The circular main content includes simplifying the management of outbound direct investment capital remittance. The main difference between the total investment amount of the outbound direct investment project and the registered capital can be remitted back to China after it is registered with SAFE.
Before this change in policy, domestic enterprises were required to register outbound investment registers or withdrawals before they could remit back to China.
William Yonge, a partner at Morgan, Lewis & Bocklus, a major international law firm, told Asia Outbound that simplifying the management of outbound investment capital will make investing overseas drastically easier than it was in the past.
Simplifying the administration of offshore loans is another big change for Chinese outbound investors. The Circular relaxes the restrictions on funding sources offshore loans, permitting domestic companies to only use foreign exchange loans that come from domestic banks to grant offshore loans to companies they have invested offshore. Furthermore, the new rules abolish the approval requirements for the transaction, payment and remittance of foreign exchange.
bolishing the approval requirements will speed up transaction times and encourage Chinese companies to invest abroad since the administration is becoming simpler, Yonge said. eijing is taking significant steps in allowing its people to invest abroad.
The Circular also prescribes that domestic companies may make or receive offshore loan payments through a special account for offshore loans opened together with foreign exchange businesses, within a loan quota approved by SAFE after registration formalities have been completed.
The new rules also allow individuals to provide external security with corporate security. The Circular now allows individuals to provide external security for the financing granted by offshore lenders to offshore invested companies only if external security is also provided by domestic companies for the same financing reasons. External security can be provided in the form of pledges, mortgages, or guarantees. SAFE will not verify the terms of the individual security, such as the person qualifications, and the scope of that person assets.
Regarding registration, SAFE can make a note on the external security registration certificate for corporate external security that a domestic individual is provided an external security for the same debt. Another important thing that comes out of these rules is that when a domestic individual external security is enforced, the local SAFE will verify the relevant evidence.
