In 1845, land regulations were proposed by the senior local Chinese official or Taotai, and agreed with the British Consul which formed the basis of the subsequent growth of the cosmopolitan community of Shanghai. The boundaries of the Settlement were re-defined, the western boundary being extended as far as Defence Creek. Local Chinese living within the boundaries of the Settlement, or its further extension were prohibited from "renting to each other, nor may they again build houses there for the purpose of renting to Chinese merchants." This ban on Chinese owning property in the Settlement provided endless opportunities for money-making in the decades ahead.

The consuls of Britain, France and the United States agreed new Land Regulations in 1854 which established a Municipal Council to be chosen by owners of leases on land within the settlements. The council was given the power to levy rates and charge wharfage fees for all goods being on or off-loaded from ships, an was charged with organising a police force as well as roads, lighting and general urban upkeep.

The regulations acknowledged that China had ultimate sovereign right over the land in the Settlements, and provided for an annual land tax to be paid to the Chinese government. But they made no mentioned of the legal position with regard to renting or selling land within the settlements to Chinese people even though Chinese residents far outnumbered foreigners.

In 1866, the Land Regulations of 1854 were revised by the land renters in concert with the Consuls without previous consultation with the embassies in Peking. The new rules recognized the establishment of the French Concession. The Council was increased to nine members and given wider powers. It was made responsible to a Court of Consuls, established for this special purpose. Upon requisition of twenty-five land renters the Consuls could convene a public meeting and adopt measures which, if passed, should have the force of laws. The land renters should have the right to vote by proxy. Chinese were to have the right to participate in the Municipal Government. These new rules and bye-laws were not sanctioned by the embassies in Peking until 1869, and in sanctioning them, the ambassadors eliminated the clause giving Chinese participation in the Municipal Government.

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Shanghae, 5th July, 1854

The undersigned consuls of the Three Powers, having Treaties with China, under the instructions of their respective Plenipotentiaries; and His Excellency Woo, the Chief Local Authority representing the Chinese Government at Shanghae, having jointly and severally aiuthorized the issue of a New Code of Municipal and Land Regulations for the better security and government of all foreigners settled wihin certain limits, therein specified, a copy of the same is annexed for general information.

The Committee of Roads and Jetties under the late Regulations haveing also made representation, in the annexed letter, of the necessity of convening a Public Meeting of the Foreign Community into whose hands they might resign their trust; Notice is hereby given that a Public Meeting of Foreign landowners within the boundaries aforesaid for Tuesday, the 11th instant, at 11 o'clock A.M. to be held at H.B.M.'s Consulate, for the purpose of receiving the Report of the Committee of Roads and Jetties, with a statement of their accounts; for the appointment of a new committee; and generally, for taking into consideration the present condition of the foreign settlement in respect to the large Chinese populations recently located within the limits; and the best means of providing for its future security, order and cleanliness. The accounts of the committee will be open for inspection on the 10th instant, at the British Consulate.

Rutherford Alcock, H.B.M.'s Consul
Robert C. Murphy, Consul U.S.A.
B. Edan H.I.M.'s Consul ad interim.

To the foreign community,
Shanghae

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