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China Published New Regulations on Foreign Debt Administration

8 May 2013
On 28 April 2013, the PRC State Administration of Foreign Exchange published the “Foreign Debt Registration Administrative Measures” and “Operation Guidance for Administration of Foreign Debt Registration” (collectively the “New Regulations”) which will be implemented as from 13 May 2013.
Currently, in relation to a normal foreign loan borrowed by an enterprise in the PRC (where the loan proceeds will be received by the borrower and the funds will be remitted abroad for repayment of principal and payment of interest), all the major procedures are subject to review and approval by local branch of the SAFE (State Administration of Foreign Exchange), such as:
- foreign debt registration and deregistration;
- opening and closing of foreign debt account;
- foreign loan drawdown registration;
- conversion of foreign loan from foreign exchange into RMB;
- foreign loan repayment and interest payment; and
- foreign loan repayment registration.
According to the New Regulations, for such a foreign loan, except for the foreign debt registration and deregistration, all the other procedures mentioned above are no longer subject to review and approval by the local SAFE but to be handled directly by the banks, while the banks are required to conduct the relevant review diligently. For example, for the purpose of conversion of foreign loan proceeds from foreign exchange into RMB, the relevant bank is required to conduct a due diligence investigation on the use of the RMB amount to be converted.


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Disclaimer
Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.

                                           

 

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