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20051101
the State Administration of Foreign Exchange
Notice of the State Administration of Foreign Exchange on Relevant Issues of Registration of Overseas Investments Contributed by Domestic
Individual Residents and Foreign Exchange Registration of Merger or Acquisition with Foreign Investments
Hui Fa [2005] No. 29
April 21, 2005
The branches and foreign exchange administration departments of the State Administration of Foreign Exchange in all provinces, autonomous
regions and municipalities directly under the Central Government, and the branches of the State Administration of Foreign Exchange
in Shenzhen, Dalian, Qingdao, Xiamen and Ningbo:
With a view to maintaining the balance of international income and payment, guaranteeing the regularized and orderly flow of trans-territorial
capitals, we hereby give our notice as follows regarding the registration of overseas investments contributed by domestic individual
residents and the foreign exchange registration of merger or acquisition with foreign investments:
I.
Where a domestic individual resident contributes his domestic assets or stock rights into an overseas enterprise, and thus directly
or indirectly holds shares or stocks of the overseas enterprise, if the merged or acquired domestic enterprise (or the enterprise
established for the sake of merger or acquisition) has obtained the foreign-funded enterprise approval certificate before January
24, 2005 for the latest connected transaction of merger or acquisition with foreign investments occurring prior to this date, the
domestic individual resident shall go to the foreign exchange administration office at the locality of the merged or acquired enterprise
to supplement foreign exchange registration of overseas investments according to the format of the Attachment.
No domestic individual resident may undertake any foreign exchange business for overseas investments or other capital programs without
making registration in the foreign exchange administration office.
II.
Where an overseas enterprise with its stock rights directly or indirectly held by a domestic individual resident, after supplementing
the foreign exchange registration of overseas investments, meets with the increase or decrease of investments, transfer of stock
rights, merger, division, contribution of stock right investments to a foreign party, guaranty involving domestic assets to a foreign
party, or any other similar major matter, the domestic individual resident who directly or indirectly owns the maximum stock rights
of the overseas enterprise shall, within 30 days as of occurrence of the major matter, go to the foreign exchange administration
office at the locality of registration of the overseas investments to go through relevant procedures for modification or archival
filing of foreign exchange registration.
III.
Where an overseas enterprise with its shares partially or totally held by domestic individual residents has made the foreign exchange
registration of overseas investments, the involved branches or foreign exchange administration departments may make foreign exchange
registration of foreign investments for the overseas enterprise’s transactions of merge or acquisition of domestic enterprises that
have occurred before January 24, 2005.
IV.
The “foreign exchange registration of a foreign-funded enterprise established by means of merger or acquisition with foreign investments”
as referred to in Article 3 of the “Notice of the State Administration of Foreign Exchange on Relevant Issues concerning Improving
the Foreign Exchange Administration of Merger and Acquisition with Foreign Investments” (Hui Fa No. 11 [2005]) and the “foreign exchange
registration of merger or acquisition with foreign investments” as referred to in Articles 1 and 3 of this Notice shall include the
following circumstances:
(1)
If a foreign investor purchases by agreement the stock rights of a Chinese party in a Chinese-funded enterprise within the territory,
and changes the domestic-funded enterprise into a foreign-funded enterprise, such foreign-funded enterprise shall make foreign exchange
registration, and the foreign investor shall make foreign exchange registration of foreign investments in the form of foreign exchange
upon the transfer of stock rights;
(2)
If a foreign investor purchases by agreement the stock rights of a Chinese party in a foreign-funded enterprise within the territory,
the former foreign-funded enterprise shall make alterations of the foreign exchange registration, and the foreign investor shall
make foreign exchange registration of foreign investments in the form of foreign exchange upon the transfer of stock rights;
(3)
If a foreign investor increases investments to a domestic enterprise, the domestic enterprise shall make or modify the foreign exchange
registration for the foreign-funded enterprise;
(4)
If a foreign investor establishes a foreign-funded enterprise within the territory, and purchases assets of domestic enterprises by
agreement via the foreign-funded enterprise and operates such assets, or a foreign investor purchases assets of domestic enterprises
by agreement and invests the assets to establish a foreign-funded enterprise to operate such assets, the newly established foreign-funded
enterprise shall make foreign exchange registration;
(5)
If a foreign investor establishes a new foreign-funded enterprise within the territory, and controls another enterprise or the right
of proceeds or the franchise rights of a certain asset within the territory by agreement via the foreign-funded enterprise, the newly
established foreign-funded enterprise shall make foreign exchange registration.
V.
When making foreign exchange registration, the newly established foreign-funded enterprise shall submit to the local foreign exchange
administration office the application letter for registration in which the enterprise shall state the foreign investor’s final controller
and main operation performance in details. If the foreign investor’s final controller or main operation performance is not clear,
the enterprise shall give clear indication in the application letter: “None of the shares of the foreign investor of this Company
is directly or indirectly held by any domestic individual resident or any domestic institution. If there is any act of making foreign
exchange registration with false or misleading statements, this Company and its legal representative will bear the legal consequences
caused thereout.”
VI.
Where a foreign-funded enterprise with its shares directly or indirectly held by a domestic individual resident or directly held by
a domestic institution, does not make foreign exchange registration of overseas investments according to provisions, the involved
branches or foreign exchange administration departments shall not make foreign exchange registration of foreign investments for domestic
enterprises merged or acquired by this overseas enterprise. Any foreign-funded enterprise that has made foreign exchange registration
of foreign investments by means of false or misleading statements shall, once found, be subject to the liabilities for evasion of
foreign exchange for the profits remitted outside as of the date of registration and other sums of money of capital programs.
VII.
The domestic enterprises are prohibited from paying profits, or funds for liquidation, share-transfer or investment decrease and etc.
to any overseas enterprise whose shares are directly or indirectly held by domestic institutions or individual residents, and who
has not made foreign exchange registration of overseas investments, modification of the registration or archival filing. The violator
shall be deemed to have committed evasion of foreign exchange and shall be punished accordingly.
VIII.
Except for enterprises listed outside the territory, any company for particular purposes shall not retain any foreign exchange income.
And the foreign exchange income obtained by a domestic individual resident either directly or indirectly via the company for particular
purposes shall be totally transferred into the territory for settlement within 30 days as of the day when it is obtained. The violator
shall be deemed to have committed evasion of foreign exchange and shall be punished accordingly. The company for particular purposes
shall refer to an overseas enterprise directly or indirectly controlled by a domestic individual resident for the purpose of raising
funds outside the territory for the interests of his actually controlled domestic enterprise.
IX.
This Notice shall go into effect as of the date of its promulgation.
Attachment:Form of Foreign Exchange Registration of the Domestic Individual Resident’s Overseas Investments htm/e04030.htm Attachment
Attachment:
Form of Foreign Exchange Registration of the Domestic Individual Resident’s Overseas Investments
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Name of the Resident (principal):
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Permanent Residence:
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Number of the Resident’s Identity Card or Passport:
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Name of the principal:
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Name of the Overseas Enterprise
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Registration Place
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Date of Registration
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Place of Listing
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Date of Listing
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Net Assets
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Total Assets
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Proportion of Shares Held
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Amount of the Consolidated Statements
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Total Book Value of the Shares Held:
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Total Market Value:
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