[Data Source: Website of Shenzhen News, www.sznews.com]

On the 20th session of the Standing Committee of the 6th Municipal People's Congress took place on October 16, 2017, the Regulations on Shenzhen Special Economic Zone National Independent Innovation Demonstration Zone (Draft Rev. 1) (hereafter, the "Regulations (Draft Rev. 1)") was proposed for a "Second Review" in the meeting of the Standing Committee of the Municipal People's Congress. This version of Regulations (Draft Rev. 1) breaks through the limitation that only a legal person may apply for fiscal subsidies, and expands the principal of application to responsible person in charge of a scientific research team. In addition, it also sets forth that a unit that has committed any IP infringement and the responsible person of the corresponding project shall not apply for fiscal subsidy within five years.

The Regulations (Draft Rev. 1) further clarifies the principles and scope for scientific and technical projects qualified for fiscal subsidies, and stipulates various ways of sponsorship based on the features of different objects of sponsorship.

Meanwhile, the Regulations (Draft Rev. 1) extends the scope of principals that are entitled to preferential treatment by stipulating that if the achievements of a cooperated scientific and technical research conducted by universities/colleges, scientific research institutes or companies inside the demonstration zone in cooperation with R&D institutions outside Shenzhen city are industrialized within the demonstration zone, then said project can be deemed as a scientific project inside the demonstration zone and may enjoy the relevant benefits pursuant to the rules; it expands the channel to sponsor scientific and technical innovation through funds from the Ministry of Finance by clearly stipulating that besides the general R&D projects, fiscal subsidies may be applied separately for qualified cultivation or introduction of leading scientific research talents, construction of infrastructure of key scientific research or purchase of large-scale scientific instruments and equipment; and it breaks through the present limitation that only a legal person may apply for fiscal subsidies by extending the principals of application to the responsible person of a scientific research team to prevent interception of fiscal subsidy by the organization and secure the use of the subsidy really for the R&D activities of said team.

The Regulations (Draft Rev. 1) encourages scientific researchers to directly hold stock shares through intellectual property rights and stipulates that when participating in a company through intellectual properties or establishing a company, universities/colleges, scientific research institutes and researchers may handle formalities for registration of their stock share ownership or institution of said company, and may separately hold stock shares independently.

According to the Regulations (Draft Rev. 1), a "Zero Tolerance" policy will be implemented for IP infringement committed by units and responsible person of project sponsored by funds from the Ministry of Finance. Once confirmed, the relevant authorities shall cut off said sponsorship immediately and demand the unit/responsible person to refund the subsidies that are already granted and the unit/responsible person shall not apply for fiscal subsidy within five years.

Ø Key Points

  • The principal of application for fiscal subsidies has been extended to the responsible person in charge of a scientific research team which may directly apply for such subsidy to prevent the organization from intercepting the funds of said fiscal subsidy and secure the real use of said subsidy for the R&D activities of the team;
  • Scientific researchers are encouraged to directly hold stock shares through intellectual property rights, and universities/colleges, scientific research institutes and researchers may separately hold stock shares independently;
  • The unit/responsible person which enjoys a fiscal sponsorship shall refund the funds of subsidy that are already granted and shall not apply for any fiscal subsidy within five years if said unit/responsible person has committed any IP infringement.