc. According to the Stock Exchange Implementation Details, the shareholding reduction cannot exceed 2% of the total shares of the listed company within any consecutive 90 days, and the transferee cannot further transfer the shares within six months of acquiring the shares.
2. For shares purchased via non-public offering, the shareholders shall also comply with the relevant Stock Exchange Implementation Details on percentage restriction when the shareholders reduce the holdings via collective bidding system within 12 months after the end of the lock-up period. According to the Stock Exchange Implementation Details, the percentage of shareholding reduction cannot exceed 50% of the holdings that the shareholder purchased through the non-public offering.
3. If the shareholders are not a substantial shareholder but hold pre-IPO shares or non-public offering shares of a listed company, the total number of shares to be reduced by these shareholders through collective bidding system within 3 months should not exceed 1% of the total shares of the listed company.
4. Pre-event disclosure of shareholding reduction plan is now also applicable to directors, supervisors and senior executives of listed companies, in addition to substantial shareholders,. Furthermore, information disclosure requirement also covers during and after such shareholding reduction.
5. After the reduction via agreement transfer (with scenarios being clarified) from the substantial shareholder, the transferor and corresponding transferee shall also abide by the restrictions mentioned in above point 3 and 4 within the next 6 months of the share reduction.
6. For shareholding reduction by substantial shareholders, their holdings reduction should be aggregated with its concerted parties.

Shareholding reduction shall abide by Stock Exchange Implementation Details and abnormal trading behaviors and violations will be subject to restricted trading, investigation and penalty.

A shares: There are no buy in or sell out related exchange rules for the A share market.

In the event that a custodian runs into an overdraft at its clearing reserve account with CSDCC on T+1, the CSDCC will impose overdraft interest equivalent to the inter-bank deposit rate, as well as penalty interest (0.1% per day) based on the amount of overdraft. Additionally, CSDCC will provisionally retain the securities held by the custodian, equal to 120% of the amount of the overdraft. If the custodian repays the overdraft and interest within two days, the CSDCC will return the provisionally retained securities. Otherwise, the CSDCC will dispose of the retained securities to cover the overdraft. If the proceeds from the disposal are not sufficient to cover the principal of the overdraft and the penalty interest, the difference will be claimed from the custodian.

B shares: Transactions not settled on T+3 must be settled by T+5, or a forced buy-in or sell-out will take place on T+6. 

Responsibility for ensuring settlement depends on which party is at fault:

• For trades unconfirmed by custodian banks, the buying/selling broker is responsible for settlement.
• For trades confirmed by custodian banks, the custodian banks and underlying clients are responsible for settlement.

If a party is unable to fund a purchase, the CSDCC Shanghai branch uses the guarantee fund to effect payment for settlement. The defaulting party using the guarantee fund incurs a handling fee of 0.5% of the amount of guarantee fund used per day will be charged from T+4. If the guarantee fund is not covered by T+5, the CSDCC enforces a sell-out on T+6.

In the case of an unmatched sale trade, CSDCC Shanghai will stop payment and enter a negative record and freeze the settlement of shares. The trade must be settled by T+5. Otherwise, CSDCC will impose a forced buy-in on T+6. A handling fee of 0.5% per day will be charged on the amount of guarantee fund used. In addition, the default party also needs to bear any price difference and other expenses incurred as a result of buy-in.

QFIs are currently allowed to participate in securities lending and borrowing transactions and will further be allowed to participate in bond repo transactions, although these facilities are currently under development. Further, the arrangements for QFI participation in bond repurchase activities will become effective when these are launched on the stock exchanges.

For A and B shares
The Settlement Guarantee Fund: intended to ensure participants meet their settlement obligation and liabilities.

The Settlement Risk Fund: intended to deal with systemic failure.

For A shares only
The Minimum Clearing Reserve Fund: RQFII/QFII are required by CSDCC equivalent to deposit 0.06% of the average daily inward remittance of all the R/QFIs for the previous month in the Shanghai market. The calculation is based on the amount reported by the custodian, which must also comply with the amount approved by the State Administration of Foreign Exchange for deposit into the RMB account with the custodian bank

The People’s Bank of China (PBOC) promulgated the “Anti-money Laundering Law of the People's Republic of China” on October 31, 2006, which governs the supervisory management of anti-money laundering, financial institutions’ obligations on anti-money laundering activities, investigation of anti-money laundering activities, international cooperation on anti-money laundering, as well as the legal responsibilities.

The PBOC has further promulgated “Provisions on Anti-money Laundering through Financial Institutions” with effect from January 1, 2007, which governs the anti-money laundering activities by commercial banks, securities companies, fund management companies, futures brokerage companies, insurance companies, trust investment companies, financing companies, and other financial institutions. In the Provisions, it stipulates that PBOC shall be the administrative department for anti-money laundering of the State Council, which shall supervise and administer the anti-money laundering work of financial institutions under law. CBRC, CSRC and China Insurance Regulatory Commission (CIRC) shall, in light of their respective functions, exercise their duties of anti-money laundering supervision and administration.

In addition, PBOC promulgated “Administrative Measures for the Financial Institution Reporting of Large Amount Transactions and Suspicious Transactions”, taking effect on March 1, 2007. The Measures stipulated Financial Institutions' role and responsibility in reporting of large amount or suspicious transactions for anti-money laundering purpose. PBOC and its branches shall be responsible for monitoring of such reporting by financial institutions.

This is an FII market. Please contact your RBC Investor Services' representative before making portfolio investments.

A-share Market 
(R)QFII applicants must submit license applications and quota registration/application to both the CSRC and SAFE through the custodian. A securities investment licence will be issued to those applicants whose applications have been approved. Applicants will register with/apply to SAFE through their custodians for basic/incremental investment quotas after obtaining the securities investment license. For foreign investors under RQFII scheme, each RQFII can appoint up to 3 local custodian banks. RQFIIs who use multiple local custodian banks shall appoint one of them as its Master Reporting Bank. For RQFIIs who use only one local custodian bank, that local custodian bank will become Master Reporting Bank by default. The Master Reporting Bank is responsible for the application and reporting with SAFE. Normally it will take CSRC and SAFE a certain while e.g. 3-4 months for CSRC to grant a license and 1-2 months for SAFE to register/permit quota, depending on the market situation.

Upon receipt of the approval from the CSRC and SAFE, the custodian will submit an account opening application to CSDCC Shanghai Branch. The account-opening fee charged by CSDCC Shanghai Branch is RMB 200. 
A QFII applicant should fall within the following criteria:

• The applicant should have sound financial and credit status, should meet the requirements set by the CSRC for asset size and other factors.
• Employees of the applicant should meet the requirements for professional qualifications set by its home country/region.
• The applicant should have a sound management structure and internal control system, should conduct business in accordance with the relevant regulations, and should not have received any substantial penalties by regulators in its home country/region during the three years prior to application.
• The applicant’s home country/region should have a sound legal and regulatory system, and its securities regulator should have signed a memorandum of understanding with the CSRC and should have maintained an efficient regulatory and cooperative relationship with the CSRC.
• Other criteria as stipulated by the CSRC based on prudent regulatory principles.

Eligible QFIIs include fund management companies, securities firms, insurance companies, commercial banks, pension funds, charity endowment funds and other asset management institutions and must meet the following qualification criteria:

A RQFII applicant should fall within the following criteria:

Qualified financial institutions registered and having its principal place of business in Australia, Canada, Chile, France, Germany, Hong Kong, Hungary, Ireland, Korea, Luxembourg, Malaysia, Netherlands. Qatar, Singapore, Switzerland, Thailand, UAE, UK, USA and Japan with asset management license issued by the competent local securities regulator.

B-share Market 
A foreign investor must obtain an unique investor code from the CSDCC Shanghai Branch before investing in the Shanghai stock market. The CSDCC Shanghai Branch requires foreign investors to provide identifying documentation for obtaining the investor code prior to entering the market. Additionally, a local custodian opening accounts on behalf of a foreign investor, must show documentation to prove that it has received a mandate to open an account from an authorised individual within the institution seeking access to the market. 

The code which identifies the name, address, country of domicile, and tax identification number (or equivalent reference number from the country of domicile) of the beneficial owner can be secured through one of the CSDCC Shanghai Branch’s clearing participants, normally the custodian. An investor must supply the unique investor code and name to the broker whenever placing securities transaction orders. 

CSDCC Shanghai Branch charges an account-opening fee of USD 85 for institutional investors and USD 19 for individual investors.

Foreign investment is permitted in the B share market. Foreign institutional investors who have been granted (R)QFII status are able to invest in the A share and exchange bond markets.  
Foreign Ownership Limits

• Shareholding by a foreign investor through a single foreign investor in a single listed company shall not exceed 10% of the total number of shares of the listed company;
• Aggregate shareholding of A shares by all foreign investors in a single listed company shall not exceed 30% of the total number of shares of the listed company.

On January 9, 2016, SSE and SZSE issued the implementation notice for substantial shareholders, directors, supervisors and senior executives of listed companies on reducing holdings. The total number of shares to be reduced by the substantial shareholder through collective bidding system for a rolling 3 months’ period should not exceed 1% of the total shares of the listed company starting from January 9, 2016.

If the aggregated shareholding of a listed company held by all the foreign investors reaches or exceeds 26%, Shanghai Stock Exchange (SHSE)/Shenzhen Stock Exchange (SZSE) will publish the aggregated shareholding information of the listed company by all foreign investors on its official website.

By close of a trading day, if the shareholding of a single foreign investor via QFII/RQFII to a single listed company exceeds the stipulated proportion (i.e. 10%), the QFII/RQFII will be required to sell the exceeding portion within 5 trading days and disclose the information accordingly.

By close of a trading day, if the shareholding of all foreign investors to a single listed company exceeds the stipulated proportion (i.e. 30%), SHSE/SZSE will release “force selling” notification to the appointed securities brokers and custodians of the QFII/RQFIIs based on the “Last Buy First Sell” principle. The QFII/RQFIIs should sell the exceeding portion within 5 trading days.

QFIIs/RQFIIs may invest in the following financial instruments: (1) Shares, bonds and warrants listed or transferred on the stock exchange; (2) Fixed income products traded in the inter­bank bond market (“CIBM”); (3) Securities investment funds; (4) Index future; (5) FX derivatives (for hedging purpose); (6) Chinese Depository Receipt; (7) Other financial instruments as approved by CSRC

In addition, QFII/RQFII can participate in the subscription for additional share issues, rights issues, IPO of shares and IPO of convertible bonds.

Further, in CIBM upon registration, currently QFIIs/RQFIIs can invest in cash bonds, (such as government bonds, PBOC bills, financial bonds, commercial paper and mid­term notes), interbank deposits, and participate in bond IPO.

SAFE has abolished the investment quota limitation on qualified foreign investors. QFIIs and RQFIIs no longer need to apply or file for the investment quota at SAFE. SAFE will also has removed the geographic limitation for RQFII scheme.

A share

There are two types of repatriation: principal repatriation and profit repatriation. 
For QFII:
For Open-ended China Fund/Publicly Raised Open-ended Fund:

• No lock-up period applied.
• QFII may remit or repatriate on daily basis according to its net subscription and redemption need. For the repatriation of the cumulative profit that is not related to subscription and redemption, QFII shall provide tax clearance and audit report on investment profits before repatriation.
• SAFE adopts a balance management regime for the Investment Quota granted to QFIIs. The cumulative net remitted­in amount by QFIIs shall not exceed the Investment Quota filed with or approved by SAFE.

For Non Open-ended China Fund/Publicly Raised Open-ended Fund:

• No lock-up period applied.
• QFII may repatriate the principal and profits by batch
• Audit report on investment profits issued by certified public accountants in the PRC and tax clearance or tax filing (if any) are required to support profit repatriation.
• SAFE adopts a balance management regime for the Investment Quota granted to QFIIs. The cumulative net remitted-in amount by QFIIs shall not exceed the Investment Quota filed with or approved by SAFE.

For both Open-ended Fund and Non Open-ended Fund:

SAFE may reduce or even revoke QFII’s investment quota depending on the relevant circumstance where QFII fails to effectively utilize the investment quota within 1 year upon obtaining the investment quota.

For RQFII:

For Open-ended Fund:

• No lock-up period applied
• RQFII may remit or repatriate on daily basis based on the net amount of subscription and redemption. For the repatriation of the cumulative profit that is not related to subscription and redemption, QFII shall provide tax clearance and audit report on investment profits before repatriation.
• SAFE adopts a balance management regime for the Investment Quota granted to RQFIIs. The cumulative net remitted­in amount by RQFIIs shall not exceed the Investment Quota filed with or approved by SAFE.

For Non Open-ended Fund:

• No lock-up period applied.
•  
• There is no restriction in remittance of repatriation frequency
• Audit report on investment profits issued by certified public accountants in the PRC and tax clearance or tax filing (if any) are required to support profit repatriation.
• SAFE adopts a balance management regime for the Investment Quota granted to RQFIIs. The cumulative net remitted­in amount by RQFIIs shall not exceed the Investment Quota filed with or approved by SAFE

For both Open-ended Fund and Non Open-ended Fund:

SAFE may reduce or even revoke RQFII’s investment quota depending on the relevant circumstance where RQFII fails to effectively utilize the investment quota within 1 year upon obtaining the investment quota.

QFII Principal Repatriation 
The QFII is required to provide the following documents/information to the custodian for repatriation of principal for both Open-ended Fund and Non Open-ended Fund:

• Repatriation instruction from Global Custodian

Note: After the FX and repatriation, SAFE Shanghai may request QFII to prepare some filing documents to indicate the details of the FX and repatriation transaction.  Further, QFII may be requested to attend an on-site meeting with SAFE Shanghai for their recent and future repatriation plan if needed.

QFII Profit Repatriation
Except for Open-ended China Fund, for other QFII who need to repatriate realized profits, the QFII is required to submit the following documents to custodian in addition to those described above under Principal Repatriation.

• Special audit report issued by a local CPA firm appointed by QFII on investment earnings
• Tax Payment Filing Form (Please consult with your tax advisor regard the Tax Filling Form)

RQFII Principal Repatriation 

For Non Open-ended Fund and Open-ended fund, the custodian requires a repatriation instruction from the Global Custodian.

RQFII Profit Repatriation

Except for Open-ended China Fund, for other RQFII who need to repatriate realized profits, the RQFII is required to submit the following documents to custodian:

• Special audit report issued by a local CPA firm appointed by QFII on investment earnings
• Tax Payment Filing Form (Please consult with your tax advisor regard the Tax Filling Form)
• Repatriation instruction from Global Custodian

B share
Income or sales proceeds on B shares is paid in USD and can be repatriated freely.

For QFIIs, FX conversion is only allowed for capital injection and repatriation. QFIIs may inject capital within the quota previously registered/granted by SAFE. No lock-up period for principal and profit repatriation. 

CSRC regulations require QFII’s PRC custodian to execute foreign exchange on behalf of its QFIIs. Offshore FX trades are not permitted. QFIIs may, according to the investment plan etc. and within 30 working days prior to their actual investment, notify the PRC custodian to convert the foreign currency needed for the investment into RMB and transfer to its RMB accounts.

Currency
Most of QFIIs’ FX transactions are denominated in USD.

On June 12, 2018, the SAFE officially released the 2018 version of Provisions on the Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors effective from June 12, 2018:

1. A basic quota will be granted according to the below benchmarks:

a. For QFII or its group company's asset (or assets under management) being mostly outside of mainland China: USD100 million plus 0.2 per cent of the average asset size in the past three years minus approved RQFII quota (USD equivalent).

b. For qualified investors or its group company's asset (or assets under management) being mostly within mainland China: equivalent to RMB 5 billion plus 80 per cent of asset size in the past one year minus the approved RQFII quota (USD equivalent).

c. Not exceeding USD 5 billion (including offshore sovereign entities, central banks and monetary authorities).
d. Not less than USD 20 million.

2.QFIIs would automatically obtain a basic quota up to a certain percentage of their asset sizes or sizes of asset under management through filing with SAFE. Official approval from SAFE is only required for incremental quota exceeding the basic quota.

3. Further ease the inward and outward fund remittance. There is no longer an injection period requirement for QFII fund injection, and QFII open-ended funds are allowed to remit/repatriate on a daily basis. Lock-up period and 20% monthly repatriation limitation is removed.

4. QFII is allowed to engage in onshore FX derivatives trading with custodian or financial institutions that are eligible to offer FX derivatives products for the purpose of hedging FX risk arising from the onshore securities investment. QFII shall follow “trading on actual needs” principle when engage in onshore FX derivatives trading. The positions of FX derivatives held by QFII shall not exceed their onshore asset value (excluding cash) as of the previous month end. QFII shall adjust the FX derivatives positions on monthly basis, within 5 working days of each month to ensure compliance with the “trading on actual needs” principle.

5. Quota transfer or selling is not allowed without SAFE’s approval.

Further, on June 12, 2018, the PBOC and SAFE officially released the 2018 version of Circular of the People’s Bank of China and State Administration of Foreign Exchange on Relevant Issues Concerning Investment in Domestic Securities by Renminbi Qualified Foreign Institutional Investors effective from June 12, 2018:

1. A basic quota will be granted according to the below benchmarks:
   a. For RQFII or its group company's asset (or assets under management) being mostly outside of mainland China: Equivalent to USD100 million plus 0.2% of the average asset size in the past three years minus approved QFII quota (RMB equivalent);
   b. For RQFII or its group company's asset (or assets under management) being mostly within mainland China: RMB5 billion plus 80% of asset size in the past one year minus approved QFII quota (RMB equivalent).

Above exchange rates shall refer to the conversion rate table of various currencies against USD published by SAFE in the previous month of the day when RQFIIs submit Basic Quota filing.

2. RQFII would automatically obtain a Basic Quota up to a certain percentage of their asset sizes or sizes of asset under management through filing with SAFE. Official approval from SAFE is only required for incremental quota exceeding the Basic Quota.
3. SAFE adopts a balance management regime for Investment Quota granted to RQFIIs, including both Open-ended fund and other assets or products.
4. Lock-up period is removed.
5. RQFII is allowed to engage in onshore FX derivatives trading with custodian or financial institutions that are eligible to offer FX derivatives products for the purpose of hedging FX risk arising from onshore securities investment. RQFII shall follow “trading on actual needs” principle when engage in onshore FX derivatives. The positions of FX derivatives held by RQFII shall not exceed its onshore asset value (excluding cash) as of the previous month end. RQFII shall adjust the FX derivatives positions on monthly basis, within 5 working days of each month to ensure compliance with the “trading on actual needs” principle.
6. Quota transfer or selling is not allowed without SAFE’s approval.

For B share investors in Shanghai, sales proceeds and income in USD can be freely repatriated.

There are three types of bank-to-bank RMB fund transfers in China:

Cashiers orders
Cashiers orders are issued by local branches. Same day value is provided if presented before the cut off time of 15:00.

PBOC Clearing House for RMB local clearing
A credit advice is prepared by banks and collected by PBOC to effect fund transfers in their RMB clearing system. This paper-based payment mode is used to credit funds to another bank’s account holders. This system is only applicable to the banks within the same city.

PBOC collects the credit advice from banks in two batches. For RBC Investor Services' custodian, first collection is at 10:00 and the second collection is at 16:00.

For VD value, the credit advice must reach PBOC before 11:30 on VD.

PBOC real time payment system
The PBOC launched a real time payment system, China National Advance Payment System on April 14, 2003 for bank-to-bank transfer of the electronic fund transfer.

For A share, overdrafts in (R)QFII’s RMB account are prohibited.

For B share, based on the current rules and regulations, all Chinese banks are not allowed to provide credit facilities for securities trading or settlement.

A share:
Semi-annual or annual. Declared and paid in RMB.

B share:
Semi-annual or annual. Declared in RMB and paid in USD.

A share market
Dividends are paid in RMB by the CSDCC Shanghai and Shenzhen branches on behalf of the companies. Entitlement is based on the announced record date. Custodian banks reconcile the entitlements against the confirmation from the CSDCC.

In Shanghai, payment date is normally 1 working day after record date, and if the company fails to remit the funds to CSDCC Shanghai’s account as agreed, the company is required to make a public announcement.

The listed company as paying agent is responsible to withhold and pay the tax to the paying agent’s domiciled tax bureau for (R)QFII investors. 10% withholding tax will be collected from cash dividend and net amount will be credited to the investor’s cash account on payment date. The bonus shares from profit are also subject to 10% withholding tax. In the local market, both the tax for cash dividend and bonus issue from profit are debited from the cash dividend amount.


B share market
Entitlements are calculated based on the registered holdings as of record date, which is two business days after ex-date. Dividend payments are declared in RMB, but are paid in USD. The exchange rate to convert RMB into USD is determined during the shareholder’s meeting. If not specified during the shareholder’s meeting, the exchange rate is typically set as the rate announced by the People’s Bank of China (PBOC) on the first business day after the shareholder’s meeting.

There is no regular/fixed period between record date and payment date, and the payment date for cash dividend is announced by the company separately. The company delivers the funds to the central depository’s clearing bank on payment date, who in turn pays the dividend proceeds to the clearing participant’s USD account.

Effective January 1, 2023, CSDCC issued official notice that the pay date of stock dividends and bonus issues of listed company’s A shares (including both Main Board and STAR Board), B shares and depository receipts listed on Shanghai market changed from two days after record day (RD+2) to one day after record date (RD+1).

A share: annual or semi-annual bond coupon interest and quarterly cash deposit interest.
B share: not applicable.

Currently, only approved (R)QFIIs are allowed to invest in exchange-listed fixed income instruments (e.g. treasury bonds, financial bonds, local government bonds, corporate bonds, enterprise bonds, detachable bonds and convertible bonds) in the “A” share market.

All Treasury bond interest payment information is announced by the respective stock exchanges in Shanghai and Shenzhen via the local newspapers. Entitlement is based on the settled positions as of record date. Local custodians reconcile the entitlements against the confirmation from the CSDCC.

As per SAT’s circular issued in January 2009, the bond issuer as the paying agent is responsible to withhold and pay the tax to the paying agent’s domiciled tax bureau for (R)QFII clients. 10% withholding tax will be collected from coupon interest and net amount will be credited to the client’s cash account on payment date.

N/A

A share market:

• Record date: Entitlements are based on settled position on record date. Entitlement list is prepared by the CSDCC Shanghai. The record date is the last trading day.
• Ex-date: Ex-date is one working day after record date. For purchases, stock traded before ex-date is entitled to new shares/dividend, while trades executed on or after ex-date will not have the entitlement.
• Payment date: The payment date is two working days after record date for bonus issue, while one working day after record date for cash dividends, and the payment date for cash dividend is announced by the company separately.

B share market:

• Record date: Entitlements are based on settled position on record date. Entitlement list is prepared by the CSDCC Shanghai. The record date is two working days after ex-date.
• Ex-date: for purchases, stock purchased before ex-date is entitled to the dividend while trades purchased on or after ex-date will not have the entitlement.

Payment date: The payment date of bonus issue is two working days after record date, while there is no regular/fixed period between record date and payment date for cash dividends, and the payment date for cash dividend is announced by the company separately

A share market:
Entitlements are determined by a client's settled positions of record date. For purchases, stocks traded before ex-date are entitled to the dividend. But trades executed on or after ex-dates will not have the entitlement. Market claims only apply when error trades occur. In that case, custodian will arrange to claim the non-received income or corporate action entitlement from brokers based on the error trade handling agreement signed by (R)QFII, broker and custodian, and upon receipt of instructions from clients where necessary. Once the claimed income is received, custodian will immediately deposit and credit the securities and funds into the client's account under advice to the client.

B share market:
Entitlements are determined by a client's settled positions of record date. For purchases, stocks traded before ex-date are entitled to the dividend. But trades executed on or after ex- dates will not have the entitlement. For a sale trade executed before ex-date, it will have no entitlement even if it fails to be settled before record date. Claims may have to be made if a settlement is delayed but the entitlement will be attached.

The custodian will arrange to claim non-received income or corporate entitlement from counterparts upon pending or failed trades being settled. However, for delay settled no change in beneficiary owner off-market trades, custodian will claim the non-received income and entitlements upon receipt of advice from clients. Once the claimed income is received, custodian will immediately deposit and credit the securities and funds into the client's account under advice to the client.

Foreign investors are entitled to exercise voting rights on A and B shares.

Share blocking is not applicable in China's securities market.

Disclosure of shareholder information is limited and is only announced through the appointed newspapers - theShanghai Securities News, Securities Time and China Securities Journal - in Chinese. Annual general meetings (AGMs) are announced 20 days in advance. Extraordinary general meetings are generally announced 15 days in advance.

Announced through the official appointed newspapers - the Shanghai Securities News, Securities Time and China Securities Journal

On request, subject to availability

Required

Shareholders of "A" and "B" shares have equal voting rights. Individual shareholders and custodians can consolidate share positions and vote by proxy.

PRC Income Tax on Dividend

A share
In accordance with the CIT Law, (R)QFIIs shall pay 10% withholding tax on interest (including deposit interests and coupon interests). The deposit interests for (R)QFIIs include the credit interests they earned on the RMB accounts and FCY accounts maintained with the local custodian, as well as the credit interests they earned from the clearing reserve fund and warrant collateral fund (if applicable) placed with the CSDCC. 
B share
N/A. There is no credit interest paid to securities related cash accounts in China B-share market as they are current account. Coupon interest is not applicable to B-share investors, since fixed income instruments are not available in B share market.

A shares
On 14 November 2014, the Ministry of Finance (MOF), State Administration of Taxation (SAT) and China Securities Regulatory Commission (CSRC) jointly issued a notice regarding the tax treatment on capital gains for QFII and RQFII. It was advised that QFII and RQFII will be temporarily exempted from corporate income tax for the capital gains derived from transferring stocks and other equity investments in Mainland China effective from 17 November 2014, and the capital gains derived before 17 November 2014 shall pay corporate income tax.

For details of the Double Taxation Treaties (DTT) of each country, please refer to the following website:

https://www.chinatax.gov.cn/eng/home.html

0.05% of gross consideration is payable by the seller only for A shares and B shares. Funds, warrants and bonds are exempted from stamp duty.

The State Council extended exemption of corporate income tax and value-added tax on bond interest gains arising from investment in the China bond market for overseas institutional investors.The original tax exemption period is from 7 November 2018 to 6 November 2021. The exemption policy extended till 31 December 2025 which is the end of the 14th Five-Year Plan period (2021-2025) of China.

China - Shanghai Holiday Calendar

• Shanghai Stock Exchange (SSE) sse.com.cn
• China Securities Depository and Clearing Corporation Ltd (CSDCC) chinaclear.cn   
• China Securities Regulatory Commission (CSRC) csrc.gov.cn
• China Economic Information Network – China Economy cei.gov.cn
• The People's Bank of China (PBOC) pbc.gov.cn
• The State Administration of Foreign Exchange (SAFE) safe.gov.cn
• The China Banking and Insurance Regulatory Commission (CBIRC) cbrc.gov.cn