ChinaFIG - SAFE and Repatriation of Fund Raised from an IPO of a Special Purpose Vehicle (SPV) - Article 48, Order #10
ChinaFIG consultants provide guidance to organizations on China Investments and China policies related to Initial Public Offerings (IPOs) in the US and Hong Kong (HKSE).
SAFE and Repatriation of Fund Raised from an IPO of a Special Purpose Vehicle (SPV) - Article 48, Order #10
The funds generated from the listing abroad of a SPV must be repatriated for use in the Mainland by adhering to the repatriation plan submitted to the State Administration of Foreign Exchange (SAFE) and any other applicable foreign exchange regulations. The revenue can be repatriated by the following means:
1. through a commercial loan to the Chinese Company;
2. through the formation of a new FIE in China;
3. through the acquisition of the Chinese Company.
The repatriation of the listing funds of a SPV must be in accordance with the applicable laws and rules of foreign investments and foreign debts. In the event the repatriation of such funds results in an increase in the equity or of net assets of the SPV held by the Chinese Company, this should be truthfully disclosed and necessary changes of foreign exchange registration and investment abroad registration, once the examination and approval is completed.
Any profits, dividends or foreign exchange income, which is paid to the Chinese Company or individuals from the SPV, shall be repatriated to China within six months from the date they are received. The profits and dividends may be deposited into a current account, foreign exchange account, or use it for foreign exchange settlement. Subject to SAFE approval, the foreign exchange income from capital fluctuation can be placed in a specific account for capital item or used for settlement.