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Circular of the State Administration of Foreign Exchange on Relevant
Issues Concerning the Registration of Foreign Exchange by Direct Foreign
Investment
the State Administration of Foreign Exchange
HuiFa [2002] No.42
The branches and foreign exchange administrative departments of the
State Administration of Foreign Exchange (hereafter "SAFE") in all
provinces, autonomous regions, municipalities directly under the
Central Government, and the braches in Shenzhen, Dalian, Qingdao,
Xiamen and Ningbo:
In order to carry out the Circular of the
Ministry of Finance and
the State Administration of Foreign Exchange on Further
Strengthening the Assessment of the Capital of enterprises with
foreign investment and Perfecting the System for the Registration of
Foreign Exchange and Foreign Capital (CaiKuai [2002] No.1017,
hereafter "the Circular"), to improve management and standardize
business operations, relevant issues are hereby notified as follows:
I. Perfecting the system for the registration
of foreign exchange
and foreign capital so as to be beneficial to standardizing the
practicing of certified accountants and to the reasonable and
orderly flow of foreign capital. All the branches of the SAFE shall
reach a common understanding and pay high attention to it, try every
effort to improve the internal control system, and do a good job in
the inquiring, verification and registration of the capital
assessment of the enterprises with foreign investment. The branches
and sub-branches that have a heavy business burden shall arrange for
more hands to do it. The internal departments of the foreign
exchange administrations shall pay attention to cooperating with
each other. At the same time, special attention shall be paid to the
assortment in work with the local public fiscal authorities and the
certified accountants associations (hereafter referred to as
"CAAs"), and, on the basis of the rigid implementation of the
present Circular by the CAAs, you should cooperate closely with each
other so as to improve the quality of capital assessment of
enterprises with foreign investment.
II. The letters of inquiry concerning the contributions of the
foreign investors shall be filled in by the enterprise concerned and
be accompanied by an attestation document (in photocopy) and an
accountants firm shall be entrusted to make inquiries to the foreign
exchange administrations. When inquiring the foreign exchange
administrations, the accountants firms shall present a letter of
liaison that bears the seal of the firm.
III. The phrase "to inquire about the authenticity and lawfulness of
the above documents" as mentioned in Article 1, Item 4 of the
Circular refers to inquiring whether the relevant accounts of
registered capital has been opened upon the approval of the
competent foreign exchange administration; whether the verification
documents of foreign exchange business under relevant capital items
are issued by the competent foreign exchange administrations;
whether relevant hardcopy customs declaration forms are in
conformity with the corresponding electronic ledgers in the online
verification system for import and export declarations of customs
and whether foreign exchange has been paid.
IV. The foreign exchange administration concerned shall, after
receiving the letter of inquiring about the capital contribution of
the foreign parties and the attached attestation documents, make
careful verifications according to the requirements of the
operational rules annexed to the present Circular (see Attachment
I), give a reply within 5 work days, and place the letter of
inquiring about the capital contribution of the foreign parties,
attestation documents, photocopy of the reply and other relevant
materials concerning the inquiring in archivist files for further
reference.
1. If no error has been found through verification in the issues
inquired about, the foreign exchange administration shall grant a
number for the registration of foreign capital and foreign exchange
(The method for registering the numbers of foreign capital and
foreign exchange is: serial number of the certificate for foreign
exchange registration is a two-figure sequence number, and the
sequence number is the serial number for the number of inquiries
made about the enterprise concerned. E.g. if the enterprise inquires
for the second time, the serial number shall be 01.) and express the
opinion in the letter of reply (for the format of letter of reply,
see Attachment II) by selecting a corresponding one from the
following opinions:
a) The registered capital accounted inquired has been opened upon
the approval of a branch (or sub-branch) or management department of
foreign exchange of our administration;
b) The verification document for the foreign exchange business under
the capital items inquired has been issued by a branch (or
sub-branch) or management department of foreign exchange of our
administration;
c) The declaration forms for the import goods inquired are in
conformity with the verification system and no foreign exchange has
ever been paid.
2. If any of the issues inquired is found to be inconsistent with
the relevant situations, the competent foreign exchange
administration may not grant a serial number for the registration of
foreign capital and foreign exchange, and shall express the opinion
in the letter of reply (for the format of letter of reply, see
Attachment III) by selecting a corresponding one from the following
opinions:
a) The documents attached are incomplete (by specifying the titles
of the documents);
b) The documents attached are not in conformity after verification
(by specifying the titles of the documents, serial numbers and the
points that are not in conformity);
c) The attached documents are repeatedly used (by specifying the
titles and serial numbers of the documents);
d) The capital contribution is made through a non-registered capital
account;
e) The registered capital account has not be opened upon approval;
f) Payment has been made for the declaration form for the import
goods (by specifying the serial number of the customs declaration);
g) The serial number of the letter of value appraisal of the
commodity is not specified.
V. The foreign exchange administrations shall keep a record of the
incoming letters and replies, and the procedures for receiving the
letters shall be strictly followed.
VI. In the appraisal of the capital contribution of a foreign party
concerned who makes its contribution by way of physical materials,
if the photocopy of the hardcopy declaration form of the import
goods submitted by an entrusted accountant''s firm that does not
bear the special seal of a designated foreign exchange bank and the
foreign exchange administration, the department in charge of the
management of capital projects under the foreign exchange
administration shall inquire the department in charge of the
writing-off of import about whether the content of the declaration
form is in consistency with the corresponding electronic ledgers in
the "online verification system for import and export declaration
forms", and whether foreign exchange has been paid or whether they
have been written off. The department in charge of the writing-off
of import shall complete the inquiry within two work days.
The department in charge of the writing-off of import accesses the
"online verification system for the import and export declaration
forms" by using a "Super-financial IC Card". If it is confirmed by
retrieving the "online verification system for the import and export
declaration forms" that the hardcopy declaration forms is consistent
with the corresponding electronic ledgers and foreign exchange has
not been paid or written off, the department in charge of import
shall settlement the account and write off the electronic ledgers of
the declaration forms in the "online verification system for the
import and export declaration forms", and provide the electronic
ledger of the import declaration form that bears the "business seal
of import writing-off supervision" to the department in charge of
the management of capital projects.
If the hardcopy import declaration form is inconsistent with the
electronic ledgers thereof or if foreign exchange has already been
paid or written off, the department in charge of writing off imports
shall make a remark and put the seal "business seal of import
writing-off supervision" on the printout of the electronic ledgers
of the declaration form, and return it back to the department in
charge of management of capital projects.
If there is no corresponding electronic ledgers for the hardcopy
declaration form in the "online verification system for import and
export declaration forms", the department in charge of writing off
imports shall make a remark and put the seal "business seal of
import writing-off supervision" on the printout of the electronic
ledgers of the declaration form, and return it to the department in
charge of the management of capital projects.
VII. With regard to the verification documents for the foreign
exchange business under capital projects issued at other places, the
foreign exchange administration of the place where the verification
is done shall send a photocopy of the verification documents and a
letter of inquiry (see Attachment IV) by fax to the foreign exchange
administration of the place where they are issued, and the latter
shall, after verification, specify the result of verification and
put a "business seal for foreign exchange under the capital project"
on the letter of inquiry, and send it back by fax within two work
days to the foreign exchange administration where the verification
is done. In the meanwhile, the foreign exchange administration of
the place where the documents are issued shall place the relevant
materials in the archivist files for further reference.
VIII. If, after completing the procedures of inquiring about the
capital contribution of foreign parties, an accountant''s firm fails
to issue a capital appraisal report due to the change of
circumstances, it shall inform the foreign exchange administration
in written form of the changes, and the foreign exchange
administration shall write off the serial number for the
registration of foreign capital and foreign exchange.
IX. Foreign exchange administrations shall establish special
computerized or manual ledgers (the computerized ledgers shall have
the simple functions of search and gathering information). After
confirming that there are no errors in the inquiring document on the
basis of verification and giving a reply, they shall record down the
contents of the "List of Contributions Made by Foreign Investors"
provided in the inquiring letters. The registered amount of foreign
capital and foreign exchange shall, after deducting the contribution
by way of intangible assets, be more than the total amount specified
in the attestation documents of capital contribution by foreign
parties, and, in the meanwhile, record down the name of the
enterprise, the legal person code, date of contribution, and the
serial number for registering foreign capital and foreign exchange.
If the serial number for the registration of foreign capital and
foreign exchange has already been written off, it should also be
marked in the corresponding ledgers.
X. The foreign exchange administrations shall gather together
"Reports of the Registration of Foreign Capital and Foreign Exchange
by (MM/YY) of (Name of Place)" on the monthly basis and by
hierarchical order (see Attachment V). All the sub-branches shall
submit their reports to the branches within the first 5 work days of
each month, and the branches (or departments in charge of the
management of foreign exchange) submit their reports, after
gathering together, to the General Administration within the first 8
work days of each month.
XI. The provisions concerning the inquiry about the capital
appraisal and registration of the enterprises with foreign
investment within the export processing zones and the bonded areas
as well as the enterprises with foreign investment and those
established by non-investment enterprises with foreign investment
through reinvestment within the Shanghai Diamond Exchange shall be
separately formulated. Before the new provisions are formulated, the
original provisions shall be followed, and the accountants firms
need not go through the procedures of inquiring about the capital
contributions of the foreign parties at the foreign exchange
administrations.
XII. If any foreign exchange administration finds that any
accountants'' firm fails to follow the inquiry procedures in the
issuance of capital appraisal reports or issues false reports, it
shall inform the local accountants association, and, before the
local accountants association or public fiscal authority makes a
decision on how to deal with it, the foreign administration
concerned shall not accept any new inquiries from the accountants''
firm concerned.
XIII. If, in the process of handling the inquiries and registrations
of capital appraisals of enterprises with foreign investment, any
foreign exchange administration finds that any designated bank of
foreign exchange or any enterprise with foreign investment violates
the provisions of foreign exchange administration, it shall give a
punishment according to relevant statutory provisions concerning
foreign exchange administration.
XIV. The present Circular shall enter into force as of May 1, 2002.
Should you have any question in the process of implementation,
please ask the Department of Capital Projects under the SAFE without
delay.
Annexes:
I.Operational Rules for the Verification and Registration of
Inquiries
II.Reply to Letters of Inquiry about the Capital Contributions by
Foreign Parties (Format I) (omitted)
III.Reply to Letter of Inquiry about the Capital Contributions by
Foreign Parties (Format II) (omitted)
IV.Letter of Inquiry about Foreign Exchange Business under Capital
Projects in Other Places (Format III) (omitted)
V.Reports of the Registration of Foreign Capital and Foreign
Exchange by (MM/YY) of (Name of Place) (Format IV) (omitted)
Attachment I:1 Operational Rules for the Verification and
Registration of Inquiries about the Contribution and Capital
Appraisal of Spot Exchange by Foreign Investors 1. Statutory basis;
2. Materials for verification;
3. Principles of verification;
4. Elements of verification;
5. Range of authorization
6. Points of attention.
Circular of the Ministry of Finance and the State Administration
of Foreign Exchange on Further Strengthening the Appraisal of
Capital of Enterprises with Foreign Investment and Improving the
System for the Registration of Foreign Capital and Foreign Exchange
Circular of the State Administration of Foreign Exchange on the
Registration of Foreign Exchange Directly Invested by Foreign
Investors
Measures for the Administration of Intraterritorial Foreign
Exchange Accounts
Letter of Inquiry about the Capital Contribution of Foreign
Investors
Reply to Letters of Inquiry of Banks
Foreign investors shall follow the procedures of making foreign
exchange contributions according to the relevant provisions of the
State Administration of Foreign Exchange
1. Whether registered foreign exchange capital listed in the "List
of Contributions Made by Foreign Investors" as provided in the
Letter of Inquiry about the Contributions Made by Foreign Investors;
2. Whether the registered capital account has been opened upon the
approval of a competent foreign exchange administration;
3. Whether it is marked "Account for Registered Capital" in the
column of "Nature of Account";
4. If the remitting bank is an intraterritorial bank, whether the
transfer of original currency has been approved;
5. Whether the letter of inquiry of the bank is repeatedly used.
The branches and sub-branches thereof shall handle their
businesses according to the principle of territory.
The replies shall be made within 5 work days.
If no error is found upon verification, a serial number shall be
granted and the foreign capital and foreign exchange shall be
registered.
If errors are found upon verification, no serial number may be
granted and the foreign capital and foreign exchange may not be
registered.
Due to the reasons of handling charges of the banks, the
registered amount of foreign exchange registered capital may be
reasonably smaller than the amount listed in the reply to the
letters of inquiry issued by the banks concerned.
The foreign exchange administrations need not make any comment in
the letter of inquiry
Attachment I:2 Operational Rules for the Verification and
Registration of Capital Appraisal of Contributions Made by Way of
Physical Materials 1. Statutory basis;
2. Verification materials;
3. Principles of verification;
4. Elements of Verification;
5. Range of authorization;
6. Points of attention.
Circular of the Ministry of Finance and the State Administration
of Foreign Exchange on Further Strengthening the Appraisal of
Capital of Enterprises with Foreign Investment and Improving the
System for the Registration of Foreign Capital and Foreign Exchange
Circular of the State Administration of Foreign Exchange on the
Registration of Foreign Exchange Directly Invested by Foreign
Investors
1. Letter of Inquiry about the Capital Contribution of Foreign
Investors
2. Declaration form for import goods that does not bear the special
seal of a designated bank and that of a competent foreign exchange
administration (photocopy)
Foreign investors shall truthfully perform its obligation of
making contributions by way of physical materials and observe the
relevant procedures for administration
1. Whether registered capital contributed by physical materials
listed in the "List of Contributions Made by Foreign Investors" as
provided in the Letter of Inquiry about the Contributions Made by
Foreign Investors is smaller than or equal to the amount as provided
in the declaration form for the import of goods;
2. Whether the customs declaration for the import of goods is in
conformity with the electronic ledgers in the "online verification
system for the customs declarations for the import and export of
goods" and if foreign exchange has been paid;
3. If the foreign investors in a Chinese-foreign equity joint
enterprise or Chinese-foreign cooperative enterprise make their
contributions by ways of physical materials, whether the serial
number of the letter of appraisal of the value of commodities has
been given in the column for remarks in the customs declaration for
importing and exporting goods as provided in the letter of inquiry
The branches and sub-branches thereof shall handle their
businesses according to the principle of territory.
The replies shall be made within 5 work days.
If no error is found upon verification, a serial number shall be
granted and the foreign capital and foreign exchange shall be
registered.
If errors are found upon verification, no serial number may be
granted and the foreign capital and foreign exchange may not be
registered.
Due to the reasons of appraising the value of the commodities, the
registered amount of capital contribution made by way of physical
materials may be reasonably smaller than the amount listed in the
customs declaration for importing and exporting goods.
The foreign exchange administrations need not make any comment in
the letter of inquiry
Attachment I:3 Operational Rules for the Verification and
Registration of Verification Documents of Foreign Exchange Business
under Capital Projects 1. Statutory basis;
2. Verification materials;
3. Principles of verification;
4. Elements of verification;
5. Range of authorization;
6. Points of attention.
Circular of the Ministry of Finance and the State Administration
of Foreign Exchange on Further Strengthening the Appraisal of
Capital of Enterprises with Foreign Investment and Improving the
System for the Registration of Foreign Capital and Foreign Exchange
Circular of the State Administration of Foreign Exchange on the
Registration of Foreign Exchange Directly Invested by Foreign
Investors
1. Letter of Inquiry about the Capital Contribution of Foreign
Investors;
2. Verification Document for Foreign Exchange Business under Capital
Projects (photocopy)
Foreign investors shall go through the procedures for the
intraterritorial reinvestment by way of RMB and intraterritorial
transfer of foreign exchange according to the administrative
provisions of the State Administration of Foreign Exchange.
1. Whether the situations as listed in the "List of Contributions
Made by Foreign Investors" as provided in the Letter of Inquiry
about the Contributions Made by Foreign Investors are in conformity
with the situations listed in the verification documents for the
foreign exchange business under capital projects;
2. Whether the verification documents for the foreign exchange
business under capital projects are in conformity with the
verification documents kept by the foreign exchange administration;
3. Whether the verification documents for the foreign exchange
business under capital projects are in conformity with the search
results of the foreign exchange administration concerned.
The branches and sub-branches thereof shall handle their
businesses according to the principle of territory.
1. The replies shall be made within 5 work days.
2. If no error is found upon verification, a serial number shall be
granted and the foreign capital and foreign exchange shall be
registered.
3. If errors are found upon verification, no serial number may be
granted and the foreign capital and foreign exchange may not be
registered.
4. The verification Document for Foreign Exchange Business under
Capital Projects which is regarded as the attestation document is
still effective even exceeding 15 workdays. The (sub)branches or
administrative departments of foreign exchange can''t bring forth
the negative opinions accordingly.
5. If any foreign investor makes reinvestments within the territory
by RMB and any foreign exchange is transferred to its account of
registered capital, this sum of transferred foreign exchange shall
be recorded down in the corresponding column of "Way of Investment"
of the registration forms.
6. The foreign exchange administrations need not make any comment in
the letter of inquiry. |
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