The PRC State Administration of Foreign Exchange ("SAFE") promulgated the Administrative Measures for the Registration of Foreign Debts ("Administrative Measures") and the Operational Guidelines for the Administrative Measures ("Operational Guidelines") on 28 April 2013. The Administrative Measures and Operational Guidelines, which came into force from 13 May 2013, simplify the foreign debt registration procedures and will change the landscape of the current administrative system for foreign debts. 

These Administrative Measures have clarified the foreign exchange management for foreign security provided for domestic loans. It provides that qualified domestic debtors can utilise guarantees provided by foreign entities and individuals when borrowing money from domestic financial institutions based in the PRC. Foreign-invested enterprises may enter into foreign guarantee contracts directly without prior approval from the SAFE; while domestic companies are required to apply for loan quota with the SAFE before the execution of such contracts. The foreign debts registration procedures have to be complied with when the foreign guarantee is to be enforced.

These Administrative Measures also provide that the transfer of bad assets from a domestic debtor to foreign entities shall be approved by the PRC National Development and Reform Commission first before being filed with the SAFE. The Operational Guidelines provide that domestic guarantees provided before the transfer of bad assets will not be treated as foreign security solely due to the transfer, provided that they are disclosed in the filings. However, any new security provided by onshore companies for the bad assets after the transfer of bad assets abroad will constitute foreign security.