Shanghaivest in the news > New SAFE regulations impacting foreign invested enterprises: Issuance of Circular 142, DLA Client Alert
By GLA Piper in October 2008 http://www.dlapiper.com
On August 29, 2008, China’s State Administration of Foreign Exchange (“SAFE”)issued circular 142 (“Circular 142”), which further regulates the process of foreign currency capital verification by Foreign invested Enterprises (“FIEs”)in China. Circular 142 is one of a number of measures implemented by China’s regulation in recent year to prevent “hot money” from flowing into China, including a series of regulations previously issued by SAFE.
Circular 142 is significant for foreign investors because of its potential impact on acquisitions and investments in China conducted through FIEs. This Alert summarizes several key issues reaised by Circular 142 that are relevant to foreign investors structuring investments in China.