A securities company, or a brokerage firm, can be established to engage in business operation of securities according to the Corporation Law of the People's Republic of China as well as the provisions of the Securities Law of the People's Republic of China.

The establishment of a securities company is subject to the examination and approval of the CSRC. The CSRC, within 6 months as of accepting an application for establishing a securities company, carries out an examination according to the statutory requirements and procedures and on the basis of the principle of prudent supervision, makes a decision on approval or disapproval and thereafter, notifies the relevant applicant. In the case of disapproval, an explanation will be given. Where an application for establishing a securities company has been approved, an applicant is required to, within the prescribed period, apply for registration of establishment with the organ in charge of corporation registration and collect its business license therefrom. A securities company should, within 15 days as of collectingits business license, file an application for the Securities Business License with the CSRC. Without a Securities Business Permit, a securities company may not engage in any business operation of securities.

According to Securities Law of the People's Republic of China, the establishment of a securities company should fulfill the following requirements:

1. Having a corporation constitution that meets the relevant laws and administrative regulations;
2. The major shareholders having the ability to make profitssuccessively, enjoying good credit standing and having no irregular or rule-breaking record over the latest 3 years, and its net asset being no less than 0.2 billion yuan.
3. Having a registered capital that meets the provisions of the present Law;
4. The directors, supervisors and senior managers thereof having the post-holding qualification and its practitioners having the qualification to engage in securities business;
5. Having a complete risk management system as well as an internal control system;
6. Having a qualified business place and facilities for operation; and
7. Meeting any other requirement as prescribed by laws and administrative regulations as well as the provisions of the securities regulatory authority under the State Council, which have been approved by the State Council.

Currently, foreigners are allowed to invest in the security firms of China with a maximum stake of 33 percent in mainland Chinese ventures.