Decree of the Chairman of China Banking Regulatory Commission
No. 6
The Detailed Rules for the Implementation of the Regulations of the People’s Republic of China on the Administration of Foreign-invested
Banks were adopted at the 53rd Chairmen’s meeting of China Banking Regulatory Commission. They are hereby promulgated and shall enter
into force as of December 11, 2006. Chairman of China Banking Regulatory Commission Liu Mingkang
November 24, 2006
Detailed Rules for the Implementation of the Regulations of the People’s Republic of China on the Administration of Foreign-invested
Banks Chapter I General Provisions
Article 1
The present Detailed Rules have been formulated under the Banking Administration Law of the People’s Republic of China, the Law of
the People’s Republic of China on Commercial Banks and the Regulations of the People’s Republic of China on the Administration of
Foreign-invested Banks (hereinafter referred to as the Regulations).
Article 2
The banking regulatory institution of the State Council as mentioned in the Regulations refers to China Banking Regulatory Commission
(hereinafter referred to as the CBRC). The banking regulatory institutions as mentioned therein refer to the CBRC and its dispatched
institutions.
Chapter II Establishment and Registration
Article 3
The “prudent conditions” as mentioned in the Regulations and the present Detailed Rules shall at least include the following items:
(1)
With a good reputation and social image;
(2)
With continuous good operating performances and good asset quality;
(3)
The managerial personnel having good professional quality and management abilities;
(4)
Having a sound risk management system and having the ability to control the risks in associated transactions;
(5)
Having a sound internal control system and effective management information system (MIS);
(6)
Having formulated financial statements by following the prudent accounting principle, and the accounting firm holding no reservation
about the financial statements of the three years prior to filing the application;
(7)
Without record of serious violation of law or regulation;
(8)
Having an effective capital constraint and capital supplement mechanism; and
(9)
Having a reasonable corporate governance structure.
Items (8) and (9) are applicable to sole foreign-invested banks and the shareholders thereof, Chinese-foreign equity joint banks and
the shareholders thereof, as well as foreign banks.
Article 4
The term “major shareholder” as mentioned in Article 11 of the Regulations refers to a commercial bank which holds more than 50%
of the total capital or the total shares of a Chinese-foreign equity joint bank to be established, or a commercial bank which does
not hold more than 50% of the total capital or the total shares of a Chinese-foreign equity joint bank to be established but is under
any of the circumstances:
(1)
Holding more than half of the voting rights of the Chinese-foreign equity joint bank to be established;
(2)
Having the power to control the financial affairs and operating policies of the Chinese-foreign equity joint bank to be established;
(3)
Having the power to appoint or dismiss most of the members in the board of directors or the similar powerful institution of the Chinese-foreign
equity joint bank to be established; or
(4)
Holding more than half of the voting rights in the board of directors or the similar powerful institution of the Chinese-foreign equity
joint bank to be established.
The major shareholders of the Chinese-foreign equity joint bank shall list the Chinese-foreign equity joint bank into the consolidation
scope.
Article 5
Nobody shall be a shareholder of a solely foreign-invested bank or Chinese-foreign equity joint bank if it is under any of the following
circumstances:
(1)
There are obvious flaws in the corporate governance structure and mechanism thereof;
(2)
It has a complicated share-right relationship;
(3)
It has a number of associated enterprises; having frequent and abnormal associated transactions;
(4)
It does not have an outstanding core business or it engages in too many industries; or
Other circumstances which may result in significant negative influence to the bank to be established.
Article 6
The phrase “end of the year before the establishment application is put forward” as mentioned in Articles 10 through 12 refers to
the end of the fiscal year prior to the date of application. The phrase “Having a capital adequacy ratio that is in accordance with
the provisions of the financial regulatory authority” therein refers to that the capital adequacy ratio shall not be less than 8%.
Article 7
The “feasibility study report” as mentioned in Articles 14 of the Regulations and Articles 15, 26 and 30 of the present Detailed
Rules shall include the basic information of the applicant, the analysis of the market prospect of the institution to be established,
the business development plan of the institution to be established, as well as the organizational framework, and projection of asset-liability
size and profit for the first three years, etc.
The “feasibility study report” as mentioned in Articles 20 of the Regulations shall include the basic information of the applicant
and the aim and plan of the to-be-established representative office.
Article 8
The phrase “the name of the institution to be established” as mentioned in Item 1, Article 14 of the Regulations and the “the
post_title of the representative office to be established” as mentioned in Article 20 of the Regulations shall include the name in
Chinese and the one in a foreign language.
The nationality and form of liability of the foreign bank shall be marked in the name of a branch of a foreign bank or representative
office.
Article 9
The phrases “Copies of business license”, “copies of license documents on operating financial business”, “Letters of authorization”
and “Tax and liability guarantee of the foreign bank for its branch bank as in the case of applying for establishing a foreign branch
bank” shall not only be notarized by an institution accredited by the home country or region but also be certified by the embassy
or consulate of China in that country.
China Banking Regulatory Commission may, where necessary, request that other application documents as reported by the applicant shall
not only be notarized by an institution accredited by the home country or region but also be certified by the embassy or consulate
of China in that country.
Article 10
The phrase “annual financial statements” as mentioned in the Regulations and the present Detailed Rules shall be audited with the
auditing opinions issued by the accredited accounting firm of the home country or region of the applicant. Annual financial statements
printed in a language other than Chinese or English shall be accompanied by Chinese or English translations.
Article 11
Where it is the first time to establish a foreign bank, it shall report the abstract of the financial situations and relevant financial
supervision and administration laws and regulations.
Where it is the first time to establish a representative office, it shall report the certification issued by a banking financial institution
registered within the territory of China on that it has established a relationship of agency with the foreign bank.
Article 12
Where a foreign bank plans to establish a new branch within the territory of China, it shall meet the conditions as specified in
Articles 9 and 12 of the Regulations, and the branch(es) which it has already established within the territory of China shall satisfy
the prudent conditions as provided for by the CBRC, if a foreign bank plans to establish a new branch within the territory of China.
Where a foreign bank plans to establish a new representative office within the territory of China, it shall meet the conditions as
specified in Articles 9 of the Regulations, and the representative office(s) which it has already established within the territory
of China shall have no record that involves serious violation of any law or regulation.
Article 13
Where a solely foreign-invested bank or Chinese-foreign equity joint bank plans to establish a branch, it shall meet the prudent
conditions as provided for by the CBRC.
Article 14
The phrase “the banking regulatory institution in the place where the institution is to be established” as mentioned in Articles
14, 17 and 20 of the Regulations refers to the banking regulatory bureau where the institution or representative office to be established
is located. The phrase “timely submit” means that the aforesaid banking regulatory institution shall, submit to the CBRC the application
materials with its examination auditing opinions within 20 days after it receives a complete set of the application materials.
The term “application materials” as mentioned in Articles 14, 17 and 20 of the Regulations, shall be reported to the institution dispatched
by the CBRC to the place where the institution or representative office to be established is located.
The term “application” as mentioned in Article 14 and 20 of the Regulations shall be jointly signed by the chairmen of the board
of directors or presidents (chief executives, general managers) of all capital contributors to establish the solely foreign-invested
bank or Chinese-foreign equity joint bank, or shall be signed by the chairman of the board of directors or president of the foreign
bank to establish a branch or representative office, and shall be addressed to the Chairman of the CBRC.
Article 15
For the establishment of a branch by a solely foreign-invested bank or Chinese-foreign equity joint bank, preparatory establishment
application shall be first made, and the following application materials (in duplicate) shall be submitted to the banking regulatory
bureau of the place where its headquarters is located and a copy thereof shall be sent to the banking regulatory bureau where the
branch to be established is located:
(1)
An application signed by the chairman of the board of directors or president (chief executive officer or general manager) of the applicant
and addressed to the Chairman of the CBRC, which shall include the name, location, operating capital, categories of business;
(2)
A feasibility study report;
(3)
The articles of association of the applicant;
(4)
The yearly report of the applicant;
(5)
The anti-money laundering system of the applicant;
(6)
A copy of the business license of the applicant;
(7)
A resolution which the board of directors agrees to establish a branch; and
(8)
Other materials as requested by the CBRC.
The application materials and its auditing opinions shall be submitted to the CBRC by the banking regulatory bureau of the place where
the headquarters of the solely foreign-invested bank or of the Chinese-foreign equity joint bank are located within 20 days after
it receives a complete set of application materials
The banking regulatory bureau of the place where the branch to be established is located shall submit its examination opinions to
the CBRC within 20 days after application materials are received.
Article 16
To establish a foreign-invested business institution, the applicant shall, fetch a operation start application form from the institution
dispatched by the CBRC to the place where the institution to be established is located within 15 days after it receives the preparatory
establishment notice, and shall begin the preparatory establishment. The applicant shall form a preparatory establishment team responsible
for the preparatory establishment within the period of preparatory establishment and shall send a name list of the persons taking
charge of the preparatory establishment team to the local institution dispatched by the CBRC. The preparatory establishment team
shall be dissolved automatically after the preparatory establishment is finished. The preparatory establishment period shall be six
months.
In case the applicant fails to fetch a operation start application form within the prescribed time limit, the CBRC or any of its dispatched
institutions shall not accept its application to establish a business institution in the same city within the territory of China
within 1 year from the date of approval of the preparatory establishment.
Article 17
The applicant shall finish the following tasks in order to establish a business institution of a foreign-invested bank within the
preparatory establishment period:
(1)
Establishing a sound corporate governance structure, and to submitting an explanation of the corporate governance structure to the
local institution dispatched by the CBRC (only solely foreign-invested banks and Chinese-foreign equity joint banks are so requested);
(2)
Establishing an internal control system, including the control systems and operating procedures for the internal organizational structure,
authorization and credit, credit fund management, money transactions, accounting as well as computer information management system,
and submitting the aforesaid internal control systems and operating procedures to the local institution dispatched by the CBRC;
(3)
Equipping with a certain number of business personnel, who can meet the needs of its business development and have accepted relevant
training in the relevant policies, regulations and professional knowledge, so as to meet the requirements for effective supervision
and control of risks of the main businesses, the graded examination and approval and reexamination of business, the division of work
and restraint of each other for the key posts;
(4)
Printing the important vouchers and documents for external use and submitting specimens to the local institution dispatched by the
CBRC;
(5)
Being equipped with the safety protection facilities accredited by the relevant departments and submitting the copies of the pertinent
certifications to the local institution dispatched by the CBRC; and
(6)
The internal control system, accounting system, and computer system shall be audited by a qualified accounting firm lawfully established
within the territory of China before it starts business, and an audit report shall be submitted to the local institution dispatched
by the CBRC.
Article 18
If an applicant applies for extending the preparatory establishment period, it shall file an application with the local institution
dispatched by the CBRC one month before the expiration of the preparatory establishment period. The application shall be signed by
the person responsible for the preparatory establishment team of the business institution of the foreign-invested bank.
The local institution dispatched by the CBRC shall make a decision of approval or disapproval of the extension of the preparatory
establishment period within 15 days after it receives a complete set of application materials, and a written notice to the applicant
shall be presented and simultaneously a copy shall be sent to the CBRC. If it makes a decision of disapproval, explanations shall
be specified.
If the applicant, within the prescribed time limit, cannot file an application for the extension of the preparatory establishment
period, the institution dispatched by the CBRC may not accept its application.
Article 19
The person in charge of the preparatory establishment team shall apply to the institution dispatched by the CBRC for a check before
its operation starts when the preparatory establishment of a business institution of a foreign-invested bank is finished. The local
institution dispatched by the CBRC shall make a check within 10 days. The local institution dispatched by the CBRC shall issue a
written opinion on passing the check if the applicant passes the check. The local institution dispatched by the CBRC shall give it
a written notice if the applicant cannot pass the check. The applicant may, after the lapse of 10 days from the receipt of the said
notice, file a re-check application with the institution dispatched by the CBRC to the place where the institution is to be established.
Article 20
After an applicant fulfills the preparatory establishment and passes the examination, a written opinion in respect of passing the
check, the operation start application signed by the person-in-charge of the preparatory establishment team of the to-be-established
business institution of the foreign-invested bank and addressed to the Chairman of the CBRC along with the application materials
(in duplicate) as described in Article 17 of the Regulations shall be submitted by the applicant to the banking regulatory bureaus
of the place where the institution to be established is located, and a copy shall be simultaneously sent to the institution dispatched
by the CBRC to the place where the institution to be established is located.
The banking regulatory bureau of the place where the institution to be established is located shall, submit the application materials,
its written opinion on passing the check and its examination opinions to the CBRC within 20 days after it receives a complete set
of operation start application materials.
Article 21
After a business institution of a foreign-invested bank acquires the approval for operation start, it shall fetch a financial business
permit pursuant to the relevant provisions.
Article 22
The business institution of a foreign-invested bank shall start operations within 6 months after it fetches a business license. It
may, under any special circumstance, extend the time limit for operation start upon approval of the local institution dispatched
by the CBRC.
A business institution of a foreign-invested bank shall file a operation start extension application to the local institution dispatched
by the CBRC 1 month before the expiration of the time limit for operation start if a business institution of a foreign-invested bank
applies for extending the time limit for operation start. The application shall be signed by the chairman of the board of directors
or president (chief executive officer, general manager) of the solely foreign-invested bank or Chinese-foreign equity joint bank,
or by the president (general manager) of the branch of the foreign bank.
The local institution dispatched by the CBRC shall, decide to approve or disapprove the deferment of operation start, present a written
notice to the applicant and simultaneously a copy shall be sent to the CBRC within 15 days after it receives a complete set of application
materials. If it makes a decision of disapproval, it shall make an explanation.
The institution dispatched by the CBRC shall not accept its operation start extension application if a business institution of a foreign-invested
bank cannot file an operation start postponement application within the prescribed time limit.
The maximum extended time limit for operation start shall be 3 months. The original approval of operation start shall be nullified
automatically if the business institution of a foreign-invested bank cannot start operations after the expiration of the extended
time limit. The business institution of a foreign-invested bank shall return its financial business permit to the CBRC. The CBRC
or any of its dispatched institution shall not accept its application for the establishment of business institution in the same city
within 1 year after the nullification of the original approval of operation start.
Article 23
A business institution of a foreign-invested bank shall submit to the local institution dispatched by the CBRC a written report of
the date of operation start before it starts business, and it shall make an announcement on a national newspaper as designated by
the CBRC and on a local newspaper as designated by the local institution dispatched by the CBRC.
Article 24
Articles 15 through 19 of the Regulations and Articles 16 through 23 of the Detailed Rules shall govern branches of the solely foreign-invested
banks and branches of Chinese-foreign equity joint banks.
Article 25
A foreign bank may not only satisfy the conditions of the Regulations and the present Detailed Rules on the establishment of a solely
foreign-invested bank if it plans to change its branch within China into a solely foreign-invested bank solely invested by its headquarters,
but also be capable of implementing continuous business operations within the territory of China and effectively managing the solely
foreign-invested bank to be established.
Article 26
A foreign bank shall simultaneously apply for the preparatory establishment of a solely foreign-invested bank and for changing all
of its branches within China into branches of the solely foreign-invested bank and submit the following application materials (in
duplicate) to the banking regulatory bureau of the place where the solely foreign-invested bank to be established is located if it
plans to change its branch within China into a solely foreign-invested bank solely invested by its headquarters, , and a copy shall
be sent to the institution dispatched by the CBRC to the place of each of its branches within China simultaneously.
(1)
An application, including the name, location, registered capital or operating capital of the solely foreign-invested bank and its
branches, and the businesses for which the applicant applies, shall be signed by the chairman of the board of directors or president
(chief executive or general manager) of the foreign bank and addressed to the Chairman of the CBRC;
(2)
A feasibility study report and a plan on the change of institution;
(3)
A draft of the articles of association of the solely foreign-invested bank to be established and the legal advice issued by a law
firm lawfully established within China about the draft of the articles of association;
(4)
The resolution of the board of directors of a foreign bank on the consent to change the original branch of the foreign bank into a
solely foreign-invested bank solely invested by its headquarters;
(5)
A letter of opinions signed by the chairman of the board of directors president (chief executive or general manager) of the foreign
bank on the consent to inherit the rights, debts and taxation of the original branch of the foreign bank, and a letter of guarantee
to continuously implement business within China and to effectively manage a solely foreign-invested bank;
(6)
The audited unified financial report of all the foreign bank’s branches within China of the 2 years before filing the application
(7)
A written opinion on the change issued by the financial regulatory authority of the country or region where the applicant is located;
(8)
The applicant’s annual statements of the recent 3 years; and
(9)
Other materials as requested by the CBRC.
The banking regulatory bureau of the place where the headquarters of a solely foreign-invested bank shall submit the application materials
along with its examination opinions to the CBRC within 20 days after it receives a complete set of application materials.
The CBRC shall, make a decision of approval or disapproval of the change and present a written notice to the applicant within 6 months
after it receives a complete set of the application materials. It shall make an explanation if it makes a decision of disapproval.
Article 27
Where a foreign bank plans to reserve one branch engaging in the wholesale business of foreign exchange, it shall simultaneously
file an application when it applies for the preparatory establishment of a solely foreign-invested bank.
The original branch of a foreign bank shall determine the creditor’s rights, debts and taxation which should be inherited by the branch
of foreign bank and the solely foreign-invested bank, respectively. A checklist of the assets, liabilities, owner’s equities, the
application signed by the chairman or president (chief executive or general manager) and addressed to the Chairman of the CBRC, as
well as the application materials (in duplicate) which is described in Article 26 of the Detailed Rules should be submitted to the
local banking regulatory bureau of the place where the solely foreign-invested bank to be established is located, and a copy shall
be sent to the institution dispatched by the CBRC to the place where the original branch of the foreign bank is located simultaneously.
Article 28
If a foreign bank changes its branch within China into a solely foreign-invested bank solely invested by its headquarters, the operating
capital of the original branch of the foreign bank may, upon approval of the CBRC, be changed into registered capital of the solely
foreign-invested bank or may be transferred back to its headquarters through merger-related capital verification.
Article 29
After it finishes its preparatory establishment and passes the check, as for a foreign bank planning to change its branch within
China into a solely foreign funded bank solely invested by its headquarters, the letter of opinions on passing the check and the
following application materials (in duplicate) shall be submitted to the local banking regulatory bureau of the place where the solely
foreign-invested bank is located and a copy shall be sent to the institution dispatched by the CBRC to the place where the original
branch of the foreign bank is located simultaneously:
(1)
An application signed by the person-in-charge of the preparatory team of the solely foreign-invested bank to be established and addressed
to the Chairman of the CBRC, and the name, business address, registered capital or operating capital, and categories of business
of the solely foreign-invested bank to be established shall be included ;
(2)
A checklist of the assets, liabilities, owner’s equities of the solely foreign-invested bank to be established;
(3)
A capital verification certification issued by a qualified accounting firm lawfully established within China;
(4)
The name list, resumes, and copies of the identity cards and the academic credentials of the candidates for the chairman of the board
of directors and president of the branch or intercity sub-branch of the solely foreign-invested bank;
(5)
An authorization to the president of the branch or intercity sub-branch of the solely foreign-invested bank;
(6)
Formal announcement of having no bad record as signed by the candidates; and
(7)
Other materials as requested by the CBRC.
The local financial regulatory bureau of the headquarters of the solely foreign-invested bank to be established shall submit the application
materials, a written opinion on passing the check, and examination opinions to the CBRC within 20 days after it receive a complete
set of the application materials.
The CBRC shall make a decision of approval or disapproval of operation start and present a written notice to the applicant within
2 months after it receives a complete set of the application materials. In case it makes a decision of disapproval, an explanation
shall be specified.
Article 30
If a foreign bank plans to retain one branch doing the wholesale business of foreign exchange, it shall submit the following application
materials (in duplicate) to the banking regulatory bureau of the headquarters of the solely foreign-invested bank when it applies
for the operation start of the solely foreign-invested bank to be established simultaneously:
(1)
An application signed by the chairman of the board of directors or president (chief executive or general manager) and addressed to
the CBRC, including the location, operating capital and categories of business of the branch to be maintained;
(2)
A feasibility study report;
(3)
A checklist of the assets, liabilities, owner’s equities of the branch of foreign bank remained to engage in wholesale business of
foreign exchange;
(4)
A capital verification certification issued by a qualified accounting firm lawfully established within China; and
(5)
Other materials as requested by the CBRC.
The local banking regulatory bureau of the place where the headquarters of the solely foreign-invested bank is located shall submit
the application materials and its examination opinions to the CBRC within 20 days after it receives a complete set of the application
materials.
The CBRC shall make a decision of approval or disapproval of maintaining the foreign bank’s branch working wholesale business of foreign
exchange and send a written notice to the applicant within 2 months after it receives a complete set of the application materials.
It shall make an explanation if it makes a decision of disapproval.
Article 31
When a foreign bank changes its branch within China into a foreign-invested bank solely invested by its headquarters, a foreign bank
shall make an announcement on a national newspaper designated by the CBRC and on a local newspaper designated by the institution
dispatched by the CBRC to the place where the solely foreign-invested bank to be established is located during the period of the
preparatory establishment of the solely foreign-invested bank to be established and after it goes through the registration procedures,
Article 32
A representative office of a foreign bank shall go through the registration procedures in the administrative department for industry
and commerce after it is established upon approval,.
The representative office of foreign bank shall make an announcement on a national newspaper designated by the CBRC and on a local
newspaper designated by the institution designated by the CBRC to the place where the representative office is located after the
representative office of foreign bank goes through the registration procedures.
The representative office of foreign bank shall, within 6 months from the date of approval of establishment of the CBRC, move into
a fixed office. The original approval of the CBRC shall be invalidated automatically if it cannot begin operation within the time
limit of 6 months.
Article 33
The representative office of foreign bank shall submit the following materials to the local institution dispatched by the CBRC after
it moves into a fixed office:
(1)
The registration form of its basic information;
(2)
A copy of the industrial and commercial registration certificate
