In February 2015, China’s State Administration of Foreign Exchange (SAFE) simplified procedures for foreign investors in certain respects. This is another step forward in making foreign direct investment into China less time consuming and bureaucratic. The two most important measures were these:
- Revocation of foreign exchange registration with SAFE – this can now be accomplished directly with qualified banks. SAFE will take on an indirect supervisory role through its supervision of FDI-related foreign exchange of the banking sector. How this will unfold in practice remains to be seen, so watch for the implementation of CXircular 13 to commence on June 1.
- Revocation of the registration requirement to confirm a foreign investor’s investment when it acquires an equity interest owned by a Chinese party - this relates to both cash and non-monetary forms of acquisition. The practical effect should be to provide more flexibility to contracting parties in the timing and price adjustments possible for acquisitions of interests of Chinese equity holders by foreign purchasers.
Several other changes aim to simplify the process for foreign investors and to avoid approvals that in the past have been said to have contributed to corruption and undue delays for foreign investors in certain instances.
A detailed summary of Circular 13 is provided in English and Chinese by Jun He Bulletin, April 14, 2015. Frost Brown Todd and Jun He work together on Chinese and USA matters for mutual clients, with a longstanding relationship that stretches back more than 20 years. http://www.junhe.com/images/ourpublications/Bulletin/Bulletin_EN/20150414_01.pdf.