State Administration of Foreign Exchange, Foreign Exchange Control Issues Relevant to Fund Management Companies with Foreign Equity Participation Circular

Issued: March 29 2003
Effective: May 1 2003
Interpreting authority: State Administration of Foreign Exchange (SAFE)
Applicability: "Fund management companies with foreign equity participation" means fund management companies whose equity is changed by shares of domestic fund management companies being transferred to or subscribed by foreign shareholders, or fund management companies established by joint capital contribution from foreign and domestic shareholders (Item One).

Main contents: The Circular lists the documents required for opening of foreign exchange capital fund accounts, foreign exchange settlement as well as purchase of foreign exchange for profit payment to foreign shareholders, share transfer and foreign capital reduction (withdrawal). The receipt of foreign exchange capital fund accounts of fund management companies with foreign equity participation shall be limited to remittance of capital contributions of foreign shareholders while the expenditure of such foreign exchange capital account shall be limited to external expenditure under current account items or other foreign exchange expenditure approved by SAFE (Item Four). Item 10 prohibits fund management companies with foreign equity participation from engaging in external borrowing or security.
Related legislation: PRC Administration of Foreign Exchange Control Regulations (2nd Revision), Aug 5 2008, CLP 2008 No.8 p77