Shanghai Free Trade Zone easies overseas financing
On August 22, 2013, the State Council approved the establishment of the Shanghai Free Trade Zone (SFTZ) which was officially launched on September 29, 2013. While the actual new achievements are not clear especially with regard to regultations and policies detailly explaining and defining the advantages for investors.
We frequently update for our visitors news about the SFTZ.
Foreign Invested Companies in China are still limited in assuming overseas financing. In general, the financing is limited to the gap between the share capital and the total investment. Particularly, loans from the investing company are required to be registered and are limited in amount.
Companies in the Shanghai Free Trade Zone may now borrow from overseas without the prior consent from authorities which was announced by the Shanghai headquarters of the People’s Bank of China on 12 February 2015. Banks and securities brokers have also been allowed to finance overseas.
Further, under the new regulation, companies in the SFTZ are no longer limited to borrowing Chinese yuan only.The scale of the foreign financing has also been extended and may be up to twice the company’s capital under the new control method where the mid-term or long-term funds in particularly RMB funds are encouraged to be used.