汇发[1999]397号
(Issued on 22 December 1999 by the State Administration of Foreign Exchange)
颁布日期：19991222 　实施日期：19991222 　颁布单位：国家外汇管理局

To each branch of the State Administration of Foreign Exchange, the Beijing and Chongqing foreign exchange administration offices of the State Administration of Foreign Exchange and the Dalian, Qingdao, Ningbo, Xiamen and Shenzhen branches of the State Administration of Foreign Exchange:

In September 1998, in response to the needs of the situation and irregularities in certain stages of capital account item operations, the State Administration of Foreign Exchange (SAFE) issued the Several Questions on Strengthening the Administration of Foreign Exchange for Capital Account Items Circular (document Hui Fa [1998] No.21). Paragraph Nine of Article 3 thereof provides that "If funds from share (equity) transfer by organizations in China or funds remaining after lawful liquidation of organizations in China require the purchase of foreign exchange in order to remit the same out of China, the purchase shall be subject to approval by the State Administration of Foreign Exchange." This provision played a very positive role in standardizing operations.

As the said business has basically been standardized, after study, we have made the following decision in order to further improve the environment for foreign investment, reduce the time spent on official documents and improve work efficiency:

1. The authority to examine and approve the purchase of foreign exchange in connection with equity assignment or liquidation of foreign investment enterprises is devolved to the SAFE branches of each province, autonomous region and municipality directly under the central government, the Beijing and Chongqing foreign exchange administration offices of SAFE and the Dalian, Qingdao, Ningbo, Xiamen and Shenzhen branches of SAFE (collectively SAFE Branches). Whenever a SAFE Branch has approved a purchase, it shall report the same on a case-by-case basis to the Capital Account Control Department of SAFE.

2. When the foreign party to a foreign investment enterprise assigns its equity to the Chinese party, and the Chinese party applies for purchase and payment of foreign exchange to pay the assignment price of the foreign party's equity, the Chinese party must submit the following materials to the SAFE branch of the place where it is located for examination and verification:

(1) a written application;

(2) its foreign exchange registration certificate;

(3) the equity assignment agreement;

(4) the document of the foreign economic relations and trade authority approving the change in the equity structure of the enterprise invested in;

(5) the business licence, approval certificate and approved, effective joint venture contract and articles of association of the enterprise after the change in equity;

(6) the most recent capital verification report and audit report or valid asset valuation report of the original foreign investment enterprise;

(7) statements of account for all of the Chinese party's foreign exchange accounts on the date of the application;

(8) if the equity assignment generated earnings for the foreign party, the Chinese party shall issue a tax receipt for the withholding tax withheld and paid by it; and

(9) other materials as requested, depending on the circumstances.

3. When a foreign investment enterprise terminates its business and the carries out liquidation and the enterprise applies for purchase and payment of foreign exchange to pay the foreign party's liquidation proceeds, it must submit the following materials to the SAFE branch of the place where it is located for examination and verification:

(1) a written application;

(2) its foreign exchange registration certificate;

(3) the official reply document of the foreign economic and trade authority concerning the liquidation and termination of business of the enterprise;

(4) the liquidation resolution of the liquidation committee;

(5) the capital verification report;

(6) the liquidation report issued by an accounting firm;

(7) the notices of opening of the existing foreign exchange accounts;

(8) statements of account for the foreign exchange accounts on the date of conclusion of the liquidation;

(9) the certificate of cancellation of tax registration; and

(10) other materials as requested, depending on the circumstances.

4. Paragraph Nine of Article 3 of document Hui Fa [1998] No.21 is repealed.

Hereby notified as such.