State Administration of Foreign Exchange, Provisions on Foreign Exchange Control in Connection with Overseas Direct Investment by Organisations in China
国家外汇管理局境内机构境外直接投资外汇管理规定
October 10, 2009 | BY
clpstaff &clp articles &Forex funds and overseas profits can be used for ODI projects.
Promulgated: July 13 2009
Effective: August 1 2009
Interpreting authority: State Administration of Foreign Exchange (Safe)
Applicability: The term “overseas direct investment” refers to the establishment or obtaining of ownership, controlling power or rights to operations and management of an existing enterprise or project overseas by an organisation in China by way of establishment of a wholly-owned enterprise or an equity or co-operative joint venture, a merger, acquisition, or equity participation, upon checking and approval of the department in charge of overseas direct investment (Article 2).
These Provisions also, mutatis mutandis, apply to foreign exchange control in connection with the direct investment of organisations in China in the Hong Kong and Macao Special Administrative Regions and Taiwan, and the overseas direct investment of financial institutions in China. Where relevant regulatory departments have other stipulations on the use of funds for overseas direct investment by financial institutions in China, such stipulations shall prevail (Articles 21 and 22).
Where the Provisions are inconsistent with previous provisions, these Provisions shall prevail (Article 26).
Main contents: Organisations in China may use their own foreign exchange funds (including funds in the current account-related foreign exchange accounts and the accounts for the business capital of the foreign-invested enterprise), foreign exchange loans taken out in China that comply with provisions, foreign exchange converted from renminbi or physical and intangible assets, as well as other foreign exchange assets verified and approved by Safe or its branches to conduct overseas direct investment. Profits obtained from overseas direct investment by organizations in China may also be retained overseas for overseas direct investment (Article 4). Safe and its branches shall implement a foreign exchange registration and record filing system for the overseas direct investment of organisations in China as well as the assets, and rights and interests arising therefrom. Under such registration, organisations in China shall state the sources of foreign exchange funds used for overseas investment (Article 6). The fees remitted abroad by organisations in China for the preparatory stage shall in general not exceed 15% of the total amount of overseas direct investment as specified in its application to the department in charge of overseas direct investment (Article 14).
Where an organisation in China transfers to another organisation in China all or part of the equity in directly invested enterprise overseas, the amount shall be settled in renminbi in China (Article 19).
Related legislation: PRC Regulations for the Control of Foreign Exchange (2nd Revision), Aug 5 2008, CLP 2008 No.8 p.77
Repealed legislation: Circular on the Issuance of the《Implementing Rules for the Measures on Foreign Exchange Control of Overseas Investment》 ; Guidelines on the Examination and Approval in Respect of Foreign Exchange Risk and Review of the Sources of Foreign Exchange Funds of Overseas Investments; Circular on Standardising Written Conculsions of the Examination and Approval in Respect of Foreign Exchange Risk and Sources of Foreign Exchange Funds of Overseas Investments; Supplementary Circular on the ; Circular on Exempting Certain Projects from Paying Security Deposits for Remittance of Profits from Overseas Investment; Circular on Issues Relevant to Simplifying the Review of the Sources of Foreign Exchange Funds of Overseas Investments; Circular on Issues Relevant to Expanding the Pilot Reform of Foreign Exchange Control of Overseas Investment; Circular on Adjusting Certain Foreign Exchange Control Policies on Overseas Investment; and Circular on Delegating the Review Authority of the Sources of Foreign Exchange Funds of Overseas Investments
clp reference:3800/09.07.13promulgated:2009-07-13effective:2009-08-01This premium content is reserved for
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