The central bank and the State Administration of Foreign Exchange: Funds raised by domestic enterprises through overseas listings should be repatriated to the domestic market in a timely manner.

Recently, the People's Bank of China and the State Administration of Foreign Exchange issued a public consultation on the management of funds for domestic enterprises listed overseas (draft for soliciting opinions). The opinions propose to unify the management policy of domestic and foreign currencies. Funds raised from overseas listings, reduction of holdings, or transfer of shares can be repatriated in foreign currency or Chinese yuan, and the related funds can be remitted in and out through capital project settlement accounts. Funds repatriated in Chinese yuan can also be used in domestic enterprise Chinese yuan bank settlement accounts. Dividends from domestic shareholders of entities listed on the H-share "full circulation" can be distributed in China in Chinese yuan. Funds raised from overseas listings can be repatriated in foreign currency and used independently. Listing entities can choose their own foreign exchange risk management methods and conduct spot exchange and hedging transactions through banks or securities dealers. Below is the original text: Notice of the People's Bank of China and the State Administration of Foreign Exchange on Issues Concerning the Management of Funds for Domestic Enterprises Listed Overseas (Draft for Soliciting Opinions) People's Bank of China provincial branches, autonomous regions, municipalities directly under the Central Government, and cities with separate plans; State Administration of Foreign Exchange provincial branches, autonomous regions, municipalities directly under the Central Government, and cities with separate plans; China Development Bank, policy banks, state-owned commercial banks, Postal Savings Bank of China, joint-stock commercial banks: In order to deepen the reform of capital project management, solidly promote the high-quality development of financial services for the real economy, and improve the convenience of cross-border financing for domestic enterprises, in accordance with the Law of the People's Republic of China on the People's Bank of China and the Regulations on Foreign Exchange Administration of the People's Republic of China, the relevant issues regarding the management of funds for domestic enterprises directly listed overseas are hereby notified as follows: 1. For shareholding limited companies registered in China (hereinafter referred to as "domestic enterprises") that have been filed with the China Securities Regulatory Commission (hereinafter referred to as the "CSRC") and have directly issued listings overseas or issued overseas depositary receipts (hereinafter collectively referred to as "overseas listings"), these regulations apply. 2. The People's Bank of China, the State Administration of Foreign Exchange and its branches supervise, manage and inspect matters involving business registration, account opening and usage, cross-border payments and fund remittances for domestic enterprises listed overseas. 3. For domestic enterprises listed overseas, within 30 working days from the date of completion of the overseas listing issuance or oversubscription, they should submit the following materials to the bank within the jurisdiction of their provincial branch of the People's Bank of China or city with separate plans (hereinafter referred to as the "local bank") to carry out registration for overseas listing: (1) Written application, accompanied by the "Overseas Listing Registration Form"; (2) Materials related to the overseas listing of domestic enterprises as required by the CSRC (excluding those that do not require prior approval according to the CSRC); (3) Announcement documents for the completion of the overseas issuance or oversubscription. After the bank verifies the above materials to be accurate, the domestic enterprises will be registered in the capital project module of the State Administration of Foreign Exchange's digital SAFE platform bank version (hereinafter referred to as the "system"), and a business registration certificate will be printed, stamped with the bank's business seal, and handed over to the domestic enterprise. 4. After changes occur in domestic enterprises listed overseas, they should submit a written application, the latest completed "Overseas Listing Registration Form," and relevant certification materials for the changes, and relevant filing or approval documents from the competent authorities on the changes (if any), to the local bank to carry out registration for the changes in overseas listing: (1) Changes in the name of the domestic enterprise listed overseas, registered address, information of domestic shareholders holding circulating shares, etc.; (2) Completion of overseas share cancellation, conversion of convertible bonds into shares, capital reserve, surplus reserve, undistributed profits leading to capital changes; (3) Increase, reduction, transfer, or acquisition of domestic shareholders, completion of the H-share "full circulation" after domestic shareholders holding domestic shares before the overseas listing, and newly issued domestic shares or shares held by foreign shareholders that are not listed in the overseas market are filed with the CSRC; (4) Issuance of new shares (including oversubscription, issuance of securities to purchase assets to specific domestic entities), among others. For the fourth and fifth items, applications for changes in overseas listing should be made within 30 working days from the completion of the changes. For the first to third items, changes can be processed together when applying for changes in the fourth and fifth items. 5. Domestic enterprises repurchasing their overseas shares can use overseas funds and domestic funds that comply with relevant regulations. If domestic enterprises use and remit domestic funds, they should submit a written application for repurchase and attach materials such as the "Overseas Listing Registration Form" and proof of the authenticity of repurchase transactions to the local foreign exchange bureau (hereinafter referred to as the local foreign exchange bureau) within 20 working days before the planned repurchase. After the materials are verified by the local foreign exchange bureau, the registration for repurchase adjustments will be conducted in the system for the domestic enterprises, and a business registration certificate will be printed, stamped with the special administrative seal, and handed over to the domestic enterprises. The domestic enterprises can handle related fund remittances at the bank with the business registration certificate. If there is any remaining fund used for repurchase abroad or if the repurchase is not completed, it must not change the purpose and should be remitted back to the domestic country promptly. 6. Domestic enterprises (excluding banks) should handle fund remittances related to overseas listings through capital project-settlement accounts or domestic Chinese yuan bank settlement accounts. If a new capital project-settlement account is required for overseas listing operations, it should be processed with the overseas listing business registration certificate. 7. Funds raised by domestic enterprises listed overseas should generally be repatriated to the domestic country in a timely manner. If funds are retained overseas for overseas direct investment, overseas securities investments, overseas loans, etc., approval or filing documents from the competent authorities should be obtained before the completion of the overseas listing issuance or oversubscription and should comply with relevant regulations on cross-border funds management. For funds raised in Chinese yuan, they should comply with the requirements of the "Notice of the People's Bank of China on Further Improving Policies on Renminbi Cross-border Business to Promote Trade and Investment Facilitation" (Yin Fa [2018] No. 3). Funds raised from overseas listings by domestic enterprises should be repatriated to capital project-settlement accounts for storage and use if in foreign currency and can be exchanged independently. If repatriated in Chinese yuan, they can be remitted to capital project-settlement accounts or domestic Chinese yuan bank settlement accounts for storage and use.The use of funds raised overseas for listing should be consistent with the relevant content listed in the prospectus, company bond offering documents, shareholder circulars, board or shareholder resolutions, and other publicly disclosed documents (hereinafter referred to as "public disclosure documents"). Eight, domestic enterprises issuing convertible bonds or non-participating preferred shares overseas should handle foreign debt registration, account opening, and exchange according to foreign debt management regulations. If the convertible bonds are converted into shares, the company should handle foreign debt change or cancellation registration and overseas listing change registration in accordance with regulations. Nine, if a domestic enterprise is delisted from overseas securities markets, it should promptly submit written applications and delisting announcement and other proof of authenticity documents to the local bank for overseas listing deregistration. Ten, after a domestic enterprise is listed overseas, if domestic shareholders reduce their overseas listed shares in accordance with relevant regulations, they should within 30 working days after the reduction, submit the following materials to the bank where the domestic shareholders are located for registration: (1) Written application of domestic shareholders, accompanied by the "Overseas Shareholding Change Registration Form". (2) Resolutions of the board of directors or shareholders' meeting or other relevant corporate authorities regarding the reduction (if any). (3) Domestic shareholders participating in H-share "full circulation" should provide filing materials with China Securities Regulatory Commission for participating in H-share "full circulation" business, as well as relevant proof of the conversion from domestic non-overseas listed shares to overseas listed shares. (4) If approval is required from the financial department, state-owned asset management department, or other relevant departments, relevant approval documents should be provided. After the bank verifies the above materials, the bank will register the domestic shareholders in the system, print the business registration certificate via the system, seal it with the bank's business stamp, and hand it over to the domestic shareholders. Eleven, if domestic shareholders increase their holdings of overseas shares of domestic enterprises in accordance with relevant regulations or with the approval of relevant departments (or filing, etc.), they should within 20 working days before the proposed increase, submit the following materials to the local foreign exchange bureau for registration: (1) Written application of domestic shareholders, accompanied by the "Overseas Shareholding Change Registration Form". (2) Approval or filing documents from relevant departments if required. (3) Resolutions of the board of directors or shareholders' meeting or other relevant corporate authorities regarding the increase (if any). (4) Additional materials requested if the above materials are inconsistent or do not explain the authenticity of the transaction. After the local foreign exchange bureau verifies the materials, the domestic shareholders will be registered in the system and print the business registration certificate, seal it with the administrative licensing special seal, and hand it over to the domestic shareholders. Domestic shareholders, if there is remaining funds or the transaction is not completed, they are not allowed to change the purpose of the funds and should promptly repatriate them back to domestic accounts. Twelve, after a domestic enterprise is listed overseas, the funds related to business activities such as increasing or decreasing holdings by domestic shareholders should be handled through resident overseas securities and derivatives accounts or domestic RMB bank settlement accounts. If a new resident overseas securities and derivatives account is required for increasing or decreasing holdings business, it should be processed with the business registration certificate. Thirteen, funds obtained by domestic shareholders from reducing or transferring overseas shares of domestic enterprises should be repatriated to the domestic accounts promptly, it can be in RMB or foreign currency. If repatriated in foreign currency, it should be returned to the resident overseas securities and derivatives account for deposit and use. If repatriated in RMB, it can be returned to the resident overseas securities and derivatives account or domestic RMB bank settlement account for deposit and use. Fourteen, for the needs of overseas listing related business of domestic enterprises and their domestic shareholders, a special account can be opened overseas, specifically for handling overseas listing business. Fifteen, for immediate spot foreign exchange transactions and foreign exchange derivatives transactions related to overseas listing by domestic enterprises and their domestic shareholders, it should be processed through financial institutions with foreign exchange trading qualifications, and follow the principles of actual transaction and hedging. Sixteen, if the state-owned shareholders of domestically listed enterprises are required to submit the income from reducing the overseas listed shares of the domestic enterprises to the national social security fund according to relevant regulations, it should be handled by the domestic enterprises. The domestic enterprise should provide a statement of the situation of the income from reducing that is required to be paid to the social security fund by state-owned shareholders (including explanation of the calculated income from reduction and the amount of funds to be paid or intended to be paid), overseas listing business registration certificates, etc., then transfer the related funds directly from their capital project-settlement account or domestic RMB bank settlement account to the corresponding account established by the Ministry of Finance in a domestic bank. Seventeen, expenses related to overseas listing paid by domestic enterprises to overseas regulatory authorities, exchanges, underwriters, law firms, accounting firms, etc., should generally be deducted from the funds raised overseas for listing. If payment needs to be made from domestic accounts, the following materials should be provided to the bank according to relevant regulations: (1) Overseas listing business registration certificate; (2) Overseas listing expense payment list and related proof of payment of overseas amounts (including foreign exchange purchase payment) and corresponding items; (3) Related institutions in foreign countries should pay taxes to the domestic tax authorities, and therefore, they need to provide relevant tax documents such as tax deductions for overseas enterprises or individuals. Eighteen, fund transfers related to H-share "full circulation" business should be conducted through the relevant accounts of China Securities Depository and Clearing Corporation Limited (hereinafter referred to as "China Clearing"). China Clearing should open a special foreign exchange account for H-share "full circulation" business domestically (account code 2417), and the Hong Kong subsidiary of China Clearing can open a special overseas foreign exchange account for H-share "full circulation" business, used for fund transfers related to H-share "full circulation" business. Listed companies participating in H-share "full circulation" should distribute dividends to domestic shareholders in RMB through China Clearing. Nineteen, the domestic enterprises, domestic shareholders, relevant domestic financial institutions, and China Clearing mentioned in this document should handle international balance of payments statistics reporting and submission of related account and foreign exchange settlement information in a timely manner in accordance with the "Regulations on International Balance of Payments Statistics Reporting" (promulgated by Order No. 642 of the State Council of the People's Republic of China), "Regulations on Data Collection Standards for Foreign Exchange Business of Financial Institutions (Version 1.3)" (issued by Huifu [2022] No. 13), "Measures for the Administration of Cross-border RMB Payment and Receipt Information Management System" (issued by Yinfu [2017] No. 126), and other related regulations.Enterprises participating in H shares "full circulation", domestic securities companies shall timely report the detailed foreign exchange payment information, business number and other funds registration information to China Securities Depository and Clearing Corporation (ChinaClear) or the designated bank for H shares "full circulation" special foreign exchange account. ChinaClear shall, with the assistance of the designated bank, complete the declaration of the concentrated payment and receipt data and reconstruction data for the foreign exchange funds related to H shares "full circulation".20. Relevant financial institutions should strictly follow the requirements of this notice, and conduct authenticity and compliance audits in business registration, account opening and usage, fund remittance, deduction of overseas listing expenses, etc. They should effectively fulfill anti-money laundering and anti-terrorist financing obligations, and should keep all relevant applications and registration materials for inspection. 21. All relevant applications and registration materials required to be submitted in this notice must provide a legally binding Chinese text. If there are multiple texts in Chinese and other languages, the Chinese text with legal effectiveness shall prevail. 22. In case of violations by domestic enterprises, domestic shareholders, and relevant domestic financial institutions against this notice, the People's Bank of China, the State Administration of Foreign Exchange and its branches may take regulatory measures such as ordering corrections, regulatory conversations, issuing warning letters, and impose administrative penalties in accordance with the Law of the People's Republic of China on the People's Bank of China and the Regulations of the People's Republic of China on Foreign Exchange Administration. 23. Matters related to the management of funds for domestic financial institutions' overseas listings should be handled in accordance with this notice. There are other regulations for the return remittance of funds raised by banks and insurance institutions listed overseas. 24. Separate regulations apply to the management of funds related to overseas indirect listings of domestic enterprises. 25. This notice is interpreted by the People's Bank of China and the State Administration of Foreign Exchange. 26. This notice shall come into effect from xx xx, xxxx. The Notice of the State Administration of Foreign Exchange on Issues Related to Foreign Exchange Management of Overseas Listings (Huifa [2014] No. 54), and the Reply of the State Administration of Foreign Exchange on Foreign Exchange Management Work Related to the Comprehensive Expansion of the "Full Circulation" Reform of H Shares (Huifu [2020] No.1) are simultaneously repealed. In case of any inconsistency with previous regulations, this notice shall prevail. This article is compiled from the official website of the "People's Bank of China"; GMTEight Editor: Chen Xiaoyi.