Listed companies in China have a-shares, b-shares, h-shares, n-shares and s-shares, ordinary shares subscribed for and traded in CNY (China Yuan) by participating investors who are companies and have obtained business registration licenses (known as, local existed companies), or individual investors (local citizens) in mainland China.

At present, China’s A-Shares market is mainly composed of the Shanghai Stock Exchange and the Shenzhen Stock Exchange, Chinese domestic stock investors can open multiple A-shares accounts and closed-end fund accounts, up to 20 accounts of share.

Foreign investors have to set up China company and buy A-Shares due to the restriction of Chinese securities account management rules, then can operate daily stock tradings by opening A-share accounts.

How to use foreign capitals enter China A Shares

Through setting up a Chinese company to transfer oversea funds, capitals to China A-Shares market is the most effective and direct way.

Open A Shares Institutional Account

Domestic stock investors refer to legal business entities registered in mainland China and local residents, can be opened A Shares account easily and quickly.

What requirements and qualifications for opening A-shares accounts?

Required qualifications of local citizens (individual investors):

Key Requirements and Documents:
16 years old at least, ID and proof of income.
Signature form for securities trading account opening documents.
Application form for registration of natural person’s securities account.
Customer transaction settlement funds third-party depository agreement.

Requirements of local corporations (institutional investors):

Key Requirements and Documents:
Signature form for securities trading account opening documents.
Application form for registration of natural person’s securities account.
Customer transaction settlement funds third-party depository agreement.
Business license and certificate of business registration.
Corporate bank account details and proof of banking.

So, here’s the problem, because the restriction of Chinese securities account management rules, how foreign investors jump into the China A-shares market?

Mentioned in the table listed above, as an institutional investor is the most effective and direct way for foreign investors, because nonresidents (foreign individuals) can not be obtained the approval of opening a-shares accounts. As long as the foreign investors solve the two core elements, the establishment of the company to obtain the business license, the second is to obtain the company’s bank account permit, after completing the setting up process of company incorporation, your Chinese company can open A-shares accounts easily and quickly.

Here is a PDF: how foreign funds into Chinese a-shares (the flow diagram of using foreign investment capitals to transfer funds into Chinese A-shares account by a local registered company) for your studies.

How to buy A-shares by setting up a China company?

Because the restrictions of foreign investors, you have to set up a local company as the institutional investor to open an a-shares account and to operate the daily stock transactions.

And as a foreign owned enterprise, you can transfer the investment capital from shareholder’s account into Chinese company’s account, and then the RMB currency can be transferred into a shares account of a local institutional investor.

The whole process of transferring foreign funds to a-shares account

Steps and Description:Timetable and Processing:
1st step, Establish a local LLC owned by foreign investors.Around 20 workdays, obtain business license and corporate account.
2nd step: Open a local a-shares market account.Around 1 week, and obtain the approval of a-shares account.
3rd step: Transfer the registered capital (investment capital) to local company.Around 10 workdays to obtain the approval of foreign exchange.
4th step: Use local CNY currency (exchanged capital or fund), transfer to a-shares account.Around 1 workdays.
5th step: A shares account receives the funds with CNY currency.Start the daily stock transactions by a shares account.

How to set up a Chinese business?

Description of Each Step:Time Required:
Chinese company name submit, search and obtain approval3 working days
Download and signature of the required documents of company formation (see below) and courier to SMEsChina5 working days
Obtain the certificate of foreign owned (investment) enterprise and the certificate of business registration (known as: business license)5 working days
Apply for the company stamps (known as corporate seals) and obtain approval2 working days
Open a local corporation bank account and internet banking5 working days

Whole foreign owned enterprises in China, known as WFOE, here SMEsChina has posted a guidance on <how setting up a WFOE within 20 workdays> for your studies. And also here is the links of reference on setting up a local company with SMEsChina lawyers teams assistance.

Steps:Topics of Study:Links of Reference:
Step 1Decide what types of software company, depends on your key structure of corporation (shareholder’s structure).Selecting a company type
Step 2How to choose an available company name with bilingual for your private limited company.Naming rules and requirements
Step 3List detail business activities from 10 industrial categories.Selecting business scope
Step 4Set up the registered capital for your limited company.Company registered capital
Step 5Set up core people of your local corporation, and key positions.Decide corporate structure
Step 6Required documents you have to prepare in your country.Documents required to register a company
Step 7Prepare notarization and authentication documents issued by China embassy.Notarization and authentication documents
Step 8Download application forms and legal files and after filling and signing, courier to SMEsChina offices.Company formation documents download

Why need a bank account?

A foreign owned enterprise, can open basic account and capital account, capital account means the corporate shareholders can inject the investment capitals from oversea to local company’s account, this is the key function for shareholders transferring the funds into China a shares account.

Basic account, also known as local CNY account, after completing the foreign exchange process, foreign funds will be exchanged to CNY currency and put into basic account, after that, you can transfer the CNY to a shares account as an institutional investor.

Learn more: China Bank Accounts Opening