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Article 1. In accordance with "Provisional Regulations for Exchange Control of the People's Republic of China", the following regulations are formulated with a view to promoting foreign economic and technical co-operation, ensuring the smooth expansion of international financial activities and strengthening the regulation of foreign exchange guarantee business. Article 2. The term "Foreign Exchange Guarantee" herein mentioned refers to the undertaking by which a guarantor possessing foreign exchange commits himself to a creditor or foreign banks, joint Chinese-foreign banks, joint Chinese-foreign non-bank financial institutions in China, that if the debtor fails to honor his contractual debt service, the guarantor shall repay on his behalf with foreign currency, which include: (1) loan guarantee; (2) financial lease guarantee; (3) performance guarantee for the external project contract; (4) the debt guarantee for the external project contract; and (5) others. Article 3. The State administration of exchange control and its branch offices herein after referred to the "foreign exchange control authorities," are the authorized organs in charge of approving, administrating and registering foreign exchange guarantees. Article 4. An issuer who has title to issue foreign exchange guarantee is: (1) the financial institution authorized to operate foreign exchange guarantee business; (2) non-financial legitimate enterprises with sources of foreign exchange income; government departments and institutions are not permitted to issue foreign exchange guarantees. Article 5. The total outstanding of the issued foreign exchange guarantees and foreign liabilities of a financial institution shall not exceed 20 times that of its foreign exchange equity funds. The total amount of foreign exchange guarantee issued by a non-financial institution shall not exceed its foreign exchange equity funds. A guarantor is not permitted to issue foreign exchange guarantee to the register capital for a foreign investor. Article 6. The examination and approval of foreign exchange guarantee is under the jurisdiction of the following: (1) The local foreign exchange control office, where a guarantor is located, is in charge of examining and approving foreign exchange guarantee for a domestic debtor; (2) The State administration of exchange control is in charge of examining and approving the foreign exchange guarantee for a Chinese enterprise abroad; (3) The State administration of exchange control is in charge of examining and approving foreign exchange guarantee for a foreign institution and foreign capital enterprise. Article 7. Limits of examination and approval for foreign exchange guarantee: (1) Loan guarantee provided by the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, the People's Construction Bank of China, the Investment Bank of China. the Bank of Communications, the Industrial Bank of CITIC; (2) Foreign exchange guarantee provided by other financial institutions other than the above listed banks and non-financial legal enterprises. Article 8. The guarantor should go through the formalities with the foreign exchange control authorities for examination and approval with the following required material: (1) the approved documents of the feasibility study of the project under the guarantee and other official documents concerned; (2) a certificate of the foreign exchange funds of the guarantor; (3) the documents of the guarantor's external debt and guarantees; (4) the letter of intention of the guarantee contract; (5) the documents of the debt contract under the guarantee or the letter of intention and other documents concerned; (6) the documents of the counter guarantee; (7) in case of issuing guarantee for the foreign institution or the enterprise the document which certifies that a foreign institution or enterprise has mortgaged the equipment and foreign exchange assets to the guarantor. Article 9. Where a foreign guarantee is to be provided, the guarantor shall sign a contract each with fine the respective rights and obligations of the guarantor, creditor and debtor; (1) The guarantor has the right to supervise the debtor's status of funds and assets; (2) The creditor has the right to ask the guarantor for his financial reports, balance sheet and other materials required; (3) The contract between the creditor and debtor guaranteed by the guarantor can be amended only with the consent of the guarantor, who sends the amended contract to the foreign exchange control authorities for approval; otherwise the guarantor shall be automatically relieved of his entire obligation under the guarantee; (4) After a guarantee is provided, the guarantor shall perform his obligations there-under in case the debtor fails to fulfill his contractual obligations within the maturity of the contract. The guarantor, having performed obligations under the guarantee, has the right to claim reimbursement from the debtor; (5) After a guarantee is performed, the guarantor shall be automatically relieved of his obligations in case the creditor fails to fulfill his contractual obligations. The guarantor has the right to claim relevant compensation from the creditor. (6) The guarantor has the right to demand the debtor put up appropriate collateral or other measures for the counter-guarantee and collect from him a guarantee fee. Article 10. The guarantor should go through the formalities with the foreign exchange control authorities for registration after issuing a guarantee: (1) Non-financial legal enterprises shall, within 10 days of issuing a guarantee, go to the local foreign exchange control authorities to fill in "the Form for Registration of Foreign Exchange Guarantee Issued by Resident Institution" and obtain "A Certificate for Registration of Foreign Exchange Guarantee"; (2) Financial institutions should go to the foreign exchange control authorities for the monthly-registration, and fill in "the Form of the External Debt Exchanges under Guarantee" within 15 days each month and send the debt changes under the guarantee for the preceding month to the foreign exchange control authorities; Article 11. In case of the necessary extension for the foreign exchange guarantee, the guarantor shall go through the formalities for application of the extension in 15 days before the deadline of the debt, and some documents of the extension of the debt are required for the approval. Article 12. In case of the debt matured or the debt repaid, which ceases the guarantee contract, the guarantor of non-financial institutions shall return "a certificate for registration of foreign exchange guarantee" to the original foreign exchange control authorities for cancellation in 15 days and this work shall be done monthly by financial institutions. Article 13. foreign exchange control authorities shall, according to the seriousness of the offense, take disciplinary action against guarantors violating these regulations in the form of warnings, circulating a notice, or suspension of licenses for dealing in foreign exchange guarantee business, in accordance with the penal provisions for violation of exchange control regulations. Article 14. These regulations apply equally to counter-guarantees. Article 15. The right to interpret these rules resides in the State administration of exchange control. Article 16. The regulations shall go into effect on the date of promulgation and replace "Provisional Rules Governing the Issue of Foreign Exchange Guarantee by Resident Institutions in China" published in 1987. |
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