Laws of the People's Republic of China

The State Administration of Foreign Exchange

Provisions for the Control of Band Accounts Opened Abroad by Enterprises with Foreign investment

March 1, 1989

Pursuant to the relevant stipulations of the "Rules for the Implementation of Foreign Exchange Control Relating to Enterprises with Overseas Chinese Capital, Foreign-capital Enterprises and Chinese-foreign Equity Joint Ventures", the following Provisions are enacted to tighten control over the foreign exchange accounts opened abroad by enterprises with foreign investment:

Article 1

An enterprise with foreign investment (hereinafter referred to as "enterprise") that wishes to open bank accounts abroad out of actual business and operational needs shall apply for approval at the State Administration of Foreign Exchange (SAFE) or one of its branch or sub-branch offices (hereafter referred to as "exchange control authorities") where the enterprises is located; it may open such accounts only after the application has been granted.

Article 2

As used in Article 1 , "actual business and operational needs" refer to one of the following cases:

1.

If an enterprise has regular receipts in small amounts abroad and needs to open bank accounts there to put these receipts together before repatriating them to China;

2.

If an enterprise has regular disbursements in small amounts abroad-in this case, the receipts entered in the accounts shall consist of remittances from China by the enterprise; or

3.

If an enterprise has to open bank accounts abroad out of special business requirements.

Article 3

In applying to the exchange control authorities for approval to open bank accounts abroad, an enterprise shall submit the following documents:

1.

an application affixed by the enterprise's official seal and signed by the legal representative of the enterprise or a person authorized by its board of directors, stating the reason for opening bank accounts abroad, the specific currency involved, the sum of money, the usage, the scope of receipts and disbursements, the using period, the bank with which the accounts are to be opened, and the place where the bank is located;

2.

a certificate issued by a public accountant registered in China confirming that the enterprise's capital has been fully paid up according to the pertinent provisions;

3.

the document of approval issued by the competent authorities if the enterprise has set up a representative office with resident personnel abroad; and

4.

the measures adopted by the enterprise to manage its bank accounts abroad.

Article 4

The enterprise shall open its accounts abroad with a bank in the country or region where its foreign exchange receipts and payments mainly occur. Priority shall be given to Chinese-owned banks, if there is any there; a foreign bank with good credit standing may also be chosen if there is special need for this.

Article 5

The enterprise shall maintain complete and effective control over its receipts and payments abroad and shall adopt effective managerial measures to guarantee the safety of its funds.

Article 6

The enterprise must use its own name in opening bank accounts abroad and is not allowed to transfer its funds to the accounts of other organizations or individuals.

Article 7

The exchange control authorities shall examine and determine the scope of receipts and disbursements to be covered by the enterprise's bank accounts abroad as well as the deposit ceilings and the using period of these accounts of the basis of the enterprise's application.

Article 8

The enterprise that opens bank accounts abroad with the approval of the exchange control authorities shall submit to the said authorities, within a month after the approval is given, a written statement certifying that the accounts have been opened; otherwise, the document of approval from the said authorities will become invalid automatically.

Article 9

Within 30 days after the expiry of the using period of its bank accounts abroad, the enterprise must submit to the exchange control authorities certificate confirming that these accounts have been cancelled, and must repatriate the balance to China, together with a statement of account from the opening bank; in case the enterprise needs to extend the using period of its accounts abroad, it must apply in writing to the exchange control authorities within 30 days before the expiry of the using period.

Article 10

The SAFE branch office that has approved an enterprise's application to open bank accounts abroad shall submit the relevant data to the SAFE for reference within 30 days of the approval.

Article 11

The enterprise shall submit photocopies of the opening bank's statements, together with a statement of fund and its application, to the exchange control authorities within 15 days after the end of each quarter.

Article 12

In accordance with the "Rules for the Implementation of Penalty of Offenses Against Exchange Control" and on the merit of each case, the exchange control authorities may impose penalties on an enterprise and/ or revoke its bank accounts abroad in one of the following cases:

1.

If the enterprise has exceeded the scope approved by the exchange control authorities in using its bank accounts abroad;

2.

If it has failed to submit on time the bank statements or other materials required by the exchange control authorities;

3.

If it has opened bank account abroad without authorization; or

4.

If it has violated these Provisions.

Article 13

The right to interpret these Provisions resides in the SAFE.

Article 14

These Provisions shall enter into force on March 1, 1989.