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New Guidelines Introduced for SOE Overseas Investments

New guidelines have been issued as to the financial management of state-owned enterprises (SOEs) making investments overseas. Outlined in the Ministry of Finance’s recently-published Measures for the Financial Management of the Overseas Investments of SOEs, the guidelines also detail the obligations of the parent companies of the SOEs concerned and their required liaison with the relevant government financial departments. Essentially, the Measures, which came into effect as of 1 August this year, seek to ensure that all overseas investment projects are financially viable and to specify the form and content of the financial due diligence processes and feasibility studies that SEOs are expected to implement prior to committing to any such venture.

The Measures also seek to standardise the ongoing operational and financial management procedures with regard to overseas investments, while also putting in place specific requirements for capital control, cost control, dividend distribution, foreign exchange business, financial information management, the maintenance of accounting records and a number of other financial management issues. In line with these revised requirements, SOEs are now expected to strengthen supervision by improving their internal financial control and auditing systems and conducting on-site inspections. They are also now obliged to accept financial supervision and inspection by the relevant financial authority, as well as to submit to auditing supervision by legally-appointed state bodies.

For their part, government financial departments, at every level, are now obliged to maintain databases of all of the financial reports submitted by SOEs with regard to their overseas investments. This should be conducted in line with the existing reporting system used to monitor SOE final financial and accounting statements. All such data will be used to analyse and monitor the relevant financial operations, with a view to improving the effectiveness and success rate of the “going out” policy.

For further details (in Chinese), please refer to the following websites:

Circular on the Issuance of Measures for the Financial Management of the Overseas Investments of SOEs (Cai Zi No. 24 [2017]

Official in Charge of the MOF Asset Management Department Meets the Press on the Issuance of Measures for the Financial Management of the Overseas Investments of SOEs

Content provided by Picture: HKTDC Research
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