Circular on Further Improving and Revising the Foreign Exchange Control Policy on Direct Investment
关于进一步改进和调整直接投资外汇管理政策的通知
The Circular cancels the approval requirements relating to foreign direct investment for opening of foreign exchange accounts, deposits into relevant accounts, purchase of foreign exchange for overseas payment and foreign exchange transfers within China.
(Issued by the State Administration of Foreign Exchange on November 19 2012 and effective as of December 17 2012.)
(国家外汇管理局于二零一二年十一月十九日发布，自二零一二年十二月十七日起实施。)
汇发〔2012〕59号
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，各中资外汇指定银行：
为深化外汇管理体制改革，简化行政审批程序，促进投资贸易便利化，国家外汇管理局决定改进直接投资外汇管理方式，取消和调整部分直接投资外汇管理行政许可项目。现就有关问题通知如下：
一、取消直接投资项下外汇账户开立及入账核准
（一）取消前期费用外汇账户、外汇资本金账户、资产变现账户、保证金账户的开户核准，由银行根据外汇局相关业务系统登记信息为开户主体办理开户手续。
前期费用外汇账户用于存放外国投资者在境内从事与直接投资活动相关的各类前期费用。取消该账户结汇核准，由银行参照资本金结汇相关规定办理。取消原外国投资者专用外汇账户（收购类、保证类、投资类、费用类）。
保证金账户包括境外汇入保证金专用账户和境内划入保证金专用账户。境内主体确有收取与直接投资相关保证金需求的，可以开立上述账户分别存放从境外汇入的外汇保证金和境内划入的外汇保证金。保证金账户内资金不得结汇。取消原外国投资者竞标土地使用权的保证类专用外汇账户、外国投资者产权交易专用外汇保证金账户。
资产变现账户包括境内资产变现账户和境外资产变现账户，分别存放境内主体出售境内或境外资产权益所得外汇。
（二）取消资产变现账户、境外放款专用账户入账核准，由银行根据外汇局相关业务系统登记信息为开户主体办理资金入账手续。
（三）取消异地开立外汇资本金账户、资产变现账户的限制。以外商投资企业为主体设定资本金流入限额，取消外汇资本金账户开户数量的限制，取消单个外汇资本金账户的流入限额。
二、取消外国投资者境内合法所得再投资核准
（一）取消外商投资企业以属于外国投资者的资本公积金、盈余公积金、未分配利润等合法所得以及外商投资企业已登记外债（可含利息）转增企业注册资本核准，会计师事务所可根据被投资企业相关外汇登记信息为其办理验资询证手续。
（二）取消外国投资者以境内利润、股权转让、减资、清算、先行回收投资等合法所得再投资核准，会计师事务所可根据被投资企业相关外汇登记信息为其办理验资询证手续。
三、简化外商投资性公司境内再投资外汇管理
（一）取消外商投资性公司境内再投资企业的外汇登记手续。外商投资性公司与外国投资者共同出资的，被投资企业仍需办理外汇登记手续，外商投资性公司视为中方股东登记。
（二）取消外商投资性公司境内投资款划拨核准及外商投资性公司所投资企业将其外汇利润、股息及红利境内划转给外商投资性公司核准，银行按规定审核企业提交的真实性证明材料后，为其办理资金境内划转手续，并在外汇局相关业务系统中及时备案。
（三）取消外商投资性公司境内出资的外汇局验资询证手续。外商投资性公司与外国投资者共同出资的，外国投资者的出资仍需在外汇局办理验资询证手续。
（四）境内企业接收外商投资性公司以及其他境内主体的外汇出资，应到所在地外汇局办理境内机构接收境内再投资外汇信息登记手续，银行根据外汇局登记信息为其开立境内再投资专用账户，账户内资金参照外商投资企业外汇资本金管理。
（五）外商投资创业投资企业、外商投资股权投资企业等以投资为主要业务的外商投资企业上述业务参照外商投资性公司管理。
四、简化外商投资企业验资询证手续
（一）取消会计师事务所向外汇局验资询证时提交纸质材料的要求，调整为通过外汇局相关业务系统报送电子申请材料，会计师事务所可根据外汇局相关业务系统中的确认回函作为验资询证的依据。会计师事务所应就外商投资企业在外汇局登记的各类外国投资者出资全额办理验资询证手续。
（二）取消外商投资企业外国投资者减资验资询证，会计师事务所以外汇局减资外汇登记信息作为出资确认信息。
五、简化外国投资者收购中方股权外资外汇登记手续
外国投资者采取从境外汇入形式支付全部股权转让价款的，银行办理境内资产变现账户资金入账备案后，外汇局通过相关业务系统自动完成外国投资者收购中方股权出资确认登记。
外国投资者采取其他非货币形式支付部分或者全部股权转让对价的，发生股权变更的企业应至所在地外汇局申请办理外国投资者收购中方股权出资确认登记。
六、取消直接投资项下购汇及对外支付核准
（一）取消外商投资企业减资、清算、先行回收投资所得支付给外国投资者的购汇及对外支付核准，银行根据外汇局相关业务系统中的登记信息为外商投资企业办理购汇及对外支付手续。
（二）取消境内机构或个人购买外商投资企业外方股权对外支付股权转让价款的购汇及对外支付核准，银行根据外汇局相关业务系统中的登记信息为境内机构或个人办理购汇及对外支付手续。
（三）取消境内机构向境外汇出境外投资前期费用核准，银行根据外汇局相关业务系统中的登记信息为境内机构办理境外投资前期费用购汇及对外支付手续。
（四）取消境外机构设立的境内分支、代表机构及境外个人转让境内商品房的外汇局购付汇核准，银行审核相关材料后，可为其办理购汇及对外支付手续。
（五）取消境外放款专用账户资金汇出核准，银行根据外汇局相关业务系统中的登记信息为境内机构办理境外放款购汇及对外支付手续。
（六）取消上述业务的异地购汇及对外支付限制。
七、取消直接投资项下境内外汇划转核准
（一）取消前期费用外汇账户资金因直接投资而发生的境内外汇划转核准；取消直接投资项下境内外汇资金因投资、交易、运作等资本项目交易目的所发生的其他境内外汇划转核准。
（二）发生涉及以下直接投资项下外汇账户境内资金划转的，银行应按本通知附件2审核相关材料后办理划转手续。
1、前期费用外汇账户；
2、外汇资本金账户；
3、境内资产变现账户；
4、境外资产变现账户；
5、境外汇入保证金专用账户；
6、境内划入保证金专用账户；
7、境内再投资专用账户。
八、进一步放宽境外放款管理
（一）扩大境外放款资金来源，允许境内主体以国内外汇贷款对外放款。
（二）放宽境外放款条件限制，允许外商投资企业向其境外母公司放款，放款额度不得超过该外国投资者已分配未汇出利润以及按比例享有的未分配利润之和。
九、改进外商投资企业外汇资本金结汇管理
（一）根据《国家外汇管理局综合司关于完善外商投资企业外汇资本金支付结汇管理有关业务操作问题的补充通知》（汇综发〔2011〕88号，以下简称88号文）实施资本金结汇发票核查的地区，银行可不再按月上报《提供收据、缴款通知书等相关凭证办理资本金结汇月报表》、《提供税务机关发票真伪鉴别证明材料办理资本金结汇月报表》、《结汇后退货、撤销交易、作废发票等情况月报表》，改由银行通过外汇局相关业务系统逐笔备案。
（二）取消特殊结汇事项的外汇局事前备案手续。外商投资企业存在现行法规未明确规定但符合经营范围内真实、自用原则的支付需求，银行审查后可以为其办理结汇及支付手续，并应通过外汇局相关业务系统逐笔专项备案。
十、提高银行办理直接投资项下外汇业务的合规意识
（一）银行应严格按照本通知及所附操作指引的要求，认真审核相关材料，办理直接投资项下各项业务。
（二）银行应在办理直接投资项下各类外汇账户的开立和关闭、资金的入账、结汇、购付汇、划转等各项业务当日，在外汇局相关业务系统中即时备案。对于未按规定及时、准确在外汇局相关业务系统中备案的银行，外汇局可将其上述业务办理方式由事后备案调整为事前核准。
（三）银行违反本通知及其他外汇管理相关规定的，由外汇局依据《中华人民共和国外汇管理条例》等相关法规予以处罚。
十一、其他事项
（一）取消本通知发布前银行、企业需向所在地外汇局报送以及外汇局各分局需向总局报送的所有直接投资项下各类报表。
（二）本通知实施后，现有直接投资项下各类业务衔接及账户数据迁移等问题应按照附件4的原则办理。
（三）《国家外汇管理局综合司关于印发<资本项目外汇管理业务操作规程（2009年版）>的通知》（汇综发〔2009〕77号）及《国家外汇管理局关于发布<国家外汇管理局行政许可项目表>的通知》（汇发〔2010〕43号）中直接投资项下具体业务名称、办理依据、办理期限、实施机关、需提供的申请材料等内容与本通知不一致的，按本通知执行。
本通知自2012年12月17日起实施，以前规定与本通知不符的，以本通知为准。请各分局尽快将本通知转发至辖内中心支局、支局和辖内银行；各中资银行尽快将本通知转发至分支机构。执行中如遇问题，请及时向国家外汇管理局资本项目管理司反馈。
附件：
1.资本项目直接投资外汇业务操作规程（外汇局版）
2.资本项目直接投资外汇业务操作指引（银行版）
3.资本项目直接投资外汇业务申请表
4.历史业务和直接投资系统数据的过渡和迁移方案
5.废止法规目录
Hui Fa [2012] No.59
Branches and offices of the State Administration of Foreign Exchange of the provinces, autonomous regions and municipalities directly under the central government, the Shenzhen, Dalian, Qingdao, Xiamen and Ningbo Branches of the State Administration of Foreign Exchange, and wholly Chinese-owned designated foreign exchange banks:
With a view to intensifying reform of the exchange control system, simplifying administrative approval procedures and promoting the facilitation of investment and trade, the State Administration of Foreign Exchange has decided to improve the method of foreign exchange control related to direct investment and eliminate or revise certain foreign exchange control administrative permission items relating to direct investment. We hereby notify you of relevant matters as follows:
1. Elimination of approvals for the opening of, and the crediting of funds to, foreign exchange accounts related to direct investment
(1) Approvals for the opening of foreign exchange accounts for preliminary expenses, foreign exchange capital accounts, asset realisation accounts and deposit accounts are eliminated and, instead, banks shall carry out the account opening procedures for account opening entities based on the information registered in the relevant business system of the State Administration of Foreign Exchange and its branches and offices (SAFE).
A foreign exchange account for preliminary expenses is used by a foreign investor to deposit the various preliminary expenses related to the direct investment activities it is to carry out in the PRC. Approvals for the conversion of foreign exchange through such accounts are eliminated and, instead, banks shall handle the same with reference to provisions on the conversion of capital denominated in foreign exchange. Existing special-purpose foreign exchange accounts (acquisition type, guarantee type, investment type and expense type) of foreign investors are eliminated.
Deposit accounts include designated accounts for deposits remitted from abroad and designated accounts for deposits transferred from inside the PRC. If an entity in the PRC genuinely needs to collect a deposit in connection with direct investment, it may open the aforementioned accounts to separately deposit the foreign exchange deposit remitted from abroad and the foreign exchange deposit transferred from inside the PRC. Foreign exchange conversion may not be carried out for the funds in a deposit account. Existing designated foreign exchange accounts for deposits when foreign investors are bidding on land use rights and existing designated foreign exchange deposit accounts used by foreign investors for assets and equity transactions are eliminated.
Asset realisation accounts include domestic asset realisation accounts and offshore asset realisation accounts, and are used to deposit the foreign exchange proceeds derived by an entity in the PRC from the sale of domestic and overseas assets/equity respectively.
(2) Approvals for the crediting of funds to asset realisation accounts and designated offshore loan accounts are eliminated and, instead, banks shall carry out the procedures for the crediting of funds to the accounts for account opening entities based on the information registered in SAFE's relevant business system.
(3) The restrictions on the opening of foreign exchange capital accounts and asset realisation accounts in a place other than where the entity is located are lifted. A limit is set on the amount of capital that can flow in where a foreign-invested enterprise is the entity, the limit on the number of foreign exchange capital accounts that can be opened is eliminated, and the limit on the amount that can flow into a single foreign exchange capital account is eliminated.
2. Elimination of approvals for the re-investment by foreign investors of income lawfully derived in the PRC
(1) Approvals for the conversion by foreign-invested enterprises of the portion of the capital reserve, surplus reserve, retained profits and other such lawful income belonging to the foreign investor as well as the registered foreign debts (which may include interest) of foreign-invested enterprises into registered capital of the enterprise are eliminated and, instead, accounting firms may carry out the procedures for requests for confirmation of capital verification for them based on the relevant foreign exchange registration information of the investee enterprises.
(2) Approvals for the re-investment by foreign investors of lawful income such as, or derived from, domestic profits, equity transfers, capital reductions, liquidation and early recovery of investment are eliminated and, instead, accounting firms may carry out the procedures for requests for confirmation of capital verification for them based on the relevant foreign exchange registration information of the investee enterprises.
3. Simplification of foreign exchange control in respect of domestic re-investment by foreign-invested companies with an investment nature
(1) Foreign exchange registration procedures for enterprises in the PRC that are the recipients of re-investments from foreign-invested companies with an investment nature are eliminated. Where a foreign-invested company with an investment nature and a foreign investor jointly make capital contributions, the investee enterprise is still required to carry out foreign exchange registration procedures, and the foreign-invested company with an investment nature shall be registered as the Chinese shareholder.
(2) Approvals for the transfer by foreign-invested companies with an investment nature of their domestic investment moneys and the domestic transfer by the investee companies of foreign-invested companies with an investment nature of their foreign exchange profit, dividends and bonuses to the foreign-invested companies with an investment nature are eliminated and, instead, banks shall, after reviewing in accordance with provisions the supporting documentation for truthfulness submitted by the enterprises, carry out the procedures for the domestic transfer of funds for them and, in a timely manner, carry out record filing of the same in SAFE's relevant business system.
(3) The procedures for SAFE requests for confirmation of capital verification in respect of domestic capital contributions by foreign-invested companies with an investment nature are eliminated. Where a foreign-invested company with an investment nature and a foreign investor jointly make capital contributions, procedures for the request for confirmation of capital verification still need to be carried out with SAFE in respect of the foreign investor's capital contribution.
(4) When an enterprise in the PRC accepts a capital contribution in foreign exchange from a foreign-invested company with an investment nature or other entity in the PRC, it shall carry out with the local SAFE the procedures for the registration of foreign exchange information for organisations in the PRC that accept domestic re-investments, and its bank shall open a designated domestic re-investment account for it based on the information registered with SAFE, and the funds in such account shall be administered with reference to the administration of the foreign exchange capital of foreign-invested enterprises.
(5) The aforementioned matters of foreign-invested enterprises whose main business is investment, such as foreign-invested venture investment enterprises and foreign-invested equity investment enterprises, shall be administered with reference to the administration of foreign-invested companies with an investment nature.
4. Simplification of the procedures for requests for confirmation of capital verification for foreign-invested enterprises
(1) The requirement that an accounting firm, when making a request for confirmation of capital verification to SAFE, submit documentation in hard copy is eliminated, and, instead, by submitting electronic application materials through SAFE's relevant business system, the accounting firm may treat the confirmation letter in SAFE's relevant business system as the basis for the request for confirmation of capital verification. The accounting firm shall, in respect of the foreign-invested enterprise, carry out the procedures for the request for confirmation of capital verification based on the total amount of the capital contributions of the various types of foreign investors registered with SAFE.
(2) Requests for confirmation of capital verification for capital reductions by foreign investors in foreign-invested enterprises are eliminated and, instead, accounting firms shall treat the capital reduction related foreign exchange information registered with SAFE as capital contribution confirmation information.
5. Simplification of foreign exchange registration procedures for foreign investment in respect of the acquisition of the equity of the Chinese party by the foreign investor
If a foreign investor pays all of the equity transfer price by way of a remittance from abroad, SAFE shall, after record filing by the bank of the crediting of the funds to the domestic asset realisation account, automatically complete capital contribution confirmation registration for the acquisition of the Chinese party's equity by the foreign investor through the relevant business system.
If a foreign investor pays all or part of the equity transfer consideration by a non-monetary means, the enterprise that experienced the change in its equity shall apply to the local SAFE for capital contribution confirmation registration for the acquisition of the Chinese party's equity by the foreign investor.
6. Elimination of approvals for the purchase of foreign exchange for overseas payment in connection with direct investments
(1) Approvals for the purchase of, and overseas payment in, foreign exchange to the foreign investor by a foreign-invested enterprise of the proceeds derived from a capital reduction, liquidation or early recovery of investment are eliminated and, instead, the bank shall carry out the procedures for purchase of foreign exchange for overseas payment for the foreign-invested enterprise based on the information registered in SAFE's relevant business system.
(2) Approvals for the purchase of foreign exchange for overseas payment to the foreign party of the equity transfer price by an organisation or individual in the PRC for the purchase of the equity of the foreign party to a foreign-invested enterprise are eliminated and, instead, the bank shall carry out the procedures for the purchase of foreign exchange for overseas payment for the organisation or individual in the PRC based on the information registered in SAFE's relevant business system.
(3) Approvals for the remittance abroad by an organisation in the PRC of the preliminary expenses related to an overseas investment are eliminated and, instead, the bank shall carry out the procedures for the purchase of foreign exchange for overseas payment for the preliminary expenses related to the overseas investment for the organisation in the PRC based on the information registered in SAFE's relevant business system.
(4) SAFE approvals for the purchase and payment of foreign exchange in connection with the transfer of domestic commodity premises by the domestic (sub-)branch or representative office of a foreign organisation or by an individual located abroad are eliminated and, instead, the bank, after reviewing the relevant materials, may carry out for it/him/her the procedures for the purchase of foreign exchange for overseas payment.
(5) Approvals for the outward remittance of funds from an offshore loan account are eliminated and, instead, the bank shall carry out the procedures for the purchase of foreign exchange for overseas payment in connection with an offshore loan for the organisation in the PRC based on the information registered in SAFE's relevant business system.
(6) Restrictions on the purchase of foreign exchange in a place other than where the entity is located for overseas payment in connection with the aforementioned matters are lifted.
7. Elimination of approvals for domestic transfers of foreign exchange in connection with direct investment
(1) Approvals for the domestic transfer of foreign exchange funds in a preliminary expense foreign exchange account arising in connection with direct investment are eliminated, and approvals for other domestic transfers of domestic foreign exchange funds arising under capital account transactions such as investment, transaction and operation in connection with direct investment are eliminated.
(2) Where a domestic transfer of funds involving any of the following foreign exchange accounts in connection with direct investment occurs, the bank shall carry out the transfer procedures after reviewing the relevant materials in accordance with Appendix 2 hereto:
(i) preliminary expense foreign exchange account;
(ii) foreign exchange capital account;
(iii) domestic asset realisation account;
(iv) offshore asset realisation account;
(v) designated account for a deposit remitted inward from abroad;
(vi) designated account for a deposit transferred from inside the PRC; or
(vii) designated domestic re-investment account.
8. Further relaxation of the administration of offshore loans
(1) The sources of funds for offshore loans is broadened, and entities in the PRC shall be permitted to issue loans to overseas parties using domestic foreign exchange loans.
(2) Restrictions on the conditions for issuing offshore loans are relaxed and foreign-invested enterprises shall be permitted to issue loans to their offshore parents, with the limit on such loans not to exceed the sum of the profits distributed to the foreign investor but not outwardly remitted and the proportion of the retained profits to which the foreign investor is entitled.
9. Improvement of the administration of the conversion by foreign-invested enterprises of capital denominated in foreign exchange
(1) In regions that carry out the verification of invoices for the conversion of capital denominated in foreign exchange pursuant to the General Affairs Department of the State Administration of Foreign Exchange, Supplementary Circular on Operational Issues Relevant to Improving the Control of the Payment and Conversion of Foreign Exchange in Connection with the Foreign Exchange Capital of Foreign-invested Enterprises (Hui Zong Fa [2011] No.88; “Document No.88”), banks may cease to submit on a monthly basis Monthly Statements on the Submission of Relevant Documents Such as Receipts and Payment Notices for the Carrying out of the Conversion of Capital Denominated in Foreign Exchange, Monthly Statements on the Submission of Supporting Documentation to Determine the Authenticity of Tax Authority Invoices for the Carrying out of the Conversion of Capital Denominated in Foreign Exchange and Monthly Statements for Events Such as the Return of Goods, Cancellation of Transactions and Invalidation of Invoices After the Conversion of Foreign Exchange, to be replaced by item by item record filing by banks through SAFE's relevant business system.
(2) Procedures for advance record filing with SAFE of special foreign exchange conversion matters are eliminated. If a foreign-invested enterprise has a genuine payment requirement complying with the self-use principle that is not expressly addressed in current regulations, but is in compliance with its scope of business, its bank may, after examination, carry out foreign exchange conversion and payment procedures for it, and shall carry out record filing thereof item by item through SAFE's relevant business system.
10. Enhancing the awareness of compliance of banks that handle foreign exchange transactions in connection with direct investment
(1) Banks shall carefully review relevant materials and handle various matters related to direct investment in strict accordance with the requirements of this Circular and the operational guidelines appended hereto.
(2) On the day that a bank handles a matter related to direct investment, such as the opening and closing of various types of foreign exchange accounts, the crediting of funds to such an account, the conversion, purchase and payment of foreign exchange and the transfer of funds, it shall promptly carry out record filing in SAFE's relevant business system. If a bank fails to promptly and accurately carry out record filing in SAFE's relevant business system in accordance with provisions, SAFE may change its mode of handling the foregoing matters from record filing after the matter to advance approval.
(3) If a bank violates this Circular or other provisions on foreign exchange control, SAFE shall penalise it in accordance with relevant regulations such as the PRC Regulations for the Control of Foreign Exchange.
11. Miscellaneous matters
(1) The requirement, before the issuance hereof, that banks and enterprises submit to their local SAFEs and that branches of SAFE submit to the State Administration of Foreign Exchange various statements related to direct investment is eliminated.
(2) Once this Circular is implemented, issues such as the dovetailing of various existing matters related to direct investment and the migration of account data shall be handled in accordance with the principles of Appendix 4.
(3) In the event of a discrepancy between provisions on the specific business descriptions, handling basis, handling deadlines, implementing authorities, required application materials, etc. related to direct investment of the General Affairs Department of the State Administration of Foreign Exchange, Circular on the Issuance of the Operational Rules for Foreign Exchange Control Matters on the Capital Account (2009 Edition) (Hui Zong Fa [2009] No.77) and the State Administration of Foreign Exchange, Circular on the Issuance of the List of Administrative Permission Items of the State Administration of Foreign Exchange (Hui Fa [2010] No.43), on the one hand, and this Circular on the other, matters shall be handled in accordance with this Circular.
This Circular shall be effective as of December 17 2012. In the event of a discrepancy between previous provisions and this Circular, this Circular shall prevail. We would ask all branches of the State Administration of Foreign Exchange to promptly forward this Circular to central sub-branches and sub-branches of the State Administration of Foreign Exchange and banks in their jurisdictions, and all Chinese-invested banks to promptly forward this Circular to their (sub-)branches. If a problem is encountered in the course of implementation, you are asked to report it to the Capital Account Management Department of the State Administration of Foreign Exchange in a timely manner.
Appendices:
1. Operational Rules for Foreign Exchange Transactions on the Capital Account in Connection with Direct Investment (for SAFE)
2. Operational Rules for Foreign Exchange Transactions on the Capital Account in Connection with Direct Investment (for Banks)
3. Application Form for Foreign Exchange Transactions on the Capital Account in Connection with Direct Investment
4. Transition and Migration Plan for Historical Transaction and Direct Investment System Data
5. List of Superseded Regulations
(Issued by the State Administration of Foreign Exchange on November 19 2012 and effective as of December 17 2012.)
Hui Fa [2012] No.59
Branches and offices of the State Administration of Foreign Exchange of the provinces, autonomous regions and municipalities directly under the central government, the Shenzhen, Dalian, Qingdao, Xiamen and Ningbo Branches of the State Administration of Foreign Exchange, and wholly Chinese-owned designated foreign exchange banks:
With a view to intensifying reform of the exchange control system, simplifying administrative approval procedures and promoting the facilitation of investment and trade, the State Administration of Foreign Exchange has decided to improve the method of foreign exchange control related to direct investment and eliminate or revise certain foreign exchange control administrative permission items relating to direct investment. We hereby notify you of relevant matters as follows:
1. Elimination of approvals for the opening of, and the crediting of funds to, foreign exchange accounts related to direct investment
(1) Approvals for the opening of foreign exchange accounts for preliminary expenses, foreign exchange capital accounts, asset realisation accounts and deposit accounts are eliminated and, instead, banks shall carry out the account opening procedures for account opening entities based on the information registered in the relevant business system of the State Administration of Foreign Exchange and its branches and offices (SAFE).
A foreign exchange account for preliminary expenses is used by a foreign investor to deposit the various preliminary expenses related to the direct investment activities it is to carry out in the PRC. Approvals for the conversion of foreign exchange through such accounts are eliminated and, instead, banks shall handle the same with reference to provisions on the conversion of capital denominated in foreign exchange. Existing special-purpose foreign exchange accounts (acquisition type, guarantee type, investment type and expense type) of foreign investors are eliminated.
Deposit accounts include designated accounts for deposits remitted from abroad and designated accounts for deposits transferred from inside the PRC. If an entity in the PRC genuinely needs to collect a deposit in connection with direct investment, it may open the aforementioned accounts to separately deposit the foreign exchange deposit remitted from abroad and the foreign exchange deposit transferred from inside the PRC. Foreign exchange conversion may not be carried out for the funds in a deposit account. Existing designated foreign exchange accounts for deposits when foreign investors are bidding on land use rights and existing designated foreign exchange deposit accounts used by foreign investors for assets and equity transactions are eliminated.
Asset realisation accounts include domestic asset realisation accounts and offshore asset realisation accounts, and are used to deposit the foreign exchange proceeds derived by an entity in the PRC from the sale of domestic and overseas assets/equity respectively.
(2) Approvals for the crediting of funds to asset realisation accounts and designated offshore loan accounts are eliminated and, instead, banks shall carry out the procedures for the crediting of funds to the accounts for account opening entities based on the information registered in SAFE's relevant business system.
(3) The restrictions on the opening of foreign exchange capital accounts and asset realisation accounts in a place other than where the entity is located are lifted. A limit is set on the amount of capital that can flow in where a foreign-invested enterprise is the entity, the limit on the number of foreign exchange capital accounts that can be opened is eliminated, and the limit on the amount that can flow into a single foreign exchange capital account is eliminated.
2. Elimination of approvals for the re-investment by foreign investors of income lawfully derived in the PRC
(1) Approvals for the conversion by foreign-invested enterprises of the portion of the capital reserve, surplus reserve, retained profits and other such lawful income belonging to the foreign investor as well as the registered foreign debts (which may include interest) of foreign-invested enterprises into registered capital of the enterprise are eliminated and, instead, accounting firms may carry out the procedures for requests for confirmation of capital verification for them based on the relevant foreign exchange registration information of the investee enterprises.
(2) Approvals for the re-investment by foreign investors of lawful income such as, or derived from, domestic profits, equity transfers, capital reductions, liquidation and early recovery of investment are eliminated and, instead, accounting firms may carry out the procedures for requests for confirmation of capital verification for them based on the relevant foreign exchange registration information of the investee enterprises.
3. Simplification of foreign exchange control in respect of domestic re-investment by foreign-invested companies with an investment nature
(1) Foreign exchange registration procedures for enterprises in the PRC that are the recipients of re-investments from foreign-invested companies with an investment nature are eliminated. Where a foreign-invested company with an investment nature and a foreign investor jointly make capital contributions, the investee enterprise is still required to carry out foreign exchange registration procedures, and the foreign-invested company with an investment nature shall be registered as the Chinese shareholder.
(2) Approvals for the transfer by foreign-invested companies with an investment nature of their domestic investment moneys and the domestic transfer by the investee companies of foreign-invested companies with an investment nature of their foreign exchange profit, dividends and bonuses to the foreign-invested companies with an investment nature are eliminated and, instead, banks shall, after reviewing in accordance with provisions the supporting documentation for truthfulness submitted by the enterprises, carry out the procedures for the domestic transfer of funds for them and, in a timely manner, carry out record filing of the same in SAFE's relevant business system.
(3) The procedures for SAFE requests for confirmation of capital verification in respect of domestic capital contributions by foreign-invested companies with an investment nature are eliminated. Where a foreign-invested company with an investment nature and a foreign investor jointly make capital contributions, procedures for the request for confirmation of capital verification still need to be carried out with SAFE in respect of the foreign investor's capital contribution.
(4) When an enterprise in the PRC accepts a capital contribution in foreign exchange from a foreign-invested company with an investment nature or other entity in the PRC, it shall carry out with the local SAFE the procedures for the registration of foreign exchange information for organisations in the PRC that accept domestic re-investments, and its bank shall open a designated domestic re-investment account for it based on the information registered with SAFE, and the funds in such account shall be administered with reference to the administration of the foreign exchange capital of foreign-invested enterprises.
(5) The aforementioned matters of foreign-invested enterprises whose main business is investment, such as foreign-invested venture investment enterprises and foreign-invested equity investment enterprises, shall be administered with reference to the administration of foreign-invested companies with an investment nature.
4. Simplification of the procedures for requests for confirmation of capital verification for foreign-invested enterprises
(1) The requirement that an accounting firm, when making a request for confirmation of capital verification to SAFE, submit documentation in hard copy is eliminated, and, instead, by submitting electronic application materials through SAFE's relevant business system, the accounting firm may treat the confirmation letter in SAFE's relevant business system as the basis for the request for confirmation of capital verification. The accounting firm shall, in respect of the foreign-invested enterprise, carry out the procedures for the request for confirmation of capital verification based on the total amount of the capital contributions of the various types of foreign investors registered with SAFE.
(2) Requests for confirmation of capital verification for capital reductions by foreign investors in foreign-invested enterprises are eliminated and, instead, accounting firms shall treat the capital reduction related foreign exchange information registered with SAFE as capital contribution confirmation information.
5. Simplification of foreign exchange registration procedures for foreign investment in respect of the acquisition of the equity of the Chinese party by the foreign investor
If a foreign investor pays all of the equity transfer price by way of a remittance from abroad, SAFE shall, after record filing by the bank of the crediting of the funds to the domestic asset realisation account, automatically complete capital contribution confirmation registration for the acquisition of the Chinese party's equity by the foreign investor through the relevant business system.
If a foreign investor pays all or part of the equity transfer consideration by a non-monetary means, the enterprise that experienced the change in its equity shall apply to the local SAFE for capital contribution confirmation registration for the acquisition of the Chinese party's equity by the foreign investor.
6. Elimination of approvals for the purchase of foreign exchange for overseas payment in connection with direct investments
(1) Approvals for the purchase of, and overseas payment in, foreign exchange to the foreign investor by a foreign-invested enterprise of the proceeds derived from a capital reduction, liquidation or early recovery of investment are eliminated and, instead, the bank shall carry out the procedures for purchase of foreign exchange for overseas payment for the foreign-invested enterprise based on the information registered in SAFE's relevant business system.
(2) Approvals for the purchase of foreign exchange for overseas payment to the foreign party of the equity transfer price by an organisation or individual in the PRC for the purchase of the equity of the foreign party to a foreign-invested enterprise are eliminated and, instead, the bank shall carry out the procedures for the purchase of foreign exchange for overseas payment for the organisation or individual in the PRC based on the information registered in SAFE's relevant business system.
(3) Approvals for the remittance abroad by an organisation in the PRC of the preliminary expenses related to an overseas investment are eliminated and, instead, the bank shall carry out the procedures for the purchase of foreign exchange for overseas payment for the preliminary expenses related to the overseas investment for the organisation in the PRC based on the information registered in SAFE's relevant business system.
(4) SAFE approvals for the purchase and payment of foreign exchange in connection with the transfer of domestic commodity premises by the domestic (sub-)branch or representative office of a foreign organisation or by an individual located abroad are eliminated and, instead, the bank, after reviewing the relevant materials, may carry out for it/him/her the procedures for the purchase of foreign exchange for overseas payment.
(5) Approvals for the outward remittance of funds from an offshore loan account are eliminated and, instead, the bank shall carry out the procedures for the purchase of foreign exchange for overseas payment in connection with an offshore loan for the organisation in the PRC based on the information registered in SAFE's relevant business system.
(6) Restrictions on the purchase of foreign exchange in a place other than where the entity is located for overseas payment in connection with the aforementioned matters are lifted.
7. Elimination of approvals for domestic transfers of foreign exchange in connection with direct investment
(1) Approvals for the domestic transfer of foreign exchange funds in a preliminary expense foreign exchange account arising in connection with direct investment are eliminated, and approvals for other domestic transfers of domestic foreign exchange funds arising under capital account transactions such as investment, transaction and operation in connection with direct investment are eliminated.
(2) Where a domestic transfer of funds involving any of the following foreign exchange accounts in connection with direct investment occurs, the bank shall carry out the transfer procedures after reviewing the relevant materials in accordance with Appendix 2 hereto:
(i) preliminary expense foreign exchange account;
(ii) foreign exchange capital account;
(iii) domestic asset realisation account;
(iv) offshore asset realisation account;
(v) designated account for a deposit remitted inward from abroad;
(vi) designated account for a deposit transferred from inside the PRC; or
(vii) designated domestic re-investment account.
8. Further relaxation of the administration of offshore loans
(1) The sources of funds for offshore loans is broadened, and entities in the PRC shall be permitted to issue loans to overseas parties using domestic foreign exchange loans.
(2) Restrictions on the conditions for issuing offshore loans are relaxed and foreign-invested enterprises shall be permitted to issue loans to their offshore parents, with the limit on such loans not to exceed the sum of the profits distributed to the foreign investor but not outwardly remitted and the proportion of the retained profits to which the foreign investor is entitled.
9. Improvement of the administration of the conversion by foreign-invested enterprises of capital denominated in foreign exchange
(1) In regions that carry out the verification of invoices for the conversion of capital denominated in foreign exchange pursuant to the General Affairs Department of the State Administration of Foreign Exchange, Supplementary Circular on Operational Issues Relevant to Improving the Control of the Payment and Conversion of Foreign Exchange in Connection with the Foreign Exchange Capital of Foreign-invested Enterprises (Hui Zong Fa [2011] No.88; “Document No.88”), banks may cease to submit on a monthly basis Monthly Statements on the Submission of Relevant Documents Such as Receipts and Payment Notices for the Carrying out of the Conversion of Capital Denominated in Foreign Exchange, Monthly Statements on the Submission of Supporting Documentation to Determine the Authenticity of Tax Authority Invoices for the Carrying out of the Conversion of Capital Denominated in Foreign Exchange and Monthly Statements for Events Such as the Return of Goods, Cancellation of Transactions and Invalidation of Invoices After the Conversion of Foreign Exchange, to be replaced by item by item record filing by banks through SAFE's relevant business system.
(2) Procedures for advance record filing with SAFE of special foreign exchange conversion matters are eliminated. If a foreign-invested enterprise has a genuine payment requirement complying with the self-use principle that is not expressly addressed in current regulations, but is in compliance with its scope of business, its bank may, after examination, carry out foreign exchange conversion and payment procedures for it, and shall carry out record filing thereof item by item through SAFE's relevant business system.
10. Enhancing the awareness of compliance of banks that handle foreign exchange transactions in connection with direct investment
(1) Banks shall carefully review relevant materials and handle various matters related to direct investment in strict accordance with the requirements of this Circular and the operational guidelines appended hereto.
(2) On the day that a bank handles a matter related to direct investment, such as the opening and closing of various types of foreign exchange accounts, the crediting of funds to such an account, the conversion, purchase and payment of foreign exchange and the transfer of funds, it shall promptly carry out record filing in SAFE's relevant business system. If a bank fails to promptly and accurately carry out record filing in SAFE's relevant business system in accordance with provisions, SAFE may change its mode of handling the foregoing matters from record filing after the matter to advance approval.
(3) If a bank violates this Circular or other provisions on foreign exchange control, SAFE shall penalise it in accordance with relevant regulations such as the PRC Regulations for the Control of Foreign Exchange.
11. Miscellaneous matters
(1) The requirement, before the issuance hereof, that banks and enterprises submit to their local SAFEs and that branches of SAFE submit to the State Administration of Foreign Exchange various statements related to direct investment is eliminated.
(2) Once this Circular is implemented, issues such as the dovetailing of various existing matters related to direct investment and the migration of account data shall be handled in accordance with the principles of Appendix 4.
(3) In the event of a discrepancy between provisions on the specific business descriptions, handling basis, handling deadlines, implementing authorities, required application materials, etc. related to direct investment of the General Affairs Department of the State Administration of Foreign Exchange, Circular on the Issuance of the Operational Rules for Foreign Exchange Control Matters on the Capital Account (2009 Edition) (Hui Zong Fa [2009] No.77) and the State Administration of Foreign Exchange, Circular on the Issuance of the List of Administrative Permission Items of the State Administration of Foreign Exchange (Hui Fa [2010] No.43), on the one hand, and this Circular on the other, matters shall be handled in accordance with this Circular.
This Circular shall be effective as of December 17 2012. In the event of a discrepancy between previous provisions and this Circular, this Circular shall prevail. We would ask all branches of the State Administration of Foreign Exchange to promptly forward this Circular to central sub-branches and sub-branches of the State Administration of Foreign Exchange and banks in their jurisdictions, and all Chinese-invested banks to promptly forward this Circular to their (sub-)branches. If a problem is encountered in the course of implementation, you are asked to report it to the Capital Account Management Department of the State Administration of Foreign Exchange in a timely manner.
Appendices:
1. Operational Rules for Foreign Exchange Transactions on the Capital Account in Connection with Direct Investment (for SAFE)
2. Operational Rules for Foreign Exchange Transactions on the Capital Account in Connection with Direct Investment (for Banks)
3. Application Form for Foreign Exchange Transactions on the Capital Account in Connection with Direct Investment
4. Transition and Migration Plan for Historical Transaction and Direct Investment System Data
5. List of Superseded Regulations
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