Home>News Center>China

New rules issued for overseas investment
By Chuan Yu (China Daily)
Updated: 2005-10-24 05:14

China's foreign exchange regulator has announced a new regulation relating to local citizens' overseas fundraising and return investment.

The new regulation, which comes into effect next month, will replace controversial rules promulgated early this year.

They were believed by many to have created administrative obstacles for the use of venture capital by many Chinese private companies, particularly small and medium-sized ones.

The new regulation was announced by the State Administration of Foreign Exchange (SAFE) yesterday. It allows domestic citizens, by using domestic assets, to set up overseas special purpose vehicles (SPVs) for fundraising purposes and make a return investment in China. It specifies the procedures and requirements.

The new regulation aims to "encourage, support and guide the development of the non-State sector, further improve the policy support system for venture capital, and regulate cross-border capital transactions by domestic citizens through SPV-based fundraising and investment activities," the administration said in a statement.

Partly to circumvent high listing standards and strict forex regulatory requirements, an increasing number of Chinese private firms have used overseas SPVs to raise funds in recent years. This method also encouraged the participation of venture capital, which relies heavily on easy exit channels.

But SAFE rules enacted at the beginning of this year, aimed at blocking capital flight and tax evasion, reportedly slowed down the overseas listings of Chinese private firms, as they contained stricter approval procedures.

(China Daily 10/24/2005 page2)

10th National Games closes in Nanjing
Old building demolished in Shanghai
Plowing in the Tian'anmen Square
  Today's Top News     Top China News

Income-tax threshold likely to double



New rules issued for overseas investment



All 117 feared dead in Nigeria plane crash



Celebrations mark liberation of Taiwan



Beijing steps up efforts to fight bird flu



Glittering gala marks Games' closing


  China's capital steps up bird flu surveillance
  New family planning reward policy slated
  Law mulled to ensure safety of farm products
  Audit law revised to tighten official supervision
  NPC: Income tax to be levied from 1,600 yuan
  China to ratify UN pact against corruption
  Go to Another Section  
  Story Tools  
  News Talk  
  It is time to prepare for Beijing - 2008