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In order to regulate the foreign exchange administration of fund management companies with foreign shares, the relevant issues concerning the foreign exchange administration of fund management companies with foreign shares are hereby notified as follows: I. "Fund management companies with foreign shares" used in this Circular include the fund management companies transformed from domestic fund management companies of which the equity has been transferred to or purchased by overseas shareholders, or the fund management companies that are jointly established by overseas shareholders and domestic shareholders. II. A fund management company with foreign shares may not open any foreign exchange account before obtaining the official reply from China Securities Regulatory Commission (hereinafter referred to the CSRC) on approving its start of business. (1) A fund management company with foreign shares, which is jointly established by domestic shareholders and overseas shareholders upon approval of the CSRC, may apply to the foreign exchange bureau of the place where it is located for opening the foreign exchange capital account with a domestic designated foreign exchange bank, by presenting the following documents and materials: a. Written application for opening an account; b. Agreement (or contract) on equity joint venture; c. Official reply of the CSRC on approving its start of business; d. Certificate of foreign-funded enterprise issued by the department of foreign trade and economic cooperation; e. Notification on preliminary ratification of name issued by the department of industry and commerce administration of the state; and f. Other documents and materials required by the foreign exchange bureau. (2) A fund management company with foreign shares transformed from a domestic fund management company of which the equity has been purchased by overseas shareholders may apply to the local foreign exchange bureau for opening the foreign exchange capital account with a domestic designated foreign exchange bank, by presenting the agreement on purchase of shares, the document of approval of the CSRC, and the certificate of approval of the department of foreign trade and economic cooperation. III. The capital verification procedures for the capital inflow of the overseas shareholders' of a fund management company with foreign shares shall comply with the Circular of the Ministry of Finance and the State Administration of Foreign Exchange on Further Strengthening the Work of Capital Verification of Foreign-funded Enterprises and on Perfecting the System of Foreign Exchange Registration for Foreign Capital (Docket No.1017 [2002] of the Ministry of Finance). IV. The income of the foreign exchange capital account of a fund management company with foreign shares is limited to the capital contribution remitted in by overseas shareholders; the expenditure is limited to payment to foreign parties under the current account and other expenditure of foreign exchange ratified by the foreign exchange bureau. V. Where a fund management company with foreign shares needs to settle the exchange on its foreign exchange capital account, it shall apply to the local foreign exchange bureau by presenting the following documents and materials, and go through the formalities for exchange settlement with the designated foreign exchange bank on the strengths of the approval certificates of the foreign exchange bureau: (1) Written application for exchange settlement; (2) Proof or specification of the usage of the foreign exchange to be settled; (3) Current bank statements of the foreign exchange capital account of the company; and (4) Other materials required by the foreign exchange bureau. VI. Where a fund management company with foreign shares needs to pay profits to foreign shareholders, it shall apply to the local foreign exchange bureau by presenting the following documents and materials, and go through the formalities for purchase and payment of foreign exchange with the designated foreign exchange bank on the strengths of the certificate of approval of the foreign exchange bureau: (1) Written application for purchase or payment of foreign exchange; (2) Proof of tax payment and the tax return form; (3) Auditing report on annual profits and distribution of profits of the company issued by the accounting firm; (4) Resolution of the board of the company on distribution of the profits; (5) Current bank statements of the foreign exchange capital account of the company; and (6) Other materials required by the foreign exchange bureau. If a fund management company with foreign shares fails to purchase and remit out the foreign exchange to foreign shareholders as profits payable of the year, it shall put on record with the local foreign exchange bureau. The record documents of the foreign exchange bureau include the necessary application materials for purchase and payment of foreign exchange as the profits of foreign shareholders thereafter. VII. A fund management company with foreign shares that is transformed from a domestic fund management company of which the equity has been transferred to overseas shareholders shall, within 5 workdays from obtaining the formal approval of the CSRC, put on record with the local foreign exchange bureau. Where the transferor is a domestic institution, that institution shall, within 5 workdays from obtaining the foreign exchange capital from the transferee, apply to the local foreign exchange bureau for handling the formalities for settlement of exchange, by presenting the written application, agreement on transfer, documents of approval of the CSRC and certificate of approval of the department of foreign trade and economic cooperation. VIII. A fund management company with foreign shares of which the share transfer has been approved by the CSRC and the department of foreign trade and economic cooperation shall, within 5 workdays from obtaining the documents of approval of the department of foreign trade and economic cooperation, put on record with the local foreign exchange bureau. Where any overseas shareholder transfers shares to the domestic institution, if the transferee needs to make the payment for transfer to the overseas shareholder, it shall apply to the local foreign exchange bureau for ratification of purchase and payment of foreign exchange by presenting the following documents and materials: (1) Written application for purchase and payment of foreign exchange; (2) Agreement on share transfer; (3) Official replies of the CSRC and the department of foreign trade and economic cooperation on approving the share transfer; (4) Bank statements of all the foreign exchange accounts of the transferee; (5) If the foreign party gets any proceeds from the share transfer, the transferee shall provide the proof the tax payment for the income tax withheld and remitted in advance; and (6) Other materials required by the foreign exchange bureau. IX. A fund management company with foreign shares of which the foreign party's reduction (withdrawal) of capital has been approved by the CSRC or the department of foreign trade and economic cooperation shall apply to the local foreign exchange bureau for ratification of purchase and payment of foreign exchange by presenting the following documents and materials: (1) Written application for purchase of foreign exchange; (2) Resolution of the board of the company on reduction (withdrawal) of capital by the foreign party; (3) Official replies of the CSRC and the department of foreign trade and economic cooperation on approving the reduction (withdrawal) of capital; (4) The recent capital verification report and auditing report of the company issued by the accounting form; (5) Bank statements of the foreign exchange capital account of the company; (6) If the foreign party has any proceeds from the reduction (withdrawal) of capital, it shall issue the proof of tax payment for the income tax withheld and remitted in advance; and (7) Other materials required by the foreign exchange bureau. X. A fund management company with foreign shares may not, without approval of SAFE, undertake the foreign exchange businesses under capital account such as foreign financing and foreign guarantee, except the businesses provided for by the CSRC. XI. SAFE and the branches thereof have the right to make on-spot inspections over the foreign exchange capital accounts, as well as the settlement, purchase and payment of foreign exchange, of fund management companies with foreign shares. And the fund management companies with foreign shares shall actively cooperate in the relevant inspection work, and may not provide any falsified materials. XII. Where any fund management company with foreign shares violates this Circular or other provisions on foreign exchange administration, SAFE and the branches thereof may punish that company in accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration, and other provisions on foreign exchange administration. XIII. This Circular shall come into force on May 1, 2003. The power to interpret this Circular shall remain with SAFE. |
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