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China eases forex rules for investment firms overseas

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(Globalpost/GlobalPost)

BEIJING (Reuters) - China has loosened currency controls to make it easier for domestic companies and individuals to set up special purpose vehicles (SPVs) overseas, according to revised rules published by the nation's foreign exchange regulator on Monday.

Under revised rules by the State Administration of Foreign Exchange (SAFE) that took effect on July 4, domestic investors in SPVs are allowed to keep profits and dividends made from such entities overseas.

Previously, they must repatriate such funds within 180 days.

The regulator had lifted a ban on loans made by domestic firms to their overseas SPVs - entities created for a specific, limited and normally temporary purpose - and simplified rules on the establishment of such entities, it said.

The revision of rules was aimed at supporting outbound investment by domestic firms and individuals and "improving (yuan) convertibility in cross-border capital and financial transaction in an orderly manner", it said.

But the regulator will monitor investment in SPVs and fund repatriation to crack down on fake transactions, it said.

The regulator has in recent months cut red tape and relaxed foreign exchange controls, as part of gradual reforms to make the yuan fully convertible although no time frame has been set.

(Reporting by Kevin Yao; Editing by Jacqueline Wong)

http://www.globalpost.com/dispatch/news/thomson-reuters/140714/china-eases-forex-rules-investment-firms-overseas