Ministry of Finance and State Administration of Foreign Exchange, Further Strengthening the Work of Capital Verification for Foreign Investment Enterprises and Improving the System of Registration of Foreign Capital and Foreign Exchange Circular

Issued: March 13 2002
Effective: May 1 2002

Main contents: Where the foreign party to a foreign investment enterprise makes capital contributions in foreign currency, the accountant conducting the verification shall inspect the relevant foreign exchange registration certificate and obtain external confirmation from the relevant bank to verify that the foreign funds have been remitted into the specified bank account (Section One(1)). If the foreign party uses its profits or funds from other investments or transactions as capital contribution to the enterprise, the accountant shall verify whether such capital transfer is the same as that approved by the State Administration of Foreign Exchange (SAFE) (Section One (2)). If the foreign party makes a capital contribution in kind, the accountant shall obtain a copy of the import customs declaration to verify whether the capital in kind has come from abroad (Section One (3)). In any case, the accountant is required to obtain external confirmation from the relevant SAFE branch to verify the genuineness and the legal compliance of the documents issued by banks, SAFE or customs. Such external confirmations shall serve as the bases for capital verification and the enterprise shall retain a copy of each external confirmation for its file, which shall be presented when the enterprise handles foreign exchange business or is given a foreign exchange review (Sections Four and Five).