Since this spring, new rules governing the establishment of foreign exchange bank accounts have been in effect in China. The Provisional Regulations for the Administration of Foreign Exchange Settlement, Sales, and Payments and the Provisional Measures for the Administration of Foreign Exchange Accounts, both implemented by the State Administration of Exchange Control (SAEC) on April 1, detail how foreign-invested enterprises (FIEs) may open foreign exchange accounts.
Previously, an FIE could establish a foreign exchange account after receiving a business license from the State Administration of Industry and Commerce (SAIC) or its local branch. But now an FIE must first apply to the SAEC to obtain a "Foreign Investment Enterprise Foreign Exchange Registration Certificate" (waishang touzi qiye waihui dengjizheng). Only after obtaining this certificate, known as a FERC, may the FIE open a foreign exchange account. FIEs in existence prior to the issuance of the new rules must also apply to obtain a FERC. Without a FERC, an FIE would ultimately be denied access to the swap centers.
To obtain a FERC, an FIE must give the SAEC evidence of its legal existence, assets, and the purpose of the desired foreign exchange account. This requires submitting copies of the joint-venture contract and articles of association, the business license issued by the SAIC, and an Investment Verification Report issued by a certified public accountant registered in China. FIEs established after January 1, 1994 must also submit an opinion from the SAEC on the enterprise's ability to balance foreign exchange.
Before issuing the FERC, the SAEC will examine whether all capital contributions have been made in accordance with the terms of the joint-venture contract. For new ventures this means that some capital will have to be invested before the foreign …