The State Administration of Foreign Exchange of the PRC (“SAFE”) formally released on 19 May 2014 the Foreign Exchange Administration Rules on Cross-border Security together with its operation guidelines (the “New Rules”). The New Rules will come into effect on 1 June 2014. The New Rules reform the regulatory regime for outbound and inbound security. We issued a client alert in March 2014 commenting on the final draft of the New Rules (See our China Bank Finance Client Alert issued in March 2014).
From 1 June 2014, PRC companies will be able to provide guarantee/security in favour of an offshore entity (“Outbound Security”) without the need to obtain any approval or quota from SAFE. Any Outbound Security is still subject to the requirement that it must be registered with SAFE within 15 days of its execution, but such registration will no longer be a condition to the validity of the security interest being created.
Please see full alert below for more information.
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