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Circular of the State Administration of Foreign Exchange on Issues Concerning the Joint Handling of Forward Settlement and Sales of Foreign Exchange
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 branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; and the designated national foreign exchange banks: In order to enhance the capability of financial institutions to provide clients with services to hedge against exchange-rate risks, the following issues concerning the joint handling of forward settlement and sales of foreign exchange are hereby notified in accordance with the Regulations of the Peoples Republic of China on Foreign Exchange Administration and other relevant regulations: 1. The "joint handling of forward settlement and sales of foreign exchange refers to collaboration between a domestic bank and its branches that are not qualified to handle the forward settlement and sales of foreign exchange (hereinafter referred to as the cooperating banks) and a bank and its branches that are qualified to handle the aforesaid business (hereinafter referred to as the qualified bank) for the joint handling of forward settlement and sales of foreign exchange. 2. The head office (or main office) of a cooperating bank shall meet the following requirements: (1) It must be qualified to operate spot settlement and sales of foreign exchange as ratified by the SAFE or its branches and sub-branches (hereinafter referred to as the foreign exchange authority) and must have engaged in the settlement and sales of foreign exchange for more than two years (inclusive); (2) It should be free from all significant irregularities in the operation of spot settlement and sales of foreign exchange for the past two years (inclusive); (3) Its average quarterly balance of foreign exchange assets for the previous year is equivalent to more than USD20 million (inclusive); (4) It ranks as Grade-B or above in the appraisal of its compliance with the foreign exchange administration regulations for the past two years; (5) It has a complete system for the management of joint handling of forward settlement and sales of foreign exchange; (6) Other qualifications as required by the foreign exchange authority. The branches or sub-branches of the cooperating bank shall obtain authorization from the head offices (or main offices) thereof, and shall satisfy the requirements in foregoing items (1), (2), and (4). 3. A qualified bank shall meet the following requirements: (1) Its head office will have obtained qualifications to act as a forward-swap market maker or a general market maker on the inter-bank foreign exchange market; (2) It is free from any significant irregularities in the operation of foreign exchange settlement and sales during the past two years (inclusive); (3) It has a complete system for the management of joint handling of forward settlement and sales of foreign exchange; (4) It ranks Grade-B or above in the previous years appraisal of its compliance with the foreign exchange administration regulations; (5) Other qualifications as required by the foreign exchange authority. 4. A cooperating bank shall file an application with the foreign exchange authority in its locality for the joint handling of forward settlement and sales of foreign exchange. If the foreign exchange authority thereof is a central sub-branch or sub-branch of the SAFE, the foreign exchange authority thereof shall complete the preliminary examination within 20 working days as of the date of acceptance, and shall submit the results thereof to the relevant branch (or relevant administrative office) of the SAFE (hereinafter referred to as the foreign exchange branch) at the higher level. The foreign exchange branch thereof shall, within 20 working days from the date of receipt of the letter of application and other relevant documentation, make a decision as to whether or not to register the relevant application. For financial institutions that meet the relevant requirements, the foreign exchange branch shall issue the Notice of the State Administration of Foreign Exchange __ _ Branch (Administrative Office) on the Registration of the Joint Handling of Forward Settlement and Sales of Foreign Exchange (see Appendix 1), and shall keep the internal-use form thereof. 5. A cooperating bank shall, when applying for the joint handling of forward settlement and sales of foreign exchange, submit to the local foreign exchange authority the following materials: (1) A letter of application; (2) The management system for the joint handling of forward settlement and sales of foreign exchange, which includes instructions for business operations, assignment of internal responsibilities, the statistical reporting system, the risk control measures, accounting systems, and so forth; (3) A template cooperation agreement signed with a qualified bank, in which the rights and obligations of both parties are specified; (4) If the applicant is a branch or sub-branch of a bank, the applicant thereof shall, in addition to the aforesaid materials, submit to the relevant authorities the notice on the registration of the joint handling of forward settlement and sale of foreign exchange (in duplicate) which is granted by its head office (or main office) and the authorization documents from the same. (5) Other documentation and materials as required by the local foreign exchange authority. 6. A cooperating bank shall comply with the following provisions when cooperating with a qualified bank for the handling of forward settlement and sales of foreign exchange: (1) It shall abide by the existing regulations on the administration of forward settlement and sales of foreign exchange and it shall sign an agreement on the joint handling of forward settlement and sales of foreign exchange with the qualified bank and the client; (2) It shall examine the regulatory compliance of its customer in the signing and fulfillment of the agreement on the handling of forward settlement and sales of foreign exchange, carry out separate accounting by creating specific accounts for the forward settlement and sales of foreign exchange, and close positions with the qualified bank on a case-by-case basis for its handling of forward foreign exchange settlement and sales for its customers. (3) The qualified bank shall consider the joint handling of forward settlement and sales of foreign exchange to be forward settlement and sales of foreign exchange on behalf of its customers (the trading entity shall be determined based on the nature of the customers), which shall be incorporated into its comprehensive position of the settlement and sale of foreign exchange for statistical and management purposes, and shall submit the relevant statistical statements to the foreign exchange authority in compliance with the requirements of banks regarding statistics on foreign exchange settlement and sales and so forth. The cooperating bank shall assist the qualified bank in fulfilling the statistical obligations; (4) The cooperating bank shall, within the first 5 working days of each month, submit to the local foreign exchange authority the Statistical Statement on the Joint Handling of Forward Settlement and Sales of Foreign Exchange (see Appendix 2). 7. The joint handling of forward settlement and sales of foreign exchange shall be incorporated into the annual appraisal of the qualified bank and cooperating bank by the local foreign exchange authority. If a cooperating bank is involved in significant irregularities in the operation of the foreign exchange settlement and sales, or is scored a Grade-C in the annual appraisal, its qualifications to operate forward settlement and sales of foreign exchange shall be suspended thereby. If a qualified bank is involved in significant irregularities in the operation of the foreign exchange settlement and sales, or fails to meet the requirements as stated in Article 3 of this Circular, the foreign exchange authority shall notify the cooperating bank in a timely manner of the termination of the cooperation with the aforesaid qualified bank for the joint handling of forward settlement and sales of foreign exchange. 8. A cooperating bank shall, when supplementing or changing its cooperating partner or when terminating the cooperation with a partner, report the relevant circumstances to the local foreign exchange authority for the record 20 working days before the relevant supplement, alteration, or termination is implemented. 9. Foreign exchange branches shall, within the first 10 working days of each year, complete and submit the List on the Joint Handling of Forward Settlement and Sales of Foreign Exchange by Institutions within the Jurisdiction (see Appendix 3) with the relevant data acquired by the end of the previous year, and it shall send it in a timely manner to the information portal Web site of the SAFE (manage@bop.safe). 10. If cooperating bank or a qualified bank handles the forward settlement and sales of foreign exchange in violation of the regulations with a qualified bank or a cooperating bank, penalties shall be imposed on the aforesaid cooperating or qualified bank by the foreign exchange authorities in accordance with the Regulations of the Peoples Republic of China on Foreign Exchange Administration and the relevant regulations. The SAFE branches shall, upon receipt of this Circular, promptly forward it to the central sub-branches and branches of the SAFE as well as to the relevant financial institutions within their respective jurisdictions. If any problems are encountered during implementation, please refer them to the SAFE in a timely manner. Tel: 010-68402374, 68402464. December 1, 2010 FILE: Notice of the SAFE ___ Branch (Administrative Office) on the Registration of Joint Handling of Forward Settlement and Sales of Foreign Exchange (Internal-Use Form) FILE: Statistical Statement on the Joint Handling of Forward Settlement and Sales of Foreign Exchange FILE: List of Institutions within the Jurisdiction involved in the Joint Handling of Forward Settlement and Sales of Foreign 2010-12-28/en/2010/1228/713.html
Circular of the SAFE on Relevant Issues Concerning Indirect Declarations of Collections and Payments Made to and by Domestic Non-residents for Balance of Payments Statistics
The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange in all provinces, autonomous regions, and municipalities directly under the Central Government; the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; all Chinese-funded designated foreign exchange banks: In accordance with the Measures for the Declaration of Balance of Payments Statistics and their detailed rules for implementation, for the purpose of collecting in a all-around manner information about foreign-related collections and payments by non-residents from/to overseas parties via domestic banks and information about collections and payments by domestic non-residents from/to domestic residents via domestic banks, the relevant requirements are hereby notified as follows: I. Declaration of the balance of payments statistics on collections and payments (including foreign exchange and RMB) by domestic non-residents from/to overseas parties via domestic banks shall be conducted according to the following regulations: (I) For foreign-related collections and payments by domestic non-residents from/to overseas parties via domestic banks, the banks handling this business shall handle the indirect declarations for the balance of payments statistics according to the provisions stipulated in the Operating Procedures for the Declaration of Balance of Payments Statistics via Financial Institutions (Trial). (II) The handling banks shall complete the Form of the Basic Information on the Entity for their non-resident institutional clients, and submit the information on the Form of the Basic Information on the Entity electronically to the foreign exchange administrations. (III) The handling banks shall electronically submit the information on the Declaration Form for Foreign-related Income, the Application Form for Overseas Remittances, and the Advisory Notice on External Payments/Acceptances to the foreign exchange administrations. (IV) The nature of such collection and payment transactions shall be declared in a uniform manner under the item Other investments liabilities - currencies and deposits - deposits from overseas - outward transfer of deposits from overseas, and the transaction code for the balance of payments shall be 802031. The transaction remark shall indicate collection by non-residents from overseas or payment by non-residents to overseas. II. The declaration of the balance of payments statistics on collections and payments made by domestic non-residents from/to domestic residents via domestic banks shall be handled according to the following regulations: (I) Collections and payments by domestic non-residents from/to domestic residents via domestic banks shall be incorporated into the scope of the data on the indirect declarations of balance of payments statistics, and the banks shall improve the scope of the data acquisition on their interface programs according to this Circular and the relevant provisions. Banks that have completed the development of their interface programs according to the Circular of the State Administration of Foreign Exchange Concerning Preparatory Work for Further Implementing the Pilot Operation of the SAFE Sub-project of the Jinhong Project (Huifa No. 7 [2009]) shall improve their interface programs according to the provisions in this Circular before the end of July 2009; banks that have not completed the development of their interface programs shall proceed according to their interface program development plan reported for the record, and the development of their interface programs shall be carried out in accordance with the provisions of this Circular. (II) For collections and payments by domestic non-residents from/to domestic residents via domestic banks, the indirect declaration of the balance of payments statistics shall be carried out by domestic residents according to the provisions stipulated in the Operating Procedures for the Declaration of Balance of Payments Statistics via Financial Institutions (Trial), the Declaration Form for Foreign-related Receipts, the Application Form for Overseas Remittances, or the Advisory Notice on External Payments/Acceptances shall be completed. The nature of such transactions shall be declared according to the actual nature of the transaction conducted between the domestic resident and the non-resident. Regarding the verification and writing-off of imports and exports for collections and payments made by domestic non-residents from/to domestic residents via domestic banks, domestic residents are not required to fill out again the Declaration Form for Information on the Special Page used for Verification and Writing-off of Export Foreign Exchange Proceeds (Domestic Income), the Application Form for Domestic Remittances, and the Advisory Notice for Domestic Payments/Acceptances. (III) The declaration of receipts of foreign exchange by domestic residents from domestic non-residents When domestic payment banks handle payments made by domestic non-residents to domestic residents, the domestic payment banks shall make the note in the payment remark of the payment message NRA payment (or OSA payment) (if the payment is handled via an offshore account of domestic non-residents so as to facilitate the banks recognition of the source of payment, and shall inform the domestic residents that the declaration must be handled in a timely manner. When domestic collection banks receive the aforesaid payment made by domestic non-residents, the domestic collection banks shall inform, urge, and direct the domestic residents to handle the indirect declaration of the balance of payments statistics in a timely manner. When domestic residents receive foreign exchange payments made by domestic non-residents, the domestic residents shall fill out the Declaration Form for Foreign-related Income, and the nature of the transaction shall be declared according to the actual nature of the transaction carried out between the domestic resident with and the domestic non-resident. The wording receipt of foreign exchange payment from domestic non-resident shall be noted in the transaction remark area, preceding the description of this transaction deal according to the existing regulations. (IV) The declaration of foreign exchange payments made by domestic residents to domestic non-residents When domestic payment banks handle foreign exchange payments made by domestic residents to domestic parties, the domestic payment banks shall inquire the domestic residents about the conditions of the receipt so as to judge whether the receivers are domestic non-residents. If the receivers are domestic non-residents, the said banks shall request the domestic residents to fill out the Application Form for Overseas Remittances or the Advisory Notice of External Payments/Acceptances, and the nature of the transaction shall be declared according to the actual nature of the transaction between the domestic resident and the domestic non-resident. The wording payment to domestic non-resident shall be noted in the transaction remark area, preceding the description of this transaction according to the existing regulations. (V) From August 1, 2009, an indirect declaration of balance of payments statistics shall be made for foreign exchange collections and payments made by domestic non-residents via domestic banks from/to domestic residents according to the provisions of this Circular. (e) For the time being, RMB collections and payments made by domestic non-residents via domestic banks from/to domestic residents shall not be subject to the indirect declaration of balance of payments statistics. III. Collections and payments made by foreign embassies and consulates in China and by representative offices of international organizations in China from/to overseas parties shall be declared under the corresponding item service - governmental services not mentioned elsewhere. Collections and payments made by foreign embassies and consulates in China as well as those by representative offices international organizations in China from/to domestic parties will not be subject to the indirect declarations of balance of payments statistics. IV. Collections and payments made between domestic non-residents via domestic banks will not be subject to the indirect declarations of balance of payments statistics. V. Non-residents and residents as referred to in this Circular include entities and individuals. Domestic non-residents refer to non-residents making collections and payments via domestic banks, and include non-residents who open accounts in domestic banks that are entitled to engage in offshore banking business according to the relevant laws and regulations. VI. The foreign exchange administrative departments and branches of the SAFE shall transmit this Circular to the central sub-branches, sub-branches, as well as to local commercial banks, rural credit cooperatives, and foreign banks within their jurisdictions in a timely manner upon receipt of this Circular. Regarding any questions arising from implementation of this Circular, please provide feedback to the SAFE in a timely manner. Telephone number: (010)68402373, 68402447. June 17, 2009 2009-07-17/en/2009/0717/694.html
Circular of SAFE on Relevant Issues Concerning Foreign Exchange Administration of Overseas Securities Investments by Fund Management Companies and Securities Companies
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; SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo: For the purpose of regulating foreign exchange administration of overseas securities investments by domestic fund management companies and securities companies (hereinafter referred to as Securities Trading Institutions) and pursuant to the Regulations of the People's Republic of China on Foreign Exchange Administration and the relevant regulations, the relevant issues are hereby notified as follows: 1. The State Administration of Foreign Exchange, with all its branches (hereinafter referred to as AFEs), shall be responsible for the supervision, administration, and inspection of the overseas securities investment quota (hereinafter referred to as Investment Quota), foreign exchange accounts, and exchange by/of the Securities Trading Institutions. 2. Securities Trading Institutions qualifying for foreign exchange business when operating overseas securities investment business shall apply to the SAFE for an Investment Quota. 3. The following materials shall be submitted to the SAFE when Securities Trading Institutions apply for an Investment Quota: 1) A written application, including basic information about the applicant, the overseas securities investment plan, the Investment Quota for which the application is being submitted, information about the senior executives for the overseas securities investments, the internal control system, the risk management measures, and the relevant preparations, and the Basic Information on Overseas Securities Investments by Domestic Institutions(Attachment One). 2) Qualification approvals for domestic institutional investors issued by the China Securities Regulatory Commission (hereinafter referred to as CSRC). 3) Other materials as required by the SAFE Those who apply to increase the Investment Quota shall submit the materials prescribed thereof, as well as a report on the use of the approved Investment Quota. 4. The SAFE implements balanced management of the Investment Quota. The net outward remittances for overseas securities investments by Securities Trading Institutions shall never exceed the approved Investment Quota. Securities Trading Institutions may, as investment requires, within the range of its Investment Quota invest in relevant overseas securities investment products approved by the CSRC (hereinafter referred to as Products). Should a Securities Trading Institution fail to use its Investment Quota effectively within two years after approval, the SAFE shall have the right to reduce the quota. A Securities Trading Institution shall not transfer or assign its Investment Quota in any form to any other institution. 5. Securities Trading Institutions may collect from domestic investors foreign exchange funds for overseas securities investments, as well as RMB funds to purchase foreign exchange for overseas securities investments. Domestic investors shall not invest in relevant Products issued by the Securities Trading Institutions in the form of foreign currency banknotes. 6. A domestic custodian shall open a domestic escrow account for the relevant Products of a Securities Trading Institution with the approval for the Investment Quota issued by the SAFE, among which a domestic foreign exchange escrow account shall be opened for Products collected in the form of foreign exchange, and a domestic RMB escrow account and a domestic foreign exchange escrow account shall be opened for Products collected in the form of RMB. A domestic custodian shall open a domestic escrow account for each Product respectively. Foreign exchange escrow accounts in different currencies for one Product shall be deemed to be one account. A domestic custodian shall provide and file, within 5 working days after the opening of a domestic foreign exchange escrow account, the account opening information and the trust agreement to the AFE in the place where the custodian is located.. A domestic custodian shall, at the place where the overseas custodian is located, open an overseas escrow account for the relevant Products issued by the Securities Trading Institutions See Attachment Two for the division of revenue and expenditures of domestic foreign exchange escrow accounts and overseas escrow accounts. 7. When raising foreign exchange funds from domestic investors for overseas securities investments, Securities Trading Institutions shall, in compliance with the relevant regulations, open special foreign exchange accounts with raised funds and foreign exchange clearing accounts for the Products. If Securities Trading Institutions need to raise foreign exchange funds from domestic investors in the form of direct sales and proxy sales, foreign exchange accounts for the direct sales and proxy sales of the Products shall also be opened. All the accounts hereof shall be opened by the Securities Trading Institutions based on the approved Investment Quota issued by the SAFE and in compliance with the relevant regulations. See Attachment Two for the divisions of the revenue and expenditures in all the accounts hereof. 8. If domestic investors invest with their own foreign exchange, after the inward remittance of the principal and proceeds, they shall not directly withdraw the cash or proceeds for exchange settlement, but they shall transfer it from the domestic foreign exchange escrow accounts, via the foreign exchange clearing accounts and the direct sales and proxy sales foreign exchange accounts, to the foreign exchange accounts of the domestic individual investors or to the previous foreign exchange accounts of the domestic institutional investors. If domestic investors invest with RMB funds, after the inward remittance of the principal and the proceeds, the payments shall be made after the exchange settlement by the Securities Trading Institutions on their behalf via the domestic foreign exchange escrow accounts with the approved Investment Quota issued by the SAFE. 9. Securities Trading Institutions shall, within 7 working days after the establishment of each Product, provide information about the Product, such as the amount of funds actually raised and the fund sources, to the SAFE. (See Attachment 3 for the format.) Securities Trading Institutions shall, within 7 working days after the end of every month, provide to the SAFE the relevant tabulated data on its overseas securities investments. (See Attachment 4 for the format.) Domestic custodians shall, within 7 working days after the end of every month, provide to the SAFE the relevant data regarding the overseas securities investments of entrusted Securities Trading Institutions. (See Attachment 5 and 6 for the format.) 10. Securities Trading Institutions and domestic custodians shall perform their obligations to report the balance of payments in compliance with the relevant regulations for reporting the balance of payments 11. Should Securities Trading Institutions or domestic custodians fail to honor and observe this circular, they shall be punished by the corresponding AFEs in compliance with the Regulations of the People's Republic of China on Foreign Exchange Administration and the relevant regulations on foreign exchange administration. In serious cases involving the domestic custodians, the AFEs may order a replacement of the domestic custodian of the Securities Trading Institution. In serious cases involving the Securities Trading Institutions, the AFEs may revoke their Investment Quotas. 12. The present Circular shall be implemented as of the date of promulgation. The Circular of the SAFE on Relevant Issues Concerning Foreign Exchange Management of Overseas Securities Investments by Fund Management Companies (Huifa No. 46 [2006]) shall be repealed. Upon receipt of this Circular, all SAFE branches and foreign exchange administrative departments shall transmit it in a timely manner to the fund management companies, securities companies, and designated foreign exchange banks under their respective administrations. Attachments: (omitted) 1. Basic Information on Overseas Securities Investments by Domestic Institutions. 2. Division of Revenue and Expenditures in Relevant Accounts of Overseas Securities menvestments by Fund Management Companies and Securities Companies. 3. Record for Raising Overseas Securities Investment Products by Securities Trading Institutions. 4. Monthly Report on the Use of the Overseas Securities Investment Quota by Qualified Domestic Institutional Investors. 5. Monthly Report on Overseas Securities Investments by Qualified Domestic Institutional Investors. 6. Details on Outward and Inward Remittances of Overseas Securities Investment Funds by Qualified Domestic Institutional Investors. September 29, 2009 2009-11-13/en/2009/1113/696.html
Circular of the SAFE on Relevant Issues Concerning Foreign Exchange Administration of Overseas Direct Investments by Domestic Banks
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 branches in Shenzhen, Dalian , Qingdao , Xiamen , and Ningbo ; and all designated Chinese-funded foreign exchange banks: For the purpose of regulating the foreign exchange-related business involved in overseas direct investments by domestic banks, the following issues concerning the foreign exchange administration of overseas direct investments by domestic banks are hereby announced, according to the Regulations of the People's Republic of China on Foreign Exchange Administration (Decree No. 532 of the State Council of the Peoples Republic of China) and the Circular of the SAFE on the Promulgation of the Regulations on the Foreign Exchange Administration of Overseas Direct Investments by Domestic Institutions (Huifa [2009] No. 30): 1. Domestic banks contained herein refer to legal-person banks, such as domestic policy banks, state-owned commercial banks, joint-stock commercial banks, the Postal Savings Bank of China , foreign legal-person banks, city commercial banks, rural commercial banks, and rural cooperative banks. 2. When making overseas direct investments in the event of (1) the establishment of overseas branches (except for representative offices); (2) the establishment of overseas affiliates; (3) equity acquisitions of overseas institutions in line with the relevant laws; and (4) other direct investment projects approved by the relevant authorities, the domestic banks concerned shall, after receiving approval from the banking regulatory departments or other relevant authorities, go through the foreign exchange registration formalities for overseas direct investments at the branches of SAFE in their locality (hereinafter referred to as the local SAFE offices) with the materials required in Article 7 of the Regulations on the Foreign Exchange Administration of Overseas Direct Investments by Domestic Institutions (hereinafter referred to as the Regulations). For transactions concerning Item (1) above, the domestic banks shall furnish the corresponding operating capital allocation plans that have been submitted to the banking regulatory departments. 3. The domestic banks shall fill out the Application Form for Foreign Exchange Registration for Overseas Direct Investments (hereinafter referred to as the Application Form) annexed to the Regulations according to the following: 1) Fill in the Investment Nature item according to the business scope of the invested institutions. When the invested institutions are financial institutions, fill in Otherand specify the specific financial category (banking, insurance, securities, or other) as a note. 2) When the overseas investments are made with self-owned or purchased foreign exchange (including remittances from domestic and overseas accounts), for the Means of Contribution item, Amount and Currency of Contribution in Domestic Spot Exchange shall be selected; When such investments are made with profits and dividends generated from other overseas institutions in which the domestic banks have invested, for the Means of Contribution item, Converted Amount and Currency of Contribution in Overseas Fundsshall be selected. 3) When the payment is made directly with foreign exchange (including remittances from domestic and overseas accounts), under the Source of Foreign Exchange item Domestic Outward Remittance shall be selected. If no foreign exchange purchases are involved, Self-owned Foreign Exchange shall be selected; If foreign exchange purchases are involved, Foreign Exchange Purchase shall be selected 4. The local SAFE offices shall, upon confirmation of the authenticity of the relevant materials and information, handle the foreign exchange registration for the overseas direct investments by domestic banks in the relevant business system and issue a corresponding registration certificate for the domestic banks that are handling such registration for the first time. 5. In the event of outward remittances of foreign exchange for overseas direct investments, domestic banks may, as per the foreign exchange registration certificate for overseas direct investments that contains relevant information thereof, go through the formalities for foreign exchange purchases or payments through the relevant business system. The domestic banks shall, after conclusion of the formalities for foreign exchange purchases and payments, handle the feedback formalities within THREE working days through the relevant business system as per the relevant regulations. 6. The domestic banks shall, as per the first two provisions of Article 9 as well as Article 10 of the Regulations, handle the foreign exchange registration, alteration, or cancellation formalities for overseas direct investments at the local SAFE offices for changes in issues relevant to overseas direct investments that have already been conducted. For issues important but irrelevant to capital changes, such as the long-term equity investment incurred in the registered overseas institutions, the domestic banks shall place such issues on file for the record for future reference at the local SAFE offices. 7. Domestic banks may conduct outward remittances of preliminary expenses for overseas direct investments with self-owned foreign exchange or with direct foreign exchange purchases. Domestic banks without approval for such investments by the banking regulatory departments or other relevant authorities shall recall the residual capital within ONE year after the date of the outward remittance of the preliminary expenses. When the capital remitted outward is foreign exchange purchased in RMB, the domestic banks may conduct the foreign exchange settlement on their own with the original voucher for the foreign exchange purchase. 8. Profits generated from overseas direct investments by domestic banks shall not undergo separate foreign exchange settlements, but will be included in the foreign exchange profits of the banks for uniform administration, and corresponding foreign exchange settlements shall be carried as per the relevant regulations. 9. For foreign exchange earnings under the capital account generated from capital reductions, equity transfers and liquidations, and so forth from investments in overseas institutions by domestic banks, as well as foreign exchange receipts and payments as stated in Article 7 and 8 contained herein, the domestic banks shall provide feedback on the transaction through the relevant business system within THREE working days after the date of the foreign exchange receipt and payment. 10. In the event of settlements of foreign exchange earnings under the capital account generated from capital reductions, equity transfers and liquidation, and so forth from investments in overseas institutions, the domestic banks shall, on the basis of their own capital as well as the relevant regulations on foreign exchange settlements and sales of financial projects, conduct such settlements upon approval from the SAFE or the local SAFE branches (including the foreign exchange administrative departments). Domestic banks shall also provide feedback on the transaction through the relevant business system within THREE working days after the date of settlement. 11. When domestic banks transfer full or partial equity of overseas institutions acquired from their overseas direct investments to other domestic institutions, the relevant funds shall be paid in RMB within the territory of China . The transferors of such equity shall handle the alteration or cancellation formalities for the foreign exchange registration of their overseas direct investments at their local SAFE offices. The transferees of such equity shall handle the foreign exchange registration formalities for the overseas direct investment of the transferred equity at their local SAFE offices. 12. In the event of overseas direct investments conducted prior to promulgation of this Circular, domestic banks shall, as per Article 2 contained herein, handle the foreign exchange registration for overseas direct investment at the local SAFE offices by October 31, 2010. In the event of failure to furnish the relevant approval documents by the relevant authorities for historical reasons, the domestic banks shall submit to the local SAFE offices a completed Application Form with information on each investment as well as a summary list of information on all investments, and the local SAFE offices shall enter such information on the registration. When domestic banks fail to handle the above registration formalities within the prescribed period or according to the prescribed procedures, the local SAFE offices shall impose penalties for breach of the relevant regulations on administration of foreign exchange registration. 13. This Circular shall enter into force as of September 1, 2010. As for matters of foreign exchange administration concerning overseas direct investments by domestic banks not clarified in this Circular, the domestic banks shall handle such business with reference to the Regulations. All SAFE branches and foreign exchange administrative departments shall, upon receipt of this Circular, immediately forward it to the subordinate branches, foreign legal-person banks, city commercial banks, rural commercial banks, and rural cooperative banks within their respective jurisdictions; June 30, 2010 2010-06-30/en/2010/0630/707.html
Circular of the SAFE on Adjusting Approval Authority for Certain Foreign Exchange Businesses Under the Capital Account
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 2010-06-29/en/2010/0629/706.html
Circular of the State Administration of Foreign Exchange on Printing and Distributing the Operating Rules for the Declaration of Balance of Payments Statistics via Financial Institutions
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 branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; and the designated national foreign exchange banks: In response to developments and changes in foreign-related collections and payments and for the purpose of improving the declaration of balance of payments statistics by the declaring entities via domestic financial institutions, the SAFE has revised the Operating Rules on the Declaration of Balance of Payments Statistics via Financial Institutions (see annex), which have now been printed and distributed. All branches and foreign exchange administrative departments of the SAFE shall, upon receipt of this Circular, transmit it in a timely fashion to the sub-branches and banks under their respective jurisdictions for compliance. May 25, 2010 FILE: Operating Rules for the Declaration of Balance of Payments Statistics through Financial Institutions 2010-06-08/en/2010/0608/705.html
Circular of the SAFE on Foreign Exchange Administration of Overseas Investments and Financing and Round-Trip Investments by Domestic Residents via Special Purpose Vehicles
Provincial, autonomous regions, and municipal branches, foreign exchange administration departments, the Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo branches of the SAFE, and all designated Chinese-funded foreign exchange banks: To give full play to the decisive role of the market in resource allocation, support implementation of China's "going-global" strategy, make full use of domestic and overseas resources and markets, further streamline and offer conveniences for cross-border capital transactions involved in investment and financing activities by domestic residents via SPVs (special purpose vehicles), serve the development of the real economy, and improve the level of convertibility of cross-border and financial transactions in good order, issues regarding foreign exchange administration of overseas investments and financing and round-trip investments by domestic residents via SPVs are notified as follows, in accordance with the Regulations on Foreign Exchange Administration of the People's Republic of China: I. The "special purpose vehicle” (SPV) herein refers to overseas companies directly incorporated or indirectly controlled by domestic residents (including domestic institutions and individual domestic residents) using the assets or rights and interests of domestic companies that they legally possess or the overseas assets or rights and interests they legally possess for the purpose of investments and financing. "Round-trip investments" herein refer to the direct investment activities directly or indirectly carried out by domestic residents in China via SPVs, i.e., activities to incorporate foreign-funded companies or projects (hereinafter referred to as “foreign-funded companies”) in China through incorporation or M&As and to obtain rights and interests such as ownership, control rights, and management rights. "Domestic institutions" herein refer to legal persons of enterprises and public institutions and other economic organizations duly incorporated in China; "individual domestic residents" refer to Chinese citizens who have an ID card, military ID card, or armed police ID card, which are for Chinese residents, as well as foreign individuals who do not have a legitimate ID card for Chinese residents but reside in China because they have economic interests in China. "Control" herein refers to operating rights, income rights, or decision-making rights of SPVs obtained by domestic residents through acquisitions, trusts, entrusted holdings, voting rights, buy-backs, and convertible bonds. II. The SAFE and its branches (hereinafter referred to as the “SAFE”) shall manage registration of the SPVs incorporated by domestic residents. This Circular shall apply to the registration and related foreign exchange administration of SPVs incorporated by individual domestic residents, while registration and related foreign exchange administration of SPVs incorporated by domestic institutions shall be conducted in accordance with the existing regulations and this Circular. III. Domestic residents shall apply to the SAFE to register foreign exchange for overseas investments before contributing money to SPVs using legitimate domestic and overseas assets or rights and interests. Where legitimate domestic assets or rights and interests are used, domestic residents shall apply to the foreign exchange bureau that has jurisdiction in the area where the SPV is registered or where the assets or rights and interests are located; where legitimate overseas assets or rights and interests are used, domestic residents shall apply to the foreign exchange bureau that has jurisdiction in the area where the SPV is registered or where his or her residence is registered. Individual domestic residents shall submit the following materials to register foreign exchange for overseas investments: 1. A written application and the Registration Form for Foreign Exchange for Overseas Investments by Individual Domestic Residents. 2. The personal identification documents for individuals. 3. The registration documents of the SPV and evidence of the SPV's shareholders or actual controllers (such as the stock transfer book or the subscriber book). 4. The resolution of the domestic and overseas relevant authorities of companies agreeing to the overseas investments and financing (providing a written statement of the owner’s agreement with the overseas investments and financing if the company has not been incorporated). 5. Evidence regarding the assets or rights and interests that the individual domestic resident directly or indirectly possesses in the domestic enterprises that plan to conduct overseas investments and financing, or of the overseas assets or rights and interests that the individual domestic resident legally possesses. 6. Mandatory supporting materials if the above materials do not adequately prove the authenticity of the transactions or the consistency of the application materials. Domestic institutions shall register foreign exchange for overseas investments in accordance with the Circular of the SAFE on the Release of Regulations on Foreign Exchange Administration for ODI by Domestic Institutions (Huifa No. 30 [2009]). Domestic residents must carry out the foreign exchange registration process for overseas investments before engaging in any subsequent business. IV. Domestic residents and their incorporated SPVs shall not threaten China's sovereignty, safety, or public interests; shall not violate China's laws and regulations; shall not damage relationships between China and other countries (regions); shall not violate the international treaties to which China is a signatory; and shall not be involved in technology or product exports that are prohibited by China for exported. The registration of overseas SPVs that cannot prove that their investment and financing activities are in conformity with the laws and regulations as required by the relevant industry authorities. V. In the event of any alteration in the basic information, such as shareholders, name and operating duration of the individual domestic residents, or key information, such as increases or decreases in capital, or equity transfers, swaps, consolidations, or splits, the registered overseas SPVs shall timely submit a change in the registration of the foreign exchange for overseas investments with the foreign exchange bureaus. Domestic residents must register the change in the foreign exchange for overseas investments before conducting any subsequent business (including re-exchanges of profits and bonuses). VI. If non-listed SPVs want to motivate directors, supervisors, and senior management of the domestic enterprises under their direct or indirect control or personnel who have employment or labor relationships with them using their equities or options, before performing their rights the relevant individual domestic residents shall submit the following materials to the foreign exchange bureau to register the SPV’s foreign exchange: 1. A written application and the Registration Form for Foreign Exchange for Overseas Investments by Individual Domestic Residents 2. Evidence of the registration of foreign exchange business for overseas investments by registered SPVs. 3. Materials issued by the relevant domestic enterprises regarding the employment or labor relationship with the individual. 4. Evidence issued by the SPV, or its actual controller, of the authenticity of the rights and interest motivation. 5. Mandatory supporting materials if the above materials cannot adequately prove the authenticity of the transactions or the consistency among the application materials. Participation in equity incentive plans of overseas listed companies by individual domestic residents shall be handled in accordance with the relevant regulations on foreign exchange administration. VII. The transfer of funds raised overseas by SPVs back to China shall be handled in accordance with the regulations on foreign investments and external debt management in China. Foreign-funded companies incorporated through round-trip investments shall undergo the relevant foreign exchange registration in accordance with the existing regulations on foreign exchange administration for FDI, and shall truthfully disclose such information as the actual controllers of the shareholders. VIII. The transfer back to China of the profits and bonuses received by domestic residents from SPVs shall be handled in accordance with the regulations on foreign exchange administration under the current account. The transfer of foreign exchange income back to China due to capital changes shall be handled in accordance with the regulations on foreign exchange administration under the capital account. IX. Domestic residents shall promptly submit authenticity evidence and go through the alteration or writing-off registration procedures with the foreign exchange bureau if they no longer possess the registered SPV's rights and interests or they no longer need to register the SPV due to transfers of shares, bankruptcy, dissolution, liquidation, the maturity of the operating duration, or a change in identification. X. Domestic enterprises controlled by domestic residents, directly or indirectly, can lend money to registered SPVs in accordance with the existing regulations, provided that the demand is true and rational. XI. Domestic residents can repurchase remitted capital for the incorporation, share repurchases, and the delisting of SPVs, provided that the demand is true and rational. Domestic residents shall submit a statement to the foreign exchange bureau to explain why it has contributed money to the SPV using legitimate domestic and overseas assets or rights and interests but has not registered foreign exchange for investment as required. The foreign exchange bureau shall carry out the registration based on the principles of legitimacy and rationality, and shall impose administrative penalties on those domestic residents who violate the regulations on foreign exchange administration. XIII. The BOP statistics shall be declared in accordance with the existing regulations for cross-border receipts and payments between domestic residents and overseas SPVs. XIV. The SAFE shall regularly analyze the overall situation of the overseas investments and financing and round-trip investments by domestic residents through SPVs, pay close attention to their impact on the BOP, and enhance interim and post regulation. XV. If domestic residents or the domestic companies that they control, directly or indirectly, remit capital to SPVs through false or structured transactions, they shall be punished by the SAFE in accordance with Article 39 of the Regulations on Foreign Exchange Administration of the People's Republic of China. Domestic residents who fail to carry out the foreign exchange registration, to truthfully disclose information on the actual controller of the companies that make the round-trip investments, or make false commitments shall be punished by the SAFE in accordance with Paragraph 5 of Article 48 of the Regulations on Foreign Exchange Administration of the People's Republic of China. Domestic residents who fail to carry out the foreign exchange registration, to truthfully disclose information on the actual controller of the companies that make the round-trip investments, or make false commitments but have capital outflows shall be punished by the SAFE in accordance with Article 39 of the Regulations on Foreign Exchange Administration of the People's Republic of China. If these residents have capital inflows or foreign exchange settlements, they shall be punished by the SAFE in accordance with Article 41 of the Regulations on Foreign Exchange Administration of the People's Republic of China. Domestic residents and SPVs that fail to declare the required BOP statistics for cross-border receipts and payments shall be punished by the SAFE in accordance with Paragraph 1 of Article 48 of the Regulations on Foreign Exchange Administration of the People's Republic of China. XVI. This Circular will come into force on the day of its release and the Circular of the SAFE on Foreign Exchange Administration for Financing and Round-Trip Investments by Domestic Residents via Overseas SPVs (Huifa No. 75 [2005]) shall be repealed. Where there is any discrepancy between the previous regulations and this Circular, this Circular shall prevail. Upon receipt of this Circular, the branches and foreign exchange administration departments of the SAFE shall immediately forward it to the central sub-branches, sub-branches, urban commercial banks, rural commercial banks, foreign banks, and rural credit cooperatives, and the Chinese banks shall forward it immediately to the branches under its jurisdiction. Please contact the Capital Account Administration Department of the SAFE if any problems are encountered in implementation of this Circular. Appendices: 1. Operating Guide for Foreign Exchange Administration of Round-trip Investments 2. Application Form for Direct Investments of Foreign Exchange under the Capital Account State Administration of Foreign Exchange July 4, 2014 FILE: Operational Guidelines for Businesses Involved in Foreign Exchange Administration for Round-trip Investments FILE: Application Form for Foreign Exchange Transactions under Direct Investments of the Capital Account 2014-11-28/en/2014/1128/749.html
Circular of the State Administration of Foreign Exchange on Adjusting the Relevant Management Policies Regarding Entry into the Inter-bank Foreign Exchange Market by Financial Institutions
Branches and Foreign Exchange Administration Departments of the various provinces, autonomous regions, and municipalities directly under the central government and the branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo, and all national banks: In order to further streamline administration and to delegate power to lower levels, diversify market players, promote the development of the foreign exchange market, adjust the relevant management policies regarding entry into inter-bank foreign exchange market by financial institutions, the Regulations of the People’s Republic of China on Foreign Exchange Administration are hereby notified as follows: I. After qualifying for spot foreign exchange settlement and sales business upon the approval of the State Administration of Foreign Exchange (SAFE) and qualifying for derivative product trading business upon the approval of the relevant financial regulatory departments, domestic financial institutions can, based on the prerequisite of meeting the technical specifications for the relevant inter-bank foreign exchange market business, become members of the inter-bank foreign exchange market and conduct spot trading and derivative product trading of RMB against foreign exchange. The SAFE will not require ex-ante qualifying approvals for entry into the inter-bank foreign exchange market. Financial institutions are required to submit for the record their internal operational procedures and risk management system for spot trading and derivative product trading of RMB against foreign exchange to the China Foreign Exchange Trade System (CFETS). II. The trading of RMB against foreign exchange conducted by financial institutions in the inter-bank foreign exchange market shall be conducted for the purpose of hedging risks arising from the exchange settlement and sale business for clients and for themselves, conducting market-making and proprietary transactions within the limit of the overall position of the foreign exchange settlements and sales, as well as engaging in hedging activities for themselves pursuant to the relevant regulations. Such financial institutions shall observe the laws and regulations, rules on inter-bank foreign exchange market transactions, clearing, and information, as well as the stipulations of the relevant financial regulatory authorities. III. Currency brokerage companies (including branches) incorporated with the approval of the banking regulatory authorities can, as specified by the foreign exchange administration, conduct foreign exchange brokerage business, such as derivative product trading of RMB against foreign exchange and trading of foreign exchange against foreign exchange and foreign exchange lending, and the SAFE will not require ex-ante qualifying approvals. When conducting foreign exchange brokerage business, the currency brokerage companies shall observe the relevant rules and regulations for the inter-bank foreign exchange market. IV. The Trading Center and the Inter-bank Market Clearing House Co., Ltd. (the “Shanghai Clearing House”) shall, in line with the requirements of this Circular, adjust the relevant business rules and systems accordingly, and shall provide effective technical support and services. The Trading Center and the Shanghai Clearing House shall be responsible for the daily monitoring of inter-bank trading and clearing of RMB against foreign exchange and shall promptly report to the SAFE whenever any abnormal transactions or clearing situations are discovered. V. Financial institutions shall observe professional ethics and follow market practices so as to promote self-disciplined management and standardized development of the foreign exchange market. VI. This Circular will come into force as of January 1, 2015. At the same time, the Reply of the SAFE on Relevant Issues Concerning the Conduct of RMB and Foreign Currency Swap Transactions by the Bank of China on the Inter-bank Foreign Exchange Market (Huifu No. 61[2006]), the Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning the Introduction of Renminbi-Against-Foreign Exchange Options Trading (Huifa No. 8 [2011]), the Circular of the State Administration of Foreign Exchange on Adjustments to the Administration of Some Businesses in the Inter-bank Foreign Exchange Market (Huifa No. 30 [2012]), and the Circular of the State Administration of Foreign Exchange on Adjustments to the Administration of the Renminbi-against-Foreign Exchange Derivatives Business (Huifa No.46 [2013]) will be repealed. Relevant issues involving management of entry into the inter-bank foreign exchange market in other documents shall be subject to this Circular. Upon receipt, the branches and the Foreign Exchange Administration Departments of the SAFE shall promptly distribute this Circular to the financial institutions within their respective jurisdictions. State Administration of Foreign Exchange December 5, 2014 2014-12-17/en/2014/1217/751.html
Circular of the State Administration of Foreign Exchange Concerning Reform of the Administrative Approaches to Settlement of Foreign Exchange Capital of Foreign-invested Enterprises
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 branches of the SAFE in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo: To further deepen the reform of foreign exchange administration system, better serve and facilitate the business and capital operations by foreign-invested enterprises, the SAFE decides to implement the reform of the administrative approach to settlement of foreign exchange capital by foreign-invested enterprises across the country, based on the experience from the preliminary pilot program conducted in some regions. To ensure the smooth implementation of such reform, the relevant issues are hereby notified as follows: I. Voluntary settlement of foreign exchange capital of foreign-invested enterprises (FIEs) Voluntary settlement of foreign exchange capital of a FIE means that foreign exchange capital in the FIE's capital account, recognized by the foreign exchange authority as the right and interest of cash contribution (or registered by the bank for accounting entry of cash contribution), can be settled in banks according to its actual business requirements. The provisional percentage for the voluntary settlement of foreign exchange capital of FIEs is 100 percent. The SAFE may adjust the aforesaid percentage in due time according to the international receipts and payments situation. During the course of implementing the voluntary settlement of foreign exchange capital, the FIEs can still choose the existing procedures for settlement upon payment for the use of foreign exchange capital. For each foreign exchange settlement for enterprises, based on the principle of foreign exchange settlement upon payment, the banks shall examine the authenticity and compliance in the use of the funds for prior transaction of foreign exchange settlement (including voluntary settlement of foreign exchange and foreign exchange settlement upon payment). Domestic transfers and cross-border outward payments of foreign exchange capital of FIEs shall be processed pursuant to the prevailing regulations on foreign exchange administration. II. RMB Funds from the Voluntary Settlement of Foreign Exchange Capital of FIEs Included in Management of Accounts for FX Settlement and Pending Payment The FIEs shall, in principle, open accounts with their banks for capital account– foreign exchange funds settled and to be paid (“accounts for FX settlement and pending payment”) for the deposits of RMB funds from the voluntary settlement of foreign exchange on a one-to-one corresponding basis, and make various payments through these accounts. The capital account, domestic asset realization account and domestic reinvestment account under the same name which are opened by a FIE with the same bank outlet may share an account for FX settlement and pending payment. The RMB funds of FIEs from foreign exchange settlement upon payment shall not be used for payments through the accounts for FX settlement and pending payment. Receipts in the FIEs' capital accounts include: foreign exchange capital remitted from overseas or capital subscribed to and contributed by foreign investors (including contributions from non-resident deposit accounts, offshore accounts, and domestic foreign exchange accounts of foreign individuals); foreign exchange capital or capital subscribed to and contributed as transferred from the special accounts for security deposits of overseas remittances; funds returned after transfers, pursuant to the regulations; funds received from the capital account under the same name; funds returned due to revocation of the transactions; received interest income; and other receipts registered by the foreign exchange authority (bank) or approved by the foreign exchange authority. The scope of the payments from the capital accounts includes: foreign exchange settlement within the business scope; transfers through the foreign exchange settlement into the accounts for FX settlement and pending payment; domestic transfers in the original currency to the special accounts for security deposits domestically transferred, capital accounts under the same name, accounts for entrusted loans, special accounts for concentrated funds management, special accounts for overseas lending, special accounts for domestic reinvestments; outward remittances owing to capital reductions or withdrawals by foreign investors; outward payments under the current account; and other payment under the capital account registered by the foreign exchange authority (bank) or approved by the foreign exchange authority. The scope of the receipts in the accounts for FX settlement and pending payment includes: funds transferred through foreign exchange settlement from capital account, domestic asset realization account and domestic reinvestment account under the same name or held by an enterprise for domestic equity investments; funds transferred from the account for FX settlement and pending payment under the same name or held by an enterprise for domestic equity investment; funds returned after transfer from these accounts, pursuant to the regulations; funds returned due to revocation of the transactions; RMB interest income; and other receipts registered by the foreign exchange authority (bank) or approved by the foreign exchange authority. The scope of payments in the accounts for FX settlement and pending payment includes: payments within the business scope, payments of funds for domestic equity investments and security deposits in RMB, funds transferred to the special account for centralized funds management and the account for FX settlement and pending payment under the same name; repayment of RMB loans after completed utilization; foreign exchange purchases and payments or direct outward repayments of foreign debts; foreign exchange purchases and payments or direct outward payments owing to capital reductions or withdrawals by foreign investors; foreign exchange purchases and payments or direct outward payments under the current account; and other payments under the capital account registered by the foreign exchange authority (bank) or approved by the foreign exchange authority. RMB funds in the accounts for FX settlement and pending payment shall not be transferred back to the capital accounts through purchase of foreign exchange. RMB funds transferred from the accounts for FX settlement and pending payment for the purpose of guarantees or payments of other security deposits, unless guarantee contract is performed or deductions occur due to default, shall be returned to the accounts for FX settlement and pending payment through the original route. III. Utilization of FIEs’ Capital according to the Principles of Authenticity and Self-use within the Business Scope FIEs' capital and RMB funds from their settlement shall not be used for the following purposes: (I) directly or indirectly used for payment beyond the business scope or prohibited under the laws and regulations of the State; (II) directly or indirectly used for securities investments, unless otherwise prescribed under the laws and regulations; (III) directly or indirectly used for the extension of RMB entrusted loans (unless permitted by the business scope), repayments of inter-enterprise borrowings (including third-party advances), and repayments of RMB bank loans already refinanced to any third party; (IV) Used for the payment of expenses related to the purchase of real estate not for self-use, except for foreign-invested real estate enterprises. IV. Facilitation of Domestic Equity Investments by FIEs with Funds from Foreign Exchange Settlement Except for transfers in the original currency owing to equity investments, it is acceptable for FIEs with investment as their main business (including foreign-funded investment companies, foreign-funded venture capital enterprises, and foreign-funded equity investment enterprises) to directly settle the foreign exchange capital into RMB or transfer the RMB funds in the account for FX settlement and pending payment to the account of the invested enterprise according to the actual scale of investment, provided that the domestic investment project is authentic and compliant with the regulations. When ordinary FIEs other than the above-mentioned enterprises invest in domestic equities with capital in the original currency, the existing regulations on domestic reinvestments shall prevail. When RMB funds settled with foreign exchange are used for domestic equity investments, the investee shall first register for a domestic reinvestment with the foreign exchange authority (bank) at the place of registration and open a corresponding account for FX settlement and pending payment, then the investor shall transfer the RMB funds settled with the foreign exchange, according to the actual scale of investment, to the said account, which is opened by the investee. When the investee continues to invest in domestic equities, the aforesaid principles shall apply. V. Further Standardizing the Management of Payments with Funds from Foreign Exchange Settlement (I) Foreign investors, FIEs, and other relevant applying entities shall provide, on an accurate and authentic basis and according to the regulations, the relevant documents certifying the authenticity to the banks, and complete the Order of Payments with Funds in Accounts Related to Direct Investments (see the Appendix) when applying for payments with RMB funds from the settlement of capital (including direct payments with foreign exchange capital). (II) The banks shall, according to the business development principles of “knowing your customers,” “understanding your businesses,” and “due diligence reviews,” be responsible for verification of the authenticity of outward payments with capital and payments with RMB funds from the foreign exchange settlement by the FIEs. When handling each payment with such funds, the authenticity and compliance of the certifying documents with respect to the prior payment transaction shall be examined. The banks shall keep the certifying documents relevant to the settlement and use of the foreign exchange capital of the FIEs for five years for future reference. The banks shall report the data, including the accounts related to the capital accounts and the accounts for FX settlement and pending payment (account nature code: 2113), cross-border receipts and payments, domestic transfers, foreign exchange settlement and sales within the accounts, on a timely basis and according to the Circular of the State Administration of Foreign Exchange on Issuing the Standards Version 1.0 for Collecting Data on Foreign Exchange Transactions by Financial Institutions (Huifa No. 18 [2014]). In case of transfers of funds between the accounts for FX settlement and pending payment and other RMB accounts, the information on the domestic transfers shall be reported by filling in the documents for domestic payments and receipts and indicating the fund purpose code under the “invoice number” column (according to “7.10: Code of Purpose for Foreign Exchange Settlement” in the Circular of Huifa No. 18 [2014]) ; the transaction code for other transfers than that for payments under verification of trade in goods shall be indicated as “929070”. (III) When enterprises fail to provide documents certifying authenticity for special reasons at the moment, the banks may make the relevant payments for the enterprises, provided that the obligation of due diligence review has been performed and the authentic background of the transactions has been verified, and may file with the foreign exchange authority through its relevant business system with respect to the special items on the date of payment. The banks shall collect and examine the full set of relevant certifying documents resubmitted by the enterprises within 20 working days upon completion of the payment and report to the foreign exchange authority through relevant business system with respect to the resubmission of the documents certifying the authenticity of the filing of special items. Where FIEs use capital for the purpose of reserve funds, the banks may not require submission of the aforesaid documents certifying authenticity. The cumulative amount of payments for reserve funds by a single enterprise each month (including voluntary settlement of foreign exchange and foreign exchange settlement upon payment) shall not exceed an equivalent of USD 100,000. Where a FIE applies for settlement upon payment with all the foreign exchange capital on a one-off basis, or payments with all the RMB funds in the account for FX settlement and pending payment, but fails to provide the relevant documents certifying the authenticity, the bank concerned shall not handle for the enterprise the foreign exchange settlement and payment. VI. Management of the Settlement and Utilization of Funds in the Foreign Exchange Accounts under Other Direct Investment Items The foreign exchange funds in the domestic asset realization accounts and domestic reinvestment accounts opened by domestic institutions shall be settled with reference to the regulations for management of the FIEs' capital accounts. The foreign exchange funds in the domestic asset realization accounts and domestic reinvestment accounts opened by domestic individuals and those in the overseas asset realization accounts opened by domestic institutions and individuals shall be settled directly through the banks, against the relevant business registration certificates. The foreign exchange funds in the foreign investors’ accounts for preliminary expenses shall be settled according to the principle of settlement upon payment. The foreign exchange funds in the special accounts for security deposits of overseas remittances and special accounts for security deposits domestically transferred shall not be used through the foreign exchange settlement. In case that guarantee contract is performed or deduction occurs due to default, the relevant security deposits shall be transferred into another foreign exchange account under the capital account of the recipient of the deposits that have been registered by the foreign exchange authority (bank) or approved by the foreign exchange authority, and shall be used according to the relevant regulations. The interest income and investment income in the above-mentioned accounts under direct investments can be retained in these accounts, and afterwards transferred to and retained in the settlement account under the current account or directly settled and paid through the bank against the detailed list of the interest and income. VII. Further Strengthening Ex-post Supervision and Investigations of Irregularities by the Foreign Exchange Authority (I) The foreign exchange authorities shall strengthen the guidance and examination on the compliance of banks in handling such business as settlement and utilization of capital for FIEs in accordance with relevant regulations including the Regulations of the People's Republic of China on Foreign Exchange Administration and the Provisions on Foreign Exchange Administration of Domestic Direct Investments by Foreign Investors. The manner of examination includes request for submission of written explanatory and transaction documents by the relevant entities, an interview with the persons in charge, field inspections or duplication of the relevant documents of the entities, and notification of any irregularities. With respect to banks with serious or malicious irregularities, their foreign exchange transactions under the capital account may be suspended according to the relevant procedures. With respect to FIEs with serious or malicious irregularities, their qualifications for voluntary settlement of foreign exchange may be revoked. Prior to the submission of the written explanatory documents and proper rectification, any other foreign exchange transactions under the capital account shall be prohibited. (II) For FIEs and banks with violations against this Circular with respect to foreign exchange settlement and utilization of FIEs' capital, the foreign exchange authorities shall investigate and treat them according to the Regulations of the People's Republic of China on Foreign Exchange Administration and other relevant provisions. VIII. Others This Circular shall take effect as of June 1, 2015. In case of any discrepancies with prior regulations, this Circular shall prevail. The Circular of the State Administration of Foreign Exchange on Business Operational Issues Concerning Improving Administration for the Payment and Settlement of the Foreign Exchange Capital of Foreign-Invested Enterprises (Huizongfa No. 142 [2008]) and the Supplementary Circular of the General Affairs Department of the State Administration of Foreign Exchange on Business Operational Issues Concerning Improving Administration for the Payment and Settlement of the Foreign Exchange Capital of Foreign-Invested Enterprises (Huizongfa No. 88 [2011]) and Circular of the State Administration of Foreign Exchange on Relevant Issues Concerning Pilot Reform in Some Regions on Administrative Approaches to Settlement of Foreign Exchange Capital of Foreign-invested Enterprises (Huifa No. 36 [2014]) shall be abolished at the same time. After receiving the Circular, the branches and foreign exchange administrative departments of the SAFE shall timely forward it to the central sub-branches, sub-branches, and banks within their respective jurisdictions. Please contact the Capital Account Administration Department of the SAFE in a timely manner if any problems are encountered in implementation of this Circular. Appendix: Order of Payments with Funds in Accounts Related to Direct Investments State Administration of Foreign Exchange March 30, 2015 FILE: Order of Payments with Funds in Accounts Related to Direct Investments 2015-06-11/en/2015/0611/762.html
Circular of Nullified and Modified Documents on the Registered Capital Registration System
The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (hereinafter referred to as the “SAFE”) of all provinces, autonomous regions, and municipalities directly under the Central Government; the branches of the SAFE in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo： To implement the Circular of the State Council on Printing and Distributing the Reform Plan on the Registered Capital Registration System (Guofa No. 7 [2014]) and the Circular of the General Office of the State Council on Accelerating Implementation of the Reform on the Registered Capital Registration System (Guobanhan No. 14 [2015]), some regulatory documents on foreign exchange administration are nullified and modified as follows: I. The Circular of the State Administration of Foreign Exchange on the Implementation of the Pilot Program on Domestic and Foreign Currency Exchange Franchise Businesses for Individuals (Huifa No. 38 [2008]) is nullified. II. Article 2 under the Circular of the State Administration of Foreign Exchange on Printing and Distributing the Measures for Administration of the Pilot Program on Domestic and Foreign Currency Exchange Franchise Businesses for Individuals (Huifa No. 27 [2012]) and Article 18 Paragraph (I) of the attached Measures for Administration of the Pilot Program on Domestic and Foreign Currency Exchange Franchise Businesses for Individuals are deleted. Article 8 Paragraph (I) of the attached Measures for Administration of the Pilot Program on Domestic and Foreign Currency Exchange Franchise Businesses for Individuals is modified into “having independent legal person qualification.” The sequence of the relevant provisions is adjusted accordingly. III. Article 6 Paragraph (V) under the Appendix II to the Circular of the State Administration of Foreign Exchange on Printing and Distributing of the Regulations for Foreign Exchange Administration on Trade in Services (Huifa No. 30 [2013]), namely, the Rules for Implementation of the Guidelines on Foreign Exchange Administration for Trade in Services, is modified into “external payment under profit, dividend and bonus: the board resolution on profit distribution relating to this outward remittance.Interim dividend and bonus attributable to an overseas shareholder and payable by a domestic institution according to the law; External payment under the profit attributable to a foreign partner in a foreign-invested partnership: resolution on profit distribution to partners; Receipt of foreign exchange under profit, dividend and bonus: resolution on disposal of profit and financial statements of an overseas institution for relevant year(s).” IV. Article 6 of the Circular of the State Administration of Foreign Exchange and the Ministry of Construction on Issues Related to Regulating Foreign Exchange Administration of the Real Estate Market (Huifa No. 47 [2006]) is modified into “a foreign-invested real estate enterprise which has not obtained the State-owned Land Use Certificate or whose capital fund for a development project has not reached 35% of the total project investment is not allowed to make borrowings from overseas. Nor shall a foreign exchange authority conduct external debt registration and approve of foreign exchange settlement and verification with respect of external debts.” V. In the Appendix 2 to the Circular of the State Administration of Foreign Exchange on Promulgating the Measures for Administration of External Debt Registration (Huifa No. 19 [2013]), i.e., the Operating Guidelines on Administration of External Debt Registration, Paragraph 2(2) and (3) (Principles for review) of Section I (Registration of External Debt Contract Execution for Non-banking Debtors) are deleted; Paragraph 6(3) thereof is modified into “a foreign-invested real estate enterprise which has not obtained the State-owned Land Use Certificate or whose capital fund for a development project has not reached 35% of total project investment is not allowed to make borrowings from overseas. Nor shall a foreign exchange authority conduct external debt registration and approve of foreign exchange settlement and verification with respect of external debts.” The sequence of the relevant provisions is adjusted accordingly. VI. Article 7 Paragraph 1 of the Circular of the State Administration of Foreign Exchange on Foreign Exchange Administration for Overseas Loans Extended by Domestic Enterprises (Huifa No. 24 [2009]) is modified into “lenders and borrowers shall be organized and registered according to the law” VII. Article 14 of the Circular of the State Administration of Foreign Exchange on Releasing the Provisions for the Centralized Operations and Administration of Foreign Exchange Funds of Internal Members of Domestic Enterprises (Huifa No. 49 [2009]) is modified into “domestic enterprises engaging in the foreign currency fund pool business shall be organized and registered according to the law and have not violated any laws or regulations on foreign exchange administration in the last two years.” VIII. In the Appendix 1 to the Circular of the State Administration of Foreign Exchange on Further Improving and Adjusting the Policies on Foreign Exchange Administration of Direct Investments (Huifa No. 59 [2012]), i.e., Operating Guidelines for Foreign Exchange Business for Direct Investment under the Capital Account(SAFE Version), Paragraph 2 (Principles for review) of Article 1.14, “Domestic Enterprises Engaging in the Foreign Currency Fund Pool Business” is modified into “domestic member enterprises applying for engaging in the foreign currency fund pool business shall be organized and registered according to the law and independently bear legal liabilities”;Paragraph 1 (Principles for review) of Article 2.8, “Registration of the Quota for Overseas Loans Extended by Domestic Institutions” is modified into “lenders and borrowers shall be organized and registered according to the law.” IX. In the Appendix to the Circular of the General Affairs Department of the State Administration of Foreign Exchange on Printing and Distributing the Operating Guidelines on the Foreign Exchange Business under the Capital Account (2013 version) (Huizongfa No. 80 [2013]), i.e., the Operating Guidelines on the Foreign Exchange Business under the Capital Account, Paragraph 2 (Principles for review) of Article 2.10 “domestic enterprises engaging in the foreign currency fund pool business” is modified into “domestic member enterprises applying for engaging in the foreign currency fund pool business shall be organized and registered according to the law and independently bear legal liabilities”;Paragraph 1 (principles for review) of Article 3.7 “registration of the quota for overseas loans extended by domestic institutions” is modified into “lenders and borrowers shall be organized and registered according to the law”; Paragraph 2(2) and (3) (Principles for review) of Article 4.2, “registration of external debt contract execution for non-banking debtors” are deleted; and Paragraph 6(3) is modified into “a foreign-invested real estate enterprise which has not obtained the State-owned Land Use Certificate or whose capital fund for a development project has not reached 35% of total project investment is not allowed to make borrowings from overseas. Nor shall a foreign exchange authority conduct external debt registration and approve of foreign exchange settlement and verification with respect of external debt.” The sequence of the relevant provisions is adjusted accordingly. The Circular will take effect as of the date of promulgation. The General Affairs Department of the State Administration of Foreign Exchange May 4, 2015 2015-06-24/en/2015/0624/763.html

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