Circular of China Banking Regulatory Commission Concerning the Printing and Distribution of the Operating Rules for Applying for the
Establishment of Financial Companies of Enterprise Groups
Each banking regulatory bureau:
The amended Operating Rules for Applying for the Establishment of Financial Companies of Enterprise Groups are hereby printed and
distributed to you, please observe and implement them earnestly. Meanwhile, the primary Operating Rules for Applying for the Establishment
of Financial Companies of Enterprise Groups (Yin Jian Fa [2006] No.78) shall be repealed.
The China Banking Regulatory Commission
January 26, 2007
Operating Rules for Applying for the Establishment of Financial Companies of Enterprise Groups
Chapter I General Provisions
Article 1
In accordance with the Banking Supervision Law of the People’s Republic of China and the Measures for the Administration of Financial
Companies of Enterprise Groups (hereinafter referred to as Measures), the present Rules are formulated with a view to further regulating
the work relevant to the application for setting up financial companies of enterprise groups (hereinafter referred to as financial
companies) and guaranteeing the healthy and orderly proceeding of the work relevant to the market access of financial companies.
Article 2
The term “financial company” as referred to in the present Rules means the non-bank financial institutions that provide financial
management services for the member entities of enterprise groups (hereinafter referred to as member entities) in order to reinforce
centralized management of enterprise group funds and enhance the fund utilization efficiency.
Article 3
The present Rules shall apply to the market access behaviors occurring during the stage of preparatory establishment or business
opening of a financial company to be established. As regards the market access of the financial companies established by foreign-funded
investment companies (in which foreign capital stock accounts for 25% or more), the present Rules shall apply by analogy.
Article 4
Where any financial company is established within the territory of China, it shall be reported to China Banking Regulatory Commission
(hereinafter referred to as CBRC) for examination and approval.
Chapter II Establishment Conditions
Article 5
An enterprise group (parent company) applying for the establishment of a financial company shall meet the following conditions:
(1)
It complies with the industrial policies of the state and has core principal business.
(2)
Its registered capital is not less than 800 million Yuan by the end of the year prior to its application.
(3)
By the end of the year before its application, its member entities’ total assets consolidated into statement for accounting as prescribed
is not less than 5 billion Yuan, and the net assets ratio may not be lower than 30%.
(4)
Its financial situation is good, for two consecutive years before its application, by the end of each year, the total amount of its
member entities’ business income consolidated into statement for accounting as prescribed is not less than 4 billion Yuan, and that
of pre-tax profits is no less than 200 million Yuan.
(5)
It has stable cash flow with a large scale.
(6)
It has been set up for more than two years and possesses certain experience in the internal financial management and capital management
of enterprise group.
(7)
It has sound corporate governance structure and has no improper associated transaction.
(8)
Its credit standing is good, and in the two consecutive years prior to its application, it has no bad credit record or illegal or
irregular act.
(9)
The source of the funds used for purchasing shares is authentic and lawful, no loan funds or the funds entrusted by other people may
be used to purchase shares. And
(10)
Other prudential conditions as provisioned by CBRC.
Article 6
A financial company’s registered capital shall be raised mainly from the member entities of the enterprise group or through absorbing
the shares of the strategic investors with much experience in industrial management excluding the member entities.
Except for enterprise groups of a special industry into which external investors are restricted from entering and obtains the consent
of CBRC in advance, a newly established financial company’s shareholders shall include strategic investors with much industrial managing
experience or its operation team shall include at least one senior manager with much practical experience and one risk management
professional.
Article 7
For becoming a shareholder of a financial company of an enterprise group, a member entity of the enterprise group shall meet the
following requirements:
(1)
It has been registered as an enterprise legal person at the administrative department of industry and commerce.
(2)
It possesses a sound corporate governance structure or effective organizational management manner.
(3)
It has good social reputation, credit record and taxation record.
(4)
Its financial situation is good, and it consecutively gains profits in the latest two accounting years.
(5)
After the year-end distribution, its net assets accounts for 30% or more of its total assets (in accordance with the standards for
consolidated accounting statements).
(6)
Its operation and management are nice, it repays bank loans on time and in full amount, and commits none illegal or irregular act
in the latest two years.
(7)
The source of the funds used for purchasing shares is authentic and lawful, loan funds or the funds entrusted by other people may
not be used to purchase shares.
(8)
This investment complies with the legal provisions of the state. And
(9)
Other prudential requirements as provided for by CBRC.
Article 8
For becoming a shareholder of a financial company, a strategic investor other than the member entities of an enterprise group shall
meet the following requirements:
(1)
He consents that he will, in principle, not alienate the shares of the financial company he holds within 3 years as of the date of
the establishment of the financial company, and this shall be indicated in the financial company’s articles of association.
(2)
He possesses 3 years or more of experience in operating and managing financial companies or similar institutions. And
(3)
Other prudential requirements as provisioned by CBRC.
Article 9
As regards a strategic investor that is a financial institution legal person, for becoming a shareholder of a financial company,
it shall meet, in addition to the requirements prescribed for in Article 8 , also the following requirements:
(1)
It possesses a nice corporate governance structure.
(2)
It has sound and effective inner management and risk control bylaws.
(3)
Its financial situation is nice and it consecutively gains profits in the latest two years.
(4)
Its credit standing is nice, and it has not been substantially punished by the supervisory organ in the latest two consecutive years.
(5)
The source of the funds used for purchasing shares is authentic and lawful, loan funds or the funds entrusted by other people may
not be used to purchase shares.
(6)
It meets the related supervisory requirements and indices, and this investment complies with the related laws, regulations and supervisory
provisions.
(7)
In case it is an overseas financial institution legal person, its total assets may not, by the end of the latest year, be less than
USD 1 billion in principle. And
(8)
Other prudential requirements as provided for by CBRC.
Article 10
As regards a strategic investor that is a non-financial institution legal person, for becoming a shareholder of a financial company,
it shall meet the requirements as provided for in Articles 7 and 8.
Article 11
A financial company to be set up shall meet the requirements as follows:
(1)
The establishment is really necessary for the concentrated management of enterprise group’s funds, and the financial company can,
upon reasonable estimate, achieve a certain business scale.
(2)
It has the articles of association complying with the provisions of the Company Law of the People’s Republic of China and the Measures.
(3)
It has the minimum registered capital as provided for in the Measures.
(4)
It has the directors and senior managers that meet the requirements on post-holding qualification as provided for by CBRC, and a proportion
of professional practitioners as prescribed, as well as qualified professional talents for key posts such as risk management and
fund intensive management, etc.
The term “directors and senior managers” as referred to above means the financial company’s legal representative of and the personnel
who enjoy decision-making power over the operation and management of the financial company or who play mail role in risk control,
including the chairman of the board of directors, vice chairmen thereof, directors, general managers and deputy general managers.
The term “personnel for key posts such as risk management and fund intensive management” as referred to above means the working staff
that, according to the establishment of the specific business departments, business bylaws and business flow of the company, undertake
the duties of risk management and fund intensive management in the principal business activities of the financial company.
The number of the personnel that have been undertaking finance or accounting work for 3 years or more may not be less than 2/3 of
the total number of the personnel of the financial company, particularly, that of the personnel that have been engaging in finance
or accounting work for 5 years or more may not be less than 1/3.
(5)
It has established relatively perfect bylaws for corporate governance, inner control, business operation and risk prevention, etc,
and has set up relatively perfect information management system and risk control system.
(6)
It has a business place, safety measures and other facilities as required. And
(7)
Other prudential requirements as provided for by CBRC.
Chapter III Directors and Senior Managers
Article 12
The post-holding qualifications of a financial company’s chairman of the board of directors and vice chairmen thereof, general managers,
deputy general managers as well as senior managers who do not hold the posts mentioned above but undertake the same duties, shall
be subject to the examination and approval of CBRC.
Article 13
A financial company’s directors and senior managers shall meet the following basic requirements:
(1)
Being a natural person with complete civil capacity.
(2)
Possessing nice vocational ethics, personal integrity, morality and reputation, acquainting with and respecting laws and administrative
regulations, and having a nice record in respect of the abidingness of law and regulation.
(3)
Possessing professional knowledge, skills and work experience necessary for fulfilling his duties, ensuring the time and energy necessary
for fulfilling his duties, showing nice judging and management capacity in his acts and decisions, and having no ill practicing record.
(4)
Possessing the independency necessary for fulfilling his duties.
(5)
Not falling within any of the circumstances under which he may not undertake the post of director or senior manager of any financial
institution as prescribed by any law or regulation. And
(6)
Other prudential requirements as provided for by CBRC.
Article 14
A financial company’s directors shall also meet the requirements as follows in addition to the requirements listed in Article 13
:
(1)
Possessing more than 5 years of working experience in such field as economy, banking, law, finance or any other one facilitating his
performance of the director’s duties.
(2)
Being capable of judging the operation, management and risk situations of the financial company from its financial statements and
statistical statements. And
(3)
Acquainting with the financial company’s corporate governance structure, articles of association, duties of the board of directors
as well as the rights and obligations of the members of the board of directors.
Article 15
The chairman or vice chairman of a financial company shall meet, in addition to the requirements listed in Articles 13 and 14, also
the requirements as follows:
Possessing an educational background of university or higher and having been working in financial institutions for more than 6 years,
or having been engaging in the accounting work or fund management work of this enterprise group for more than 8 years, or having
been engaging in the core principal business and the related management work of this enterprise group for more than 10 years.
Article 16
A financial company’s general manager and deputy general manager shall meet, in addition to the requirements as provided for in Article
13 , also the requirements as follows:
Possessing an educational background of university or higher and having been working in financial institutions for more than 6 years
or having been engaging in the accounting work or fund management work for more than 10 years (among which, more than 3 years for
engaging in the financial work).
In case the general manager or deputy general manager holds the post of director concurrently, the requirements as provided for in
Article 14 shall be satisfied.
Article 17
A senior manager introduced from overseas shall also meet the following requirements in addition to the requirements as provided
for in Article 13 :
(1)
Acquainting with the economy, financial policies and the related laws and regulations on financial supervision of China as well as
the operating rules and characteristics of both the domestic and foreign financial markets.
(2)
Possessing the working experience and organizational management experience in line with the post he holds.
He shall possess more than 5 years of fund management experience in a world famous transnational financial institution or the fund
centralized management experience in a world famous large-scale enterprise, and more than 3 years of experience in the post of business
department manager or the equivalent post or above.
Or, he shall possess more than five years of working experience in a world famous commercial bank or investment bank, acquaint with
fund plans and the investment and financing business of capital market, and possess more than 3 years of experience in the post of
business department manager or the equivalent post or above.
In case he concurrently holds the post of director, the requirements prescribed in Article 14 shall be also satisfied.
Chapter IV Application for Establishment
Article 18
The establishment of a financial company shall be divided into such two phases as the application for preparatory establishment and
the application for opening business, and the application materials shall be submitted by the parent company of the group as the
applicant.
Article 19
The applicant shall submit the application materials for preparatory establishment and opening business to the banking regulatory
bureau at the locality of the financial company is to be established.
Article 20
The application materials for preparatory establishment shall contain the contents as follows:
(1)
Application form for preparatory establishment (see attached list 1).
(2)
Application letter for preparatory establishment, which shall contain such contents as the name of the financial company to be set
up (for which the approval of the administrative organ of industry and commerce is not required), the place where the financial company
is to be set up, its registered capital, shareholders, equity structure and business scope, etc.
(3)
Feasibility study report on establishing the financial company.
(4)
Materials for proving the qualification of the parent company of the group.
(5)
Roster of the member entities and the related evidentiary materials issued by the competent departments.
Member entities shall contain the parent company of the group, the subsidiary companies with 51% shares held by the parent company
(hereinafter referred to as subsidiary companies), the companies with more than 20% shares held by the parent company or a subsidiary
company either solely or jointly, or with less than 20% shares held but the position of the biggest shareholder occupied thereby
as well as the public institution legal persons or social group legal persons affiliated to the parent company or the subsidiary
companies.
(6)
Materials about the shareholder qualifications of the applicant and other contributors.
(7)
The contributors’ capital contribution guarantee or agreement.
(8)
Written commitment made by the board of directors of the parent company on increasing corresponding capital in the case of any payment
difficulty, etc encountered by the financial company.
(9)
In the case of the introduction of senior managers or risk management professionals, the parent company’s board of directors shall
provide the related evidentiary materials on such introduction.
(10)
Evidentiary materials signed by the parent company’s legal representative on confirming the authenticity of the materials submitted
by the parent company and its member entities.
(11)
Legal letter issued by a law firm on the applicant’s legality, regulation-compliance and integrity in respect of the procedure and
materials for applying for preparatory establishment. And
(12)
Other documents and materials shall be submitted as required by CBRC.
Article 21
The feasibility study report on establishing a financial company shall contain the major contents as follows:
(1)
The enterprise group’s basic information, including its historical evolution, situations of its member entities, organizational structure,
personnel situation, basic financial situations and principal financial indices, etc.
(2)
Industry to which the enterprise group belongs and instruments on the related industrial policies of the state.
(3)
The enterprise group’s production and operation situations, its position in the industry, development plans and the proportion of
its core principal business in its assets, etc.
(4)
Cash flow analysis, that is, the analysis on the scale, characteristics and routs, etc, of the enterprise group’s cash flow in the
last two years and the reasonable forecasting of its future cash flow.
(5)
The enterprise group’s finance and fund management experience. And
(6)
Principles, role, business volume forecast and profit mode of the financial company to be set up.
Article 22
The materials on proving the qualification of the parent company of a group shall contain the major contents as follows:
(1)
Enterprise Group Registration Certificate as issued by the administrative organ of industry and commerce.
(2)
Materials proving that the enterprise group conforms to the related industrial policies of the state.
(3)
The parent company’s articles of association, organizational structure and internal management system.
(4)
Certificate on tax payment credit rating issued by the tax authorities; list of the banks from which the parent company lends money
during the latest three years and the no bad credit record certificates confirmed by these banks; announcement made by the board
of directors (or operation decision-making body) of the parent company on the company’s legality and regulation-compliance.
Special explanation shall be made accordingly where the general public or any media discloses the company’s any illegal or irregular
act.
(5)
Accounting statements (including consolidated accounting statements) of the latest two years which are prepared pursuant to the Enterprise
Accounting Standards and have been audited by domestic or overseas accounting firms or other intermediary organs set up in accordance
with law. The accounting statements contain: balance sheet, profit and loss statement, cash flow statement and annotations of accounting
statement, etc. Great associated transactions of the enterprise shall be disclosed in the annotations of accounting statements as
required by the Enterprise Accounting Standards promulgated by the Ministry of Finance.
Article 23
The materials on the shareholders qualifications of the applicant and other contributors shall contain the basic contents as follows:
(1)
A roster of the applicant and other contributors, photocopy of the business license, accounting statements of other contributors (including
balance sheet, profit and loss statement, cash flow statement and annotations of accounting statement) of the latest two years which
have been audited by domestic or overseas accounting firms or other intermediary organs set up in accordance with law, and the evidential
materials on repaying bank loans on time confirmed by the loan-granting banks.
(2)
Evidence on the source of the contributed funds.
(3)
Moreover, a strategic investor shall provide the related materials on proving its successful engagement in the operation and management
of financial companies or similar institutions for more than 3years, mainly including:
The strategic investor’s organizational structure, roster of its main shareholders, branches, roster of the subsidiary companies it
holds d (participates in or controls) and their principle business and major profit source, its actual controller, major associated
enterprises and the associated relationships.
In case the strategic investor is a financial institution, it shall also provide the opinion letter issued by the competent regulatory
organ on its corporate governance structure, credit status, regulation-compliance status and its prudent operation situation, as
well as the report produced by an international rating agency and recognized by CBRC on its credit rating in the latest two years.
The evidential materials on the centralized management scale and mode of financial companies’ funds or that of similar institutions
as conducted by the strategic investor in the latest three years and the successful cases, etc.
Article 24
The contributors’ guarantee for and the agreement on capital contribution shall contain the main contents as follows:
(1)
The guarantee for or the agreement on capital contribution shall be affixed with the signature of the legal representatives of all
contributors (or promoters) and the official seals; the agreement shall specify the capital-contributing proportion of each contributor
(or promoter), their rights and obligations, etc, and shall authorize in written the parent company of the group, as an applicant
on behalf of all the contributors, to handle preparatory establishment issues.
(2)
The strategic investors shall indicate in the investment agreement their promise of not alienating the shares they hold in the financial
company within three years.
(3)
The resolution, authorization or approval papers made at the shareholders’ meeting or by the board of directors on the contributors’
contemplation of contributing funds to se up the financial company.
Article 25
The application materials for opening business shall contain the contents as follows:
(1)
Application form for opening business (see attached list 2).
(2)
Report on the application for opening business, including the explanation on the accomplishment of the preparatory work, the contribution
of the registered capital, the business to be opened, the preparation of the related systems, inner institutions, staff number and
structure, etc. The report shall be signed jointly by all the contributors’ legal representatives and affixed with official seals.
(3)
The articles of association draft of the financial company to be established.
(4)
The financial company’s operation principles and plans of.
(5)
A roster of the finance company’s shareholders, their respective amounts and investment proportions.
(6)
Capital verification certificate produced by a legal capital verification institution on the capital contributions of the finance
company’s shareholders;
The capital verification certificate produced by a legal capital verification institution means a capital verification report issued
by an accounting firm set up within the territory of China in accordance with law.
(7)
A registration letter issued by the administrative department for industry and commerce on advance approval of the financial company’s
name.
(8)
Name list, detailed profession training, resumes and post-holding qualification certificates of the directors and senior managers
to be appointed.
(9)
Evidentiary materials on the personnel to hold such pivotal posts as risk control and fund centralized management.
(10)
Evidentiary materials on the introduced risk management professionals’ assuming of the manager post for two years or more in risk
management department.
(11)
Evidentiary materials on the related personnel’s engagement in the financial or accounting work for 5 years or more.
(12)
The financial company’s business rules and risk prevention system, which shall contain the strict risk isolation between the financial
company and its parent company.
The financial company shall, by referring to the Guidance for Internal Control of Commercial Banks, set up and perfect the rules and
regulations on the business to be opened and internal risk control system.
(13)
The financial company’s management information system and risk control system.
(14)
Materials on the financial company’s business place and other business-related facilities (which means the agreement on the financial
company’s purchase or lease of business place and the documents produced by the public security department and fire department, etc
on the check and acceptance of business place and other business-related facilities.).
(15)
Resolutions made at the first shareholders’ assembly of the financial company.
(16)
Legal opinion on the applicant’s legality, regulation-compliance and integrity in respect of the application procedure and materials
for opening business as produced by a law firm. And
(17)
Other documents and materials as required by CBRC.
Article 26
The articles of association draft of a financial company to be set up shall contain the main contents as follows:
(1)
The company’ name, domicile, organization form, business scope and registered capital.
(2)
Each shareholder’s name and investment amount, the shareholders’ rights and obligations and the strategic investors’ promise of not
alienating the shares they hold in the financial company within three years.
(3)
The company’s legal representative, institutions, as well as its formation method, discussion rules.
(4)
Method of profit distribution. And
(5)
Causes for dissolution and liquidation method, and the promise of the parent company’s board of directors on increasing corresponding
capital when the financial company encounters any payment difficulty, etc.
Article 27
The name list of the directors and senior managers to hold posts in a financial company, their detailed professional training, resumes
and post-holding qualification certificates shall include the following main contents:
(1)
Their application letters for the approval of post-holding qualification, which shall be affixed with the signature of the applicants’
legal representatives and official seals.
(2)
Their application forms for the approval of post-holding qualification (refer to Attached list 3).
(3)
Comprehensive appraisement on their morality, whether there is any bad record, business capacity, management capability and work performance,
etc as conducted by the parent company of the group or the appointment and removal departments of the entities in which they are
currently holding posts.
(4)
Photocopies of their identity certificates.
(5)
Photocopies of their academic certificates and professional technology certificates recognized by the state.
Such photocopies shall be affixed with the seals of the applicants, and the CBRC shall take charge of examining and verifying the
originals.
(6)
Announcements signed by them on no bad record.
(7)
Evidentiary materials on proving that the introduced senior managers comply with the related prescribed requirements.
(8)
Announcement signed by the person in charge of the appointment and removal department of the parent company of the group on the authenticity
of all the application materials.
(9)
Materials in the shareholders’ meeting on proposing the directors and senior managers to hold posts. And
(10)
Other materials
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Circular of the Foreign Investment Bureau of the State Administration of Industry and Commerce On Employing the New Edition of Registration
Certificate of Resident Offices
Foreign Investment Departments of the Administration of Industry and Commerce of all provinces, autonomous regions, municipalities
directly under the Central Government:
The State Administration of Industry and Commerce printed the new edition of Registration Certificate of Resident Offices of Foreign
Enterprises lately. The authorized bureaus which are responsible for the registration of resident offices of foreign enterprises
may apply to the State Administration of Industry and Commerce for the new edition as of today and start to use it.
Tel: 010-68057995
Fax: 010-68058004
Foreign Investment Bureau of the State Administration of Industry and Commerce
February 6, 2007
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