On February 13, 2015, the State Administration of Foreign Exchange issued the Circular of the State Administration of Foreign Exchange on Further Streamlining and Improving the Foreign Exchange Policy for Direct Investment (hereinafter, the "Circular").

The Circular directly cancels two administrative review items, namely foreign exchange registration approval under domestic direct investment and under overseas direct investment, and, instead, requires banks to directly review and handle foreign exchange registration under domestic and overseas direct investment (hereinafter collectively, the "Direct Investment Foreign Exchange Registration"), and the State Administration of Foreign Exchange and its branches (hereinafter, the "SAFE") will exercise indirect supervision of the Direct Investment Foreign Exchange Registration via banks.

In addition, the Circular also streamlines part of the formalities for the direct investment foreign exchange business, including streamlining the administration over the confirmation registration of capital contribution by foreign investors under domestic direct investment, canceling the confirmation registration of non-cash contribution by foreign investors under domestic direct investment and of a foreign investor's acquisition of the equity of Chinese investors; cancelling the recordation of foreign exchange for overseas re-investment where a new foreign enterprise invested or controlled by another foreign enterprise established or controlled primarily by domestic investors is not subject to the formalities for foreign exchange recordation; and directly canceling annual foreign exchange inspection for direct investment and, instead, switching to a system of annual reporting of interests under domestic and overseas investment.

In addition, the Circular requires banks to raise compliance awareness when they handle the Direct Investment Foreign Exchange Registration and the SAFE to enhance the training, guidance and after-the-fact supervision of banks and to stipulate specific penal measures against banks in violation of relevant requirements