Circular of the State Administration of Foreign Exchange on Amending "Circular on Issues Concerning Outward Remittance of Profit, Stock Dividends and Stock Bonuses Processed by Designated Foreign Exchange Banks"

HuiFa [1999] No.308
September 14, 1999

All branch of State Administration of Foreign Exchange,foreign exchange department of Beijing and Chongqing, sub-branch of Dalian, Qingdao, Ningbo, Xiamen, Shenzhen, all the China-invested designated foreign exchange banks:

To further improve foreign exchange administration of the outward remittance of profits, stock dividends or stock bonuses by enterprises with foreign investment or by enterprises issuing stock abroad, the "Circular on Issues Concerning Outward Remittance of Profits, Stock dividends and Stock Bonuses Processed by Designated Foreign Exchange Banks" (hereinafter referred to as "the Circular")(Chinese Version) is amended as follows.

1. Article 5 of the Circular is revised to read: "No enterprises with foreign investment whose registered capital has not been fully paid in as provided by the articles of contract is allowed to remit foreign exchange profits or stock bonuses abroad". If the delay in fully paying in registered capital as provided by the articles of contract is caused by special reasons, approval of the former inspection and approval institutions will be requested. Profits and stock bonuses distributed in accordance with the proportion of paid-in registered capital can be remitted abroad based on the approval documents issued by the former inspection and approval institutions and other documents specified in the Circular.

2. The following provision is inserted after Article 5 of the Circular: When a designated foreign exchange bank performs the procedures for outward remittance of foreign exchange stock dividends or bonuses for an enterprise issuing stock abroad, it must determine whether foreign exchange funds raised by the issuance of stock abroad have been repatriated by the enterprise issuing the stock abroad in accordance with the provisions of the Circular. If an enterprise issuing stock abroad has bona fide stock dividends or bonuses to remit but has failed to repatriate foreign exchange funds raised abroad by the issuance of stock, the designated foreign exchange bank shall first carry out for the enterprise the procedures for outward remittance of stock dividends or bonuses, then report the circumstances in timely fashion to SAFE, which will impose a penalty on the enterprise, in accordance with Article 39 of Regulations on Administration of Foreign Exchange, for unauthorized delay in repatriation of receipts from issuance of stock abroad.

3. This Circular takes effect on October 1, 1999.

On receipt of this Circular, SAFE branches are requested to transmit it expeditiously to their sub-branches, to financial institutions (including foreign-funded financial institutions), and to relevant organizations, and Chinese-funded designated foreign exchange banks are requested to transmit it to
their branches. If problems arise during implementation, it is requested that they be reported to SAFE in timely fashion.