China Securities Regulatory Commission (CSRC) issued a statement on Friday approving the setting up of a brokerage joint venture (JV) between mainland and Hong Kong investors.
This is the first brokerage JV between the mainland and Hong Kong formed under the Closer Economic Partnership Arrangement (CEPA).
According to a report by Xinhua, the new company will have a registered capital of 3.5 billion yuan (US$540 million) and will be set up in Shanghai pilot free trade zone. The new entity will offer standard brokerage services.
The new entity has six months to register with regulatory authorities before commencing operations.
Three Hong Kong investors will hold a total of 34.85% in the new company whereas 11 mainland investors will hold the remaining 65.15%.
CEPA allows Hong Kong or Macao-funded financial institutions to establish one brokerage joint venture in each of Guangdong, Shanghai and Shenzhen with a maximum stake of 51%. They can also set up one brokerage JV in the mainland’s reform pilot zones with a maximum shareholding of 49%.
For the official announcement from the Chinese regulator, click here.