New SAFE Notice Relaxes Restrictions over External Guarantees1


In a broad overhaul of China’s foreign exchange control rules on the provision of forex guarantees, the State Administration of Foreign Exchange (“SAFE”) issued the Notice of the Issue of the Administration of External Guarantees by Domestic Institutions (the “Notice”) on July 30, 2010.

The Notice amends two existing regulations in this area that emerged during the Asian financial crisis, namely the Administrative Measures for the Provision of External Guarantees by Domestic Institutions and the Detailed Rules for the Implementation of the Administrative Measures for the Provision of External Guarantees by Domestic Institutions, which took effect in October 1996 and January 1998, respectively (together, the “Old Rules”).

In broad terms, the Notice has relaxed existing restrictions on the provision of “external” (i.e., foreign exchange denominated) guarantees by removing or watering down various requirements previously imposed upon both guarantors and debtors under the Old Rules as well as by simplifying the administrative procedures for the provision of external guarantees. These changes appear to be in line with other recent policy shifts designed to support outbound investments.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:


Morrison & Foerster LLP on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.