New SAFE Measures will Facilitate Cross-border Investments

New SAFE Measures will Facilitate Cross-border Investments
As one of the efforts to further improve the country’s business environment and open up its economy, State Administration of Foreign Exchange (SAFE) announced its latest measures to facilitate cross-border trade and investment and streamline SAFE administrations by issuing a Circular on Further Promotions to Facilitate Cross-border Trade and Investment (Huifa [2019] No 28), effective on October 25, 2019, and a Circular on Streamlining Foreign Exchange Accounts (Huifa [2019] No. 29) which is to be effective on February 1, 2020.
1、Foreign investment enterprises without investment business are allowed to use their foreign exchange registered capital to make equity investment
Previously only those foreign investment enterprises who have a business scope of “investment”, including foreign investment holding companies, foreign investment venture capital enterprises and foreign investment equity investment enterprises, are allowed to use their foreign currency registered capital to make equity investment in China based on actual investment need following the principles of authenticity and regulatory compliance.
Now any foreign investment enterprise, regardless it has an investment business scope, may utilize its foreign exchange registered capital to make a domestic equity investment, as long as
such investment is in line with the market access requirement under the Negative List; and
equity investment project is authentic and compliant.
2、Payment from foreign exchange receipts under capital account no longer requires prior verification of supporting documents
Previously, if a domestic institution intends to make payment using the foreign exchange receipts under capital account (including foreign exchange registered capital, foreign exchange debts and foreign exchange funds raised through overseas listing), it shall provide to relevant banks documents to prove the authenticity of purpose for each payment in advance.
Now, any qualified enterprise including foreign investment enterprises in pilot regions may make a payment from foreign exchange receipts under capital account in China without obligation to provide the abovementioned supporting documents for bank verification, as long as
use of fund is authentic and compliant; and
use of fund is in line with the permitted use[1].
3、Restriction that foreign investor’s deposit cannot be exchanged to RMB is removed
Any deposit remitted by a foreign investor from overseas or allocated within China now can be used for the foreign investor’s capital contribution to its invested enterprises or payment for considerations inside or outside China. Any fund in such deposit account is allowed to be exchanged to RMB for any payment.
4、Foreign exchange debt registration is further simplified
(1) All non-finance enterprises including foreign investment enterprises may apply for registration of foreign exchange debts with a quota of twice of their respective net assets. Within the registered amount of foreign exchange debts, they may borrow the foreign exchange debts at their discretionary schedule, without a need to register each borrowing, compared to the previous requirement.
(2) Non-bank borrowers may deregister foreign exchange debts registrations directly through banks without time limits any longer.
5、Restriction on quantity of foreign exchange accounts under capital account is removed.
The new SAFE measures have removed restriction on quantity of foreign exchange accounts under capital account. Now enterprises may apply to open multiple foreign exchange accounts pursuant to their actual needs and requirements of prudent supervision.
6、Foreign exchange accounts will be streamlined from February 1, 2020
Pursuant to the Circular on Streamlining Foreign Exchange Accounts (Huifa [2019] No. 29), starting from February 1, 2020, SAFE will streamline some foreign exchange accounts in order to reduce the types of accounts. It will involve around 20 types of foreign exchange accounts. To support the streamlining, SAFE issued an operation guide at the same time, detailing the practices of opening, entry and use of relevant foreign exchange accounts under capital account.
[1] Domestic institutions shall comply with the following provisions in using their foreign exchange receipts under the capital account and RMB funds obtained from foreign exchange settlement:
(1) Such receipts and funds shall not, directly or indirectly, be used for the expenditures beyond the business scope of domestic institutions or the expenditures prohibited by laws and regulations of the State;
(2) Unless otherwise provided, such receipts and funds shall not, directly or indirectly, be used for investment in securities or other investments than banks’ principal-secured products;
(3) Such receipts and funds shall not be used for the granting of loans to non-affiliated enterprises, with the exception that such granting is expressly permitted in the business license; and
(4) Such receipts and funds shall not be used for construction or purchase of real estate for purpose other than self-use (exception applies for real estate enterprises).
外商投资享有更多跨境投资外管便利
1、非投资性外商投资企业资本金可开展境内股权投资
国家外汇管理局《关于改革外商投资企业外汇资本金结汇管理方式的通知》（汇发【2015】19号）允许以投资为主要业务的外商投资企业（包括外商投资性公司、外商投资创业投资企业和外商投资股权投资企业），在其境内所投资项目真实、合规的前提下，按实际投资规模将外汇资本金结汇开展境内股权投资。但非投资性外商投资企业的外汇资本金无法结汇用于境内股权投资。
现在，在满足以下前提条件下，非投资性外商投资企业可以自己的外汇资本金开展境内股权投资：
不违反外商投资负面清单；
境内股权投资项目真实、合规。
2、资本金、外债收入境内支付无需事前逐笔提供证明材料
无论是《关于改革外商投资企业外汇资本金结汇管理方式的通知》（汇发【2015】19号）还是《关于改革和规范资本项目结汇管理政策的通知》（汇发【2016】16号），境内机构办理资本项目收入（包括外汇资本金、外债资金和境外上市调回资金等）支付时应提供与资金用途相关的真实性证明材料。
现在，允许试点地区符合条件的企业将资本金、外债和境外上市等资本项目收入用于境内支付时，无需事前向银行逐笔提供真实性证明材料，前提是：
资金使用真实合规
收入使用符合关于改革和规范资本项目结汇管理政策的通知》（汇发【2016】16号）的规定[1]
3、取消外国投资者保证金不得结汇的限制
外国投资者从境内汇入或从境内划入的保证金，在交易达成后可直接用于其境内合法出资、境内外支付对价等。保证金账户内的资金可以直接结汇用于支付。
4、外债登记更加简化
1、包括外商投资企业在内的所有非金融企业均可按其净资产2倍的外债额度办理外债登记，在其登记外债金额内可自行安排借入外债资金（无需逐笔登记）。
2、非银行债务人可直接通过银行办理外债注销登记，且无时间限定。
5、取消资本项目外汇账户开户数量限制
很多资本项目下外汇账户开户的数量限制均已取消，市场主体可以根据实际需要和审慎监管要求开立多个资本项目外汇账户。
6、外汇账户自2020年2月1日起精简
根据《关于精简外汇账户的通知》（汇发【2019】29号），自2020年2月1日起，国家外管局对部分外汇账户进行清理整合，进一步减少账户种类（此次清理整合工作涉及20类外汇账户）。与之相配套，国家外管局同时发布了《银行办理相关资本项目外汇业务操作指南》，对相关资本项目外汇账户开立、入账和使用等业务进行了细化。
[1] 境内机构的资本项目外汇收入及其结汇所得人民币资金的使用，应当遵守以下规定：
（一）不得直接或间接用于企业经营范围之外或国家法律法规禁止的支出；
（二）除另有明确规定外，不得直接或间接用于证券投资或除银行保本型产品之外的其他投资理财；
（三）不得用于向非关联企业发放贷款，经营范围明确许可的情形除外；
（四）不得用于建设、购买非自用房地产（房地产企业除外）。