Foreign exchange management of foreign-invested enterprises | govt.chinadaily.com.cn

Foreign exchange management of foreign-invested enterprises

Updated: Dec 9, 2018 govt.chinadaily.com.cn Print

Is the willingness settlement applicable to all foreign exchange capital of foreign-invested enterprises?

Yes. The “willingness settlement of foreign exchange capital of foreign-invested enterprises” refers to the fact that settlement of foreign exchange capital in the capital accounts of foreign-invested enterprises that have been subject to the entry registration of cash contribution at banks (or the confirmation of cash contribution at the foreign exchange administration before June 1, 2015) may be handled at banks based on the enterprises' actual requirements for business operation. The proportion of willingness settlement of foreign exchange capital of foreign-invested enterprises is temporarily determined as 100 percent. The State Administration of Foreign Exchange(hereafter referred to as SAFE) may, based on the international balance of payments, adjust the aforesaid proportion at appropriate times.

How to manage the RMB funds obtained from the willingness settlement of foreign exchange capital of foreign-invested enterprises?

According to the Notice of the State Administration of Foreign Exchange on Reforming the Mode of Management of Settlement of Foreign Exchange Capital of Foreign-Funded Enterprises ([2015] No 19, SAFE), the RMB funds obtained from the willingness settlement of foreign exchange capital of foreign-invested enterprises shall be included in the capital account for settled foreign exchange to be paid for management. A foreign-invested enterprise shall, in principle, open at a bank a one-to-one account for settled foreign exchange to be paid to deposit the RMB funds obtained from the willingness settlement of foreign exchange capital, and handle various kinds of payment formalities.

Is annual foreign exchange inspection still a must for foreign-invested enterprises? If so, how to apply for the annual inspection?

Since June 1, 2015, the inventory equity registration of domestic and foreign direct investment has been implemented, in replacement of the annual foreign exchange inspection of direct investment (including the annual foreign exchange inspection of foreign-invested enterprises and foreign investment enterprises). Thereafter, foreign-invested enterprises do not need to handle the annual foreign exchange inspection; instead, they must submit last year's domestic direct investment inventory equity data on their own or by entrusted accounting firms or banks through the foreign exchange administration's capital account information system before September 30 (inclusive) each year as stipulated.

If a foreign-invested enterprise receives spot exchange capital from a foreign shareholder, is it necessary to go to an accounting firm for capital verification confirmation?

Since June 1, 2015, the SAFE has simplified the  registration procedures for confirmation of the capital contribution of foreign investors under domestic direct investment, which include cancelling the registration for confirmation of the non-cash capital contribution of foreign investors under domestic direct investment and the registration for confirmation of the capital contribution made by foreign investors for acquisition of the equity interests of the Chinese side, as well as adjusting the registration for confirmation of the capital contribution of foreign investors to the entry registration of cash contribution under domestic direct investment.

Therefore, if a foreign-invested enterprise receives a spot exchange capital contributed by the foreign shareholder in the form of money, it no longer needs to go to the accounting firm for capital verification confirmation. After the foreign-invested enterprise completes the registration of the basic information (including the change registration), the bank in which the enterprise opens an account shall directly handle the registration procedure for the entry of the capital contribution under domestic direct investment through the capital account information system of the foreign exchange administration after receiving relevant capital payments, and such capital may not be used until it has been registered.

Should a foreign-invested enterprise first undergo foreign exchange deregistration or industrial and commercial deregistration in case of liquidation and cancellation?

In the event of liquidation and cancellation, a foreign-invested enterprise must in principle first conduct basic information deregistration, then industrial and commercial deregistration. The liquidation group of a foreign-invested enterprise can apply for the cancellation of the enterprise’s rights and interests after processing industrial and commercial deregistration with such materials as 1) the application form signed by the person in charge of the liquidation group affixed with the official seals of all shareholders of the original foreign-invested enterprise (or signed by the legal representative), 2) the approval document or other supporting documents (such as court rulings and administrative revocation documents) issued by the competent departments on the original foreign-invested enterprise's liquidation and cancellation, 3) the industrial and commercial deregistration certificate, 4) the certification materials issued by the competent industrial and commercial departments on the legitimate establishment of the liquidation group, 5) the subject certifications of the foreign shareholders, 6) the liquidation report, and 7) the guarantee issued by all shareholders of the original foreign-invested enterprise (the content must ensure that the liquidation group has liquidated the original foreign-invested enterprise in accordance with law, all the materials submitted to the bank are true and effective, and all the shareholders bear all the responsibilities arising from the violation of the above guarantees).

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