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Issues Relevant to Improving the Foreign Exchange Administration Regarding Mergers and Acquisitions by Foreign Investors Circular
关于完善外资并购外汇管理有关问题的通知
The Circular aim to maintain the balance of payments and to ensure the compliant and orderly flow of cross-border capital. Local investors who wish to invest abroad with it sown domestic assets/equity shall obtain the verification of the foreign exchange administration.
(Issued by the State Administration of Foreign Exchange on, and effective as of, January 24 2005.)
(国家外汇管理局于二零零五年一月二十四日发布施行。)
Hui Fa [2005] No.11
汇发 [2005] 11号
To the branches and offices of the State Administration of Foreign Exchange of each province, autonomous region and municipality directly under the central government and the Shenzhen, Dalian, Qingdao, Xiamen and Ningbo municipal branches of the State Administration of Foreign Exchange:
国家外汇管理局各省、自治区、直辖市分局、外汇管理部，深圳、大连、青岛、厦门、宁波市分局:
With a view to maintaining the balance of payments and ensuring the compliant and orderly flow of cross-border capital, we hereby notify you as follows on issues relevant to improving the foreign exchange administration regarding mergers and acquisitions by foreign investors:
为维护国际收支平衡，确保跨境资本合规有序流动，现就完善外资并购外汇管理有关问题通知如下:
1. Citizens of China who invest abroad and directly or indirectly establish or control enterprises outside China shall carry out approval and registration procedures with reference to the Exchange Control for Investments Outside the People's Republic of China Procedures.
一、境内居民境外投资直接或间接设立、控制境外企业，应参照《境外投资外汇管理办法》的规定办理审批、登记手续。
2. Pursuant to the Acquisition of Domestic Enterprises by Foreign Investors Tentative Provisions, if a Chinese citizen wishes to obtain an instrument of equity or other property right in a foreign company by selling domestic assets or equity, he is required to obtain the verification of the foreign exchange administration. Without verification, a Chinese citizen may not use his domestic assets or equity as consideration for equity or other property right in a foreign enterprise.
二、根据《外国投资者并购境内企业暂行规定》，境内居民为换取境外公司股权凭证及其它财产权利而出让境内资产和股权的，应取得外汇管理部门的核准。未经核准，境内居民不得以其拥有的境内资产或股权为交易对价取得境外企业股权及其它财产权利。
3. When a branch or office of the State Administration of Foreign Exchange carries out foreign exchange registration in respect of a foreign-invested enterprise established through a merger or acquisition by a foreign investor, it shall put emphasis on examining whether the foreign enterprise was established or is controlled by a Chinese citizen and whether it has the same management as the target enterprise (for details see the appendix). A branch or office of the State Administration of Foreign Exchange shall submit to the State Administration of Foreign Exchange for approval any application for foreign exchange registration from a foreign-invested enterprise established by a Chinese citizen through the merger or acquisition of a domestic enterprise by a foreign enterprise.
三、各分局、外汇管理部在办理由外资并购设立的外商投资企业外汇登记时，应重点审核该境外企业是否为境内居民所设立或控制，是否与并购标的企业拥有同一管理层(详见附件)。对于境内居民通过境外企业并购境内企业设立的外商投资企业，各分局、外汇管理部应将其外汇登记申请上报总局批准。
4. The branches and offices of the State Administration of Foreign Exchange shall draw up detailed lists of foreign-invested enterprises that have been established by Chinese citizens through the merger or acquisition of domestic enterprises by foreign enterprises and which have carried out foreign exchange registration, and place stress on monitoring requests for confirmation of capital verification, registration of foreign capital and foreign exchange in respect of receipts of foreign exchange from equity transfers, registration of shareholder loans, outward remittance of profits, reinvestment of profits, equity transfers, etc. of such enterprises. If they discover any problems, they shall promptly investigate and handle the same.
四、对于境内居民通过境外企业并购境内企业设立并已办理外汇登记的外商投资企业，各分局、外汇管理部应列出详细名单，对该类企业的验资询证、转股收汇外资外汇登记、股东贷款登记、利润汇出、利润再投资、股权转让等情况实施重点监控，发现问题，要及时查处。
This Circular shall enter into effect on the date of issuance.
本通知自下发之日起执行。
Appendix: Operational rules for foreign exchange registration in respect of foreign-invested enterprises established through mergers or acquisitions by foreign investors
clp reference:3820/05.01.24prc reference:汇发 [2005] 11 号promulgated:2005-01-24effective:2005-01-24附件：外资并购设立外商投资企业的外汇登记操作规程
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