Article 11 The voluntary foreign exchange settlement policy shall be applied to foreign-invested corporations in the PFTZ in handling their foreign exchange capital. Foreign-invested corporations shall open corresponding RMB special deposit accounts in the deposit bank of foreign exchange capital account. All types of payment procedures shall be conducted on the principle of authentic transactions through RMB special deposit accounts where RMB funds arising from capital for foreign exchange settlement are deposited.

Banks shall report information on the opening and closing of RMB special deposit accounts, and the information on the deposit and payment and balance of these accounts in accordance with the requirements of Foreign Exchange Account Data Collecting Rules (Version 1.1), Annex 4 of the Notice of the State Administration of Foreign Exchange on the Pilot Program of the Capital Account Information System and the Relevant Data Submission (Exchange Publication [2012] No. 60). The type code of RMB special deposit account is 2113 and its type name is “capital account – settlement and transfer to be paid”. Banks shall, through domestic deposit and payment voucher, report information on the deposit and payment between RMB special deposit accounts and other domestic RMB accounts in accordance with the requirements of Notice of the State Administration of Foreign Exchange on Making Proper Adjustments of the Preparatory Work of Submitting Foreign-related Receipt and Payment Vouchers and Relevant Information of Domestic Banks (Exchange Publication [2011] No. 49)

Article 12 The capital of foreign-invested companies and RMB funds arising from their settlement and transfer shall not be used for:

1．Expenditure beyond the scope of business operations or banned by national laws and regulations directly or indirectly;

2．Portfolio investment directly or indirectly unless otherwise ruled;

3．Issuance of entrusted loans in RMB (except those within the operation scope), repayment of loans between enterprises (including advances by third parties) and repayment of bank loans in RMB sub-loaned to the third party directly or indirectly; or

4．Payment of related expenses arising from purchase of non-self-use real estate property except by foreign-invested real estate enterprises.

Article 13 The administration of offshore foreign exchange loans provided by enterprises in the PFTZ shall be relaxed. The quota for an enterprise in the PFTZ to extend such loans shall be raised to 50% of the enterprise’s shareholders’ equity. The SAFE Shanghai shall deal with, through group discussions, the situations where it is necessary to exceed the said quota.

Article 14 The enterprises in the PFTZ shall, when providing external guarantees, enter into guarantee contracts without the need of applying to the SAFE Shanghai for prior administrative approval.