On July 13, 2009, the State Administration of Foreign Exchange (the “SAFE”) promulgated the Circular on issuing the Provisions on Administration of the Foreign Exchange Used in the Offshore Direct Investment by Onshore Institutions (the “Provisions”). The Provisions became effective on August 1, 2009. Nine copies of foreign exchange related regulations and rules were abolished at the same time. Compared with the previous relative provisions, the Provisions simplifies the examination procedure in respect of the sources of foreign exchange funds used in offshore direct investment by removing it from a separate pre-approval process and incorporating it into the offshore direct foreign exchange registration procedures, as well as annuls the requirement for approval of outward remittance of foreign exchange funds used in offshore direct investment. It also expands foreign exchange fund sources allowed to be used by onshore institutions in offshore direct investment and reduces the costs of offshore investment. The Provisions is outlined as follows:
