Jurisdiction - China
Reports and Analysis
China – People’s Bank Of China Clarifies the Operation Details of RMB Settlement for Foreign Direct Investment

31 July, 2012


Legal News & Analysis – Asia Pacific – China – Investment Funds


On June 14, 2012, the People’s Bank of China issued the Notice on Clarifying the Operation Details of Renminbi Settlement for Foreign Direct Investment. The notice reiterates that foreign invested enterprises must use their Renminbi funds for approved purposes, and may not invest their Yuan capital in negotiable securities, financial derivatives, assets management products, non-own use properties or to make entrusted loans, and that foreign invested enterprises without an investment business scope shall not reinvest within the territory of China. Under the notice, overseas investors are prohibited from using their Renminbi funds as upfront fees for land tenders, auctions or listing and purchasing of properties. Foreign invested real estate companies are prohibited from borrowing offshore Renminbi funds. The notice also requires overseas investors, foreign invested enterprises and Chinese shareholders to clear and verify their Renminbi bank accounts within three months of the issuance of the notice to make sure that only one bank account for capital fund, M&A fund or share transfer fund has been opened under a single approval document. 

The full Chinese text of the notice is available here.






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