Circular of the State Administration of Foreign Exchange on Issuing the Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations
Circular of the State Administration of Foreign Exchange on Issuing the Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations
Circular of the State Administration of Foreign Exchange on Issuing the Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations
Hui Fa [2019] No.7
March 15, 2019
Branches or administrative offices of the State Administration of Foreign Exchange in all provinces, autonomous regions, and municipalities directly under the Central Government, branches of the State Administration of Foreign Exchange in Shenzhen City, Dalian City, Qingdao City, Xiamen City, and Ningbo City, and all domestic national banks,
In order to further boost trade and investment facilitation and serve the real economy, the State Administration of Foreign Exchange ("SAFE") has revised the Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations (Hui Fa [2015] No.36, the "Document No.36"). The related matters are hereby announced as follows:
I. Applying macro-prudential management to foreign debts and outbound lending. A multinational corporation (“MNC”) may consolidate the foreign debt quotas and/or outbound lending quotas of its domestic member companies based on macro-prudential principles to conduct foreign debt business and/or outbound lending business on its own within the consolidated amount(s) in line with commercial practice.
II. Substantially simplifying the foreign debt and outbound lending registration. When the SAFE branch or subbranch in the place where the pool header of an MNC resides (the "local foreign exchange administration") issues a notice of registration to the pool header, it will complete a one-off foreign debt and/or outbound lending registration for the company based on the registered consolidated quota(s), and the pool header will not be required to register each foreign debt (or outbound lending) transaction regardless of currency or creditor (or debtor); and the bank and the company will not be required to submit the three manual statements required under Document No.36.
III. Facilitating the settlement of and payment with foreign exchange earnings under capital account items. When handling payments using the foreign exchange earnings under capital account items in a domestic master account, the pool header of an MNC is not required to provide proof of authenticity for each transaction to the partner bank in advance; and the partner bank shall conduct authenticity and compliance reviews in accordance with the principles for banking business operations.
IV. Improving the market access and exit mechanism. The pool header of an MNC shall open a master account for domestic funds (the “domestic master account”) and carry out actual operations in relation to the centralized operation of cross-border funds within one year of receipt of a notice of registration for the MNC; otherwise, the notice of registration shall expire upon the lapse of one year from the date of its issuance. An MNC may cease the centralized operation of its cross-border funds after registering with the competent SAFE branch.
V. Adjusting and optimizing account functions. An MNC handles all operations in relation to the centralized operation of cross-border funds primarily through a domestic master account of its pool header; and if it is necessary, it may designate an overseas member company to open an NRA account for the centralized operation and management of the funds of its overseas member companies. A domestic master account is a multi-currency (including RMB) account, and there is no limit on the number of such accounts that could be opened.
The funds in a master account for international funds that were opened under the code “3600” before the issuance of this Circular shall, within six months of issuance of this Circular, be transferred to a domestic master account or to an NRA account opened pursuant to this Circular based on the nature of the funds, and the transfer shall be reported to the local foreign exchange administration for registration.
VI. Enhancing regulation during and after event. Loocal foreign exchange administrations shall conduct risk assessments on a regular basis or from time to time, step up off-site monitoring and on-site checks and inspections, and effectively provide risk warnings and guidance to banks and companies.
The revised Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations are hereby issued. Branches and administrative offices of the SAFE shall, upon receipt of this Circular, promptly forward it to the central sub-branches and sub-branches of the SAFE, urban commercial banks, rural commercial banks, foreign-funded banks, and rural cooperative banks within their respective administrative areas. All domestic national banks shall, upon receipt of this Circular, promptly forward it to all their branches. Any problems encountered during the implementation of this Circular shall be promptly reported to the SAFE.
Telephone:
010-68402250, 68402448 and 68402450
Attachment: Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations
Chapter 1 General Provisions
Article 1 These Provisions are enacted to boost trade and investment facilitation, serve the real economy, and facilitate the centralized operation of cross-border funds for multinational corporations.
Article 2 For the purposes of these Provisions, the term "multinational corporation" (“MNC”) refers to a consortium composed of a parent company, its subsidiaries and other member companies or institutions that are connected by capital.
The term “pool header” refers to a domestic company having an independent legal personality that is authorized by an MNC to perform entity and business registration, data reporting, situation feedback and other responsibilities. If the pool header is a financial company, its engagement in cross-border fund transactions shall comply with the regulations of the industry regulatory authorities.
“Member companies” refer to all companies having an independent legal personality that directly or indirectly hold shares in each other within an MNC and are divided into domestic member companies and overseas member companies. A sister company that has no direct or indirect shareholding relationship with the pool header but is controlled by the same parent company can be identified as a member company.
Financial institutions (other than financial companies acting as the pool header), local-government financing platforms, and real estate companies are not allowed to participate in the centralized operation of cross-border funds for an MNC as either the pool header or a member company.
Article 3 The term "centralized operation of cross-border funds" as mentioned in these Provisions refers to the centralized operation and management of domestic and overseas funds such as the handling of the centralized management of foreign debt quotas and outbound lending quotas, centralized receipts and payments and settlement netting under current account items and other business operations.
Article 4 An MNC may select a qualified Chinese domestic bank (within the provincial-level region where the pool header resides, hereinafter the same) as the partner bank (hereinafter referred to as the “partner bank”) to provide service for its centralized operation of cross-border funds.
Chapter II Business Registration and Changes
Article 5 An MNC that meets the following requirements may, as needed for its business, select one domestic company as the pool header for the centralized operation and management of the funds of its domestic and overseas member companies, covering one or more of the following items of business: consolidation of foreign debt quotas, consolidation of outbound lending quotas, centralized receipts and payments under current account items, and settlement netting under current account items:
(1) it has real business needs;
(2) it has a sound management structure and internal control system for cross-border funds;
(3) it has established electronic systems for the corresponding internal management;
(4) its previous year’s balance of payments denominated in Renminbi and foreign currencies exceeded US$100 million (aggregate number of all domestic member companies participating in the centralized operation of cross-border funds);
(5) it has not committed a material foreign exchange violation in the past three years (or in the case of one existing for less than three years, has not committed a material foreign exchange violation since its establishment);
(6) if the pool header or any domestic member company is included in the list of companies for receipts and payments in foreign exchange for trade, the trade-in-goods classification of that company should be Class A; and
(7) other prudential regulatory requirements as set forth by the State Administration of Foreign Exchange (“SAFE”).
Article 6 A partner bank providing service for the centralized operation of cross-border funds for an MNC shall meet the following requirements:
1.
......
Hui Fa [2019] No.7
March 15, 2019
Branches or administrative offices of the State Administration of Foreign Exchange in all provinces, autonomous regions, and municipalities directly under the Central Government, branches of the State Administration of Foreign Exchange in Shenzhen City, Dalian City, Qingdao City, Xiamen City, and Ningbo City, and all domestic national banks,
In order to further boost trade and investment facilitation and serve the real economy, the State Administration of Foreign Exchange ("SAFE") has revised the Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations (Hui Fa [2015] No.36, the "Document No.36"). The related matters are hereby announced as follows:
I. Applying macro-prudential management to foreign debts and outbound lending. A multinational corporation (“MNC”) may consolidate the foreign debt quotas and/or outbound lending quotas of its domestic member companies based on macro-prudential principles to conduct foreign debt business and/or outbound lending business on its own within the consolidated amount(s) in line with commercial practice.
II. Substantially simplifying the foreign debt and outbound lending registration. When the SAFE branch or subbranch in the place where the pool header of an MNC resides (the "local foreign exchange administration") issues a notice of registration to the pool header, it will complete a one-off foreign debt and/or outbound lending registration for the company based on the registered consolidated quota(s), and the pool header will not be required to register each foreign debt (or outbound lending) transaction regardless of currency or creditor (or debtor); and the bank and the company will not be required to submit the three manual statements required under Document No.36.
III. Facilitating the settlement of and payment with foreign exchange earnings under capital account items. When handling payments using the foreign exchange earnings under capital account items in a domestic master account, the pool header of an MNC is not required to provide proof of authenticity for each transaction to the partner bank in advance; and the partner bank shall conduct authenticity and compliance reviews in accordance with the principles for banking business operations.
IV. Improving the market access and exit mechanism. The pool header of an MNC shall open a master account for domestic funds (the “domestic master account”) and carry out actual operations in relation to the centralized operation of cross-border funds within one year of receipt of a notice of registration for the MNC; otherwise, the notice of registration shall expire upon the lapse of one year from the date of its issuance. An MNC may cease the centralized operation of its cross-border funds after registering with the competent SAFE branch.
V. Adjusting and optimizing account functions. An MNC handles all operations in relation to the centralized operation of cross-border funds primarily through a domestic master account of its pool header; and if it is necessary, it may designate an overseas member company to open an NRA account for the centralized operation and management of the funds of its overseas member companies. A domestic master account is a multi-currency (including RMB) account, and there is no limit on the number of such accounts that could be opened.
The funds in a master account for international funds that were opened under the code “3600” before the issuance of this Circular shall, within six months of issuance of this Circular, be transferred to a domestic master account or to an NRA account opened pursuant to this Circular based on the nature of the funds, and the transfer shall be reported to the local foreign exchange administration for registration.
VI. Enhancing regulation during and after event. Loocal foreign exchange administrations shall conduct risk assessments on a regular basis or from time to time, step up off-site monitoring and on-site checks and inspections, and effectively provide risk warnings and guidance to banks and companies.
The revised Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations are hereby issued. Branches and administrative offices of the SAFE shall, upon receipt of this Circular, promptly forward it to the central sub-branches and sub-branches of the SAFE, urban commercial banks, rural commercial banks, foreign-funded banks, and rural cooperative banks within their respective administrative areas. All domestic national banks shall, upon receipt of this Circular, promptly forward it to all their branches. Any problems encountered during the implementation of this Circular shall be promptly reported to the SAFE.
Telephone:
010-68402250, 68402448 and 68402450
Attachment: Administrative Provisions on the Centralized Operation of Cross-border Funds for Multinational Corporations
Chapter 1 General Provisions
Article 1 These Provisions are enacted to boost trade and investment facilitation, serve the real economy, and facilitate the centralized operation of cross-border funds for multinational corporations.
Article 2 For the purposes of these Provisions, the term "multinational corporation" (“MNC”) refers to a consortium composed of a parent company, its subsidiaries and other member companies or institutions that are connected by capital.
The term “pool header” refers to a domestic company having an independent legal personality that is authorized by an MNC to perform entity and business registration, data reporting, situation feedback and other responsibilities. If the pool header is a financial company, its engagement in cross-border fund transactions shall comply with the regulations of the industry regulatory authorities.
“Member companies” refer to all companies having an independent legal personality that directly or indirectly hold shares in each other within an MNC and are divided into domestic member companies and overseas member companies. A sister company that has no direct or indirect shareholding relationship with the pool header but is controlled by the same parent company can be identified as a member company.
Financial institutions (other than financial companies acting as the pool header), local-government financing platforms, and real estate companies are not allowed to participate in the centralized operation of cross-border funds for an MNC as either the pool header or a member company.
Article 3 The term "centralized operation of cross-border funds" as mentioned in these Provisions refers to the centralized operation and management of domestic and overseas funds such as the handling of the centralized management of foreign debt quotas and outbound lending quotas, centralized receipts and payments and settlement netting under current account items and other business operations.
Article 4 An MNC may select a qualified Chinese domestic bank (within the provincial-level region where the pool header resides, hereinafter the same) as the partner bank (hereinafter referred to as the “partner bank”) to provide service for its centralized operation of cross-border funds.
Chapter II Business Registration and Changes
Article 5 An MNC that meets the following requirements may, as needed for its business, select one domestic company as the pool header for the centralized operation and management of the funds of its domestic and overseas member companies, covering one or more of the following items of business: consolidation of foreign debt quotas, consolidation of outbound lending quotas, centralized receipts and payments under current account items, and settlement netting under current account items:
(1) it has real business needs;
(2) it has a sound management structure and internal control system for cross-border funds;
(3) it has established electronic systems for the corresponding internal management;
(4) its previous year’s balance of payments denominated in Renminbi and foreign currencies exceeded US$100 million (aggregate number of all domestic member companies participating in the centralized operation of cross-border funds);
(5) it has not committed a material foreign exchange violation in the past three years (or in the case of one existing for less than three years, has not committed a material foreign exchange violation since its establishment);
(6) if the pool header or any domestic member company is included in the list of companies for receipts and payments in foreign exchange for trade, the trade-in-goods classification of that company should be Class A; and
(7) other prudential regulatory requirements as set forth by the State Administration of Foreign Exchange (“SAFE”).
Article 6 A partner bank providing service for the centralized operation of cross-border funds for an MNC shall meet the following requirements:
1.
......