Shanghai Head Office of the People's Bank of China, Implementing Rules for the Macro Prudential Administration of Offshore Financing under Separate Accounting and Cross-border Fund Flows in the China (Shanghai) Pilot Free Trade Zone
中国人民银行行上海总部中国（上海）自由贸易实验区分账核算业务境外融资与跨境资金流动宏观审慎管理实施细则
March 16, 2015 | BY
clpstaff &clp articles &Shanghai FTZ relaxes offshore financing.
Issued: February 12 2015
Effective: as of date of issuance
Applicability: For the purposes of these Rules, the phrase “offshore financing under separate accounting in the China (Shanghai) Pilot Free Trade Zone (the Pilot Zone)” means the act of offshore financing by a financial institution in the Shanghai region handled through a separate accounting unit in the Pilot Zone or the act of offshore financing by an enterprise or non-bank financial institution in the Pilot Zone through a free trade account.
For the purposes of these Rules, the term “financial institution” means a financial institution with legal personality established in the Shanghai region or a (sub-)branch established in Shanghai by a national financial institution with the approval of the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission or the China Insurance Regulatory Commission, that has established an internal Zone separate accounting management system in accordance with the requirements of the Implementing Rules for Separate Accounting in the China (Shanghai) Pilot Free Trade Zone (Trial Implementation) and the Rules for the Prudential Management of Risks Associated with Separate Accounting in the China (Shanghai) Pilot Free Trade Zone (Trial Implementation) issued by the Shanghai Head Office of the People's Bank of China and is connected to the relevant system (including the SAFE system) of the Shanghai Head Office of the People's Bank of China (Article 2).
In the event of a discrepancy between previous relevant provisions of the Shanghai Head Office of the People's Bank of China and these Rules, these Rules shall prevail (Article 19).
Main contents: The Rules raise the leverage ratios for the offshore financing of economic entities, with the scale of financing of enterprises increasing from the equivalent of their capital to twice their capital. Furthermore, where banks originally could not borrow renminbi funds from abroad, under the new policy framework, they will be able to borrow both renminbi and foreign currency funds from abroad, and non-bank financial institutions, such as securities companies, will also be able to borrow funds from abroad.
Enterprises and non-bank financial institutions in the Pilot Zone may opt, at their own discretion, to apply either the current foreign debt and offshore loan administration model or the macro prudential administration model provided for in these Rules (Article 2).
Enterprises and non-bank financial institutions in the Pilot Zone and financial institutions that provide Zone separate accounting services may seek financing in China (including the Pilot Zone) or offshore, and shall comply with the principle of controllable risk. For the offshore portion, administration shall be effected by means of the offshore financing leverage ratio, credit conversion factors and macro prudential adjustment parameters (Article 4).
clp reference:3500/15.02.12promulgated:2015-02-12effective:2015-02-12
This premium content is reserved for
China Law & Practice Subscribers.
A Premium Subscription Provides:
- A database of over 3,000 essential documents including key PRC legislation translated into English
- A choice of newsletters to alert you to changes affecting your business including sector specific updates
- Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
Already a subscriber? Log In Now