Circular of the State Administration of Foreign Exchange on Promulgation of the Provisions on the Administration of Foreign Exchange for Cross-border Guarantee

Circular of the State Administration of Foreign Exchange on Promulgation of the Provisions on the Administration of Foreign Exchange for Cross-border Guarantee

Hui Fa [2014] No.29

May 12, 2014

The branches and administrative offices of the State Administration of Foreign Exchange in all provinces, autonomous regions, municipalities directly under the Central Government, branches of the State Administration of Foreign Exchange in Dalian City, Qingdao City, Ningbo City, Xiamen City and Shenzhen City and all designated Sino-invested foreign exchange banks,

In order to deepen the foreign exchange administration system reform, simplify the administrative examination and approval procedures and regulate the balance of payments under cross-border guarantee, the State Administration of Foreign Exchange (hereinafter referred to as the "SAFE") has decided to improve the administration modes for foreign exchange for cross-border guarantee and formulated the Provisions on the Administration of Foreign Exchange for Cross-border Guarantee and operational guideline thereof (hereinafter referred to as the "Provisions"), which are hereby printed and distributed to you for your compliance and implementation.

The Provisions shall come into force as of June 1, 2014; where there are inconsistencies between the previous provisions and the Provisions, the Provisions shall prevail. Upon the implementation of the Provisions, the laws and regulations set out in the Appendix III shall be repealed simultaneously.

Upon the receipt of the Circular of the State Administration of Foreign Exchange on Promulgation of the Provisions on the Administration of Foreign Exchange for Cross-border Guarantee (hereinafter referred to as the "Circular"), all SAFE branches and administrative offices shall timely forward it to the central sub-branches, sub-branches, city commercial banks, rural commercial banks, foreign banks and rural cooperation banks in the areas under their administration; after receiving the Circular, each Sino-invested bank shall timely forward it to each branch and sub-branch under its administration. In case of problems in the course of implementation, please feed back the same to the Capital Account Management Department of the SAFE in a timely manner.

Appendix I Provisions on the Administration of Foreign Exchange for Cross-border Guarantee

Chapter I General Provisions

Article 1 The Provisions are formulated in accordance with the Real Rights Law of the People's Republic of China, the Security Law of the People's Republic of China, the Administrative Regulations of the People's Republic of China on Foreign Exchange and other laws and regulations in order to improve the administration of foreign exchange for cross-border guarantee, regulate the balance of payments under cross-border guarantee and promote the benign and orderly development of cross-border guarantee business.

Article 2 For the purpose of the Provisions, the term "cross-border guarantee" shall refer to the undertakings provided by guarantors to provide legally binding guarantee in writing to creditors that they shall perform the payment obligations as agreed in the guarantee contract and the transactions of balance of payments, such as receipt and payment of cross-border funds or cross-border transfer of asset ownership that may arise.

Article 3 Cross-border guarantee shall be categorized as overseas loans under domestic guarantee, domestic loans under overseas guarantee and other forms of cross-border guarantee according to the place of registration of parties to the guarantee.
Overseas loans under domestic guarantee shall refer to the cross-border guarantee under which the place of registration of the guarantor is within the territory of China (hereinafter referred to as the "Territory") and the places of registration of the debtor and the creditor are outside the Territory.
Domestic loans under overseas guarantee shall refer to the cross-border guarantee under which the place of registration of the guarantor is outside the Territory and the places of registration of the debtor and the creditor are within the Territory.
Other forms of cross-border guarantee shall refer to other cross-border guarantees than the abovementioned overseas loans under domestic guarantee and domestic loans under overseas guarantee.

Article 4 The SAFE and its branches and sub-branches (hereinafter referred to as "foreign exchange authorities") shall be responsible for regulating various international transactions of balance of payments arising from cross-border guarantee.

Article 5 Domestic institutions that provide or accept cross-border guarantee shall observe the state laws and regulations and the provisions of the competent industrial department and handle the relevant foreign exchange administration formalities in accordance with the Provisions.
The parties to the guarantee engaging in the cross-border guarantee business shall adhere faithfully to the business ethics and be honest and trustworthy.

Article 6 Foreign exchange authorities shall implement registration administration for overseas loans under domestic guarantee and domestic loans under overseas guarantee.
Domestic institutions that engage in the business of overseas loans under domestic guarantee shall go through the registration for overseas loans under domestic guarantee in accordance with the Provisions; for the business of overseas loans under domestic guarantee that is registered with foreign exchange authorities, where there is contract performance for it, guarantors may handle contract performance on their own; after contract performance for guarantee, guarantors shall handle registration of overseas creditors' rights in accordance with the requirements hereof.
Domestic institutions that engage in the business of domestic loans under overseas guarantee shall meet the relevant requirements hereof.
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