State Administration of Foreign Exchange, Circular on Issues Concerning the Administration of the Provision of Security to Foreign Parties by Organisations in China

国家外汇管理局关于境内机构对外担保管理问题的通知

September 04, 2010 | BY

clpstaff &clp articles

Relaxation on foreign security benefits outbound investment.

Clp Reference: 3520/10.07.30 Promulgated: 2010-07-30 Effective: 2010-07-30

Issued: July 30 2010
Effective: as of date of issuance

Main contents: The State Administration of Foreign Exchange subjects the provision of security to foreign parties for financing purposes by banks in China to balance control, and it subjects the provision of security to foreign parties by non-bank financial institutions and enterprises mainly to approval on a case by case basis, however, it may subject those that satisfy certain conditions to balance control (Article 2).

If a bank provides foreign security for financing purposes, the secured party is not subject to restrictions such as an equity relationship with an organisation in China, net asset percentage and profitability (Article 10).

When a non-bank financial institution or an enterprise provides security to foreign parties, the secured party shall have realised a profit in at least one of the last three years; if the secured party is involved in resource development or other such long-term project, it shall have realised a profit in at least one of the last five years (Article 14).

Related legislation: PRC Security Law, Jun 30 1995, CLP 1995 No.6 p.21; and PRC Property Law, Mar 16 2007, CLP 2007 No.4 p.31

Repealed legislation: Circular on Current Situation Concerning the Administration of the Request on Chinese-invested Designated Foreign Exchange Banks to Report on Their Balances of Security Provided to Foreign Parties, 1997; Letter on the Explanation of Provisions Relevant to the Provision of Security to Foreign Parties by Organisations in China, 1999; Reply Letter on Questions Raised by the Bank of China on the Issuance of Letters of Guarantee to Foreign Parties, 2000; Reply on Issues Relevant to the Provision of Security to Foreign Parties, 2000; and Circular on Revising the Method of Administration of the Provision of Security to Foreign Parties for Financing Purposes by Banks in China for Offshore Investee Enterprises, 2005

clp reference:3520/10.07.30
prc reference:汇发 [2010] 39号
promulgated:2010-07-30
effective:2010-07-30

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