Q & A on Foreign Direct Investment Policy

Q: What do foreign-invested enterprises need to do to register inventory equity?

A: A foreign-invested enterprise may submit its inventory equity information directly or through an accounting firm，bank or the capital account information system of the foreign exchange bureau. Foreign invested entities that need to make such a declaration can visit the website of the State Administration of Foreign Exchange (SAFE)，log in to the capital account information system and register their inventory ownership on that platform.

Q: How should a foreign invested company's shareholders open a foreign currency capital account that can be used for a capital increase?

A: According to the Notice on Further Simplifying and Improving the Policy on Foreign Direct Investment from the State Administration of Foreign Exchange (SAFE[2015] No. 13)，the company can directly register a capital increase or open a capital account for the capital increase at a registered bank.

Q：When a foreign-invested enterprise re-opens a capital account，how does it apply for a business registration certificate from the foreign exchange bureaus? What information is needed?

A: If the company needs to collect the business registration certificates of the previous corresponding foreign exchange registration from a foreign exchange bureau office，it must submit the original business license or copies of the document affixed with the company seal to the local foreign exchange bureau. If the company needs to collect the business registration certificate of the previous corresponding foreign exchange registration made at a bank，it must submit the related documents to the bank to collect the business registration certificate.

Q: What is the quasi-settlement account and what is it used for?

A: At present，foreign exchange regulations do not give a clear definition of the quasi-settlement account，which is considered to be part of the capital account. However，according to the relevant regulations of the Notice on Reforming and Standardizing the Policy on Settlement of Foreign Exchange under the Capital Account from the State Administration of Foreign Exchange (SAFE[2016] No. 16) and the Notice on Printing and Distributing the Regulations on Centralized Operational Management of Foreign Exchange Capital of Multinational Corporations from the State Administration of Foreign Exchange (Huifa[2015] No. 36)，the quasi-settlement account is a special renminbi account used to keep renminbi capital from settlements made at the discretion of the company. As to account-related income and expenditures，businesses can refer to the provisions of Notice No. 16，mentioned earlier. In addition，the quasi-settlement account can be used in tandem with a capital account under an entity with the same name and at the same bank. It can also be used together with a cash-realization account for domestic assets，a domestic re-investment account，a special account for foreign debts，a special account for foreign listings and other types of capital accounts that comply with regulations. Domestic corporate entities in principle cannot use a quasi-settlement account for settlement.

Q：Are foreign-invested enterprises permitted to use their own capital to invest in another domestic enterprise?

A: