The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the central government; the SAFE branches in Shenzhen, Dalian , Qingdao , Xiamen , and Ningbo ; and all designated Chinese-funded foreign exchange banks:

In order to streamline administrative procedures and processes and promote facilitation of trade and investment, the SAFE hereby has decided to make adjustments to the approval authority for certain foreign exchange businesses under the capital account in accordance with the Administrative Licensing Law of the PRC and the Regulations on Foreign Exchange Administration of the PRC. The relevant issues are as follows:

1. Businesses for which the approval authority is delegated by the SAFE to the branches

1) For cases where domestic enterprises extend overseas loans in excess of the prescribed ratios or amounts, the branch or foreign exchange administrative department of the SAFE in the place where the enterprise is located (hereinafter referred to as the branch) shall handle such cases in line with the opinions proposed at the collective review conference.  Meanwhile, the relevant replies thereof shall be forwarded to the Capital Account Management Department of the SAFE.

2) For cases that are in accordance with the administrative principles for capital accounts as stipulated in the existing laws and regulations, but are not specifically regulated in the relevant documents or business-operating instructions, the local branches shall handle such cases in line with the opinions proposed at the collective review conference.  Meanwhile, the relevant replies thereof shall be forwarded to the Capital Account Management Department of the SAFE.

3) For verification of the balance quotas for the short-term external debt of domestic Chinese-funded enterprises, the local branches shall conduct such verifications within the range of the balance quota for the short-term external debt in the region according to the principles for such verifications as specified by the SAFE for the current year.

2. Businesses for which approval authority is delegated from the branches to the central sub-branches (sub-branches)

The branches may, according to the specific situations in their respective jurisdictions, delegate authority for the following businesses to the corresponding central sub-branches (sub-branches) in their jurisdictions:

1) Verifications of fund transfers and opening, alterations and cancellations of special guaranty foreign exchange accounts for bidding for land-use rights by foreign investors;

2) Verifications of fund transfers/FX settlement and opening, alterations and cancellations of special foreign exchange accounts for foreign exchange funds (including the agreed upon price and transaction guarantee monies) under custody and settlement for equity transactions by foreign investors;

3) Examination and approval of payments in foreign exchange or entry of inward remittances of funds for overseas lending by domestic enterprises.

4) Examination and approval for recalling and settlement of funds for participation in employee stock ownership plans or employee stock options of overseas listed companies by domestic individuals.

3. Businesses that can be handled directly by designated foreign exchange banks

1) The examination and approval for foreign exchange purchases/payments made with the foreign investors profits from non-bank financial institutions in which the foreign investors (excluding insurance companies, and similarly hereinafter) hold shares shall be handled by the designated foreign exchange banks. Non-bank financial institutions in which foreign investors hold shares shall, within 5 working days following the date of the outward remittance of profits, file such transactions for the record with the bank receipt for foreign exchange purchases/payments at the SAFE branches/sub-branches.

2) The examination and approval of outward remittances of overseas IPO expenses from China by overseas listed foreign-invested companies shall be handled by the designated foreign exchange banks. Overseas listed foreign-invested companies shall, within 5 working days following the date of the outward remittance of the said expenses, file for the record the relevant data at the local SAFE branches/sub-branches.

4. Simplification of the materials required for business examination and approval

Submission of the RMB Account Statement for the Latest 5 Working Days is no longer required when an enterprise handles business related to foreign exchange purchases under the capital account.

Upon adjustment by the authority for the foresaid examinations and approvals, the SAFE branches and designated foreign exchange banks shall improve their internal control systems, reinforce employee training, strictly abide by the documents and operating instructions for the administration of foreign exchange businesses under the capital account, and fulfill the reporting procedures in line with the relevant regulations. (For the Operating Instructions for Designated Foreign Exchange Banks for Handling the Relevant Businesses, see the annex). The branches/sub-branches shall strengthen subsequent supervision and examination over the relevant issues thereof, and shall also further enhance the statistics and monitoring thereof.  If any major circumstances or policy-related problems are encountered, please provide feedback to the SAFE in a timely manner.

Upon receipt of this Circular, the SAFE branches and foreign exchange administrative departments shall forward it to the central sub-branches (sub-branches) and foreign-funded banks within their respective jurisdictions, and the Chinese-funded designated foreign exchange banks shall promptly forward it to the branches/sub-branches within their respective jurisdictions.

The Circular will come into effect as of July 1, 2010.  In case of any problems encountered during implementation, please send feedback to the Capital Account Management Department of the SAFE in a timely manner. Tel: 010-68402273.

Annex: Operating Instructions for Designated Foreign Exchange Banks for Handling the Relevant Businesses