Foreign Investment Joint Stock Company(“JCS”)

China is opening up its stock market to FIEs and foreign investors. FIEs increasingly are likely to be listed on Chinese stock markets (both A and B shares) and overseas stock markets. Only foreign investment joint stock companies (JSCs) qualify for public listing; FIEs that are planning to be listed on a Chinese stock market must be converted into a JSC, which generally means that the registered capital must be converted into stock of the company.

All of the capital must be divided into equal shares represented by share certificates. Companies must receive approval before they can issue A shares (denominated in renminbi and available to Chinese citizens and qualified foreign institutional investors) and B shares (denominated in US dollars). A and B shares are tradable on stock exchanges. A shares are further divided into shares owned by individuals, legal persons and the state. Unlisted shares owned by foreign investors of a qualified foreign investment joint stock company can be traded on the B share market if approved by the Ministry of Commerce.

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