Summary of the Key Rules

	QFII	RQFII	Unified QFII and RQFII (January 2019 CSRC Consultation Paper)
Entry Requirements	Certain type of institutional investors with certain AUM and operation experience	General operation and compliance requirements	General operation and compliance requirements
Investment Scope	Stocks, bonds and ABS on stock exchanges, including stocks listed on the SSE STAR market Fixed income products on the domestic interbank bond market Publicly offered securities investment funds Stock index futures FX derivatives for hedging purpose only Subscription for new share issuance, convertible bond issuance, secondary share offerings, and share allocations on stock exchanges		Stocks, depository receipts, bonds, bond repurchases, and ABS on stock exchanges, including securities listed on the SSE STAR market Shares transferred on the national equities exchange and quotations (NEEQ) Eligible products traded on the domestic interbank bond market Publicly offered securities investment funds Financial futures contracts listed and traded on the china financial futures exchange (CFFEX) Commodity futures contracts listed and traded on futures exchanges approved by the CSRC Options listed and traded on futures exchanges approved by the state council or the CSRC Eligible FX derivatives Subscription for new share issuance, bond issuance, secondary share offerings, and share allocations on stock exchanges and the NEEQ Margin trading and securities lending in stock exchanges Private investment fund whose investment scope conforms to first two types of products listed above A qualified investor can appoint its associated domestic private securities investment fund manager as its investment adviser
Custodians	Each qualified investor can only appoint one custodian		Restriction on the number of custodians engaged by a qualified investors is removed. If there are more than two custodians, the qualified investor shall appoint a principal custodian
Quota Limit	Individual QFII: maximum USD 5bn or minimum USD 20m for basic quota Aggregated market level: USD 300bn	Individual RQFII: no limit Aggregated market level: different limit for each RQFII market	Quota limitation was cancelled
Quota Application	Within Basic Quota: Filing with SAFE Exceed Basic Quota: Application with SAFE		Investment quota of individual qualified foreign investor will no longer need to be approved

	QFII	RQFII
Multiple Brokers	Onshore Can notify custodian to conduct FX conversion 30 working days prior to actual investment	Offshore
Injection Period	SAFE may revoke part or all of its unused investment quota if QFII/RQFII fails to effectively utilize the quota within 1 year since filing or approval
Repatriation	Open-ended funds: daily remittance or repatriation for net amount of subscription and redemption Other products or assets: no restriction in remittance or repatriation frequency For repatriation of profit, need to obtain tax clearance and audit financial report for profit
Trading Restrictions	Buy/sell the same stock on the same day that might lead to unfair transaction or transfer of interest is prohibited Short-selling is prohibited Same-day turnaround trade is prohibited in exchange market except for bonds and warrants
Foreign Ownership Limit	Shareholding by a 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 Foreign ownership limitation shall be monitored at combined QFII and RQFII level
Eligible Investors	Institutional investors with QFII/RQFII Licenses QFII: certain type of institutional investors with certain AUM and operation experience RQFII: institutional investors meet general operation and compliance requirements Entry requirements to be simplified and unified, quantitative criteria to be cancelled	All Hong Kong and overseas institutional and individual investors
Investment Scope	Primary and secondary market, including the SSE STAR Market Almost all exchange-listed or traded financial products, including equities, bonds, funds, futures and derivatives Further investment scope expanding under evaluation	Secondary market only, excluding the SSE STAR Market Eligible A shares listed in SSE and SZSE
Quota Control	Individual-level quota Filing and approval required Quota limitation and approval management to be abolished	Market-level Daily quota
Key Features	Onshore mechanism Close to domestic institutional investor treatment with access to wide range of financial products	Offshore mechanism Relatively flexible with limited range of eligible financial products

Taxation Rules

	Exchange Market	China Inter-bank Market (CIBM)
Capital Gain	On 14 November 2014, Ministry of Finance (MOF), State Taxation Administration (SAT) and 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 (CIT) for the capital gains derived from transferring stocks and other equity investment in Mainland China effective from 17 November 2014, and the capital gains derived before 17 November 2014 shall pay corporate income tax http://www.chinatax.gov.cn/chinatax/n362/c484890/content.html (Chinese)	On 8 November 2017, PBOC released Operational Procedures for overseas institutional investors to Enter CIBM and stated that the capital gain realized from bond sales is temporarily exempt from CIT http://www.pbc.gov.cn/huobizhengceersi/214481/3406502/3406509/3424889/index.html (Chinese)
Dividends and Coupon Interest	Dividends are subject to 10% CIT QFII/RQFII who are eligible for a lower tax rate under a tax treaty can apply to the competent tax bureau for tax relief or reimbursement http://www.chinatax.gov.cn/n810341/n810765/n812166/n812652/c1189689/content.html (Chinese)
Dividends and Coupon Interest	From 7 November 2018 till 6 November 2021, coupon interest in domestic bond market is exempt from CIT and value-added tax (VAT) for overseas institutional investors http://www.chinatax.gov.cn/n810341/n810755/c3912855/content.html(Chinese)

SSE Rules and Regulations

Guidelines No.1 on the Application of Securities Trading Rules of the Shanghai Stock Exchange for Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors30 Oct 2020

For more rules and regulations please visit:

CSRC

CSRC January 2019 Consultation Paper

SAFE

SAFE Rules and Regulations
Regulations on Foreign Exchange Administration for Domestic Securities Investments by Qualified Foreign Institutional Investors June 2018, QFII rules
Circular of the People's Bank of China and the State Administration of Foreign Exchange on the Management of Domestic Securities Investment by RMB Qualified Foreign Institutional InvestorsJune 2018, RQFII rules
Abolish Restrictions on the Investment Quota of Qualified Foreign Investors (QFII/ RQFII) and Further Expand the Opening up of Financial MarketsSeptember 2019, SAFE abolish quota limits
Press Conference on Abolishing Restrictions on the Investment Quota of Qualified Foreign Investors (QFII/ RQFII) Wang Chunying Spokeswoman and Chief Economist State Administration of Foreign Exchange