Meaning
A foreign exchange administrative procedure implemented by China’s State Administration of Foreign Exchange delegates the cancellation of corporate exchange registrations to commercial banks. When a foreign-invested enterprise in China decides to wind up its operations and liquidate its assets, completing safe circular 13 foreign exchange deregistration is a necessary administrative step to close its capital accounts and legally repatriate the remaining capital to the foreign parent company. The regulation aims to simplify the administrative process by removing the requirement for direct approval from the State Administration of Foreign Exchange, allowing approved local banks to handle the registration cancelations instead.
This delegation of authority accelerates the liquidation process, provided the foreign investor has prepared all the required corporate and tax compliance documents.
Administrative Process
The execution of the foreign exchange deregistration begins after the company has completed its tax clearance and received its official liquidation approval from the local Bureau of Commerce. The company must prepare a comprehensive application dossier, including the formal liquidation report, the tax clearance certificate, the board resolution authorizing the closure of the entity, and the original foreign exchange registration certificate. This dossier is submitted to the commercial bank where the company holds its primary capital account.
The bank reviews the documentation to ensure that all financial transactions executed during the liquidation phase were conducted in compliance with foreign exchange control regulations. Once the bank is satisfied, it updates the state foreign exchange database, cancels the registration, and issues a formal deregistration certificate.
Bank Verification
Delegation to commercial banks means that the burden of regulatory compliance falls on the bank’s internal compliance officers, who often apply strict and detailed standards during the document review process. The bank will scrutinize the liquidation audit report to confirm that all outstanding domestic debts have been settled, that all wages and social security contributions have been paid to local employees, and that all import and export transactions have been resolved. Any inconsistency in the financial figures or missing documentation will result in the bank rejecting the application, which requires the company to restart the review process.
This bank-level verification can become a significant bottleneck if the foreign investor has not maintained meticulous financial records throughout the company’s operating life.
Fund Remittance
Once the bank has issued the deregistration certificate, the company is authorized to close its foreign currency capital accounts and execute the final fund remittance to the foreign parent company. The bank will convert the remaining Chinese yuan assets into the requested foreign currency and execute the cross-border wire transfer to the parent company’s bank account. This remittance is the final step in the corporate exit process, and without it, the liquidated assets remain trapped in China as non-convertible domestic funds.
The ability to complete this transfer depends entirely on the successful completion of the deregistration procedure, which makes it the critical milestone for foreign investors seeking to realize their investments. After the remittance is executed, the company’s capital accounts are permanently closed, and the bank notifies the State Administration of Foreign Exchange of the completed transaction.
