Decree of China Banking Regulatory Commission, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Commerce, the People’s Bank of China and the State Administration for Industry & Commerce
No.3 [2010]
For the purpose of strengthening the regulation of financing guarantee companies, regulating financing guarantee actions and promoting the sound development of the financing guarantee sector, in accordance with the Company Law of the People’s Republic of China, the Guarantee Law of the People’s Republic of China, the Contract Law of the People’s Republic of China, the Interim Measures for the Administration of Financing Guarantee Companies has been jointly formulated by China Banking Regulatory Commission, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the Ministry of Commerce, People’s Bank of China and the State Administration for Industry & Commerce, and is hereby promulgated upon approval of the State Council. It shall enter into force as of the date of promulgation.
Chairman of China Banking Regulatory Commission Liu Mingkang
Chairman of the National Development and Reform Commission Zhang Ping
Minister of Industry and Information Technology Li Yizhong
Minister of Finance Xie Xuren
Minister of Commerce Chen Deming
Governor of the People’s Bank of China Zhou Xiaochuan
Minister of the State Administration for Industry & Commerce Zhou Bohua
Mar.8, 2010
Interim Measures for the Administration of Financing Guarantee Companies
Chapter 1 General Provisions
Article 1 The measures herein are formulated in accordance with the Company Law of the People’s Republic of China, the Guarantee Law of the People’s Republic of China, the Contract Law of the People’s Republic of China for the purpose of strengthening the regulation of financing guarantee companies, regulating financing guarantee actions and promoting the sound development of the financing guarantee sector.
Article 2 The financing guarantee herein refers to the actions by which the guarantor enters into a contract with creditors including banking financial institutions, stating that it/he will assume the liabilities as agreed in the contract when the guaranteed party fails to fulfill its/his obligations to the creditors.
The financing guarantee company herein refers to the limited liability company and the joint stock limited company that is duly established and engages in financing guarantee business.
The regulatory agency herein refers to the department determined by the People’s governments of provinces, autonomous regions or the municipalities directly under the Central Government responsible for regulating the financing guarantee companies within its jurisdiction.
Article 3 Financing guarantee companies shall establish the market-oriented sustainable prudent operation model in the operating principles of safety, liquidity and profitability.
Financing guarantee companies shall follow the principles of good faith and honesty and abide by what is agreed in their contracts in their businesses with enterprises, banking financial institutions and other clients.
Article 4 Financing guarantee companies may conduct their businesses according to law free from intervention of any agency, unit and individual.
Article 5 Financing guarantee companies shall observe laws, regulations and the provisions herein and may not jeopardize the state interests and the public interests when conducting their businesses.
Financing guarantee companies shall discharge confidentiality obligation for their clients and may not use any of the information provided by their clients to undertake any activity irrelevant with the guarantee business or harmful to the interests of the clients.
Article 6 Financing guarantee companies shall follow the principle of fair competition and shall not conduct any unfair competition.
Article 7 Financing guarantee companies are subject to the administration by the People’s governments of provinces, autonomous regions and municipalities directly under the Central Government within their jurisdictions. The regulatory agencies determined by the People’s governments of provinces, autonomous regions and municipalities directly under the Central Government shall be specifically responsible for the access, withdrawal, routine regulatory and risk disposal of the financing guarantee companies under their jurisdiction and shall report to the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business set up by the State Council.
Chapter 2 Establishment, Alteration and Termination
Article 8 The establishment of a financing guarantee company and its branches is subject to the examination and approval of the regulatory agency.
The financing guarantee company and its branches established upon approval shall obtain the business licenses issued by the regulatory agency and apply to the administration for industry and commerce for registration on the strength of the licenses.
Any unit or individual without approval of the regulatory agency shall not engage in financing guarantee businesses and use the characters of “financing guarantee” in its name, except as otherwise provided in laws and regulations.
Article 9 The following conditions shall be satisfied to establish a financing guarantee company:
(1) Having the articles of associations in compliance with the Company Law of the People’s Republic of China;
(2) Having shareholders with the capability of sustainable capital contribution;
(3) Having the registered capital in compliance with the provisions herein;
(4) Having qualified directors, supervisors, officers and practitioners;
(5) Having sound institutional structure, internal control and risk management systems;
(6) Having business places as required; and
(7) Other prudent requirements as provided by the regulatory agency.
The measures for the administration of the qualifications of directors, supervisors, officers and practitioners shall be formulated by the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business separately.
Article 10 The regulatory agency shall fix the minimum amount of the registered capital of a financing guarantee company according to local reality, which shall not be less than RMB5mn.
The registered capital shall be the paid-in capital in cash.
Article 11 The following documents and materials shall be submitted to the regulatory agency to establish a financing guarantee company:
(1) An application, stating the name, domicile, registered capital and business scope of the financing guarantee company to be established;
(2) A feasibility research report;
(3) The draft articles of association;
(4) The name list of shareholders and their contributed capital and the equity structure;
(5) The verification reports of capital contributions by shareholders and the certificates of credit standing and the relevant materials of the shareholders who holds more than 5% of the registered capital;
(6) The qualification certificates of directors, supervisors and officers to be appointed;
(7) The business development strategy and plans;
(8) The certificates of business places; and
(9) Other documents and materials required by the regulatory agency.
Article 12 The alteration of any of the following items by a financing guarantee company shall be subject to the examination and approval of the regulatory agency:
(1) Alteration of name;
(2) Alteration of institutional structure;
(3) Alteration of registered capital;
(4) Alteration of domicile;
(5) Adjustment of business scope;
(6) Alteration of any director, supervisor and officer;
(7) Alteration of any shareholder holding more than 5% of the registered capital;
(8) Division or merger;
(9) Amendment of the articles of association; or
(10)Other alteration items provided by the regulatory agency.
When any of the alteration items involves company registration items, the financing guarantee company shall, after examination and approval of the regulatory agency, apply to the administration for industry and commerce for alteration of registration.
Article 13 Where a financing guarantee company intends to set up any branch in other provinces, autonomous regions and municipalities directly under the Central Government, it shall obtain the consent of the regulatory agency in the place where it is located and the approval of the regulatory agency in the place where the branch is to be set up.
Article 14 Where a financing guarantee company intends to dissolve due to division, merger or any dissolution issue as stipulated in its articles of association, it shall obtain the approval of the regulatory agency and go through the cancellation registration with the administration for industry and commerce with the approval documents in a timely manner.
Article 15 Where a financing guarantee company conducts any material illegal operation and may bring great harms to the market order and the public interests if it is not cancelled, the regulatory agency shall cancel the company, except as otherwise provided in laws and administrative regulations.
Article 16 Where a financing guarantee company is to be dissolved or cancelled, it shall set up a liquidation group and pay off the relevant debts according to the debt liquidation plan in a timely manner. The regulatory agency shall supervise over the liquidation process.
Before relief of the guarantee liabilities, shareholders of the company shall neither distribute the property of the company nor obtain any interests or benefits from the company.
Article 17 A financing guarantee company which fails to pay off its due debts and does not have sufficient property to pay off all of its debts or obviously does not have the liquidation capability shall go bankruptcy according to law.
Chapter 3 Business Scope
Article 18 Upon approval of the regulatory agency, financing guarantee companies may operate the following financing guarantee business, wholly or partially:
(1) Loan guarantee;
(2) Guarantee of acceptance of bills;
(3) Trade financing guarantee;
(4) Project financing guarantee;
(5) Guarantee of letter of credit; and
(6) Other financing guarantee businesses.
Article 19 Upon approval of the regulatory agency, financing guarantee companies may concurrently operate the following businesses, wholly or partially:
(1) Procedural preservation guarantee;
(2) Tender guarantee, advance payment guarantee, project performance guarantee, guarantee of payment of the remaining price of a project, and other guarantees of performance of agreements;
(3) Financing consulting, financial consulting and other intermediary services related to the guarantee business;
(4) Investment with its own capital; and
(5) Other businesses provided by the regulatory agency.
Article 20 A financing guarantee company may provide the re-guarantee for the guarantee liabilities of any other financing guarantee company and conduct the bond issuance guarantee business, but the following conditions shall be satisfied meanwhile:
(1) Having no record of illegal or irregular performances; and
(2) Other prudent conditions as provided by the regulatory agency.
If a financing guarantee company engages in re-guarantee business, except for the aforesaid conditions, its registered capital shall be no less than RMB100mn and it shall operate for over two consecutive years.
Article 21 Financing guarantee companies shall not engage in the following activities:
(1) Acceptance of deposits;
(2) Granting of loans;
(3) Entrusted granting of loans;
(4) Entrusted investment; and
(5) Other activities as provided by the regulatory agency.
If a financing guarantee company conducts any illegal fund-raising activity, it shall be prosecuted by the relevant department.
Chapter 4 Operation Rules and Risk Control
Article 22 A financing guarantee company shall establish a sound corporate governance structure and improve its discussion rules, decision-making procedures and internal approval systems to maintain the effectiveness of corporate governance.
The financing guarantee company which sets up branches in other provinces, autonomous regions and municipalities directly under the Central Government shall appoint two or more independent directors.
Article 23 A financing guarantee company shall establish the guarantee assessment system, decision-making procedures, the follow-up recovery and disposal system, the risk early-warning system and the emergency response system consistent with the prudent operation principle, and formulate strict and standard business operation procedures to strengthen efforts on risk assessment and management of guarantee projects.
Article 24 A financing guarantee company shall have or employ professionals with the relevant qualifications in economics, finance, law and technology.
The financing guarantee company that has set up branches in other provinces, autonomous regions and municipalities directly under the Central Government shall set up the chief compliance officer and the chief risk officer. The CCO and the CRO shall have obtained the qualifications of lawyer or certificated accountant and shall be of experience in financing guarantee or finance.
Article 25 A financing guarantee company shall set up a sound financial accounting system in accordance with the requirements of the financial rules for financial enterprises and the accounting standards for business, truly recording and reflecting the financial status, operation results and cash flows of the company.
Article 26 The guarantee charges collected by a financing guarantee company may be agreed by the financing guarantee company and the guaranteed party through independent negotiation, but no provision of the state may be violated.
Article 27 The financing guarantee liability balance to an individual guaranteed party by a financing guarantee company shall not exceed 10% of its net assets; that to an individual guaranteed party and its affiliated party shall not exceed 15% of the net assets; and that to the bond issuance by an individual guaranteed party shall not exceed 30% of the net assets.
Article 28 The financing guarantee liability balance of a financing guarantee company shall not exceed the amount of 10 times of its net assets.
Article 29 The investment of a financing guarantee company with its own capital shall be limited to the fixed-earning financial products with relatively high credit ratings including treasury bonds, financial bonds and debt financing instruments of large enterprises and other investments without interest conflict and with the total amount less than 20% of its net assets.
Article 30 A financing guarantee company shall not provide financing guarantee to its parent company or subsidiaries.
Article 31 A financing guarantee company shall draw the amount equal to 50% of its guarantee income of the year as its undue liability reserve and the amount no less than 1% of the balance of the year-end guarantee liability in the same year as the guarantee compensation reserve. If the accumulated guarantee compensation reserve reaches 10% of the balance of the guarantee liability of the year, the difference shall be recognized as a provision. The measures for the difference recognition and the use of the guarantee compensation reserve shall be formulated by the regulatory agency separately.
The regulatory agency may improve the requirements on the percentage of the guarantee compensation reserve according to the liability risk conditions of the financing guarantee company and the prudent regulation requirements.
A financing guarantee company shall conduct risk classification management of its guarantee liabilities and accurately measure its guarantee liability risks.
Article 32 A financing guarantee company and its creditors shall establish the business relationship in the principle of unanimous negotiation and make clear the means of assumption of guarantee liabilities in their contracts.
Article 33 When handling financing guarantee business, a financing guarantee company shall make agreement with the guaranteed party that it is entitled to continuously obtain the relevant information and verify the relevant situation during the guarantee period.
Article 34 A financing guarantee company and its creditor shall establish the mechanism for exchange of the relevant information related to the guaranteed party during the guarantee period and enhance efforts on assistance and supervision of the credit of the guaranteed party so as to safeguard both parties’ legitimate rights and interests.
Article 35 A financing guarantee company shall inform the relevant creditors of the corporate governance, financial accounting reports, risk management conditions, capital composition and use and the general situation of guarantee business in accordance with the provisions of the regulatory agency.
Chapter 5 Supervision and Administration
Article 36 The regulatory agency shall establish sound systems of collection, collation and statistical analysis of the information of the financing guarantee company, carry out ongoing monitoring of the operation and risk conditions of the company, and complete the previous-year overview reports of the financing guarantee companies under its regulation by the end of June every year.
Article 37 A financing guarantee company shall submit its operation reports, financial accounting statements, legal compliance reports and other documents and materials to the regulatory agency.
The documents and materials submitted to the regulatory agency by the financing guarantee company shall be true, accurate and complete.
Article 38 Financing guarantee companies shall report to the regulatory agency the use of capital on a quarterly basis.
The regulatory agency shall give the requirements on the capital quality and capital adequacy ratio of a financing guarantee company in a timely manner according to the principle of prudent regulation.
Article 39 The regulatory agency has the right to require a financing guarantee company provide special materials, make an appointment to meet with its directors, supervisors and officers, and require it to make an explanation or make necessary ratification according to regulatory requirements.
The regulatory agency may inform the creditors of the non-compliance or risks of the relevant financing guarantee company under its jurisdiction when it holds necessary.
Article 40 The regulatory agency may conduct on-site inspection of a financing guarantee company according to regulatory requirements, and the financing guarantee company shall give assistance and provide the relevant documents and materials as required.
When conducting on-site inspection, inspectors shall be no less than two and produce the notice of inspection and the relevant certificates to the financing guarantee company.
Article 41 When a guarantee fraud or a guarantee compensation or investment loss of the potential amount exceeding 5% of its net assets incurred to a financing guarantee company, or any of its director, supervisor or officer involves in any serious illegal and irregular issue, the company shall immediately take emergency actions and report to the regulatory agency.
Article 42 Financing guarantee companies shall report to the regulatory agency the material decisions of the general meeting of shareholders or meetings of shareholders and the board.
Article 43 Financing guarantee companies shall invite social intermediaries to conduct annual auditing and timely submit the auditing reports to the regulatory agency.
Article 44 The regulatory agency together with the relevant departments shall establish the system of discovery, report and disposal of emergencies in the financing guarantee sector, work out the emergency response plans for the financing guarantee sector, clarify the disposal agencies and functions thereof and disposing measures and procedures, and timely and effectively handle emergencies in the sector.
Article 45 The regulatory agency shall conduct a full analysis and assessment of the annual development of the financing guarantee sector under its jurisdiction as well as regulation situations by the end of the year, and report the development of the financing guarantee sector under its jurisdiction as well as regulation situations of the previous year to the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business and the People’s Republic of China of provinces, autonomous regions and municipalities directly under the Central Government by the end of February every year.
The regulatory agency shall timely report to the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business and the People’s Republic of China of provinces, autonomous regions and municipalities directly under the Central Government any material risk event in the financing guarantee sector under its jurisdiction as well as disposals.
Article 46 The financing guarantee industry shall establish a self-disciplinary organization to perform functions of self-discipline, safeguarding of rights and provision of service.
A national self-disciplinary organization of the financing guarantee industry shall accept the guidance of the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business.
Article 47 The credit administration shall incorporate the relevant information of financing guarantee companies into the credit management system and provide information inquiry services to financing guarantee companies.
Chapter 6 Legal Liabilities
Article 48 If any of the staff members of the regulatory agency for supervision and administration is in any of the following circumstances, administrative punishments shall be imposed; and if a crime is constituted, his/her criminal liabilities shall be prosecuted:
(1) Where he/she gives approval for the establishment, alteration, termination and business scope of a financing guarantee company in violation of provisions;
(2) Where he/she conducts on-site inspection of a financing guarantee company in violation of provisions;
(3) Where he/she fails to report any material risk event and disposal thereof in accordance with Article 45 herein; or
(4) Other actions in violation of laws, regulations and provisions herein.
Article 49 If a financing guarantee company violates any law, regulation and provision and there are provisions on punishment prescribed in the relevant laws and regulations, punishment shall be imposed according to the provisions. If the relevant laws and regulations do not contain any provision on punishment, the regulatory agency shall order it to make correction and may impose punishment as warning and penalties; and if a crime is constituted, the company’s criminal liabilities shall be prosecuted.
Article 50 If a financing guarantee company operates any financing guarantee business in violation of Paragraph 3 of Article 8 herein, the relevant department shall close down the company and give it punishments. If a financing guarantee company uses the characters of “financing guarantee” in its name without approval, the regulatory agency shall order it to make correction and give it punishment according to law.
Chapter 7 Supplementary Provisions
Article 51 The operation of financing guarantee business by a financing guarantee institution without corporate capability shall refer to the relevant provisions herein and the specific measures for implementation shall be formulated by the People’s governments of provinces, autonomous regions and municipalities directly under the Central Government separately and submitted to the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business for filing.
The measures herein apply to foreign-invested financing guarantee companies, except as otherwise provided in laws and administrative regulations.
The measures for the administration of financing re-guarantee institutions shall be formulated by the People’s governments of provinces, autonomous regions and municipalities directly under the Central Government separately and submitted to the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business for filing.
Article 52 The People’s governments of provinces, autonomous regions and municipalities directly under the Central Government may formulate detailed rules for implementation in accordance with provisions herein and then report to the Interdepartmental Joint Conference for Regulation of Financing Guarantee Business for filing.
Article 53 If any financing guarantee company that has been established before implementation of the measures herein does not conform to the provisions herein, it shall satisfy the requirements as prescribed herein before Mar.31, 2011. The specific plans for regulation and rectification shall be formulated by the People’s governments of provinces, autonomous regions and municipalities directly under the Central Government.
Article 54 The measures herein shall enter into force as of the date of promulgation.
China Banking Regulatory Commission, the National Development and Reform Commission, the Ministry of Industry and Information Technology of People's Republic of China, the Ministry of Finance of People's Republic of China, the Ministry of Commerce of People's Republic of China , the People's Bank of China and the State Administration for Industry & Commerce of People's Republic of China 2010-03-08
Editor (Compiler): Shanghai International lawyers
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