20 June, 2013
On 10 May 2013, the State Administration of Foreign Exchange (the "
1. General : Foreign Exchange Registration vs Foreign Exchange Approval
Foreign exchange transactions in foreign direct investment now require
2. Opening of Bank Accounts
Once the registration is completed, the foreign investor may open an pre-establishment expense account (前期费用账户), a capital account (资本金账户), an asset realization account (资产变现账户) and other accounts for direct investment in China directly with the relevant bank in the PRC.
3. SAFE Approvals Simplified
In the past, opening of foreign exchange accounts required approvals of SAFE and the process could be time-consuming. Under the New Provisions, the bank are authorised to open bank accounts for applicants as long as registration with
4. Use of Foreign Exchange by FIE for Permitted Purpose
A FIE shall comply with relevant provisions on foreign exchange administration in terms of foreign exchange settlement and use of foreign exchange. A FIE shall use its foreign exchange and the RMB funds converted from foreign exchange for genuine self-use purposes which are within its business scope.
Previous filing requirements for certain foreign exchange settlement transactions have been uplifted. With regard to foreign exchange requirement of FIEs for overseas payment which are not expressly within the current permitted categories of
5. Outward Remittance Procedures
A FIE which needs to remit foreign exchange to overseas as a result of capital reduction, liquidation, pre-end-of-term recovery of investment and profit distribution, etc. may purchase foreign exchange and make outward remittance with the relevant bank after completion of corresponding registration. The previous
Conclusion
We have noted that the reform of foreign exchange administration system was deepened, and the administration of foreign exchange over direct investment in China was simplified and streamlined. We may expect that with the implementation of these New Provisions, foreign investors and FIEs would find their operations in China more effective and convenient.
For further information, please contact:
Machiuanna Chu, Partner, Deacons
machiuanna.chu@deacons.com.hk
Hellen Lu, Deacons
helen.lu@deacons.com.hk