Ocean Sky International Limited - Ocean Sky International Ltd ...

EXCHANGE CONTROLS
MALAYSIA
Based on the exchange control regulations in Malaysia issued by Bank Negara Malaysia, foreign funds
brought into Malaysia and the profits made therefrom are subject to the following rules:-
(a) The principal amount of the foreign funds brought into Malaysia when repatriated will not attract
any levy; and
(b) Prior to 2 May 2001, all profits realised in the utilisation of such foreign funds in portfolio
investments, when repatriated within 12 months starting from the month the profits are realised,
attracted a standard 10% levy. With effect from 2 May 2001, the 10% levy is abolished. No such
levy is imposed on the repatriation of profits made from the sale of other types of assets, including
real property.
The criteria set by Bank Negara Malaysia in determining whether an investment is considered a portfolio
investment include:-
(i) whether it is a short-term investment with concern on safety of capital, returns and likelihood of
appreciation;
(ii) whether the investor has significant influence over the operations of the investee company; and
(iii) whether the investor holds less than 10% of the equity or voting rights in the investee group of
companies.
Whilst there is currently no restriction on the repatriation of non-levyable profits from Malaysia, including
dividends, Bank Negara Malaysia requires documentary evidence to be furnished to the remitting banks
to show that the funds to be remitted are not subject to levy.
Currently, there is no restriction on the ability of our Malaysian subsidiary to transfer funds to our
Company in the form of cash dividends.
THE PRC
The present position under PRC law relating to foreign exchange control, taking into account the
promulgation of the recent new regulations and the extent the existing provisions stipulated in previous
regulations do not contradict these new regulations, are as follows:-
1. Foreign investment enterprises may have their own foreign currency account and are permitted to
retain a certain percentage of their recurrent foreign exchange earnings.
2. Foreign investment enterprises may require foreign exchange for their ordinary trading activities
such as trade services and payment of interest on foreign debts may purchase foreign exchange
from designated foreign exchange banks if the application is supported by proper payment notices
or supporting documents.
3. Foreign investment enterprises may require foreign exchange for the payment of dividends that are
payable in foreign currencies under applicable regulations, such as distributing profits to their
foreign investors. They can withdraw funds in their foreign exchange bank accounts kept with
designated foreign exchange banks, subject to the due payment of tax on such dividends. Where
the amount of the funds in foreign exchange is insufficient, the enterprise may, upon the
presentation of the resolutions of the Directors on the profit distribution plan of the particular
enterprise, purchase foreign exchange from designated foreign exchange banks.
4. Foreign investment enterprises may apply to the Bank of China or other designated foreign
exchange banks to remit the profits out of the PRC to the foreign parties to equity or co-operative
joint ventures or the foreign investors in wholly foreign-owned enterprises if the requirements
provided by the PRC laws, rules and regulations are met.
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