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How can FIE borrow from overseas parent companies?外商投资企业如何向境外母公司借款?

When the registered capital of a foreign-invested company is not sufficient for actual operations and additional funds need to be raised, what should be done?


Should the registered capital be increased or should a loan be obtained?


Registered capital is the basis and guarantee for the operation of a company and is a legal commitment by the company. According to the Company Law, the registered capital of a company cannot be withdrawn halfway after registration. This means that the money not only has to fulfil the legal commitment, but also needs to wait until the company is cancelled and liquidated before it can be taken away.


Therefore, undoubtedly, borrowing is a good fundraising solution for foreign-invested companies in China, which can meet their actual financial needs while avoiding the constraints of registered capital. In this article, we will discuss the requirements for borrowing from overseas parent companies.


 Case background 


ABC Company is a foreign-invested enterprise established in China, and XYZ Company is its parent company (i.e. investor and shareholder) registered outside of China. In 2023, the subsidiary company in China (ABC Company) needs to borrow from its overseas parent company (XYZ Company) to relieve the shortage of working capital.


 Operation steps 


As foreign exchange transactions are involved, ABC Company needs to prepare the following before obtaining overseas loans:


ABC Company completes the financial statement audit for the previous year (2022) and obtains an Audit Report;


ABC Company prepares the Macro-prudential Cross-border Financing Risk-weighted Balance Sheet to determine the maximum limit for this loan;


ABC Company and XYZ Company sign a Foreign Debt Loan Agreement;


ABC Company submits a written application to the State Administration of Foreign Exchange (SAFE);


At least 7 days before the loan start date, ABC Company needs to provide the following materials to SAFE to apply for approval.

·Audit Report;

·Macro-prudential Cross-border Financing Risk-weighted Balance Sheet;

·Foreign Debt Loan Agreement;

·Written application;

·A copy of Business License;







After the SAFE's foreign debt registration procedures are completed, ABC Company will obtain the Domestic Institutions' Foreign Debt Signing Status Sheet and the Foreign Debt Signing Business Registration Certificate;


ABC Company prepares the "Special Account for Foreign Debt Finance Chapter";


ABC Company prepares a "Situation Explanation" according to the bank's requirements;


ABC Company completes the foreign debt special account opening procedures at the bank;


The account opening procedures for special accounts for foreign debt is completed, ABC Company will be given the "application for the opening of a unit bank settlement account", access to the bank account number of the special account for foreign debt, ABC Company can instruct the overseas XYZ Company to remit borrowings to the territory.


The above is a detailed operation process. If you have similar business finance-related questions that require our professional team's consultation and analysis, please continue to follow us for more information analysis, or you can book an appointment with our consultants for consultation.


Author | Alex

     作者 | Alex


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