To simplify the foreign exchange procedures for Foreign Invested Partnership (“FIP”), SAFE issued the Circular on Relevant Issues Regarding Administration of Foreign Exchange for Foreign Invested Partnership, to standardize the registration procedures for foreign exchange matters for FIPs. The new rules will come into force on 17 December 2012.
- Initial registration with SAFE
An FIP is required to effect a general registration with the relevant local SAFE within 30 days after obtaining its business license. Prior to the issuance of the new rules, in practice SAFE would require each foreign partner of an FIP to effect a registration with the relevant local SAFE.
- Subsequent filing requirements with SAFE
- Renewal and de-registration: An FIP is required to update its registration with the relevant local SAFE within 30 days after any key information registered with the State Administration of Industry and Commerce is changed, or if the FIP is de-registered.
- Upfront fee account: In the event that a foreign partner has to make any capital contribution before an FIP has completed its general foreign exchange registration, the foreign partner may apply to the relevant local SAFE to open an upfront fee account in its own name into which the capital can be contributed prior to SAFE registration.
- Capital contribution confirmation: An FIP needs to complete a confirmation process with the relevant local SAFE for capital contributed by its foreign partner(s). Without this confirmation, funds contributed by foreign partners cannot be transferred to other accounts in the PRC or converted into RMB. In addition, the proceeds from any liquidation, capital reduction or distribution of profits received by the foreign partner may only be remitted or used for re-investment purposes after this confirmation process has been completed.
- Delegation of certain powers to banks
- Capital contribution: Each FIP may open a foreign exchange capital account with a bank immediately after its initial general registration with the relevant local SAFE and capital may be contributed to that account. The foreign exchange account will be regulated in the same way as the capital account of a foreign invested enterprise.
- Purchase of Foreign exchange: Where a foreign partner transfers its interest in the partnership to a domestic partner, the domestic partner may purchase and pay the consideration in foreign exchange directly through the bank after the domestic partner has filed details of the transfer with the relevant local SAFE where the FIP is located.
- Opening of asset realisation account: Where there is a transfer of an interest in a partnership from a domestic partner to a foreign partner, the domestic partner may open a special asset realisation account directly with the bank after the FIP has filed details of the transfer with the relevant local SAFE.
Reference: Circular on Relevant Issues Regarding Administration of Foreign Exchange for Foreign Invested Partnership (《国家外汇管理局关于外商投资合伙企业外汇管理有关问题的通知》)
Issuing authority: State Administration of Foreign Exchange (“SAFE”)
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