Meaning
Foreign exchange administrative reforms introduced by the State Administration of Foreign Exchange moved the burden of direct investment registration from government bureaus to commercial banks. Under the guidelines of circular 13, foreign invested enterprises no longer need to obtain prior approval from the regulator for basic capital accounts or equity transfers. The policy aims to reduce the time required for incoming investment to reach operational bank accounts.
Procedural Reform
Registration for foreign direct investment is now completed at the bank where the entity opens its capital account. This change under circular 13 removed the requirement for a separate physical visit to the foreign exchange bureau for each capital injection. The bank performs the verification of the business license and the investment agreement on behalf of the government.
Bank Supervision
Commercial banks now hold the responsibility for verifying the authenticity of capital injections and conducting the necessary anti-money laundering checks. This delegation under circular 13 allows for a faster registration process because the bank handles the data entry directly into the government’s management system. The bank must still follow the strict verification protocols established by the central authorities to ensure compliance.
The system requires the bank to upload the transaction data in real time, allowing the regulator to monitor total capital inflows without intervening in every individual transaction.
Filing Duty
Companies remain obligated to report their investment status and any changes in ownership to the relevant authorities through the information reporting system. While circular 13 simplified the bank-level interaction, it did not remove the statutory requirement for accuracy in the underlying investment data. Incorrect filings can lead to the freezing of the capital account and the inability to remit profits in the future.
