1. The use of funds under domestic insurance and foreign loans shall meet the following requirements:

(1) The funds under the domestic guarantee loan are only used for related expenses within the normal business scope of the debtor, and may not be used to support the debtor to engage in related transactions outside the normal business scope, and may not fabricate trade background for arbitrage or other forms of speculative transactions.

(2) Without the approval of the foreign exchange bureau, the debtor may not directly or indirectly transfer the funds under the guarantee back to China for use through borrowing from China, equity investment or securities investment.

2. The funds under the guarantee shall not be used for direct or indirect equity or creditor's rights investment by overseas institutions or individuals in domestic institutions or individuals, including but not limited to the following acts:

(1) The debtor uses the funds under the guarantee to directly or indirectly invest in the equity or creditor's rights of an institution registered in China.

(2) The funds under the guarantee are directly or indirectly used to obtain the equity of the overseas target company, and more than 50% of the assets of the target company are in China.

(3) The funds under the guarantee are used to repay the debts undertaken by the debtor himself or other overseas companies, and the original financing funds are directly or indirectly remitted back to China in the form of equity or creditor's rights.

(4) The debtor uses the funds under the letter of guarantee to prepay the trade payment for goods or services to domestic institutions, and the payment time exceeds 1 year, and the prepayment amount exceeds 1 10,000 USD and accounts for 30% of the total sales contract price (when exporting large-scale complete sets of equipment or contract services, the completed workload can be regarded as delivery).

3. When the following types of special transactions occur under the domestic insurance and foreign loan contract, the following provisions shall be met:

(1) When the guarantee liability under the domestic guarantee and foreign loan is the repayment liability under the debt issuance by the overseas debtor, the overseas debtor shall be directly or indirectly held by the domestic institution, and the income from overseas debt issuance shall be used for overseas investment projects with equity related to the domestic institution, and the relevant overseas institution or project has been approved, registered, filed or confirmed by the domestic and foreign investment authorities according to regulations;

(2) When the financing funds under the domestic insurance loan contract are used to directly or indirectly obtain the equity of other overseas institutions (including newly established overseas enterprises, acquisition of equity of overseas enterprises and capital increase to overseas enterprises) or creditor's rights, the investment behavior shall comply with the provisions of relevant domestic departments on overseas investment;

(3) When the obligation under the domestic insurance loan contract is the payment obligation under the derivative transactions of overseas institutions, the debtor shall engage in derivative transactions for the purpose of stopping loss and preserving value, which is consistent with its main business scope and is officially authorized by shareholders.

The above contents are for your reference. Please refer to the actual business regulations.

If you have any questions, please contact online customer service of Bank of China.

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