Chapter I General Provisions Article 1 The Administrative Rules Governing the Auto Financing Company (hereinafter referred to as the Rules) is stipulated in accordance Article 2 Auto financing companies referred to in the Rules are defined as non-bank financial legal entities charted by the China Banking Regulatory Article 3 Auto financing companies are supervised and regulated by the China Banking Regulatory Commission. Chapter II Incorporation, Change and Termination Article 4 The establishment of an auto financing company shall be subject to the approval of the China Banking Regulatory Commission. Without the approval of the China Banking Regulatory Commission, no individual or entity shall be allowed to establish an auto financing Article 5 An investor of an auto financing company shall satisfy following requirements: (a) It shall be a corporate legal entity incorporated in and outside China. If the investor is a non-financial entity, its total assets of the previous year shall be no less than RMB4 billion yuan or an equivalent If the investor is a non-bank financial institution, its registered capital shall be no less than RMB300 million yuan or an equivalent (b) It shall have sound business performance and remain profitable for the last three consecutive years; (c) It shall comply with the laws of the countries where it is incorporated and shall have a clean record; (d) In case of the largest investor, it shall be an auto enterprise or a non-bank financial institution. The auto enterprise refers to an enterprise that manufactures and sells the whole unit of an automobile. The largest investor refers to the investor with the largest share of capital and its capital contribution accounting for no less (e) It shall not invest in more than one auto financing company; and (f) It shall satisfy other prudential supervisory requirements set forth by the China Banking Regulatory Commission. Article 6 An auto financing company shall satisfy the following conditions in order to be incorporated: a) the minimum amount of registered capital required by the Rules; b) Articles of Association that complies with relevant laws including the Company Law of the People s Republic of China and the Rules; c) senior management familiar with auto financing and other related business; d) a sound organizational structure, management and risk control systems; e) proper business premises, safety measures and other facilities for business operations; and f) other conditions set out by the China Banking Regulatory Commission. Article 7 The minimum registered capital of an auto financing company shall be no less than RMB500 million yuan or an equivalent amount in The China Banking Regulatory Commission shall have the power to adjust the minimum registered capital of an auto financing company Article 8 The establishment of an auto financing company shall cover two stages, i.e. the preparation stage and the business commencement stage. Article 9 To apply for the preparation of a prospective auto financing company, the largest investor of the company shall act as the applicant (a) an application letter, including the auto financing company s name, location of incorporation, registered capital, business scope (b) a feasibility study on establishing the auto financing company, including a market analysis, a business plan, the organizational (c) an Articles of Association of the auto financing company (a draft note); (d) basic information of each investor of the auto financing company, including name, legal representative, location of incorporation, (e) the investor s balance sheet, profit and loss statement and cash flow statement for the latest three years audited by qualified (f) name and resume of the person in charge of the preparation; and (g) other documents required by the China Banking Regulatory Commission. If the applicant is a foreign non-bank financial institution, it shall submit the consent of its home country supervisory authority Article 10 The China Banking Regulatory Commission, upon receiving a complete set of application documents for the preparation of an auto financing Article 11 The applicant shall, upon receiving the approval letter from the China Banking Regulatory Commission, complete the preparation within If the applicant fails to apply for business commencement upon the completion of the preparation stage or the extended preparation During the preparation stage, the applicant shall not conduct any auto financing business. Article 12 The applicant shall, before the deadline of the preparation stage or the extended preparation stage, apply for business commencement (a) a report on completion of the preparation and an application letter for business commencement; (b) a certification of paid-in capital issued by a qualified Chinese certifying agency, and a registration certificate issued by the (c) articles of Association of the auto financing company; (d) names and detailed resumes of proposed senior managerial personnel; (e) name and capital contribution of each shareholder; (f) proposed business rules and procedures and internal controls; (g) verification documents on business premises and other business-related facilities issued by relevant authorities; and (h) other documents required by the China Banking Regulatory Commission. Article 13 The China Banking Regulatory Commission, upon receiving a complete set of business commencement application documents, shall provide The applicant shall, before commencing operations, register with the State Administration of Industry and Commerce with the presentation The China Banking Regulatory Commission shall revoke the license to conduct financial business and issue a public notice of the revocation Article 14 An auto financing company shall not set up any branch or subsidiary. Article 15 The appointment of the senior managerial personnel of an auto financing company shall be either subject to the qualification review The chairman of the board of directors, general manager and deputy general manager, executive directors, and chief financial officer Article 16 An auto financing company, in case of any of the following changes, shall seek the approval of the China Banking Regulatory Commission: (a) change of company name; (b) change of registered capital; (c) change of business premises; (d) change of business scope; (e) change of organizational structure; (f) change of equity structure; (g) revision of Articles of Association; (h) change of senior managerial personnel; (i) merger or split; and (j) other changes that require the approval of the China Banking Regulatory Commission. Article 17 The liquidation of an auto financing company whose operation is terminated because of dissolution, closure or bankruptcy, shall be Chapter III Business Scope and Supervision Article 18 An auto financing company may conduct all or part of the following lines of Renminbi business with the approval of the China Banking (a) taking deposits with maturity of no less than three months from its shareholders in the mainland of China; (b) extending loans for auto purchase; (c) extending loans to auto dealers for purpose of purchasing automobiles or facilities for operations (including the show-room construction, (d) transferring and selling auto loan receivables; (e) borrowing from financial institutions; (f) providing guarantee for auto purchase financing; (g) agency business relating to auto purchase financing; and (h) other loan business approved by The China Banking Regulatory Commission. Article 19 An auto financing company, in case of extending loans to a natural person for auto purchase, shall observe relevant rules governing Article 20 An auto financing company, without the approval of relevant regulatory authorities, shall not issue bonds or borrow funds from overseas. Article 21 An auto financing company shall meet the requirement on the capital to risk assets ratio, and the capital adequacy ratio shall not Article 22 An auto financing company shall adopt relevant accounting rules for financial institutions. Article 23 An auto financing company shall compile in required format and submit to the China Banking Regulatory Commission the balance sheet, An auto financing company shall not provide false financial statements, or statements in which important facts are concealed. Article 24 An auto financing company shall establish and improve various business management systems and internal controls in line with Guidelines Article 25 An auto financing company shall accept the on-site examination and the off-site surveillance by the China Banking Regulatory Commission. Article 26 The China Banking Regulatory Commission may call the legal representatives or other senior managerial personnel of an auto financing Article 27 An auto financing company shall establish a system of external audit on a regular basis and submit to the China Banking Regulatory Article 28 An auto financing company, in case of encountering payment difficulties or other emergencies, shall take remedial actions, and promptly Article 29 The China Banking Regulatory Commission shall demand remedial actions by an auto financing company in case of the following circumstances: (a) The company suffers from a loss in the current year of above 50 percent of the registered capital or losses in the last three (b) The company is in payment difficulties; and (c) The company faces other major operational risks that the China Banking Regulatory Commission deems necessary to issue an order Article 30 The China Banking Regulatory Commission, after issuing an order for corrective actions to an auto financing company, may take the (a) demanding or prohibiting the change of the company s senior managerial personnel; (b) suspending part of the company s business or prohibiting the company s engagement in new business lines; (c) demanding an increase of the company s capital within a prescribed time frame; (d) demanding the company to change its equity structure or implement other forms of restructuring; (e) prohibiting the dividend distribution; and (f) other enforcement actions that the China Banking Regulatory Commission deems necessary. Article 31 An auto financing company, when receiving an order for remedial actions, shall not resume normal business operations until the following (a) Solvency is restored; (b) Losses are covered; and (c) Major operational risks are addressed. Article 32 The maximum time limit that an auto financing company is allowed for corrective actions shall not exceed one year. If the company Article 33 Auto financing companies may establish a trade association for self-regulation purposes. The activities of the trade association Chapter IV Legal Liabilities Article 34 Any establishment of an auto financing company or any auto financing business without the approval of the China Banking Regulatory Article 35 The China Banking Regulatory Commission shall demand correction and impose a fine of RMB1000 yuan if a company, without the approval Article 36 In case of an auto financing company being found to engage in business activities beyond its prescribed business scope, the China Article 37 In case of an auto financing company being found in violation of relevant provisions of the Rules to provide false financial statements Article 38 In case of an auto financing company being found in violation of relevant provisions of the Rules to reject or impede the examinations Article 39 An auto financing company, in case of being found in violation of the Rules, shall be punished in accordance with the provisions Article 40 An auto financing company, in case of being found in violation of other Chinese laws and regulations, shall be subject to enforcement Chapter V Supplementary Provisions Article 41 The Rules is applicable to all auto financing companies incorporated in the mainland of China funded by investors from Hong Kong Article 42 The Rules enters into effect on October 3, 2003, and the power of the interpretation rests with the China Banking Regulatory Commission.
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EDITOR:Victor |