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Administrative Rules on Settlement of RMB-denominated Foreign Direct Investment PBC Document No.23 [2011] 13 October 2011
 

For the purposes of further expanding the use of RMB in cross-border trade and investment, and regulating the banks and overseas investors in carrying out settlement for RMB-denominated foreign direct investment, the People’s Bank of China has formulated the Administrative Rules on Settlement of RMB-denominated Foreign Direct Investment (see Appendix), which is hereby promulgated for implementation.

Chapter I General Provisions

Article 1 These Rules are formulated pursuant to the Law of the People’s Republic of China on the People’s Bank of China, the Administrative Rules for RMB Bank Settlement Accounts (promulgated via People’s Bank of China Decree No.5 [2003]) and other related laws, administrative regulations and rules for the purposes of expanding the scope of use of RMB in cross-border trade and investment, and regulating banking institutions (hereinafter referred to as the “banks”) in carrying out RMB settlement for foreign direct investment.

Article 2 These Rules shall be applicable to bank settlement for foreign direct investment denominated in RMB.

Article 3 Overseas enterprises, economic entities or individuals (hereinafter referred to collectively as the “overseas investors”) shall comply with the provisions of the laws of the People’s Republic of China on foreign direct investment when making investment in China using RMB.

Article 4 The People’s Bank of China shall regulate the settlement of RMB-denominated foreign direct investment pursuant to these Rules.

Chapter II Business Handling

Article 5 To get settlement for RMB-denominated foreign direct investment, overseas investors may apply for opening of a RMB bank settlement account of overseas institutions in accordance with the Administrative Rules for RMB Bank Settlement Accounts, Administrative Rules for RMB Bank Settlement Accounts of Overseas Institutions (promulgated via PBC Document No.249 [2011]) and other provisions on administration of bank settlement accounts. For initial RMB funds related to the investment project(s) and RMB funds used for domestic reinvestment obtained by means of profit distribution, liquidation, capital reduction, equity transfer, recovery of investment, etc, a special deposit account for initial RMB funds and a special deposit account for RMB reinvestment shall be opened respectively in accordance with the principle of “special accounts for special purposes”, and the accounts shall not be used for cash receipt and payment.

Article 6 The bank shall, upon examination of the letter of payment instruction, explanation on the use of funds, letter of undertaking on the use of funds and other materials submitted by an overseas investor, process the payment of the initial funds to the investor’s domestic RMB bank settlement account. Upon establishment of the foreign-invested enterprise, the remaining initial funds shall be transferred to the special deposit account for RMB capital funds opened pursuant to the provisions of Article 8 of these Rules or returned via the original path of fund transfer.

Article 7 The foreign-invested enterprise (including newly established ones and those established through mergers and acquisitions) shall, within 10 business days after obtaining a business license, submit the following documents to the branch office of the People’s Bank of China at the place of registration to apply for registration of enterprise information.

(1) A photocopy of the certificate of approval of foreign-invested enterprise; and

(2) A copy of business license and organization code certificate.

Foreign-invested partnership enterprises need not submit the materials specified in the aforesaid item (1).

The branch office of the People’s Bank of China at the place of registration of the foreign-invested enterprise shall, within 10 business days from the date of receipt of the application materials, complete registration procedure for enterprise information.

In the case of change of basic information of a registered foreign-invested enterprise such as the name, operating period, method of capital contribution, partner and method of joint venture/cooperation etc, or major changes of the enterprise such as capital increase, capital reduction, equity transfer or swap, merger or division, etc, the foreign-invested enterprise shall report the aforesaid changes to the branch office of the People’s Bank of China at the place of registration within 15 business days after having registered the change or filed with the Administration for Industry and Commerce.

Article 8 A foreign-invested enterprise shall submit materials such as the business license, and etc to the commercial bank in accordance with the Administrative Rules for RMB Bank Settlement Accounts and other provisions on bank settlement accounts to apply for opening RMB bank settlement account. For registered capital denominated in RMB remitted from abroad or RMB capital paid-in by overseas investors, a special deposit account for RMB capital funds shall be opened for deposit in accordance with the principle of “special accounts for special purposes”, and the account shall not be used for cash receipt and payment.

Where the overseas investor establishes a foreign-invested enterprise through mergers and acquisitions of a domestic enterprise using RMB, the Chinese shareholders of the merged or acquired domestic enterprise shall, in accordance with the Administrative Rules for RMB Bank Settlement Accounts and other provisions on bank settlement accounts, apply for opening of a special deposit account for RMB-denominated merger and acquisition to deposit RMB acquisition funds remitted by overseas investors, and the account shall not be used for cash receipt and payment.

Where an overseas investor makes RMB payment to receive equity transfer from the Chinese shareholders of a domestic foreign-invested enterprise in China, the Chinese shareholders shall, in accordance with the Administrative Rules for RMB Bank Settlement Accounts and other provisions on bank settlement accounts, apply for opening of a special deposit account for RMB-denominated equity transfer used exclusively for deposit of the RMB-denominated equity transfer payment remitted by the overseas investor, and the account shall not be used for cash receipt and payment.

Article 9 At the time of remitting RMB-denominated investment funds to China, an overseas investor shall submit the relevant materials such as the approval documents or those documents filed with the relevant government departments in China, and etc, to the bank. The bank shall seriously examine the materials and may log into the Cross-border RMB Receipt and Payment Information Management System to query the relevant information.

When a foreign-invested real estate enterprise receives remittance of RMB funds as foreign direct investment, the bank shall log into the website of the Ministry of Commerce to verify whether the enterprise has completed the filing procedure with the Ministry of Commerce with success.

Article 10 A foreign-invested enterprise shall entrust an accounting firm to carry out capital verification and query about the actual receipt of the paid-in capital, capital contribution and RMB funds for equity acquisition from the overseas investors in accordance with the relevant provisions. The accounting firm may issue a capital verification report upon query of the account opening bank.

The account opening bank shall actively cooperate with the accounting firm; seriously check the relevant data and materials upon receipt of the letter of query, provide opinions in writing affixed with the special business seal having the validity of statutory evidence, and reply to the letter of query within five business days from the date of receipt of the letter.

Article 11 The bank shall supervise the legitimate use of RMB capital funds by a foreign-invested enterprise in accordance with the relevant provisions on administration of foreign direct investment, and examine payment through the special deposit account for RMB capital funds. The bank must not process payment of RMB funds from the special deposit account for RMB capital funds that has not completed capital verification procedure.

Article 12 Where an overseas investor remits the RMB profits obtained by it out of China, the bank may process directly upon examination of the relevant materials such as the resolution on disposal of profits and tax payment certificate, and etc, of the foreign-invested enterprise.

Article 13 Where the overseas investor remits the RMB funds obtained from capital reduction, equity transfer, liquidation, advance recovery of investment, and etc, out of China, the bank shall, upon examination of the approval or filing documents with relevant government departments and the tax payment certificate, complete the procedure for outward remittance of RMB funds for the overseas investor.

Article 14 Where the overseas investor uses the RMB funds obtained through RMB profit distribution, advance recovery of investment, liquidation, capital reduction, equity transfer, and etc to make domestic reinvestment or increase registered capital, the overseas investor may deposit the RMB funds into the special deposit account for RMB-denominated reinvestment and go through the settlement procedure in accordance with these Rules. The bank shall, upon examination of the approval or filing documents of the relevant government departments and tax payment certificate, make payment of RMB funds.

Article 15 Where a foreign-funded investment company, foreign-invested venture capital investment enterprise, foreign-funded equity investment enterprise or foreign- invested partnership enterprise with investment as its principal business line carries out investment business using RMB in China pursuant to the law, the invested enterprise shall, in accordance with the Administrative Rules for Administration of RMB Bank Settlement Accounts and other provisions on bank settlement accounts, apply for opening of a special deposit account for RMB capital funds exclusively for deposit of RMB registered capital or capital contribution funds and fund settlement, and the account shall not be used for cash receipt and payment.

Article 16 Where an overseas investor makes capital contributions using both RMB and foreign currency funds, the bank shall complete the RMB fund settlement procedure in accordance with these Rules, and complete the foreign currency fund settlement procedure in accordance with the relevant foreign exchange provisions. The exchange rate for conversion between RMB and the foreign currency shall be the central parity of the RMB exchange rate announced by the People’s Bank of China on the date of capital registration and verification.

Article 17 RMB and foreign currency funds borrowed by a foreign-invested enterprise from its overseas shareholders, affiliated enterprises within the group and overseas financial institutions shall be consolidated for computation of the total amount.

Article 18 A foreign-invested enterprise shall, in accordance with the provisions of Article 12 of the Administrative Rules for RMB Bank Settlement Accounts, present the RMB loan contract to apply for opening of a general RMB deposit account used exclusively for deposit of RMB funds borrowed from overseas.

Article 19 A bank shall examine the authenticity and compliance of the use of RMB registered capital funds and RMB borrowings of the foreign-invested enterprise, and supervise the use of RMB funds by the foreign-invested enterprise pursuant to the law. During the process of settlement, the bank shall, in accordance with the relevant provisions on prudential regulation, require the enterprise to provide materials the payment instruction, proof of the use of funds, and etc, and examine the materials seriously.

Article 20 Where a foreign-invested enterprise repays the principal and interest of the overseas RMB borrowings using RMB, it shall present materials such as the loan contract and payment instruction, tax payment certificate, and etc to complete the procedure directly with the bank.

Chapter III

Supervision and Administration

Article 21 The bank shall seriously perform information reporting obligations, and promptly, accurately and completely report to the RMB Cross-border Receipt and Payment Information Management System information about the opening of the RMB bank settlement account by overseas institutions, special deposit account for RMB capital funds, special deposit account for RMB-denominated merger and acquisition, special deposit account for RMB-denominated equity transfer and general RMB deposit account opened pursuant to these Rules as well as information on cross-border and domestic receipt and payment of RMB funds through the aforesaid accounts.

Article 22 The bank shall carry out RMB bank settlement account business for overseas investors, foreign-invested enterprises and their Chinese shareholders and other depositors in accordance with the Administrative Rules for RMB Bank Settlement Accounts, the Rules for Implementing the Administrative Rules for RMB Bank Settlement Accounts (promulgated via PBC Document No.16 [2005]), and the Measures on Administration of RMB Bank Settlement Accounts of Overseas Institutions and other provisions on bank settlement accounts.

Article 23 When carrying out settlement of RMB-denominated foreign direct investment, a bank and foreign-invested enterprise shall make balance of payment declaration in accordance with the relevant provisions of the Measures on Declaration of Statistics of Balance of Payments, and etc.

Article 24 When carrying out settlement of RMB-denominated foreign direct investment, the bank shall, in accordance with the Law of the People’s Republic of China on Anti-Money Laundering and the relevant provisions of the People’s Bank of China, earnestly perform the duty of anti-money laundering and counter terrorism financing, and prevent illegal and criminal activities such as money laundering, financing of terrorism, and etc, by means of settlement for RMB-denominated foreign direct investment. The bank shall collect the information on anti-money laundering and counter financing of terrorism at the location of the overseas investor, have knowledge of the actual natural person that controls the investment and the real beneficiary of the investment, assess the money laundering and financing of terrorism risks of the investment and take appropriate risk management measures.

Article 25 The People’s Bank of China and the relevant government departments shall establish an information sharing and management mechanism, intensify the efforts of ex-post inspection, and implement effective regulation over the settlement activities for RMB-denominated foreign direct investment.

Article 26 The People’s Bank of China shall, jointly with the relevant government departments, carry out on-site and off-site inspection of the settlement activities for RMB-denominated foreign direct investment of banks and foreign-invested enterprises as well as extended inspection of the use of funds, and urge the banks to earnestly perform their duties including examination of transaction authenticity, information reporting, anti-money laundering, and etc.

Article 27 Where a bank or foreign-invested enterprise violates the relevant provisions of these Rules, the People’s Bank of China, jointly with the relevant government departments, may circulate a notice of criticism or impose penalty on the bank or foreign-invested enterprise pursuant to the law; in serious cases, the bank or foreign investment enterprise may be suspended or forbidden from continuing to carry out cross-border RMB business.

Article 28 Where a bank violates the relevant provisions on prudential regulation when carrying out settlement for RMB-denominated foreign direct investment, the relevant government departments shall deal with the case pursuant to the law; in case of violation of the relevant provisions on RMB bank settlement accounts, anti-money laundering, counter financing of terrorism, and etc, the People’s Bank of China shall deal with the case pursuant to the law.

Chapter IV

Supplementary Provisions

Article 29 The People’s Bank of China shall be responsible for interpretation of these Rules.

Article 30 These Rules shall become effective on the date of promulgation. Where there is any inconsistency between these Rules and the relevant provisions promulgated prior to these Rules, these Rules shall prevail.


Guidelines of the People’s Bank of China on RMB Loans of Domestic Banking Institutions for Overseas Projects PBC Document No. 255 [2011]

For the purposes of enlarging the cross-border use of RMB, regulating relevant business of RMB loans of domestic banking institutions (hereinafter referred to as “banks”) for overseas projects, preventing risks, and promoting trade and investment facilitation, the following guidelines are formulated according to the Law of the People’s Republic of China on the People’s Bank of China, to guide RMB lending of domestic banking institutions for overseas projects.

1. Overseas Projects in these Guidelines refer to the various overseas investments and other cooperation projects carried out by domestic institutions in the process of “going global”, including, but not limited to, direct overseas investments, contracted engineering projects for foreign parties, export buyer’s credit, and etc.

Direct overseas investments are domestic institutions’ act of establishing enterprises or projects or obtaining the ownership, controlling stake or right to participate in the management, etc. of such enterprises or projects by way of establishment of wholly-owned, joint venture or cooperative enterprises or projects, merger, equity investment and acquisition, and etc.; “contracted engineering projects” mean the overseas construction engineering projects with a Chinese enterprise or other entity as a party to the contract, including the activities of consulting, survey, design, supervision, calling for bids, estimation of costs, purchase, construction, installation, trial run, operation and management, etc.

RMB bank loans for overseas projects mean the RMB loans granted by banks to the aforesaid overseas projects.

2. The banks that can conduct international settlement and have the experiences of granting loans to foreign-related entities may, after being connected with the Cross-Border RMB Receipts and Payments Information Management System (RCPMIS), carry out RMB lending business for overseas projects.

3. When a bank handles the RMB lending business for an overseas project it shall, within 15 working days after signing the RMB loan contract for the overseas project, submit a photocopy of the contract to local branch office of the PBC. For banks that carry out the RMB lending business for the overseas project for the first time, they shall also submit photocopies of relevant internal rules and regulations.

4. Banks shall, when handling the RMB lending business for overseas projects, comply with the principle of prudence, strictly examine the credit standing of the borrowers and the corresponding banks, and protect the safety of the funds.

5. Banks may open RMB bank settlement accounts for overseas borrowers, and manage the accounts according to the Administrative Rules for RMB Bank Settlement Accounts of Overseas Institutions (PBC Document No.249 [2010]). Banks may also handle the RMB lending business for overseas projects via the corresponding accounts opened by borrowers in overseas agent banks.

6. Banks shall, according to relevant provisions on RMB bank settlement accounts and payment and settlement management, provide fund transfer and other relevant services for cross-border RMB loans to the filed projects.

7. Banks may allot RMB funds to its overseas branches or provide RMB financing to its overseas subsidiaries or corresponding banks to meet the need of overseas project lending business.

The accumulative amount of RMB loans provided by a bank to an overseas project shall not exceed the amount as specified in the project loan contract. The RMB funds repatriated from overseas to a bank due to loan repayments by the overseas borrower, overseas branch offices and agent banks shall not exceed the sum of the principal and reasonable incomes under the filed loan contract.

8. The funds of RMB lending for overseas projects shall not be used for providing domestic loans.

9. The statistics of RMB loans for overseas projects shall be made separately, and the lending interest rate shall conform to relevant provisions of the PBC.
10. Non-resident deposits arising from the RMB lending business for overseas projects are not subject to existing administrations on foreign debts.
11. Banks shall report the relevant information of its RMB lending business for overseas projects to the Cross-Border RMB Receipts and Payments Information Management System within 5 business days.

12. The PBC and its branch offices shall make on-site and off-site inspections on banks’ RMB lending business for overseas projects, urge banks to earnestly fulfill their duties of verifying authenticity of the project loans and information reporting, and etc., so as to supervise banks to carry out their business activities according to the law.

13. The PBC and its branch offices shall, according to these Guidelines, guide banks to conduct businesses related to providing RMB loans to overseas projects.


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