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In order to advance the implementation of the development strategy of "going out", and deepen the trial work for the reform of the foreign exchange administration on overseas investment, as well as further improve the foreign exchange administration on overseas investment, we hereby make the following notice on relevant issues: I. The branches and departments of foreign exchange administration at the districts where the experiments on the reform of the foreign exchange administration on overseas investment are carried out after being approved by the State Administration of Foreign Exchange (hereinafter referred to the "Experimental Branches"), may directly issue opinions on the examination of the source of foreign exchange for overseas investment projects, of which the amount of foreign exchange investment of the Chinese party is less than 3 million US dollars. And the Experimental Branches may, after reporting to and being approved by the State Administration of Foreign Exchange, authorize their sub-branches within the territory of China, which have larger overseas investment portfolio, to directly issue opinions on the examination of the source of foreign exchange for overseas investment projects, of which the amount of foreign exchange investment of the Chinese party is less than one million US dollars. The power to examine the source of foreign exchange for overseas investment in non-experimental districts shall remain unchanged. II. An investor may, after being examined and approved by the Experimental Branches, remit overseas the prophase capital of a project in light of the principle of actual need before the registration and establishment of the overseas enterprises invested by him. The Experimental Branches shall examine and verify the application of the investor for the remittance of the preliminary capital of the project according to the business operating rules (See Attachment I). 1. The prophase capital of a project includes the preparatory establishment fees needed for preparing the establishment of an overseas enterprise, the deposit for the performance of contract paid for purchasing the assets and capitals or stock rights of the overseas enterprise, etc.. The prophase capital shall be included in the total foreign exchange investment of the Chinese party for administration, and shall be used by the investor in light of the particular circumstances of the project. 2. For the prophase capital under the preparatory establishment fees, the investor shall pay directly to the foreign institutions or individuals, and no special overseas account needs to be opened for the deposit. The investor shall, by virtue of the following documents, file an application to the Experimental Branches at the place where it is located for handling the formalities on the remittance of the capitals under the preparatory establishment fees: (1) A written application (including the reasons for the payment, name of the payee, the opening bank, account number, kind of currency, and the amount of payment, the list for the use of the preparatory establishment fees, thereof, etc.); (2) The opinions issued by the foreign exchange administration on the examination of the source of foreign exchange for the overseas investment; (3) The official and written reply and the certificate of approval for the overseas investment project issued by the department of examination and approval for a project; (4) The certification documents issued by the relevant overseas institutions on the preparatory establishment fees that really need to be paid; and (5) Other documents required by the Experimental Branches in light of the particular circumstances. 3. For the prophase capital under the deposit for the performance of contract, the investor shall deposit it in the special account opened overseas, and shall not pay directly to the overseas institutions or individuals. The investor shall, by virtue of the following documents, file an application to the Experimental Branches at the place where it is located for opening a special overseas account and for purchasing and paying the foreign exchange: (1) A written application (including the reasons for opening the account, the opening bank to be chosen, the kind of currency, the amount of money, and the time limit for use, the explanations for its purpose, etc.); (2) The business license of the investor that has passed the annual examination conducted by the department of industry and commerce administration; (3) The relevant provisions on the accounts management at the place where the special overseas accounts are opened; (4) The statements on the conditions of the assets and capitals or stock rights to be purchased, the evaluation report of the special intermediary agencies on the assets and capitals or stock rights to be purchased, and the certificates of payment to the deposit for contract performance in actual need issued by the relevant institutions overseas, etc.; and (5) Other documents required by the Experimental Branches in light of the circumstances. The special overseas accounts shall be opened in the name of the investor, and the opening bank shall be chosen firstly from the overseas Chinese-funded banks, in case of any alteration, it shall be examined and verified by the Experimental Braches beforehand. The investors shall, by virtue of the approval documents and the certification documents for opening the overseas account, and the approval documents for the purchase and payment of the foreign exchange, handle the formalities for the purchase and payment of the foreign exchange for the prophase capital under the deposit for performance of the contract. 4. After the establishment of the overseas enterprise invested by the investor, the remaining sum of prophase capital may be transferred directly into the account of the overseas enterprise. In case the remaining sum of capital needs to be transferred, the investor shall, within 7 days after the establishment of the overseas enterprises, transfer it into the account of the overseas enterprise (in case there is already a special overseas account, the special overseas account shall be closed simultaneously), and shall, within 20 days after the establishment of the enterprise, have the use of the prophase capital, the transfer of the remaining capital, and the opening and closing of the special overseas accounts reported to and put on records at the former Experimental Branches approving the remitted capital. In case the overseas enterprise invested fails to be established due to failure to prepare for construction, or failure to purchase the stock rights, the investors shall, within 7 days after making resolutions on terminating the investment, transfer the remaining prophase capital to China (where there is already a special overseas account, the special overseas account shall be closed simultaneously), and shall, within 20 days after making resolutions on terminating the investment, have the use of the prophase capital, the transfer of the remaining capital, and the opening and closing of the special overseas account reported to and put on records at the Experimental Branches that originally approved the remitted capitals. III. Where an investor undertakes overseas investment, it shall, in addition to submitting the relevant documents pursuant to the provisions of the Circular of the State Administration of Foreign Exchange on Relevant Issues concerning Simplifying the Examination on the Source of Foreign Exchange for Overseas Investment (No. 43 [2003] of the State Administration of Foreign Exchange), submit to the foreign exchange administration at the place where it is located such certification documents as the documents on the statements of assets and capitals or stock rights to be purchased, the purchase agreement, the evaluation report of the intermediary agencies on the objects to be purchased, etc.. In case an investor adds capitals to the overseas enterprise having been established, it shall submit to the foreign exchange administration at the place where it is located the documents in conformity with the regulations, such as the official or written reply for the establishment of an overseas enterprise, the opinions of the foreign exchange administration on the examination of the capital sources in the establishment of the overseas enterprises, the documents of approval for the remittance of the foreign exchange, the certificate of registration on foreign exchange for the overseas investment, and the certificate of registration on the overseas enterprise, the business license, etc.. IV. Where a project has been established overseas but the formalities on foreign exchange of which fail to be handled, the investors shall, by virtue of the following documents, apply for making a makeup foreign exchange registration of the overseas investment at the foreign exchange administration where it is located before May 31, 2004: 1. A written application (including the statement on the history of the project and the source of capital thereof, etc.); 2. The official and written reply of the department of overseas investment on the project, and the certificate of approval or the confirmation letter; 3. The certificate of registration of the overseas enterprises and the business license thereof; 4. The Articles of Association of the overseas enterprise and the contract thereof; 5. The composition of the board of directors of the overseas enterprises and the name lists thereof; 6. The opening of the accounts of the overseas enterprises (including the opening bank and the account number, etc.); 7. The balance sheet of the overseas enterprise in the past one year; and 8. Other documents required by the foreign exchange administration in light of the circumstances. The foreign exchange administration shall, after receiving a complete set of the above-mentioned documents and finding no mistakes after examination, handle the makeup registration on the overseas investment for the investors within 15 working days, and issue the "Certificate of Registration on Foreign Exchange for Overseas Investment". Where an investor has filed an application for making up the registration of an overseas investment project, but fails to provide the documents enumerated in item 2 of the preceding paragraph, the foreign exchange administration shall firstly put on records the relevant information on the overseas investment project, and shall not issue the "Certificate of Registration on Foreign Exchange for Overseas Investment" until a confirmation letter has been issued by the department of the overseas investment. V. All the branches shall, within the first ten office days of every month, report to the department of the capital project administration under the State Administration of Foreign Exchange the new "Statistical Statement for the Foreign Exchange Business of the Overseas Investment" (See Attachment II), and the former "Statistical Statement for the Experiment on Overseas Investment" shall no longer be reported by the Experimental Branches. The present Circular shall come into force as of November 1, 2003. In case any problem encountered in the implementation, please respond to the department of capital project administration under the General Administration. ATTACHMENT: I. Operating Rules for Remittance of the Prophase Capital of the Overseas Investment (Omitted) II. Statistical Statement for Foreign Exchange Business of the Foreign Investment (Omitted) |
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