Service-related foreign exchange payment procedures are simplified. Domestic entities and domestic individuals benefit from procedure simplification for contracts below US$5,000 and an increased foreign exchange purchase limits to US$20,000.
The Circular drops the previous acquisition deposit requirement but adds a repatriation requirement where approval procedures are not completed within six months.
China is one step closer to the qualified domestic institutional investor (QDII) programme, allowing banks, fund management firms, insurers and securities institutions to convert Chinese clients' renminbi into foreign currency and invest it overseas.
China has revised and issued new accounting standards, bringing the country's financial reporting system for listed companies in line with international practices.
The Implementing Opinion issued jointly by the State Administration for Industry and Commerce, the Ministry of Commerce, the General Administration of Customs adn teh State Administration of Foreign Exchange clarifies issues such as organizational structure, incorporation form, timing and documentary requirements pertaining to approval applications, registration and capital contribution of foreign-invested enterprises, reinvestment requirements as well as approvals and registration of amendment. In particular, it elaborates on the basic rules in Article 218 of the Company Law on the applicability of laws to foreign-invested companies, and establishes the position that Company Law should govern foreign direct investment in China unless pre-empted by FIE laws. The Opinion also produces a list of FIC classification, including 13 FIEs formed as limited liability companies and 10 as foreign-invested companies limited by shares. The respective roles of board of directors, the shareholders' meeting, and the articles of association in corporate governance of various FIE structures are delineated.
The Tentative Measures allow PRC institutions and residents to invest in foreign financial products through PRC commercial banks, thus broadening their investment channels.
The Circular symbolizes further liberalization of the capital account foreign exchange purchase and remittance by PRC entities for making outbound foreign investments, following previous attempts in 2003 and 2005.
New restrictions are in place on share offering, price floor and private placements in particular for foreign strategic investors. A new three-stage application process is introduced.
Further procedure and restriction relief is given to foreign exchange control on the current account.
After a one-year suspension of new share sales, the Measures reopen the PRC's stock market with tightened listing requirements.