Notice on Further Improving Management Measures Concerning Foreign-invested Companies by Ministry of Commerce and State Administration for Foreign Exchange
To all provinces, autonomous regions, municipalities, cities specifically designated in the state plan , Xinjiang Production and Construction Corps., commerce departments of Changchun, Shenyang, Jinan, Nanjing, Hangzhou, Guangzhou, Wuhan, Chengdu and Xi'an, national economic and technological development zones and border economic cooperation zones; branch bureaus and foreign exchange administration departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions and municipalities, and SAFE branch bureaus of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo,
In order to regulate the approval procedures and foreign exchange management of foreign-funded investment companies, and promote the development of foreign-invested investment companies, relevant requirements are hereby notified as follows:
1. Commerce authorities at all levels should strengthen the administration of the approval of statistical information of foreign-funded investment companies. Approved foreign-funded investment companies should be noted as “Investment Company” in the Basic Information Sheet of Foreign-invested Enterprises, and registered in the system of administration of review and approval for foreign-invested enterprises of MOFCOM. Other types of enterprises are not allowed to name themselves as “Investment Company” or “Investment Holdings”, or similar terms. These requirements will be regarded as important issues in the joint annual inspection of foreign-invested companies.
2. Domestic loan of foreign-funded investment companies shall not be used for reinvestment in China.
3. Foreign-funded investment companies may, with the approval of local foreign exchange bureau, directly use RMB profits, RMB obtained in China by way of early recovery of investment gains, liquidation, equity transfer and capital reduction for domestic investment. Foreign investors may also carry out domestic investment with the said legitimate income after register capital (investment increment) to investment companies. Foreign-funded investment companies shall provide the foreign exchange administration authorities with the following materials when applying for domestic investment approval:
(A) Written application;
(B) IC card for foreign exchange registration of foreign-funded companies
(C) Documents from commerce authorities approving domestic investment of foreign-funded investment companies
(D) Evidence of RMB funding sources and documents submitted for domestic reinvestment of profits, early recovery of investment gains, liquidation, equity transfer and capital reduction (increment) of legitimate RMB income of foreign-funded investment companies.
(E) The latest capital verification report and financial audit report (with the audit report of foreign exchange income and expenditure).
Foreign-funded investment companies may transfer RMB funds directly to the invested enterprises, or transfer to a foreign-funded investment company,before transferring to the invested enterprise after the materials are reviewed and approved by the local foreign exchange bureau.
The local foreign exchange bureau shall process capital verification with the working letter of accounting form, the application (for inflow) for capital verification, letter of inquiry for capital placement of foreign investor, and copies of the said documents for domestic investment from local foreign exchange bureau. The amount and date of verification should be marked on the original copy.
Commerce departments and foreign exchange administrative departments at all levels should contact and inform the Department of Foreign Investment Administration of MOFCOM and the Department of Capital Project of SAFE in case of any problems in implementation.
Ministry of Commerce of the People’s Republic of China
State Administration for Foreign Exchange
December 8, 2011