RMB Settlement in Foreign Direct Investment
January 2, 2012
Chapter I General Provisions
Article 1 For the purpose of expanding the scope of application of RMB in cross-border trade and investment and regulating the financial institutes in the banking industry (hereinafter referred to as banks) to handle RMB settlement in foreign direct investment, in accordance with the Law of the People’s Bank of China of the People’s Republic of China, the Administrative Measures for the RMB Bank Settlement Accounts (Decree of the People’s Bank of China [2003] No. 5) and related laws, administrative regulations and rules, the Measures shall hereby be formulated.
Article 2 Banks handling RMB settlement in foreign direct investment shall be subject to the Measures.
Article 3Any foreign enterprise, economic organization or individual (hereinafter referred to as foreign investor) investing within China in RMB should abide by laws and regulations of the People’s Republic of China on foreign direct investment.
Article 4 The People’s Bank of China shall, in accordance with the Measures, execute administration on RMB settlement in foreign direct investment.
Chapter II Business Process
Article 5Â Any foreign investor may in accordance with the Administrative Measures for RMB Bank Settlement Accounts and the Administrative Measures for RMB Bank Settlement Accounts for Foreign Institutes (Yin Fa [2010] No. 249) apply for the opening RMB bank settlement account for foreign institutes in handling RMB settlement in foreign direct investment. And for the early-stage RMB costs fund related to investment project and the RMB capital gained through distribution of profits, liquidation, reduction of capital, transfer of equity and recovery of investment ahead of time for reinvestment within China should in the principle of special account for special purpose be opened special deposit account for the early-stage RMB costs and the one for RMB reinvestment respectively, which shall not handle cash receipt and payment business.
Article 6 Banks should handle payment of the early-stage costs to the RMB bank settlement account within China after examining and reviewing such materials as payment command letter, capital purpose specification and capital utilization commitment letter. The rest early-stage costs should be transferred to the special deposit account for RMB capital fund opened according to Article 8 of the Measures or refunded after the foreign investment enterprise is established.
Article 7 The foreign investment enterprise (inclusive of the newly-established and merged and acquired)should within 10 working days upon receiving the business license apply to the branch of the People’s Bank of China where it is registered for handling the registration of enterprise information with the following materials.
（I）copies of certificate of approval for foreign investment enterprise;
（II）duplicate of the business license and organization institution code certification.
Foreign investment partnership shall not submit the materials as mentioned in （I）.
The branch of the People’s Bank of China where the foreign investment enterprise is registered should complete the formalities of enterprise information registration within 10 working days upon receiving the application materials.
Where the alterations of the name, operating period, contribution mode, partners, joint venture and cooperation mode and other basic information of the registered foreign investment enterprise, or material alterations of increase of capital, decrease of capital, equity transfer or replacement, merger or division arise, it should within 15 working days upon altering registration or filing in the industrial and commercial administration report and submit the aforesaid alterations to the branch of the People’s Bank of China where it is registered.
Article 8 Any foreign investment enterprise should in accordance with the administrative provisions for bank settlement accounts including the Administrative Measures for RMB Bank Settlement Accounts submit the business license and other materials to apply for the opening RMB bank settlement account. And the RMB registered capital remitted inward or RMB contribution by foreign investor should in the principle of special account for special purpose be opened special deposit account for RMB capital fund, which shall not handle cash receipt and payment business.
Where any foreign investor merges and acquires the domestic enterprise in RMB to establish the foreign investment enterprise, Chinese shareholders of the merged and acquired domestic enterprise should in accordance with the provisions for the administration over bank settlement accounts including the Administrative Measures for RMB Bank Settlement Accounts apply for opening the special deposit account for RMB merger and acquisition specially for the deposit of the RMB merger and acquisition capital remitted inward by foreign investor, which shall not handle cash receipt and payment business.
Where any foreign investor makes equivalent payment to Chinese shareholder of foreign-funded enterprise abroad for equity transfer in RMB, Chinese shareholder should in accordance with the provisions for the administration over bank settlement accounts including the Administrative Measures for RMB Bank Settlement Accounts apply for opening the special deposit account for RMB equity transfer specially for the deposit of the equivalent payment for RMB equity transfer remitted inward by foreign investor, which shall not handle cash receipt and payment business.
Article 9 Any foreign investor should submit the related materials approved or filed by the national departments concerned in handling inward remittance of foreign RMB investment capital. Banks should conduct careful examination and verification and may enter the cross-border RMB payment information management system for related information.
For foreign investment enterprise in the real estate handling the inward remittance of RMB capital fund for foreign direct investment, banks should also log on the website of the Ministry of Commerce to verify whether the enterprise has been filed in the Ministry of Commerce.
Article 10 Any foreign investment enterprise should in accordance with related provisions entrust an accounting firm to conduct capital verification and confirmation of the paid-in situation of the registered capital, contribution and RMB capital in equity paid by foreign investor. The accounting firm may issue the capital verification report after conducting the capital verification and confirmation on the bank of deposit.
The bank of deposit should actively coordinate with the accounting firm, carefully check related data, specify the signature of opinion, affix the special seal with legal proof effectiveness upon receiving the confirmation letter of the bank, and make a reply within 5 working days upon the receipt of the letter.
Article 11 The bank should in accordance with the related administrative provisions for foreign direct investment supervise foreign investment enterprise to use the RMB capital fund by law, review the capital payment handled through the special deposit account for RMB capital fund, and shall not handle the foreign payment of RMB capital for the special deposit account for RMB capital fund without completing the formalities of capital verification.
Article 12 Where any foreign investor remits the RMB profits abroad, the bank may directly handle it after examining and checking the resolutions related to profits disposition, tax certificate and other related materials of the foreign investment enterprise.
Article 13 Where any foreign investor remits the RMB capital gained through decrease of capital, equity transfer, liquidation and recovery of investment ahead of time abroad, the bank should handle the formalities of RMB capital remittance after examining and checking the approval or filing documents of the related national departments and tax certificate.
Article 14Â Where any foreign investor uses the RMB capital gained through distribution of RMB profits, recovery of investment ahead of time, liquidation, decrease of capital and equity transfer to reinvest or increase registered capital within China, it may deposit the RMB capital in the special account for RMB reinvestment and handle related settlement in accordance with the Measures. The bank should handle the foreign payment of RMB capital after examining and checking the approval or filing documents of the related national departments and tax certificate.
Article 15 Where the foreign investment company, the foreign investment venture capital investment enterprise, foreign-owned investment enterprise and foreign investment partnership with investment as main business conduct investment business in RMB within China by law, its investment enterprise should in accordance with the administrative provisions for bank settlement accounts including the Administrative Measures for RMB Bank Settlement Accounts apply for opening the special deposit account for RMB capital fund for RMB registered capital or contribution capital and to handle related capital settlement business, which shall not handle the cash receipt and payment business.
Article 16 Where any foreign investor uses RMB capital and foreign currency capital to make contributions simultaneously, the bank should in accordance with the Measures handle the formalities of RMB capital settlement and foreign exchange capital settlement according to related administrative provisions for foreign exchange. And the conversion exchange rate RMB and foreign currency is the central parity of RMB released by the People’s Bank of China on the day of registration and capital verification.
Article 17 The total scale of the foreign investment enterprise should be subject to aggregative calculation when conducting RMB lending and foreign exchange lending to foreign shareholders, affiliated enterprises in the group and foreign financial institutions.
Article 18 Any foreign investment enterprise should in accordance with Article 12 of the Administrative Measures for RMB Bank Settlement Accounts hold the RMB loan contract to apply for opening the general deposit account of RMB specially for the deposit of the RMB capital borrowed from abroad.
Article 19 The bank should review the registered capital of RMB of the foreign investment enterprise and authenticity and compliance of the purpose of RMB borrowing capital and supervise the foreign investment enterprise to utilize RMB capital by law. And in handling the settlement, the bank should in accordance with the provisions related to prudential supervision require the enterprise to submit such materials as payment command letter and capital purpose certification and conduct careful examination and verification.
Article 20 Where any foreign investment enterprise uses RMB to compensate for the principal and interests of the foreign RMB borrowing, it may hold the loan contract, payment command letter and tax certificate to directly handle it in the bank.
Chapter III Supervision and Administration
Article 21 The bank should carefully fulfill the duty of information submission to submit timely, accurately and completely to the cross-border RMB settlement management system the information of the RMB bank settlement account for foreign institutions opened according to the Measures by law, special deposit account for RMB capital fund, special deposit account for RMB merger and acquisition, special deposit account for RMB equity transfer and the general deposit account of RMB as well as the information of handling cross-border and domestic receipt and payment of RMB capital through the above-mentioned accounts.
Article 22 The bank should in accordance with the administrative provisions for bank settlement accounts including the Administrative Measures for RMB Bank Settlement Accounts, the Implementing Rules of the Administrative Measures for RMB Bank Settlement Accounts (Yin Fa [2005] No. 16) and the Administrative Measures for RMB Bank Settlement Accounts for Foreign Institutions handle the RMB bank settlement account business for such depositors as foreign investors, foreign investment enterprises, and Chinese shareholders.
Article 23 The bank and foreign investment enterprise should in accordance with the Measures for the Declaration of Balance of Payment Statistics and other related provisions to handle the declaration of the balance of payment in handling RMB settlement in foreign direct investment.
Article 24 The bank should in accordance with the Anti-money-laundering Law of the People’s Republic of China and related provisions of the People’s Bank of China practically perform the obligation of anti-money laundering and anti-terrorist financing and prevent the illegal criminal activities of utilizing RMB settlement in foreign direct investment to conduct money laundering and terrorist financing in handling the business of RMB settlement in foreign direct investment, and also collect the anti-money laundering and anti-terrorist financing information where the foreign investor is domiciled, know about the natural person actually controlling investment and the true beneficiary of investment, evaluate the risks of money laundering and terrorist financing of investment and adopt proper measures of risk management.
Article 25 The People’s Bank of China and related departments shall establish the necessary information-sharing and management mechanism, intensify the strength of after-event inspection and effectively supervise and manage the RMB settlement in foreign direct investment.
Article 26 The People’s Bank of China, together with related departments, shall conduct the on-site inspection and offsite surveillance in the RMB settlement in foreign direct investment, the extending inspection over capital purpose on banks and foreign investment enterprises and urge banks to practically fulfill such duties as the verification of authenticity of transactions, information submission and anti-money laundering.
Article 27 Where the bank and foreign investment enterprise violate related provisions of the Measures, the People’s Bank of China together with related departments may circulate a notice of criticism or impose penalty on it; if the situation is serious, the bank and foreign investment enterprise shall be suspended or banned to continuously carry out cross-border RMB business.
Article 28 Where the bank violates the provisions related to prudential supervision in handling RMB settlement in foreign direct investment, the departments concerned shall make punishment on it by law; where it violates the administrative provisions for RMB bank settlement accounts, anti-money laundering and anti-terrorist financing, the People’s Bank of China shall be responsible for punish it by law.
Chapter IV Supplementary Provisions
Article 29 The People’s Bank of China shall be responsible to interpret the Measures.
Article 30 The Measures shall take effect as of the day of promulgation. And the Measures shall prevail in case of any conflict with the previous provisions concerned.
People’s Bank of China  www.pbc.gov.cn
No tag for this post. Related Posts:Arrangement on Mutual Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of Mainland And Hong Kong SAR
August 22, 2010
The Supreme People’s Court and HK SAR Government hereby make the following arrangement on recognition and enforcement of judgments in civil and commercial matters pursuant to choice of court agreements between parties concerned through consultation according to Article 95 of the Basic Law of Hong Kong Special Administrative Region of the People’s Republic of China:
Article 1 Final judgment, defined with payment amount and enforcement power, made between mainland court and HK SAR court in civil and commercial case with written jurisdiction agreement, the parties concerned shall apply to mainland people’s court or HK SAR court for recognition and enforcement based on this arrangement.
Article 2 “Final judgment with enforcement power” in this arrangement:
(1) On the mainland, it refers to:
1. Judgment of the supreme people’s court;
2. The second instance judgment and judgment made by the upper level people’s court according to judgment supervision procedure is effective, when judgment of first instance is not allowed to appeal by people’s high court, intermediate people’s court and basic people’s court (as appendix) that’s authorized to be in charge of foreign related, HK, Macao and Taiwan related civil and commercial matters of the first instance, or when the appeal is out of prescribed time limit.
(2) In HK SAR, it refers to effective judgment made by court of final appeal, court of the appeal of the high court, court of the first instance and district court.
Judgment in this arrangement refers to judgment paper, ruling paper, mediation agreement and payment order on the mainland; refers to judgment paper, order and evaluation certificate of legal expense in HK SAR.
After the party applies to HK SAR for recognition and enforcement of the judgment, if people’s court of the mainland shall legally review the case, such case should be raised by upper level people’s court of the court that makes effective judgment.
Article 3 “Choice of court agreement in written” in this arrangement refers to a written agreement defining the exclusive jurisdiction of either the mainland people’s court or HK SAR in order to revolve dispute with particular legal relation occurred or likely to occur by the parties concerned since effective date of this arrangement.
“Particular legal relation” of this article refers to contract of civil and commercial matters between parties, excluding contract of employment and contract involving natural person with individual consumption, family affair or other non-commercial purposes.
“Written form” in this arrangement refers to contract, letter and electronic data (including telegraph, telex, facsimile, electronic data exchange and email) and other forms that can physically present the carried content and can be used in the future.
Written choice of court agreement can be constituted of one or more copies.
The choice of court agreement exists independently and any change, relief, termination or invalidation of the contract won’t influence effect of the choice of court agreement, except when it’s otherwise prescribed in the contract.
Article 4 Application for recognition and enforcement of civil and commercial judgment prescribed in the arrangement, should be submitted to intermediate people’s courts of residence, living place or place of property of the applicant on the mainland, or submitted to high court of HK SAR.
Article 5 If residence, living place or place of property of the applicant are under jurisdiction of different intermediate people’s courts, the applicant shall choose one of the people’s court to apply for recognition and enforcement rather than applying it to two or more people’s courts.
If residence, living place or place of property of the applicant is both on the mainland and in HK SAR, the applicant can submit application to courts at these two places at the same time. Judgment enforcement amount of courts at both places shouldn’t exceed fixed amount of the judgment itself. Court that has partly or completely executed the judgment should provide status of executed judgment upon requirement of the other court.
Article 6 Applicant shall submit the following document for application of judgment recognition and enforcement:
(1) Application for recognition and enforcement;
(2) Copy of judgment paper with seal of court that makes the final judgment;
(3) Certificate issued by court of final judgment to prove such judgment is the final judgment referred to in Article 2 of this arrangement and can be executed at the place of judgment;
(4) Identification evidence:
1. If applicant is natural person, he shall submit ID card or notarized copy of ID card;
2. If applicant is legal person or other form of organization, they shall submit notarized copy of registration certificate of legal person or other form of organization;
3. If applicant is a foreign legal person or other form of organization, they shall submit related notarization and authentication materials.
If there’s no Chinese version of submitted document to the mainland people’s court, the applicant shall submit a correct Chinese translation.
Court at the enforcement place doesn’t need to require particular notarization for certificate issued by court prescribed in this article.
Article 7 The following items should be included in the application for recognition and enforcement:
(1) The name and living place of the party, who is natural person; name and location of legal person or other organization, and name, position and residence of the legal representative or principal;
(2) Reason of application and request content, place of property and property status of the applicant;
(3) Whether the judgment is applied in court of original place and the enforcement status.
Article 8 Applicant shall comply with law of the enforcement place while applying for recognition and enforcement of judgment of court on the mainland or in HK SAR, except for otherwise prescribed.
Application period for recognition and enforcement by applicant is two years.
During the above period, if judgment on the mainland is applied to be executed in HK SAR, it will calculate from the last day of performance period prescribed by the judgment; if the judgment requires performance in different period, it will calculate from the last day of each performance period; if the judgment doesn’t prescribe performance period, it will calculate since effective day of the judgment; if judgment in HK SAR is applied to be executed on the mainland, it will calculate from the day of judgment mandatory enforcement, which is put in the judgment; if the judgment has other prescription during performance period, it will calculate since maturity of performance period.
Article 9 For application for judgment recognition and enforcement, if debtor of the first trial provides evidence that proves one of the following situations and is proved by the court that handles the application, the judgment will not be recognized or executed:
(1) The jurisdiction agreement is invalid according to local law at the original court chosen by the parties concerned, except for jurisdiction agreement that is judged by the chosen court as being valid;
(2) The judgment is performed completely;
(3) Court of the execution place enjoys exclusive jurisdiction based on local law;
(4) The party that loses a lawsuit and doesn’t appear in court has no legal summon or hasn’t acquired legal replying time though with legal summon according to law at the original court, except for cases that original court announce service based on law or related regulation;
(5) Judgment is acquired by cheating;
(6) Judgment of the same lawsuit by court at enforcement place, or judgment of the same lawsuit request by courts abroad, or arbitration made by related arbitration institute have been recognized or executed by court at the enforcement place.
If the people’s court of the mainland believes enforcement of the judgment made by HK SAR impairs social public interests, or court of HK SAR believes enforcement of judgment made by court on the mainland violates public policy of HK SAR, the recognition and enforcement are not permitted.
Article 10 For judgment made by court of HK SAR, if the debtor confirmed by judgment has lodged suit or the procedure is still underway, the people’s court of the mainland, after checking and verification, can pause recognition and enforcement of the procedure. If all or part of the original judgment is maintained after appealing, the reorganization and enforcement procedure can be recovered; if the original judgment is overthrown, the recognition and enforcement procedure can be ceased.
If local people’s court of the mainland has arraigned adjudication of the made judgment according to judgment supervision procedure, or the Supreme Court has arraigned another adjudication, after being checked by the court of HK SAR, the recognition and enforcement procedure can be paused. If the second judgment maintains all or part of original judgment, the recognition and enforcement can be recovered; if the second judgment has changed overall original judgment, the recognition and enforcement procedure should be ceased.
Article 11 The effect of judgment that’s recognized according to this arrangement should be equal to judgment of local court.
Article 12 If the party doesn’t agree to the judgment of whether it’s recognizable or executable, he can apply to the upper level people’s court for review on the mainland, or to lodge suit based on law and regulation in HK SAR.
Article 13 The court won’t handle lawsuit, lodged by the party with the same fact, while the court is handling the application of recognizing and executing judgment of the party.
The court won’t handle judgment that’s recognized or executed if the party lodges lawsuit with the same fact.
The applicant can’t submit application for recognition or enforcement again based on judgment that should not be recognized or executed in Article 9 of this arrangement, but can lodge suit to local court with the same case fact according to law of executing place.
Article 14 Before court handles application for recognizing and executing judgment, they can adopt protective or compulsory measures for applicant property based on regulations of property preservation or assets transferring prohibition of local law and according to application of the applicant.
Article 15 If the party applies to related court for judgment enforcement, they should pay execution fee or court expense based on law and regulation on lawsuit charge of execution place.
Article 16 The bidding scope recognized and executed by courts of the mainland and HK SAR includes but not limited to fixed amount confirmed in judgment, but also interests required by the judgment, lawyer fee and legal cost ratified by the court, excluding tax and fine.
Legal cost in HK SAR refers to lawsuit fee prescribed or ordered amount in evaluation certificate of lawsuit fee by the judge or judicial executive officer.
Article 17 This arrangement is applicable to judgment made by courts of the mainland and HK SAR since the effective day (including the effective day) of this arrangement.
Article 18 If any problem occurs during implementation of this arrangement or modification is necessary, the Supreme People’s Court and government of HK SAR shall resolve through consultation.
Appendix:
Name List of Basic People’s Court Authorized to Handle Foreign-Related, HK, Macao and Taiwan Civil and Commercial Case of the First Instance (omitted)
Source: http://www.fdi.gov.cn
Tags: judgement, Hong Kong, LawRelated Posts:
Difference between Trademark Registration and Company Registration
August 14, 2010
Separate laws and systems regulate the registration of company names, business names and trademarks in Hong Kong. A company name registration at the Companies Registry or a business name registration at the Business Registration Office (Inland Revenue Department) is not the same as a trademark registration at the Trade Marks Registry. A business or company name registration is not an indication of trademark rights.
There have been recent reports of registered trademarks or well-known trademarks being registered without authorization as company names with the Companies Registry (often with a minor variation of the name). We understand that such company name registrations are then used outside Hong Kong (principally in the Mainland) as a cover for promoting or dealing in infringing trademark goods.
A Hong Kong business registration certificate or a company registration certificate does not by itself indicate that the business or company has rights to use its name or a trademark in promoting or dealing in goods and services.
Tags: Hong Kong, Trademark, registered trademarksRelated Posts:
Undisclosed Commercial Information – Trade Secrets
August 14, 2010
Trade secrets and undisclosed commercial information are confidential information in a commercial setting, such as formulaes, methods, technologies, designs, product specifications, business plans and client lists, that have commercial value. In Hong Kong, trade secrets and undisclosed commercial information are protected by common law of confidence. An obligation of confidence will arise whenever the information is communicated to or acquired by a person who knows or ought as a reasonable person to know that the other person wishes to keep that information confidential. An industry or trade custom or practice may also impose an obligation of confidence. The release of trade secrets and undisclosed commercial information would be detrimental to the owner or advantageous to his or her competitors or others. The remedies available for breach of confidence include injunctions, damages, account of profits and delivery up of materials containing confidential information. To enhance the protection of trade secrets and undisclosed commercial information, you should sign non disclosure agreement with everyone who has knowledge of your secrets.
Protection of trade secrets and undisclosed commercial information is of particular importance when the IP is not registrable or you find the period of patent protection (20 years) not long enough. Whereas patents enjoy a limited term of protection, trade secrets and undisclosed commercial information protection last until the information becomes public knowledge. The formulae for Coca Cola is a good example of long-kept trade secrets and undisclosed commercial information. However, trade secrets and undisclosed commercial information do not give you exclusive rights. Your competitors may independently invent an identical product or process or come up with the same ideas which they can exploit freely.
How do trade secrets and undisclosed commercial information differ from patents or copyright?
The application for a patent requires disclosure of details of invention. In other words, details of a patented invention cannot be kept confidential as trade secrets and undisclosed commercial information. As said above, patents enjoy a limited term of protection but trade secrets and undisclosed commercial information last for as long as the information remains confidential.
Copyright only protects the form in which ideas and information are expressed, but not ideas and information per se. The law of confidence protects the substance of ideas and information, no matter how they are expressed. There are statutory permitted acts for works protected by copyright but not works protected by confidence.
The above only set out some basic principles of trade secrets and undisclosed commercial information. You may seek independent professional advice for protection of your trade secrets and undisclosed commercial information from Ming Dynasty (HK) Limited.
Related Posts:
Pilot Operations for Individual Foreign Exchange Settlement and Sales Business via E-banking
June 20, 2010
The SAFE Gives a Green Light for Three Commercial Banks to Engage in Pilot Operations for Individual Foreign Exchange Settlement and Sales Business via E-banking
For the purpose of further encouraging business innovation in banks as well as facilitating individual foreign exchange settlement and sales, the State Administration of Foreign Exchange (SAFE) recently approved that three commercial banks, i.e., the Bank of China, the China Merchants Bank, and the Industrial and Commercial Bank of China, will conduct pilot operations for individual foreign exchange settlement and sales business through e-banking.
The Measures for Individual Foreign Exchange Administration and the detailed rules which took effect in February 2007 allow individuals to carry out foreign exchange purchase and settlement businesses within their yearly quota at bank counters by presenting their valid identity documents. Such pilot operations for individual foreign exchange settlement and sales business via e-banking will provide individuals with more efficient and convenient channels to handle the relevant businesses. Domestic individuals are allowed to conduct non-operational foreign exchange settlement and sales business under the current account within their yearly quota via e-banking or via self-service terminals after opening an account at the pilot banks by presenting their valid resident identification cards of the Peoples Republic of China. This will increase the banks efficiency in handling business and help ease pressures at bank counters and reduce bank costs.
By using the data information-sharing mechanism that connects the e-banking system with the Management Information System for Foreign Exchange Settlement and Sales by Individuals, relevant information about foreign exchange purchases and settlement by domestic individuals in the e-banking system will be transmitted automatically in a real-time manner to the Management Information System for Foreign Exchange Settlement and Sales by Individuals, and will be incorporated into the management of the yearly quota of foreign exchange settlement and sales by individuals. The SAFE will closely track and monitor the status of the pilot operations, sum up the experiences from the pilot operations, guard against inflows and outflows of abnormal foreign exchange funds via individual e-banking channels, and continue to maintain a standardized and orderly foreign exchange market.
Source: SAFE
http://www.safe.gov.cn
Tags: safe, China, foreign exchangeRelated Posts:
