China Securities Regulatory Commission (CSRS) Circular of China Securities Regulatory Commission (CSRC) on Relevant Issues concerning Securities Companies’ Borrowing Subordinated All the securities companies: In accordance with the Circular on Promoting the Self-examination and Self-correction, the Operation in Line with the Rules, and the I. The subordinated debt as mentioned in this circular refers to the fixed-maturity debt, with a time limit of more than 3 years (included), The qualified institutional investor of subordinated debt refers to the legally-established legal entity or investment institution II. Where the securities company borrows subordinated debt, its Board of Directors shall formulate the plan, and the shareholders’ meeting 1. The size, time limit and interest rate of the subordinated debt; 2. The function of the borrowed capital; 3. The duration of validity of the resolution; and 4. Other important issues in relation to the borrowing of subordinated debt III. Where the securities company borrows subordinated debt, a contract of subordinated debt shall be concluded between it and the creditors, 1. The subordinated debt shall be discharged after the common liabilities of the securities company hereof, and shall be repaid before 2. Where the securities company repays the due subordinated debt, it shall obtain the consent from the creditors of the due common liabilities 3. Where its net asset is lower than the stipulated standard, the securities company shall not repay the due subordinated debt. 4. The volume, time limit and interest rate of the subordinated debt hereof; 5. The arrangement for repaying the principal and interest of the subordinated debt hereof; 6. The function of the borrowed capital; 7. The content of the information to be disclosed by the securities company to its creditors and the mode of disclosure; and 8. Liabilities for breach of contract IV. In order to guarantee the rights and interests of the creditors of the subordinated debt and to reduce the repayment risks of the 1. Profit shall not be distributed to the shareholders without the consent from the creditors of the subordinated debt 2. Financing or guarantee shall not be supplied to the shareholders and their related parties; 3. Related transactions injuring the interests of the company shall not be conducted together with the shareholders and their related 4. The withdrawal ratio of the common accumulation fund of free surplus and the reserve fund of average risk shall be raised; 5. Such programs of capital expenditure as important overseas investments and acquisition and merger etc. shall not be conducted without 6. Shareholders or actual controllers with stock equities of more than 5% shall undergo no alteration without the consent from the creditors V. The securities company shall set up a special debt-redemption account to repay the principal and interest of the subordinated debt, VI. The securities regulatory authorities of where the company was registered and the Department of Intermediary Supervision of the CSRC VII. After obtaining the consent from the securities regulatory authorities of where the company was registered and the examination and As regard to the subordinated debt borrowed in cash and with a time limit of more than 5, 4, 3, 2 and 1 years, it shall in principle As regard to the subordinated debt converted from the debt of the entrusted institution of asset-backed securities, the entrusted The exact ratio for accounting the subordinated debt into the net asset shall also be defined in accordance with the company’s situation VIII. Where the securities company repays the due subordinated debt, it shall, in advance, notify the securities regulatory authorities IX. Where the securities company encounters important problems, it shall timely notify the securities regulatory authorities of where Ministry of Commerce December 13, 2005 |
China Securities Regulatory Commission (CSRS)
2005-12-13