Representative Christopher H. Smith, Chair
Senator Jeff Merkley, Cochair
PRC Legal Provisions
Additional Laws and Regulations
Decision Regarding Amending Articles 68 and 158 of the "Rules on Coal Mine Safety" (Chinese Text)
December 8, 2006
The following text was retrieved from the Chinese Central Government <a href="https://www.gov.cn/ziliao/flfg/2006-11/13/content_440444.htm">Web site</a> on December 4, 2006. |
Circular Regarding Supervising and Assessing the Launch of Coal Mine Rectification and Closure Work
December 8, 2006
The following text was retrieved from the Chinese central government <a href="https://www.gov.cn/gzdt/2006-10/30/content_428028.htm">Web site</a> on October 31, 2006. |
Circular Regarding Reviewing Coal Mine Production Capacity (Chinese Text)
December 8, 2006
The following text was retrieved from the Changsha, Hunan Safety Production Supervision and Administration Office <a href="https://www.hunansafety.gov.cn:81/view.asp?aid=175&fileid=2049">Web site</a> on December 5, 2006. |
Interim Provisions on Sanctioning Government Employees for Behavior Violating Law and Discipline in the Safety Production Area (Chinese Text)
December 8, 2006
The following text was retrieved from the Fuzhou, Jiangxi People's Government <a href="https://www.jxfz.gov.cn/zhengwu/zcfagui/20061127102649.asp">Web site</a> on December 4, 2006. |
Provisions on Collective Contract (Chinese Text)
December 8, 2006
The following text was retrieved from the Supreme People's Court Web site on July 10, 2006. |
Labor Contract Law (Draft) (Chinese Text)
December 8, 2006
The following text was retrieved from the National People's Congress Web site on December 8, 2006. |
Management Measures for Imports of Auto Parts Having the Characteristics of a Complete Automobile (Chinese Text)
December 8, 2006
The following text was retrieved from the Xinhua Web site on December 8, 2006. |
General Administration of Quality Supervision, Inspection and Quarantine Public Notice 2004[73] (Chinese Text)
December 8, 2006
The following text was retrieved from the Ministry of Commerce Web site on August 23, 2006. |
Circular Regarding Certain Issues With Foreign Invested Non Commercial Enterprises Expanding the Scope of Retail Operations (Chinese Text)
December 8, 2006
The following text was retrieved from the Ministry of Commerce Web site on May 16, 2006. |
Rules for Establishment of Securities Companies with Foreign Equity Participation (Chinese Text)
December 8, 2006
The following text was retrieved from the State Council Information Office Web site on July 7, 2006. |
Measures for the Administration of Securities Investment Fund Management Companies
December 8, 2006
The following text was retrieved from the Ministry of Commerce's China Investment Guide Web site on July 7, 2006. |
Measures on Implementing the Items Subject to Administrative Licensing for China-Funded Commercial Banks
December 8, 2006
The following text was retrieved from the Ministry of Commerce Web site on May 5, 2006. <HR> Decree No.2, 2006 of China Banking Regulatory Commission, Promulgating the Measures on Implementing the Items Subject to Administrative Licensing for China-Funded Commercial Banks Measures on Implementing the Items Subject to Administrative Licensing for China-Funded Commercial Banks have been approved and passed by China Banking Regulatory Commission on November 10, 2005. It is now promulgated and shall be put into effect as of February 1, 2006. Chairman of China Banking Regulatory Commission: Liu Mingkang January 12, 2006 |
Circular Regarding Certain Questions Regarding the Implementation of the "Measures for the Administration of Securities Investment Fund Management Companies" (Chinese Text)
December 8, 2006
The following text was retrieved from the State Council Information Office Web site on July 7, 2006. |
Public Notice Regarding Implementation of WTO Accession Commitments (Chinese and English Text)
December 8, 2006
The following translation was retrieved from the Chinese Insurance Regulatory Commission <a href="https://www.circ.gov.cn/Portal0/InfoModule_1146/18409.htm">Web site</a> on July 11, 2006. The Chinese text was retrieved from the Chinese Insurance Regulatory Commission<a href="https://www.circ.gov.cn/Portal0/InfoModule_1146/18409.htm">Web site</a> on July 11, 2006. <HR> CIRC Gazette Regarding Implementation of WTO Accession Commitments -------------------------------------------------------------------------------- 2005-12-22 Pursuant to China’s WTO accession commitments, as of today, foreign-funded life insurance companies are permitted to be engaged in health insurance, group insurance, and pension/annuity business; geographical limitations on establishment of foreign-funded insurance institutions are removed; and shares controlled by foreign equity-holders can be as high as 51% for joint ventures of insurance brokerage companies. Foreign-funded life insurance companies may apply for adjustments to “Insurance Institutional Legal Person License” and “Insurance Business License” as per relevant rules. China Insurance Regulatory Commission December 11, 2004 |
Measures on the Administration of Foreign Finanicial Institutions Taking Equity Stakes in Chinese Invested Financial Institutions
December 8, 2006
The following translation was retrieved from the China Banking Regulatory Commission <a href="https://www.cbrc.gov.cn/mod_en00/jsp/en004002.jsp?infoID=552&type=1">Web site</a> on July 10, 2006. The Chinese text was retrieved from the Xinhua Web site on July 10, 2006. <HR> Order of China Banking Regulatory Commission (No. 6, 2003) Following the approval of the State Council, the Administrative Rules Governing the Equity Investment in Chinese Financial Institutions by Overseas Financial Institutions is hereby promulgated by China Banking Regulatory Commission. Chairman LIU Mingkang December 8, 2003 Administrative Rules Governing the Equity Investment in Chinese Financial Institutions by Overseas Financial Institutions Article 1 The Administrative Rules Governing the Equity Investment in Chinese Financial Institutions by Overseas Financial Institutions (hereinafter referred to as the Rules) is formulated for the purpose of regulating the activities in respect to the equity investment by overseas financial institutions in Chinese financial institutions, thereby optimizing the capital structure of Chinese financial institutions. Article 2 The Rules is applicable to the equity investment by overseas financial institutions in a legally incorporated Chinese financial institution. The term "overseas financial institutions" referred to in the Rules shall include international financial institutions and foreign financial institutions, whereby the international financial institutions shall refer to the World Bank and its affiliated entities, other inter-governmental financial development institutions, and other international financial institutions recognized by China Banking Regulatory Commission (hereinafter referred to as the CBRC); the foreign financial institutions shall refer to the financial holding companies, commercial banks, securities firms, insurance companies, fund investment companies and other foreign financial institutions recognized by the CBRC that are incorporated in foreign countries. The term "Chinese financial institutions" referred to in the Rules shall mean the Chinese commercial banks, urban and rural credit co-operatives, trust and investment companies, financial leasing companies, finance companies affiliated to enterprises and other Chinese financial institutions chartered by the CBRC that are legally incorporated within the territory of the People's Republic of China. The term "equity investment proportion" referred to in the Rules is defined as the capital contribution or equity shares of a foreign financial institution as a percentage of the aggregate paid-up capital or the total equity of a Chinese financial institution. Article 3 The CBRC shall be in the position of regulating and supervising the activities in respect to the equity investment in Chinese financial institutions by overseas financial institutions. Article 4 A prior approval from the CBRC shall be obtained for the equity investment in Chinese financial institutions by overseas financial institutions. Article 5 The equity investment in Chinese financial institutions by overseas financial institutions shall be carried out in good faith and with the long-term investment as the objective. Article 6 The equity investment in Chinese financial institutions by overseas financial institutions shall be made in cash. Article 7 An overseas financial institution engaging in equity investment in a Chinese financial institution shall meet the following requirements: (1) Its total assets at the end of the previous year shall be in principle no less than US$10 billion if investing in a Chinese commercial bank; no less than US$1 billion if investing in a Chinese urban or rural credit co-operative; no less than US$1 billion if investing in a Chinese non-bank financial institution; (2) Its long-term credit rating for the last two consecutive years assigned by the international rating agencies recognized by the CBRC shall be favorable; (3) It shall remain profitable for the last two consecutive fiscal years; (4) Where the overseas financial institution is a commercial bank, its capital adequacy ratio shall be no lower than 8 percent; where it is a non-bank financial institution, the ratio of its total capital to its total risk-weighted assets shall be no less than 10 percent; (5) It shall have in place sound internal controls; (6) Its home country (or region) shall have in place sound framework and systems for financial regulation and supervision; (7) Its home country (or region) shall have a favorable economic environment; and (8) It shall satisfy other prudential requirements set out by the CBRC. The CBRC shall have the power to make adjustment to the qualification requirements of the overseas financial institution to reflect the changes in the risk profile of the financial sector and supervisory needs. Article 8 The equity investment proportion of a single overseas financial institution in a Chinese financial institution shall not exceed 20 percent. Article 9 Where the combined equity investment proportion of all overseas financial institutions in a non-listed Chinese financial institution is equal to or exceeds 25 percent, the non-listed Chinese financial institution shall be treated as a foreign-funded financial institution by the regulatory authority. Where the combined equity investment proportion of all overseas financial institutions in a listed Chinese financial institution is equal to or exceeds 25 percent, the listed Chinese financial institution shall still be treated as a Chinese financial institution by the regulatory authority. Article 10 When filing an application for the equity investment in a Chinese financial institution by an overseas financial institution, the Chinese financial institution shall act as the applicant and submit the application to the CBRC for approval. (1) Where the applicant is a wholly State-owned commercial bank, a joint-stock commercial bank, or a non-bank financial institution supervised directly by the CBRC's headquarters, the application shall be submitted directly to the CBRC's headquarters for approval. (2) Where the applicant is a Chinese financial institution other than those provided in the previous paragraph, the application shall be submitted to the CBRC's local office in the location of the applicant, and, following the review and approval of the CBRC's local office, to the CBRC's headquarters for final approval. Article 11 The Chinese financial institution applying for the equity investment by an overseas financial institution shall submit the following documents and information to the CBRC: (1) an application letter for the equity investment; (2) the corporate resolution adopted by the general meeting of shareholders or the board of directors of the Chinese financial institution to approve the proposed equity investment, or the relevant approval document(s) issued by the applicant's supervisory authority; (3) the corporate resolution adopted by the general meeting of shareholders or the board of directors of the overseas financial institution to approve the proposed equity investment; (4) a letter of intent signed by both parties; (5) the annual reports or the audited financial statements including the balance sheet and the income statement of the overseas financial institution for the last three consecutive years; (6) a description of the funding sources, business performance and other related information of the overseas financial institution; and (7) other documents and information required by the CBRC. Where the equity investor is a foreign financial institution, the Chinese financial institution shall also submit the rating report issued by an international rating agency recognized by the CBRC to provide the investor's credit ratings for the past two consecutive years as well as the letter of consent from the investor's home country supervisor. Article 12 Upon receiving a complete set of application documents and information, the CBRC shall provide its decision of approval or denial within three months; if the application is denied, the applicant shall receive a written notice in which reasons for denial are provided. Article 13 Upon receiving the approval from the CBRC, the overseas financial institution shall transfer the full amount of capital required for equity investment to the bank account of the Chinese financial institution within 60 working days, which shall be verified by an accounting firm recognized by the CBRC. Article 14 Where the equity investment by the overseas financial institutions leads to a change in the amount of registered capital or equity structure of the Chinese financial institution, the Chinese financial institution shall proceed to apply for the approval of the change in accordance with applicable procedures and regulations. Article 15 Where a Chinese financial institution is found in violation of the Rules to change its shareholder or its equity structure without approval, it shall face a penalty imposed by the CBRC in accordance with applicable regulations. Article 16 The relevant provisions of the Rules shall be applicable to the increase of the equity holdings of an overseas financial institution in its capacity as an existing shareholder of the Chinese financial institution. Article 17 The Rules shall be applicable to the equity investment in a Chinese financial institution by financial institutions incorporated in Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan region. Where the State Council provides otherwise, the provisions issued by the State Council shall prevail. Article 18 The Rules is not applicable to the activities of the Qualified Foreign Institutional Investors (QFII) to purchase the marketable shares of the listed Chinese financial institutions. Article 19 The activities in respect to equity investment in an auto financing company by overseas financial institutions shall be governed by the relevant provisions of the Administrative Rules Governing the Auto Financing Company. Article 20 The CBRC shall have the power of the interpretation of the Rules. Article 21 The Rules shall enter into effect on December 31, 2003 and shall prevail where there is any discrepancy between the Rules and the formerly promulgated documents. |
Regulations on the Administration of Financial Institutions with Foreign Investment (Chinese and English Text)
December 8, 2006
The following translation was retrieved from the Ministry of Commerce's Invest in China <a href="https://www.fdi.gov.cn/ltlaw/lawinfodisp.jsp?appId=1&language=en&id=ABC00000000000005129">Web site</a> on July 10, 2006. The Chinese text was retrieved from the Ministry of Commerce's Invest in China <a href="https://www.fdi.gov.cn/ltlaw/lawinfodisp.jsp?id=ABC00000000000003944">Web site</a> on July 10, 2006. <HR> Regulations of the People's Republic of China on the Administration of Financial Institutions with Foreign Investment Order [2001] No.340 of the State Council The Regulations of the People's Republic of China on the Administration of Financial Institutions with Foreign Investment has been adopted at the 50th Executive Meeting of the State Council on December 12, 2001 and is hereby promulgated, and shall come into force on February 1, 2002. Premier of the State Council: Zhu Rongji December 12, 2001 Regulations of the People's Republic of China on the Administration of Foreign-Funded Financial Institutions Chapter 1 General Provisions Article 1 These Regulations have been formulated with a view to strengthening and perfecting the administration of financial institutions with foreign investment in China and promoting the steady operation of the banking industry to meet the demands arising from the work of opening to the outside world and economic development. Article 2 The term "financial institutions with foreign investment" mentioned in the regulations is referred to the following institutions which have been approved to be established to operate within the territory of China according to the relevant laws and regulations of the People's Republic of China. 1. Foreign banks whose headquarters are within the territory of China (hereinafter referred to as solely foreign-funded banks); 2. Branches of foreign banks within the territory of China (hereinafter referred to as branches of foreign banks); 3. Joint venture banks within the territory of China established jointly by foreign financial institutions and Chinese companies and enterprises (hereinafter referred to as joint venture banks); 4. Foreign financial companies whose headquarters are within the territory of China (hereinafter referred to as solely financial companies with foreign investment); 5. Joint venture financial companies established jointly by foreign financial institutions and Chinese companies and enterprises (hereinafter referred to as joint venture financial companies). Article 3 Financial institutions with foreign investment shall abide by the laws and regulations of the People's Republic of China and shall not do harm to the social and public interests of the People's Republic of China. The normal operations and legitimate rights and interests of financial institutions with foreign investment shall be protected by the laws of the People's Republic of China. Article 4 The People's Bank of China is the organization that is in charge of the administration and supervision of financial institutions with foreign investment; the branches of the People's Bank of China shall undertake the routine administration and supervision of the financial institutions with foreign investment in their respective areas. Chapter 2 Establishment and Registration Article 5 The minimum limit of registered capital for solely foreign-funded banks and joint venture banks shall be convertible foreign currencies on a par with RMB300 million; the minimum limit of registered capital for solely financial companies with foreign investment and joint venture financial companies shall be convertible foreign currencies on a par with RMB200 million. The registered capital shall be the paid-in capital. The working capital of branches of foreign banks provided by their head offices shall be no 1/7 less than convertible foreign currencies on a par with RMB100 million. The People's Bank of China may, according to the needs of the business scope of financial institutions with foreign investment and the prudent supervision, raise the minimum limit of registered capital or working capital thereof, and prescribe the proportion of Renmingbi thereof. Article 6 In applying for the establishment of a solely foreign-funded bank or a solely foreign-funded financial company, the applicant must be qualified as: 1. a financial institution; 2. having a representative office in China for at least two years; 3. having a total assets of no less than US$10 billion at the end of the year before the application is filed; 4. having a complete financial supervision and control system in the country or region where it is located, and to have been effectively supervised and controlled by the relevant competent authorities of the country or region where it is located; 5. having obtained approval for its application from the relevant competent authorities of the country or region where it is located; 6. having other prudent conditions prescribed by the People's Bank of China. Article 7 In applying for establishing a foreign bank branch, the applicant must be qualified as: 1. having a representative office in China for at least two years; 2. having a total assets of no less than US$20 billion at the end of the year before the application is filed, and a rate of capital sufficiency of not lower than 8%; 3. having a complete financial supervision and control system in the country or region where it is located, and to have been effectively supervised and controlled by the relevant competent authorities of the country or region where it is located; 4. having obtained approval for its application from the relevant competent authorities of the country or region where it is located; 5. having other prudent conditions prescribed by the People's Bank of China. Article 8 To apply for establishing a joint venture bank or a joint venture financial company, the applicant must meet the following conditions: 1. The foreign party must be a financial institution; 2. The foreign party has set up a representative office in China; 3. The total assets of the foreign party shall not be less than US$10 billion at the end of the year before the application is filed; 4. There is a complete financial supervision and control system in the country or region where the foreign party is located, and the foreign party has been effectively supervised and controlled by the relevant competent authorities of the country or region where it is located; 5. The foreign party has obtained approval for its application from the relevant competent authorities of the country or region where it is located; 6. Other prudent conditions prescribed by the People's Bank of China. Article 9 In applying for establishing a solely foreign-funded bank or solely financial company with foreign investment in China, the applicant shall file an application in written form with the People's Bank of China and submit the following materials: 1. An application form for establishing a solely foreign-funded bank or a solely financial company with foreign investment with the name, registered capital and line of business of the bank or financial company to be established; 2. A feasibility study report; 3. The articles of association of the bank or financial company to be established; 4. The business license (copy) and the letter of opinions on the application issued by the relevant competent authority of the country or region where the applicant institution is located; 5. The annual financial statements of the last 3 years of the applicant institution; 6. Other materials as required by the People's Bank of China. Article 10 In applying for establishing a foreign bank branch in China, the head office of the foreign bank shall file an application in written form with the People's Bank of China and submit the following materials: 1. An application form signed by the legal representative with the name of the branch to be established, the amount of working capital appropriated by its head office and the line of business to 2/7 be handled. 2. A feasibility study report; 3. The business license (copy) and the letter of opinions on the application issued by the relevant competent authority of the country or region where the applicant institution is located; 4. The annual financial statements of last 3 years of the applicant institution;and 5. Other materials as required by the People's Bank of China. Article 11 In applying for establishing a joint venture bank or joint venture financial company in China, the parties to the joint venture shall jointly file and application in written form with the People's Bank of China and submit the following materials: 1. An application form for establishing the joint venture bank or joint venture financial company with the name of the new company, the names of joint venture parties, the amount of registered capital, the ratio of investment of each joint venture party and the line of business to be applied for; 2. A feasibility study report; 3. The joint venture contract and articles of association of the joint venture bank or joint venture financial company to be set up; 4. The business licenses (copy) and the letter of opinions on the application issued by the relevant competent authority of the country or region where the foreign parties are located; 5. The annual financial statements of the last 3 years of the foreign party; 6. The relevant materials of the Chinese party; and 7. Other materials as required by the People's Bank of China. Article 12 The materials indicated in Articles 9, 10 and 11, except the annual financial statements, shall have a Chinese translation attached if they are written in a foreign language. Article 13 The People's Bank of China shall make an initial examination of the application for the establishment of financial institution with foreign investment, and shall make a decision on whether to accept it or not within 6 months from the day of receiving the complete application documents. Where the application is accepted, an official application form shall be issued to the applicant; where the application is rejected, the applicant shall be notified in written form to explain the reasons. Under special circumstances that the People's Bank of China can't finish the initial examination and make the decision on whether to accept the application or not within the period prescribed in the preceding paragraph, the period may be extended appropriately, and the applicant shall be informed; however, the extended period shall not exceed 3 months. Article 14 An applicant shall finish the preparations within 6 months from the day of receiving the official application form; where the preparations can't be finished within the prescribed period due to good reasons, the period may be extended for 3 months upon the approval of the People's Bank of China. Where the preparation work can't be finished within the extended period, the decision made by the People's Bank of China on accepting the application shall be invalidated automatically. After the preparation work is finished, the applicant shall fill in the formal application form and submit it to the People's Bank of China for examination and approval, together with the following documents: 1. A name list of the principals of the foreign financial institution to be established and their resumes; 2. Letters of authorization for the principals of the foreign capital financial institution to be established; 3. Certification on verification of capital issued by a statutory capital verification agency; 4. Safety measures and materials of other facilities related to business; 5. Tax and liability guarantee of the head office for its branch bank as in the case of applying for a foreign branch bank; and 6. Other documents as required by the People's Bank of China. Article 15 The People's Bank of China shall make the decision on whether to approve the application or not within 2 months from the day of receiving the complete official application documents for the establishment of a financial institution with foreign investment. Where the application is approved, the financial transaction license shall be issued; where the application is not approved, the applicant shall be notified in written form to explain the reasons. Article 16 Where a financial institution with foreign investment is established upon approval, the applicant shall make the registration with and draw the business license from the administration for 3/7 industry and commerce based on the financial transaction license. Chapter 3 Business Scope Article 17 Solely foreign-funded banks, foreign bank branches and joint venture banks in China may handle part or all of the following businesses within the scope approved by the People's Bank of China: 1. Drawing public deposits; 2. Granting loans of short term, mid term and long term; 3. Handling the acceptance and discount of bills; 4. Trading government bonds and financial bonds, and trading other valuable foreign currency securities other than stocks; 5. Providing letters of credit and guarantees; 6. Handling domestic and foreign settlements; 7. Trading and trading as an agent foreign exchange; 8. Conducting conversion of foreign currencies; 9. Conducting interbank borrowings; 10. Running business of bank cards; 11. Providing safe-keeping services; 12. Providing services of credit rating and consulting; 13. Other businesses approved by the People's Bank of China. Article 18 Solely financial companies with foreign investment, joint venture financial companies may handle some or all of the following businesses within the scope approved by the People's Bank's of China: 1. Drawing deposit with each account no less than 1 million Renmingbi or equivalent convertible currency and with a term of no less than 3 months; 2. Granting short-term, mid-term and long-term loans; 3. Handling the acceptance and discount of bills; 4. Trading government bonds and financial bonds, and trading other valuable foreign currency bonds other than stocks; 5. Providing guarantees; 6. Trading and trading as an agent foreign exchange; 7. Conduction interbank borrowings; 8. Providing services of credit rating and consulting; 9. Providing services of foreign exchange trust; 10. Other businesses approved by the People's Bank of China. Article 19 The scope of areas where financial institutions with foreign investment may run Renmingbi business and the range of their clients shall be ratified by the People's Bank of China according to the relevant provisions. Article 20 To engage in the Renmingbi business, a financial institution with foreign investment shall meet the following conditions: 1. having practiced within the territory of China for not less than 3 years before filing the application; 2. having made profits for 2 successive years before filing the application; 3. other prudent conditions prescribed by the People's Bank of China. Article 21 Where a financial institution with foreign investment wishes to run a new line of business within the business scope approved by the People's Bank, it shall file an application in written form with the People's Bank of China before start the business. The People's Bank of China shall make a decision on whether to approve the application or not within 60 days from the day of receiving the written application. Where the People's Bank of China decides not to approve the application, it shall notify the applicant in written form and explain the reasons. Chapter 4 Supervision and Administration 4/7 Article 22 The interest rates for deposits and loans and commission fees shall be determined by foreign financial institutions according to the relevant regulations promulgated by the People's Bank of China. Article 23 In handling deposits, a foreign financial institution shall lodge reserve against deposits in a branch of the People's Bank of China in the locality, with the ratio to be determined by the People's Bank of China and adjusted according to needs. Article 24 Thirty percent of the working capital of a foreign bank branch shall be in the form of interest-earning assets designated by the People's Bank of China, including the bank deposits designated by the People's Bank of China. Article 25 The rate of capital sufficiency of a solely foreign-funded bank, a joint venture bank, a solely financial company with foreign investment or a joint venture financial company shall not be less than 8%. Article 26 The balance of credits granted to an enterprise and its associates by a solely foreignfunded foreign bank, a joint venture bank, a solely financial company with foreign investment or a joint venture financial company shall not exceed 25 percent of the sum of its capital, except where approval has been obtained from the People's Bank of China. Article 27 The fixed assets of a solely foreign-funded foreign bank, a joint venture bank, a solely financial company with foreign investment or a joint venture financial company shall not exceed 40% of the sum of interests of its owners. Article 28 The proportion of Renmingbi in the assets of a solely foreign-funded foreign bank, a joint venture bank, a solely financial company with foreign investment or a joint venture financial company and the proportion of Renmingbi in its risk assets shall not be less than 8%. The proportion of Renmingbi in the totality of working capital and reserve of a foreign bank branch and the proportion of Renmingbi in its risk assets shall not be less than 8%. The People's Bank of China shall adjust the proportions prescribed in the preceding two paragraphs according to the relevant provisions gradually. Article 29 A foreign financial institution shall ensure the fluidity of its assets. The ratio of the balance of liquid assets and the balance of liquid debts shall not be less than 25%. Article 30 The total amount of deposits from within the territory of China in a foreign financial institution shall not exceed 70% of the total foreign exchange assets of the institution concerned. The People's Republic of China shall adjust the proportion prescribed in the preceding paragraph gradually according to the relevant provisions. Article 31 A foreign financial institution shall draw reserves against bad debts according to the provisions. Article 32 A foreign financial institution shall employ registered Chinese accountants with the approval of the branch of the People's Bank of China in the locality. Article 33 A foreign financial institution shall go through the registration procedures with the administration for industry and commerce according to law if it has the following cases with the approval of the People's Bank of China; 1. Establishing a branch office; 2. Adjusting and transferring its registered capital, adding or reducing the working capital; 3. Altering the name or business office of the institution; 4. Adjusting the business scope; 5. Changing the shareholders that hold not less than 10% of the total amount of capital or stock shares; 6. Amending the articles of association; 7. Replacing senior managerial personnel; 8. Other cases prescribed by the People's Bank of China. Article 34 A foreign financial institution shall submit the financial statements and related materials to the head office of the People's Bank of China and its branches according to the provisions. Article 35 The People's Bank of China and its branch offices have the right to check and verify at any time the deposits, loans, settlements, bad debts and other data of foreign financial institutions, have the right to request the financial institutions with foreign investment to submit the relevant documents, materials and written reports within the prescribed period, and have the right to deal 5/7 with and punish the violations of laws and rules committed by financial institutions with foreign investment. Article 36 The People's Bank of China and its branch offices have the right to request the financial institutions with foreign investment to formulate operation rules, establish and perfect systems of operation management, cash management and safeguarding according to the provisions. Article 37 The financial institutions with foreign investment shall subject themselves to the supervision and check conducted by the People's Bank of China and its branch offices according to law, submit the relevant documents, materials and written reports according to the facts, and shall not refuse, hinder or conceal. Chapter 5 Dissolution and Liquidation Article 38 If a foreign financial institution terminates its operations, it shall file a written application to the People's Bank of China 30 days in advance of the date of termination and shall dissolve and carry out liquidation after getting the approval of the People's Bank of China. Article 39 If a foreign financial institution has become insolvent, the People's Bank of China shall order it to stop operation and take stock within a prescribed limit of time. If it has restored its solvency during the period of stock taking and needs to restore operation, it shall file an application with the People's Bank of China. If it has failed to restore its solvency after the prescribed time limit expires, it shall carry out liquidation. Article 40 If a foreign financial institution has terminated its operations due to dissolution, cancellation according to law or bankruptcy, the specific matters concerning liquidation shall be handled according to the relevant Chinese laws and regulations. Article 41 After the termination of liquidation, a foreign financial institution shall go through the cancellation registration procedures with the original register organization within the time limit prescribed by law. Chapter 6 Legal Liability Article 42 If a foreign financial institution is established or anyone illegally conducts financial businesses without approval of the People's Bank of China, the People's Bank of China shall ban its operation; criminal responsibilities shall be investigated for according to the provisions of the Criminal Law on the crime of unauthorized establishment of financial institution, the crime of illegally drawing public deposits or other crimes; if the case is not serious enough to be subject to criminal punishment, the People's Bank of China shall confiscate the illegal gains and shall impose a fine of not less than 1 time but not more than 5 times the illegal gains; if there is no illegal gains or the illegal gains is less than 100,000 Yuan, a fine of not less than 100,000 Yuan but not more than 500,000 Yuan shall be imposed. Article 43 If a financial institution with foreign investment conducts financial businesses beyond the business scope, the scope of business areas or the scope of clients approved by the People's Bank of China, criminal responsibilities shall be investigated for according to the provisions of the Criminal Law on the crime of illegal business operations or other crimes; if the case is not serious enough to be subject to criminal punishment, the People's Bank of China shall give a warning, confiscate the illegal gains and impose a fine of not less than 1 time but not more than 5 times of the illegal gains; if there is no illegal gains or the illegal gains is less than 100,000 Yuan, a fine of not less than 100,000 Yuan but not more than 500,000 Yuan shall be imposed. Article 44 If a financial institution with foreign investment, within the business scope approved by the People's Bank of China, opens any new line of business without approval, the People's Bank of China shall order it to stop the operations of the new line of business without approval, confiscate the illegal gains and impose a fine of not less than 1 time but not more than 3 times of the illegal gains; if there is no illegal gains or the illegal gains is less than 50,000 Yuan, a fine of not less than 50,000 Yuan but not more than 300,000 Yuan shall be imposed. Article 45 If a financial institution with foreign investment operates in violation of the relevant provisions of Chapter 4 of this Regulations, the People's Bank of China shall give a warning, 6/7 confiscate the illegal gains and impose a fine of not less than 1 time but not more than 3 times the illegal gains; if there is no illegal gains or the illegal gains is less than 50,000 Yuan, a fine of not less than 50,000 Yuan but not more than 300,000 Yuan shall be imposed. Article 46 If a financial institution with foreign investment, in violation of the relevant provisions of this Regulations, refuses or hinders the supervision and check conducted according to law, or submits false documents, materials and written reports, the People's Bank of China shall give a warning and impose a fine of not less than 100,000 Yuan but not more than 500,000 Yuan. Article 47 If a financial institution with foreign investment, in violation of the relevant provisions of this Regulations, fails to submit the financial statements and the relevant documents, materials within the prescribed period, or fails to formulate the relevant operation rules, establish and perfect the relevant management systems, the People's Bank of China shall give it a warning, order it to make corrections within a prescribed period, and impose a fine of not more than 100,000 Yuan. Article 48 If the circumstances of the violation of this Regulations committed by a financial institution with foreign investment are serious, the People's Bank of China may order that financial institutions with foreign investment to suspend its operation for rectification or revoke its financial transaction license, in addition to the punishment given according to the relevant provisions of Article 43, Article 44, Article 45, Article 46 and Article 47 of this Chapter; and the work qualifications of the senior managerial personnel of that financial institution with foreign investment shall be cancelled for a certain period or even for their lifetime. Article 49 If a financial institution with foreign investment violates other laws and regulations of the People's Republic of China, it shall be dealt with by the relevant competent authorities according to law. Chapter 7 Supplementary Provisions Article 50 These regulations apply to financial institutions established and operated by financial institutions from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan areas within the territory of China. Article 51 The methods for the administration of representative offices of foreign financial institutions shall be formulated separately by the People's Bank of China. Article 52 These Regulations shall come into force on February 1, 2001. And the Regulations of the People's Republic of China on the Administration of financial institution with foreign investment promulgated by the State Council on February 25, 1994 shall be nullified simultaneously. 7/7 |
Detailed Rules for the Implementation of the Regulations on the Administration of Foreign-funded Financial Institutions (Chinese and English Text)
December 8, 2006
The following translation was retrieved from the China Banking Regulatory Commission <a href="https://www.cbrc.gov.cn/mod_en00/jsp/en004002.jsp?infoID=814&type=1">Web site</a> on July 10, 2006. The Chinese text was retrieved from the Ministry of Commerce's Invest in China <a href="https://www.fdi.gov.cn/ltlaw/lawinfodisp.jsp?id=ABC00000000000008701">Web site</a> on July 10, 2006. Note: These supercede the <a href="/pages/virtualAcad/index.phpd?showsingle=61489">rules issued in 2002</a>. <HR> Order of China Banking Regulatory Commission (No.4, 2004) Adopted by the 16th Chairmen’s meeting of the China Banking Regulatory Commission (CBRC), the Rules for Implementing the Regulation of the People’s Republic of China Governing Foreign-funded Financial Institutions is hereby promulgated by the CBRC to enter into effect as of September 1st, 2004. Rules for Implementing the Regulation of the People’s Republic of China Governing Foreign-funded Financial Institutions ChapterⅠ General Provisions Article 1 The Rules for Implementing the Regulation of the People’s Republic of China Governing Foreign-funded Financial Institutions (hereinafter referred to as the Rules) is formulated in accordance with the Law of the People’s Republic of China on Banking Regulation and Supervision, the Commercial Banking Law of the People’s Republic of China and the Regulation of the People’s Republic of China Governing Foreign-funded Financial Institutions (hereinafter referred to as the Regulation). Article 2 “Foreign capital” in Item 1 and 4 of Article 2 of the Regulation refers to the capital paid in by an institution incorporated outside the territory of the People’s Republic of China. “Foreign bank” in Item 2 refers to a commercial bank incorporated outside the territory of the People’s Republic of China following the approval or authorization by the financial supervisory authority of the country or region of its incorporation. “Foreign financial institution” in Item 3 and 5 refers to a financial institution incorporated outside the territory of the People’s Republic of China or authorization by the financial supervisory authority of the country following the approval or region of its incorporation. Article 3 A foreign-funded legal entity herein refers to a wholly foreign-funded bank, a Sino-foreign joint-equity bank, a wholly foreign-funded finance company or a Sino-foreign joint-equity finance company referred to in the Regulation. Article 4 The China Banking Regulatory Commission (hereinafter referred to as the CBRC) is the organization responsible for the regulation and supervision of foreign-funded financial institutions; and the CBRC local offices shall be responsible for the day-to-day routine supervision of foreign-funded financial institutions within their jurisdictions. ChapterⅡ Establishment and Incorporation Article 5 The prudential requirements referred to in Article 6, 7 and 8 of the Regulation include but are not limited to the following: ⑴ Sound corporate governance structure; ⑵ Persistently sound operational performance; ⑶ Financial reports drawn up in line with prudent accounting principles and clean report by accounting firms on the financial reports for three consecutive years; ⑷ No record of major violation of laws or regulations or of bad credit; ⑸ Favorable reputation in the banking sector and good image in the society; ⑹ Stable political and economic situations in the home country or region of the applicant in the case of establishing a foreign bank branch, as well as a sound communication mechanism between home and host supervisory authorities; ⑺ Other requirements in relevant laws and regulations on investors in the financial sector. Article 6 The sole shareholder or the largest shareholder of a wholly foreign-funded bank established in accordance with Article 6 of the Regulation must be a commercial bank. The sole shareholder or the largest shareholder of a wholly foreign-funded finance company established in accordance with Article 6 of the Regulation must be a commercial bank or a finance company. The capital adequacy ratio of the commercial bank referred to in this Article shall not be lower than eight per cent. Item 2 and 3 of Article 6 of the Regulation apply to the sole shareholder or the largest shareholder. Article 7 The sole foreign shareholder or the largest foreign shareholder of a joint-equity bank established in accordance with Article 8 of the Regulation must be a commercial bank. The sole foreign shareholder or the largest foreign shareholder of a joint-equity finance company established in accordance with Article 8 of the Regulation must be a commercial bank or a finance company. The capital adequacy ratio of the commercial bank referred to in this Article shall not be lower than eight per cent. Item 2 and 3 of Article 8 of the Regulation apply to the sole foreign shareholder or the largest foreign shareholder. Article 8 The representative office in China established by the applicant or foreign party in Article 6, 7 and 8 of the Regulation refers to a representative office established under the supervision of the CBRC. The end of the year prior to the submission of such an application refers to the end of the accounting year prior to the date of application. Article 9 The prudential requirements referred to in Article 20 of the Regulation and Article 16, 17 and 18 of the Rules include but are not limited to the following: ⑴ Sound corporate governance structure; ⑵ Sound risk management system; ⑶ Sound internal control system; ⑷ Effective management information system; ⑸ Good expertise and management capacity of the senior management; ⑹ Persistently sound operational performance and good asset quality; ⑺ No record of major violation of laws or regulations; ⑻ Effective measures for combating money laundering. Article 10 The feasibility study referred to in Article 9, 10 and 11 of the Regulation and Article 18 of the Rules shall include but not be limited to: basic information of the applicant, analysis of market prospect of the proposed institution, as well as business development plan, organizational structure, projection of asset-liability size and profit for the first three years. The name of the proposed foreign bank branch referred to in Item 1 of Article 10 of the Regulation shall include both its Chinese and English names. The Chinese name shall indicate the nationality and form of liabilities of the foreign bank. Article 11 The term photocopy of business license mentioned in the Regulation and the Rules refers to photocopy of business license or other financial business certificates. The photocopy of business license, power of attorney, letter from the parent institution guaranteeing to honor tax and debt obligation of its branches in China, etc. shall be notarized by an institution authorized by the home country or region or authorized by the embassy or consulates of the People’s Republic of China in the country. This requirement does not apply when the business license is issued by the administration authorities of industry and commerce in China. Article 12 Relevant data about the Chinese party mentioned in Item 6 of Article 11 of the Regulation refers to the photocopy of business license and annual reports of the Chinese party for the latest three years. Article 13 The annual reports referred to in the Regulation and herein shall be audited, with an audit opinion attached by accounting firms certified by the home country or region of the applicant. Annual reports printed in a language other than Chinese or English shall be attached with Chinese or English translation. Article 14 Other data required referred to in Article 9, 10 and 11 of the Regulation include but are not limited to the following materials: ⑴ Applicant applying for the establishment of a foreign-funded financial institution for the first time shall provide an introduction of the financial system and financial supervision laws and regulations of the home country or region; ⑵ The Articles of Association of the applicant; ⑶ Organizational chart of the applicant and the group it belongs to, lists of major shareholders, overseas branches and associated companies; ⑷ Policies or rules on combating money laundering activities stipulated by the applicant. Article 15 With the exception of annual reports, all application documents required herein, if written in a foreign language, shall be attached with Chinese translation. Article 16 Where a foreign bank wants to establish additional branches in China, its existing branch(es) in China shall meet the prudential requirements set by the CBRC, as well as the requirements provided for in Item 2, 3, 4 and 5 of Article 7 of the Regulation. Article 17 The following requirements shall be satisfied when a solely foreign-funded bank or a joint-equity bank applies for establishing a branch: ⑴ The applicant has operated in China for more than three years and remained profitable for two consecutive accounting years prior to the application; ⑵ The capital adequacy ratio of the applicant remains no less than eight per cent; ⑶ For the establishment of each additional branch, the applicant shall allocate a non-callable minimum amount of freely convertible currency equivalent to RMB100 million to the proposed branch as the operating capital of the branch. The aggregate amount of operating capital allocated by the applicant to all its branches, including the proposed one, shall not exceed 60 per cent of its registered capital; ⑷ Other prudential conditions required by the CBRC. Article 18 For the establishment of a branch by a wholly foreign-funded bank or a joint-equity bank in China, the applicant shall provide the following documents (each in three copies) to the CBRC local office where the proposed branch will be located (hereinafter referred to as relevant CBRC local office). After the preliminary review by the relevant CBRC local office, the documents will be sent directly to the CBRC headquarters for final approval with a copy sent to the CBRC local office at a higher level: ⑴ Letter of application signed by the chairman or president (CEO, general manager) of the applicant, which shall include the name of the proposed branch, amount of operating capital to be allocated, intended business activities, etc.; ⑵ Resolution passed by the board of directors on approval of the establishment of the branch; ⑶ A feasibility study; ⑷ A photocopy of the business license; ⑸ The annual reports for the past three years; ⑹ The Articles of Association of the applicant; ⑺ Other documents required by the CBRC. Article 19 The letter of application for the establishment of a foreign-funded legal entity shall be addressed to the CBRC Chairman and signed by the chairman or president (CEO, general manager) of each investor; the letter of application for the establishment of a foreign bank branch shall be addressed to the CBRC Chairman and signed by the chairman or president (CEO, general manager) of the applicant. Article 20 For the establishment of a foreign-funded financial institution, the applicant shall submit the application documents (each in duplicate) required in Article 9, 10 and 11 of the Regulation to the CBRC and submit a copy to the CBRC local office where the proposed branch will be located. Article 21 The CBRC shall make a decision within six months from the date of receiving all application documents required for establishing a foreign-funded financial institution on whether to approve or reject the preparation of the proposed institution and inform the applicant of the decision in writing. After receiving the preparation notice, the applicant shall pick up a formal application form in the relevant CBRC local office within fifteen days after receiving the notice and start the preparatory work. During the preparatory period, the applicant shall set up a preparatory team engaged in daily preparatory work and report the names the team leaders to the relevant CBRC local office. When the preparatory work is finished, the team shall be dissolved automatically. The preparatory period is six months. If the applicant fails to pick up the formal application form within the required time limit, it is prohibited to apply again for establishing an operational office in the same city within one year from the date of receiving the preparation notice. If the applicant receives a rejection notice, it can apply again when satisfying the requirements of establishing a foreign-funded financial institution. Article 22 The principal persons in Article 14 of the Regulation refer to the chairman or president (CEO, general manager) of a foreign-funded legal entity or the president (or general manager) of a foreign bank branch. Article 23 The applicant shall complete the following work within the preparatory period: ⑴ Establishing an internal control system, including internal organizational structure, authorization and credit extension, management of credit funds as well as management policy and operational procedures for capital transaction, book keeping and computer system. The management policy and operational procedures shall be filed with the relevant CBRC local office. ⑵ Establishing a professional team with appropriate number of staff that has be trained on rules and regulations and professional knowledge and can cope with business development and meet the requirements of effective monitoring of major business risks, examination, approval and reexamination of business at different levels, division of labor and checks and balances of key posts, etc.; ⑶ Printing main business vouchers and receipts used for external transactions, samples of which shall be filed with the relevant CBRC local office; ⑷ Installing security facilities that are approved by relevant authorities; relevant certificates shall be filed with the relevant CBRC local office; ⑸ Completing the pre-opening audit on its internal control system, accounting system, computer system, etc. by an accounting firm recognized by the relevant CBRC local office; the audit report shall be filed with the relevant CBRC local office. Article 24 The applicant shall submit an application to the relevant CBRC local office at least one month before the expiration of the preparatory period if it requests for an extension of the preparatory period. The letter of application shall be signed by the persons in charge of the preparatory team. The application will be rejected by the relevant CBRC local office if it is submitted the application beyond the required time limit. The relevant CBRC local office shall make a decision of approval or rejection within fifteen days from the date of receiving the application for extending the preparatory period. In the case of rejection, the relevant CBRC local office shall give a written notice to the applicant explaining the reasons of rejection and send a copy to the CBRC headquarters. Article 25 Upon completion of the preparatory work, the applicant shall submit the letter of application signed by the persons in charge of the preparatory team, the filled application form as well as documents required in Article 14 of the Regulation to the relevant CBRC local office. The application is subject to examination and approval first by the relevant CBRC local office, which shall then send the application directly to the CBRC headquarters for final approval with a copy sent to the CBRC local office at a higher level. Article 26 The CBRC shall make a decision of approval or rejection of the application within two months from the date of receiving the completed formal application form and relevant documents required for establishing a foreign-funded financial institution. The applicant shall pick up the document of approval at the CBRC within fifteen days from the date of receiving a notice from the CBRC. If the application is rejected, the applicant can apply again when meeting all the requirements of establishing a foreign-funded financial institution. Article 27 In the case that the application for establishing a foreign-funded financial institution is approved, the applicant shall apply to the relevant CBRC local office for a prior opening inspection after picking up the document of approval from the CBRC headquarters. The application shall be signed by the chairman or president (CEO or general manager) of the approved foreign-funded legal entity or the president or general manager of the approved foreign bank branch. After the applicant passes the inspection by the relevant CBRC local office, it shall pick up the financial business certificate at the CBRC headquarters by presenting the certificate of inspection. If a foreign-funded financial institution fails to pass the inspection, it may apply to the inspection CBRC office for a re-inspection within ten days from receiving the notice of the inspection failure. Article 28 A foreign-funded financial institution shall make a public announcement of its opening for business in the national newspaper designated by the CBRC headquarters and local newspaper designated by the relevant CBRC local office, and shall give a written notice on the date of opening for business to the relevant CBRC local office before opening for business. Article 29 A foreign-funded financial institution shall open for business within three months from the date of approval of its establishment by the CBRC headquarters, except in the case when an extension is granted by the relevant CBRC local office under special circumstances. When a foreign-funded financial institution applies for an extension of its opening for business, it shall submit extension application to the relevant CBRC local office within two months from the date of approval of its establishment. The application shall be signed by the chairman or president (CEO or general manager) of the foreign-funded legal entity or the president or general manager of the foreign bank branch. The relevant CBRC local office shall make a decision of approval or disapproval within fifteen days from the date of receiving the extension application. If the application is rejected, the relevant CBRC local office shall give a written notice to the applicant explaining the reasons of non-approval and send a copy to the CBRC headquarters. The relevant CBRC local office shall not approve the extension application, if the applicant fails to submit the application within the required time limit. Opening for business may be extended for no more than three months. If a foreign-funded financial institution still fails to open for business within the time limit, the approval of establishment will automatically become invalid and the foreign-funded financial institution shall return the original and copy of financial business certificate to the CBRC headquarters. The applicant shall be prohibited to apply again for establishing an operational office in the same city within one year from the date of expiration of the last establishment approval. Article 30 Restructuring of a foreign bank branch into a foreign-funded legal entity shall be conducted in compliance with legal and prudential principles as well as continuing operation and vice versa. For restructuring into a foreign-funded legal entity, the foreign bank branch shall apply to the relevant CBRC local office in accordance with the requirements of establishing a foreign-funded legal entity. For restructuring into a foreign bank branch, the foreign-funded legal entity shall apply to the relevant CBRC local office in accordance with the requirements of establishing a foreign bank branch. The relevant CBRC local office will send the application directly to the CBRC headquarters for approval with a copy sent to the CBRC local office at a higher level. The application documents shall include the proposed program for the resolution of claims and liabilities during the restructuring process. Chapter III Scope of Business Article 31 A foreign-funded financial institution shall meet the following applicable qualification before applying for conducting foreign exchange business with overseas institutions, foreign-invested enterprises, permanent missions of foreign countries in China, representative missions of Hong Kong, Macau and Taiwan in mainland China, foreigners and residents of Hong Kong, Macau and Taiwan; and conducting prescribed foreign exchange business with non-foreign-invested enterprises. The foreign exchange businesses refer to those described in Article 17 or Article 18 of the Regulation. (1) The operating capital of a foreign bank branch shall be no less than the equivalent of RMB100 million in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall be no less than the equivalent of RMB300 million in freely convertible currencies; (3) The operating capital of each branch of a wholly foreign-funded bank or a joint-equity bank shall be no less than the equivalent of RMB100 million in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall be no less than the equivalent of RMB200 million in freely convertible currencies. Article 32 A foreign-funded financial institution shall meet the following applicable qualification before applying for conducting with all kinds of customers foreign exchange business described as in Article 17 or Article 18 of the Regulation. (1) The operating capital of a foreign bank branch shall be no less than the equivalent of RMB200 million in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall be no less than the equivalent of RMB400 million in freely convertible currencies; (3) The operating capital of each branch of a wholly foreign-funded bank or a joint-equity bank shall be no less than the equivalent of RMB100 million in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall be no less than the equivalent of RMB300 million in freely convertible currencies. Article 33 A foreign-funded financial institution shall meet the following applicable qualification before applying for, in accordance with Article 20 of the Regulation, foreign exchange business with overseas institutions; conducting foreign exchange and renminbi business with foreign-invested enterprises, permanent missions of foreign countries in China, representative missions of Hong Kong, Macau and Taiwan in mainland China, as well as foreigners and residents of Hong Kong, Macau and Taiwan; and conducting prescribed foreign exchange and renminbi businesses with non-foreign-invested enterprises. The foreign exchange and renminbi businesses refer to those described in Article 17 or Article 18 of the Regulation. (1) The operating capital of a foreign bank branch shall be no less than the equivalent of RMB200 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB100 million in freely convertible currencies. (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall be no less than RMB400 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB300 million in freely convertible currencies; (3) The operating capital of each branch of a wholly foreign-funded bank or a joint-equity bank shall be no less than RMB200 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB100 million in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall be no less than RMB300 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB200 million in freely convertible currencies. Article 34 A foreign-funded financial institution shall meet the following applicable qualification before applying for, in accordance with Article 20 of the Regulation, conducting foreign exchange business with all kinds of customers; conducting renminbi business with foreign-invested enterprises, permanent missions of foreign countries in China, representative missions of Hong Kong, Macau and Taiwan in mainland China, as well as foreigners and residents from Hong Kong, Macau and Taiwan; and conducting prescribed renminbi business with non-foreign-invested enterprises. The foreign exchange and renminbi businesses refer to those described in Article 17 or Article 18 of the Regulation. (1) The operating capital of a foreign bank branch shall be no less than RMB300 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB200 million in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall be no less than RMB500 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB400 million in freely convertible currencies; (3) The operating capital of each branch of a wholly foreign-funded bank or a joint-equity bank shall be no less than RMB200 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB100 million in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall be no less than RMB400 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB300 million in freely convertible currencies. Article 35 A foreign-funded financial institution shall meet the following applicable qualification before applying for, in accordance with Article 20 of the Regulation, conducting foreign exchange business with all kinds of customers; and conducting renminbi business with foreign-invested enterprises, permanent missions of foreign countries in China, representative missions of Hong Kong, Macau and Taiwan in mainland China, as well as foreigners and residents of Hong Kong, Macau and Taiwan, and non-foreign-invested enterprises. The foreign exchange and renminbi businesses refer to those described in Article 17 or Article 18 of the Regulation. (1) The operating capital of a foreign bank branch shall be no less than RMB300 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB200 million in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall be no less than RMB600 million, among which the capital in renminbi shall be no less than RMB200 million and that in a foreign currency shall be no less than the equivalent of RMB400 million in freely convertible currencies; (3) The operating capital of each branch of a wholly foreign-funded bank or a joint-equity bank shall be no less than RMB200 million, among which the capital in renminbi shall be no less than RMB100 million and that in a foreign currency shall be no less than the equivalent of RMB100 million in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall be no less than RMB500 million, among which the capital in renminbi shall be no less than RMB200 million and that in a foreign currency shall be no less than the equivalent of RMB300 million in freely convertible currencies. Article 36 A foreign-funded financial institution shall meet the following applicable qualification before applying for, in accordance with Article 20 of the Regulation, conducting foreign exchange and renminbi businesses with all kinds of customers described in Article 17 or Article 18 of the Regulation: (1) The operating capital of a foreign bank branch shall be no less than RMB500 million, among which the capital in renminbi shall be no less than RMB300 million and that in a foreign currency shall be no less than the equivalent of RMB200 million in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity banks shall be no less than RMB1 billion, among which the capital in renminbi shall be no less than RMB600 million and that in a foreign currency shall be no less than the equivalent of RMB400 million in freely convertible currencies; (3) The operating capital of each branch of a wholly foreign-funded bank or a joint-equity bank shall be no less than RMB300 million, among which the capital in renminbi shall be no less than RMB200 million and that in a foreign currency shall be no less than the equivalent of RMB100 million in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall be no less than RMB700 million, among which the capital in renminbi shall be no less than RMB400 million and that in a foreign currency shall be no less than the equivalent of RMB300 million in freely convertible currencies. Article 37 The trade in government bonds, financial bonds and securities in foreign currencies other than stocks, described in Item 4 of Article 17 and Item 4 of Article 18 of the Regulation, includes but is not limited to the following foreign exchange investment: bonds issued by the Chinese and foreign governments, Chinese financial institutions and Chinese non-financial institutions in overseas markets. Article 38 The credit investigation and consultancy service described in Item 12 of Article 17 and Item 8 of Article 18 of the Regulation refer to those related to bank businesses. Article 39 Prescribed foreign exchange business for non-foreign-invested enterprises described in Article 31 and Article 33 of the Rules refers to the businesses of transferring foreign exchange loans into deposits, and engagement in export settlement, import settlement related to the loans and inward remittances. Prescribed RMB business for non-foreign-invested enterprises described in Article 33 and Article 34 of the Rules refers to the businesses of providing matching renminbi loans as part of foreign exchange loan agreements, as well as transferring loans into deposits, and providing guarantee for the non-foreign-invested enterprises that have already received foreign exchange loans extended by the same foreign-funded financial institution. Article 40 The Article 20 of the Regulation sets the qualifications of a foreign-funded financial institution for its initial application for the renminbi business. The Item 1 and 2 of Article 20 of the Regulation require that the applicant, which applies for renminbi business, has operated for at least three years and has remained profitable for two consecutive years prior to the application. A foreign-funded financial institution authorized to conduct renminbi business shall meet the following qualifications before applying for expansion of renminbi business customer base: (1) Remains profitable for two consecutive years prior to the application; (2) Satisfies other prudential requirements prescribed by the CBRC. “Operated for at least three years” refers to the period from the date of establishment approval of the institution to the day of application. “Remains profitable for two consecutive years prior to the application” refers to the two consecutive accounting years, prior to the day of application, for which the financial statements are audited and show profitability. Article 41 A foreign-fund financial institution shall provide the following documents (each in three copies) to the CBRC local office when filing an initial application for renminbi business or expansion of renminbi business customer base. The CBRC local office shall make preliminary review of the application documents, then hand them over with review opinions to the CBRC headquarters for final approval while sending a copy to the CBRC local office at a higher level. (1) Letter of application addressed to the chairman of the CBRC and signed by the chairman or president (CEO, general manager) of the applicant, which shall include the detailed contents of renminbi business or expansion of renminbi customer base, the prospective increase of capital or increase of operating capital, etc.; (2) A feasibility study report; (3) Prospective revision of the Articles of Association (applicable only to a foreign-funded legal entity); (4) Operational procedures and internal control system of the prospective business; (5) Audited balance sheets and income statements of the two consecutive accounting years prior to the day of application; (6) Other documents required by the CBRC. Article 42 A foreign-funded financial institution shall complete the following preparatory work within four months from the date of CBRC approval for its renminbi business or expansion of the customer base: (1) Transferring the increased capital or operating capital to its account in China, and submitting to the CBRC local office a capital verification certificate issued by an accounting firm which is accepted by the CBRC office; (2) Building up a professional team with an appropriate number of staff capable of coping with business development; (3) Printing important business vouchers and documents to be used for external transactions, and handing in the samples to the CBRC local office; (4) Installing security facilities that are approved by relevant authorities, and handing in the certificates to the CBRC local office; (5) Formulating the internal controls and operational procedures of renminbi business, and submitting to the CBRC local office. If the foreign-funded financial institution fails to finish the preparatory work within four months, the approval issued by the CBRC will automatically become invalid. Article 43 A foreign financial institution shall submit an inspection application to the CBRC local office upon completion of its preparatory work. The application shall be signed by the chairman or president (CEO, general manager) of the foreign-funded legal entity or by the president or general manager of the foreign bank branch. The foreign-funded financial institution shall, upon passing the inspection, obtain an approval document from the CBRC headquarters by presenting the inspection certificate and capital verification certificate. In case that the foreign-funded financial institution fails to pass the inspection, it may apply for re-inspection to the inspection CBRC office ten days after receiving the notice of the inspection result. Article 44 A foreign-funded financial institution shall, before starting the newly approved renminbi business, make a public announcement in nationwide newspaper designated by the CBRC headquarters and local newspaper designated by the CBRC local office. Article 45 The geographical scope for renminbi business by foreign-funded financial institutions is limited to the cities where foreign-funded financial institutions are allowed to engage in renminbi business. Article 46 The new business products described in Article 21 of the Regulation refer to the financial products that have not yet been provided by banks or finance companies in China or those that have already been provided by banks or finance companies in China but are considered high risk. A foreign-funded financial institution shall, when applying for new business products, submit the following documents (each in three copies) to the CBRC local office. The CBRC local office shall make a preliminary review of the application documents, then hand them over with review opinions to the CBRC headquarters for final approval while sending a copy to the CBRC local office at a higher level. (1) Letter of application signed by the representative authorized by the head office of the foreign-funded financial institution; (2) Detailed information of the intended business activities and necessary preparations for such business activities, including operational procedures, risk-benefits analysis, control measures, professional staff and computer systems, etc.; (3) Other documents required by the CBRC. The CBRC shall make a decision of approval or rejection on the application within sixty days from the date of receiving the complete application documents from the foreign-funded financial institution. Article 47 If a foreign-funded financial institution intends to introduce new business products in more than two branches (inclusive) in China, the application documents may be submitted in a unified way by the head office of the foreign-funded legal entity or the reporting branch of the foreign bank to the CBRC local office. The CBRC local office shall make a preliminary review of the application documents, then hand them over with review opinions to the CBRC headquarters for final approval while sending a copy to the CBRC local office at a higher level. The foreign-funded financial institution and its network, having obtained the approval, shall submit written reports to the CBRC local offices within five days from the date of initiating the new business. Article 48 A foreign-funded financial institution shall follow the application procedures in Article 46 of Article 47 of the Rules when applying for “other businesses” described in Item 13 of Article 17 and Item 10 of Article 18 of the Regulation. Article 49 A foreign-funded financial institution and its network shall submit written reports to the CBRC local offices within five days from the date of initiating the business products or services within the approved business scope and products. Article 50 A foreign-funded financial institution may engage in the business of sale and purchase of foreign exchange in accordance with applicable regulations. Article 51 A wholly foreign-funded bank, a joint-equity bank and a foreign bank branch that is authorized to conduct the renminbi business, may engage in renminbi inter-bank borrowing business in accordance with applicable regulations. Chapter Ⅳ Qualification Requirement for Senior Managers Article 52 Senior management in a foreign-funded financial institution shall have the following qualifications: (1) Familiar with and observant of the Chinese financial supervisory laws and regulations; (2) Equipped with professional knowledge, working experience and organizational capabilities compatible with the held positions; (3) No record of misconduct. Article 53 A person under any of the following circumstances shall not be allowed to assume the post of senior management in a foreign-funded financial institution: (1) Having criminal record; (2) Having been severely penalized for violation of laws and regulations; (3) Bearing major or direct management responsibility for bankruptcy, or serious violation of regulations, or revocation of financial business certificate or business license of the financial institution, the enterprise or corporation which she or he has worked for and the penalty has been imposed on for less than five years; (4) Having caused serious damages or losses, due to fateful mistakes, to the financial institution, the enterprise or corporation that she or he has worked for in the last five years. Article 54 The CBRC adopts an approval procedure and a prior filing procedure for the administration of senior management of a foreign-funded financial institution. Article 55 The approval procedure applies to the senior management of the following posts in a foreign-funded financial institution, for which the candidate shall have the following applicable qualifications: (1) Serving as chairman or president (general manager) of a foreign-funded legal entity, the candidate shall have over ten years of experience in the financial sector or over fifteen years of experience in related economic sector (including over five years of experience in the financial sector) with manager position of business department or above for over three years; (2) Serving as vice chairman, vice president (deputy general manager) of a foreign-funded legal entity or president (general manager) of a foreign bank branch, the candidate shall have over five years of experience in the financial sector or over ten years of experience in related economic sector (including over three years of experience in the financial sector) with manager position of business department or above for over two years; (3) Serving as vice president (deputy general manager) of a foreign bank branch or president of a sub-branch, the candidate shall have over four years of experience in the financial sector or over six years of experience in related economic sectors (including over two years of experience in the financial sector); (4) The candidate shall have at least a bachelor degree; an extra over six years of experience in the financial sector or over eight years of experience in related economic sectors (including over four years of experience in the financial sector) is required if the academic degree requirement is not met. Article 56 The CBRC is responsible for approving or revoking the qualification of the following personnel: (1) Chairman, president (general manager) of a foreign-funded legal entity; (2) President (general manager) of a foreign bank branch; The CBRC local offices are responsible for approving or revoking the qualification of the following personnel: (1) Vice chairman or vice president (deputy general manager) of a foreign-funded legal entity; (2) Vice president (deputy general manger) of a foreign bank branch or president of a foreign bank sub-branch. Article 57 For the senior management approval, the following documents (each in three copies) shall be submitted to the CBRC local office: (1) Letter of application to the CBRC signed by the authorized representative of the applicant. Application subject to the approval of the CBRC shall be addressed to the chairman of the CBRC; and that subject to the approval of the CBRC local office shall be addressed to the head of the CBRC local office; (2) A Power of Attorney for the proposed senior management person signed by the authorized representative of the applicant; and Power of Attorney for the authorized representative; (3) Curriculum Vitae of the candidate; (4) Photocopies of the identification card and academic diploma of the candidate; (5) A resolution of the Board of Directors or the shareholders’ meeting shall be submitted if such a meeting is required according to the Articles of Association of the foreign-funded legal entity; (6) Statement of non misconduct record signed by the candidate; (7) Other documents required by the CBRC. Article 58 The CBRC headquarters may, when receiving the application documents from a foreign-funded financial institution, have an interview with the candidate president (general manager) before his or her tenure; and the CBRC local office may have such an interview with other relevant candidates before their tenure. Article 59 The minimum tenure of the senior management of a foreign-funded financial institution, to whom the approval procedure is applicable, shall be two years. The president (general manager) and vice president (deputy general manager) shall be prohibited to take executive posts in other business institutions during the tenure. Senior management of a foreign-funded financial institution cannot simultaneously take any post in the representative offices in China. Article 60 The “a senior executive” described in Item 7 of Article 33 in the Regulation refers to a member of senior management to whom the approval procedure is applicable. Article 61 The filing system applies to senior management of the following posts in a foreign-funded financial institution: (1) Director of the board, assistant to the president (general manager), chief financial officer, chief auditing officer, senior compliance manager and chief operation officer of a foreign-funded legal entity; (2) Chief Financial Officer, Compliance Manager and Chief Operation Officer of a foreign bank branch; (3) Vice president of a foreign bank sub-branch; (4) Other senior management posts that the CBRC deems necessary to be filed for record. Article 62 For the senior management prior filing the following documents (each in three copies) shall be submitted to the CBRC local office: (1) Letter of application signed by the authorized representative of the foreign-funded financial institution; and the Power of Attorney for the authorized representative; (2) Curriculum Vitae of the candidate; (3) Photocopies of the identification card and academic diploma of the candidate; (4) Statement of non-misconduct record signed by the candidate; (5) Other documents required by the CBRC. Article 63 The photocopies of the curriculum vitae, identification card and academic diploma of the candidates shall be signed by the authorized representative of the applicant. Article 64 In case that the president (general manager) of a foreign-funded financial institution or its branch is absent from office for over a month, he or she shall report to the CBRC local office in written; and the president (general manager) shall be replaced in case of his absence from office for over three consecutive months with no justified explanations. Article 65 The CBRC may revoke the qualification of a member of senior management for a period up to lifelong according to the severity and aftermath if he or she is responsible for any of the following circumstances: (1) He or she has been prosecuted for criminal activities; (2) He or she refuses, interferes, hampers or seriously influences legitimate supervision by the CBRC; (3) Serious property damages and losses or serious financial criminal cases have been incurred as a result of inefficient or weak internal controls; (4) The institution which he or she works for is taken over, acquired and merged or declared bankrupt because of serious violation of laws and regulations, inefficient internal controls or persistently poor management; (5) The institution which he or she works for suffers heavy losses because of persistently poor management; (6) The CBRC has discovered illegal or rule-breaking activities or other circumstances or conducted by the person prior to his or her appointment, that make him/her inappropriate to take the post; (7) Other circumstances identified by the CBRC. Article 66 For senior management subject to approval by the CBRC, the CBRC headquarters shall make a reply within thirty days from the date of receiving complete application documents. For senior management subject to approval by the CBRC local office, the CBRC local office shall make a reply within thirty days from the date of receiving complete application documents. A written notice explaining the reasons for non-approval shall be issued to the applicant if the application is rejected. For senior management subject to prior filing with the CBRC local office, the application shall be taken as approved if the CBRC local office does not make a written objection within thirty days from the date of receiving complete documents. Chapter V Supervision and Regulation Article 67 If a foreign bank has established more than two branches (inclusive) in China, its head office or its regional head office shall designate a reporting branch to consolidate the financial statements and other relevant information of all its branches in China; it shall also designate a compliance manager for the China region and report to the CBRC headquarters and the relevant CBRC local offices in writing of the designation. The CBRC and its local offices shall supervise these institutions on a consolidated basis. Article 68 The interest-bearing assets referred in Article 24 of the Regulations includes the interest-bearing assets in foreign exchange and renminbi. Thirty percent of the foreign exchange operating capital of a foreign bank branch shall be maintained in the form of foreign currency time deposits with a maturity of no less than six months as foreign exchange interest-bearing asset; thirty percent of the renminbi operating capital shall be maintained in the form of renminbi government bonds or renminbi time deposits with a maturity of no less than six months as renminbi interest-bearing asset. The above-mentioned time deposits in foreign or local currencies with a maturity of no less than six months shall be put into no more than three (inclusive) Chinese commercial banks in China with sound operation and strong financial strength. The interest rate of the time deposits of interest-bearing assets shall be decided by both sides according to relevant regulations. The foreign bank branch shall report to the relevant CBRC local offices the banks where the interest-bearing assets is deposited, as well as the volume, interest rate and maturity. The foreign banks shall not be allowed to use the interest-bearing assets held in the form of time deposits without the approval of the relevant CBRC local offices. The banks where the interest-bearing assets is deposited shall handle the change of interest-bearing assets according to the documents approved by the relevant CBRC local offices. The foreign banks shall not be allowed to hypothecate and repurchase the interest-bearing assets in the form of renminbi government bonds, or adopt any other solutions that may influence the dominance of the interest-bearing asset. This Article is not applicable to the branches set up by wholly foreign-funded banks and joint-venture banks in China. Article 69 The capital mentioned in Article 26 and 28 of the Regulations refers to the aggregate of paid-in capital, capital surplus, profit surplus, retained earnings, general loan loss provisions, revaluation reserves and the amount of subordinated bonds with a maturity of five years or longer subtracting capital investment in non-consolidated financial institutions. The sum of operating capital and reserves mentioned in Article 28 of the Regulations refers to the sum of the operating capital, retained earnings and the general loan loss provisions. The risk assets mentioned in Article 28 of the Regulations refer to the risk-weighted assets on and off balance sheet calculated according to the relevant regulations on risk-weighted assets. The methods of calculation and review of the capital adequacy ratio mentioned in Article 25 of the Regulations shall be in line with the Regulation Governing Capital Adequacy Ratio of Commercial Banks of the CBRC. The ratio provided in Article 28 of the Regulations shall be calculated for each individual branch of the foreign-funded financial institutions within China, and reviewed quarterly based on the average balance at the end of each month. The CBRC may make special requirement on capital adequacy ratio based on the risk profile of a foreign-funded legal entity. Article 70 Associated enterprises mentioned in Article 26 of the Regulations refer to the circumstance that one enterprise has the capacity to directly or indirectly control the other enterprise, that one enterprise is controlled by the other enterprise, or that two or multiple enterprises are under the control of one party (such as: parent company, subsidiary company and subsidiary companies under the same parent company); joint venture; affiliated company; companies directly controlled by other company’s major investors, senior managerial personnel, or their close relations (Including: directly related family members within three generations and indirectly selected collateral relatives within two generations.); other companies to which the assets and profit can be transferred to. Credit authorization mentioned in Article 26 of the Regulations and in Article 95 of the Rules includes lendings, borrowings, foreign trade finance, acceptance and discount of bills, overdraft, factoring, guarantee, loan commitment and issuing letter of credit. Article 71 The ratio provided in Article 26 and 27 of the Regulations shall be examined quarterly based on the balance at the end of each month. Article 72 The current assets mentioned in Article 29 of the Regulations refer to cash, gold, deposits with the People’s Bank of China, inter-bank deposits, inter-bank placing with a maturity of no more than one month, inter-bank lending with a maturity of no more than one month, net asset balance of the creditor resulted from inter-bank transaction with the overseas correspondents and affiliated branches, discount and other purchased notes mature within one month, other account receivables mature within one month, loans with a maturity of no more than one month, bonds mature within one month and other assets that can be cashed in within one month. The foreseeable irrevocable part shall be deducted from the above-mentioned assets. The current assets mentioned above does not include the interest-bearing assets. The current liabilities mentioned in Article 29 of the Regulations refer to the deposits, inter-bank borrowings, inter-bank borrowings over four months, account payables and other liabilities that shall become due within one month as well as the net debt balance of the debtor resulted from overseas intra-bank transactions and affiliated institutions The foreign-funded financial institutions shall calculate the liquidity ratio each day in renminbi and foreign exchange respectively and maintain the required liquidity ratios provided in Article 29 of the Regulations. The liquidity ratio of a foreign-funded legal entity shall be examined by the CBRC on a consolidated basis while the liquidity ratio of the branches of foreign banks shall be examined individually. Article 73 The foreign exchange deposits taken within the territory of the People’s Republic of China mentioned in Article 30 of the Regulations include inter-bank non-inter-bank foreign exchange deposits. “Total foreign exchange assets held within the Chinese territory” is calculated in the following way: Total Foreign Exchange Assets within the territory of China = Total Foreign Exchange Assets ? Overseas Intra-bank Foreign Exchange (Asset) Transactions ? (Asset) Transactions with Overseas Affiliated Institutions ?Overseas Foreign Exchange Loans ? Foreign Exchange Deposits in Overseas Banks ? Foreign Exchange Lending to Overseas banks ?Overseas Foreign Exchange Investment Overseas foreign exchange investment does not include the following foreign exchange investment: securities of the Chinese government, Chinese financial institutions and non-financial institutions issued overseas. The ratio provided in Article 30 of the Regulations shall be examined based on the balance at the end of each month for each institution. Article 74 The foreign-funded financial institutions shall report their assets, liabilities and owner’s equity in a truthful manner. Article 75 The intra-bank transfer of credit assets, including those from the head office of a foreign-funded financial institution is subject to approval by the relevant CBRC local office. Article 76 The foreign-funded financial institutions shall establish a risk asset classification system that meets the minimum criteria stipulated in the Guidelines on the Loan Classification by Risks and report the relevant CBRC local offices the mapping between their criteria and the criteria stipulated in the Guidelines on the Loan Classification by Risks to the relevant CBRC local office. In case that any changes occur in the mapping, the foreign-funded financial institutions shall report such changes in writing to the relevant CBRC local offices. Article 77 The foreign-funded financial institutions shall set aside loan loss provisions according to the regulations governing banks’ loss provisioning. Article 78 The foreign-funded financial institutions shall adopt prudential accounting practices and implement the rules governing accounting practices of financial institutions. Article 79 The terms of credit provided by a foreign-funded financial institution to related parties shall be no more preferential than the terms of similar credits to other borrowing parties. The related parties in this Article refer to: (1) Directors, supervisors, managers, credit officers of the foreign-funded financial institution and their close relatives; (2) Corporations, enterprises or other economic organizations in which the parties in Item (1) have investment or assume senior managerial post; (3) Shareholders of a foreign-funded corporate entity and their associated enterprises. Article 80 “The Chinese Certified Public Accountant” mentioned in Article 32 of the Regulations refers to the Chinese certified public accountant who has previously conducted qualified annual auditing and has the experience of auditing financial institutions. One month before hiring Chinese certified public accountants to conduct annual auditing, the foreign-funded financial institutions shall report in writing to the relevant CBRC local offices the basic information of the accounting firm and the chief accountants to conduct the auditing. Article 81 At the end of each accounting year, a foreign-funded financial institution shall hire an accounting firm recognized by the CBRC to conduct annual auditing and submit the auditing report with management improvement suggestions to the relevant CBRC local office within four months after the end of the accounting year. For a foreign-funded legal entity or a foreign bank with more than two (inclusive) branches in China, the auditing shall be carried out by an accounting firm recognized by the CBRC over all the operational offices on a consolidated basis and the auditing report with management improvement suggestions shall be submitted to the relevant CBRC local office where the head office of the foreign-funded legal entity or the reporting branch of the foreign bank is located. The annual auditing conducted on the foreign-funded financial institutions shall at least cover the following aspects: financial statements, risk management, operational controls, compliance and assets quality. The annual auditing conducted on the foreign-funded legal entity shall at least cover the following aspects: capital adequacy ratio, assets quality, internal management, profitability, liquidity and market risk management. Article 82 The following documents shall be submitted to the relevant CBRC local office if a foreign-funded legal entity adjusts or transfers the registered capital or changes shareholders who hold more than 10 percent of the total amount of capital or total shares, or a foreign bank applies to change the total amount of operating capital of its branches in China. After preliminary review by the relevant CBRC local office, the application shall be directly reported to the CBRC headquarters for final approval and in the mean time, be copied to the CBRC office at higher level: (1) Letter of application signed by the Chairman or President (CEO or General Manager) of the applicant; (2) Resolution on adjustment or transfer of registered capital or change of shareholders passed by the board of directors of the foreign legal entity; (3) If the foreign partner of a foreign-funded legal entity changes the amount or percentage of its equity investment, it shall provide the resolution passed by the board of directors or the letter of opinion signed by its legal representative on such proposed changes. If the foreign partner is a financial institution, it shall provide the letter of opinion from the financial supervisory authority of its home country or region; (4) The assignment agreement or contract signed by relevant shareholders of the foreign-funded corporate entity. (5) Other documents required by the CBRC. Article 83 If approval is granted to the application for changing registered capital or operating capital or the shareholders who hold more than ten percent of the total capital or shares by a foreign-funded financial institution, the institution shall hire a certified public accounting firm recognized by the relevant CBRC local office to verify capital within thirty days from the date of receiving the approval by the CBRC and submit the capital verification certificate to the relevant CBRC local office. Article 84 The new shareholders of a foreign-funded legal entity shall meet the criteria stipulated in the Regulation and the Rules. Article 85 If a foreign bank wants to change the name of its branches in China because of merger, split or other reasons, it can go through the formal renaming procedure in two steps or directly: The head office of the foreign bank can make an initial application to the CBRC headquarters and submit the following documents: (1) Letter of application addressed to the Chairman of the CBRC and signed by the Chairman or President (CEO or General Manager) of the foreign bank; (2) Letter of confirmation or letter of approval on the merger, split or other activities issued by the financial supervisory authority of its home country or region; The CBRC headquarters shall confirm the renaming application in a signed letter after receiving the complete application documents. The foreign bank shall, within 5 days after it formally change its name, report to the CBRC headquarters and its relevant local office, and submit the following documents to the CBRC headquarters within thirty days so as to fulfill the formal procedures for changing name(s) of its branch(es) in China: (1) Letter of application addressed to the Chairman of CBRC signed by the Chairman or President (CEO or General Manager) of the new institution; (2) The application form issued by the CBRC and filled in accordance with relevant regulations; (3) Formal approval letter issued by the financial supervisory authority of the home country or region for incorporation of the new institution; (4) Photocopy of the business license of the new institution or the other documents of approval for operating financial business; (5) Letter of guarantee for tax and debt obligations incurred by the branch(es) in China signed by the Chairman or President (CEO or General Manager) of the new institution; (6) Consolidated financial statement of the new institution; (7) The Articles of Association of the new institution; (8) Name list of the board of directors of the new institution; (9) Organizational structure chart of the new institution; (10) Curriculum vitae, documents of identification and academic degree of the president or general manager of the branch(es) in China of the new institution; (11) Power of attorney to the president(s) or General Manager(s) of the branch(es) in China signed by the Chairman or President (CEO or General Manager) of the new institution. The foreign bank shall submit the initial and formal application documents to the CBRC and in the meantime submit photocopies of documents to the relevant CBRC local office. Article 86 The registered capital or operating capital and business scope of a foreign-funded financial institution shall be reconfirmed by the CBRC headquarters after the merger or split of the institution. Article 87 For renaming of a foreign-funded financial insti |
Commercial Bank Law (Chinese and English Text)
December 8, 2006
The following translation was retreived from the Ministry of Commerce's <a href="https://policy.mofcom.gov.cn/claw/record_en.aspx?db=mainlanden&lawid=e00238">Web site</a> on July 10, 2006. The Chinese text was retrieved from the China Banking Regulatory Commission <a href="https://www.cbrc.gov.cn/mod_cn00/jsp/cn004002.jsp?infoID=2421&type=1">Web site</a> on July 10, 2006. <HR> Commercial Bank Law of the People's Republic of China Order [1995] No.47 of the President of the People's Republic of China Adopted by the Standing Committee of the Eighth National People's Congress in l995 Chapter I General Provisions Article 1 This Law is formulated to protect the legitimate rights and interests of commercial banks, depositors and other clients, standardize the behavior of commercial banks, improve the quality of funds, strengthen supervision and administration, ensure safety and soundness of commercial bank, maintain a normal financial order and promote the development of the socialist market economy. Article 2 The commercial banks referred to in this Law are bodies corporate established in accordance with this Law and the Company Law of the People's Republic of China to receive money deposits from the public, extend loans, provide settlement services and do other relevant businesses. Article 3 A commercial bank may engage in some or all of the following businesses: (1) receiving money deposits from the public; (2) extending short, medium and long-term loans; (3) providing domestic and international settlement services; (4) discounting bills; (5) issuing financial bonds; (6) acting as agent of issuing, cashing and underwriting government bonds; (7) dealing in government bonds; (8) inter-bank call-money business; (9) dealing or acting as agent in foreign exchange transactions; (10) providing L/c service and guarantee; (11) acting as agent in collection and payment and insurance business; (12) providing safe deposit box service; (13) other businesses approved by the People's Bank of China. The business scope of a commercial bank is defined by the statute thereof and reported to the People's Bank of China for approval. Article 4 A commercial bank operates independently, takes up responsibility for all risks it may encounter and for its own profits and losses it may bear, and exercises self-regulating mechanism on the management principle of economic efficiency, safety and liquidity. A commercial bank shall conduct its business in accordance with the law, free from interference by any department or individual. A commercial bank shall assume civil responsibilities independently with its entire assets as a body corporate. Article 5 A commercial bank shall abide by the principle of equality, voluntariness, fairness, honesty and good faith in doing business with its clients. Article 6 A commercial bank shall protect its depositors' legitimate rights and interests from encroachment by any organization or individual. Article 7 In doing credit business, a commercial bank shall strictly examine the credibility of a borrower and persist in extending loans against collateral in order to ensure recalling loans on time. A commercial bank is protected by law to retrieve the principal and interests of a loan from the borrower thereof in accordance with the law. Article 8 A commercial hank shall abide by the relevant provisions of the law and administrative decrees and regulations in doing business and shall not impair the interests of the state or the public. Article 9 A commercial bank shall abide by the principle of fair competition in doing its business and refrain from unfair competition. Article 10 A commercial bank shall be subject to supervision and administration by the People's Bank of China in pursuance of the law. Chapter II Establishment and Organization of A Commercial Bank Article 11 The establishment of a commercial bank shall require the examination and approval by the People's Bank of China. No organization or individual shall receive money deposits from the public or do any other businesses of a commercial bank or use the title of "bank" without the approval of the People's Bank of China. Article 12 The establishment of a commercial bank shall satisfy the following requirements: (1) having its statute in pursuance of this Law and the Company Law of the People's Republic of China; (2) having the minimum registered capital defined by this Law; (3) having chairman of directors (president), general manager and other senior managerial personnel with expertise and professional experience required by their positions; (4) having complete organization and management; (5) having up-to-standard business site, safety measures and other facilities relevant with the business thereof. The People's Bank of China in examining the application for the establishment of a commercial bank should take into account the need for economic growth and the competition of the banking industry. Article 13 The minimum registered capital for the establishment of a commercial bank shall be RMB one billion yuan (RMB 1,000,000,000 yuan). Of the commercial banks, an urban cooperative commercial bank shall need a minimum registered capital of RMB 100 million yuan (RMB 100,000,000 yuan) and a rural cooperative commercial bank shall need a minimum registered capital of RMB 50 million yuan (RMB 50,000,000 yuan). Registered capital herein referred to should be paid-up capital. The People's Bank of China may readjust the floor amount of the registered capital necessary for the establishment of a commercial bank in the light of economic development, but the amount shall not be lower than those specified in the previous paragraph. Article 14 The applicant shall apply to the People's Bank of China for the establishment of a commercial bank by submitting the documents and information listed below: (1) an application for the establishment of a commercial bank, specifying the name, location, registered capital and business scope of the bank thereof; (2) a feasibility study report; (3) other documents and information required by the People's Bank of China. Article 15 The application having been examined to be in compliance with the provisions of Article 14 of this Law, the applicant shall fill a formal application form and submit the documents and information listed below: (1) a draft of the statute of the commercial bank to be established; (2) qualification documents of the senior managerial staff to be employed; (3) a certificate of capital confirmation from a legitimate capital confirmation authority; (4) a list of the names, capital contributions and shares of the share holders of the commercial bank; (5) credit certificate and other relevant information of the share holders, each holding more than ten percent of the registered capital of the commercial bank; (6) the guideline and plan for the operation of the commercial bank; (7) information of the business site, safety measures and other facilities relevant with the business of the commercial bank; (8) other documents and information required by the People's Bank of China. Article 16 Having been approved for establishment, the commercial bank shall be issued banking permit by the People's Bank of China and with it register with the Administration for Industry and Commerce for a business license. Article 17 The Company Law of the People's Republic of China is applicable to the form and structure of the organization of a commercial bank. A commercial bank which was established prior to the promulgation of this Law may follow the original provisions if its organizational form and structure do not entirely conform with the Company Law of the People's Republic of China, and the time limit for the retention thereof shall be decided by the State Council. Article 18 A commercial bank solely owned by the state shall have a board of supervisors. The Board of Supervisors shall be composed of representatives of the People's Bank of China and governmental departments, experts from other relevant departments and representative of the staff of the bank. The way of establishing the Board of Supervisors shall be defined by the State Council. The Board of Supervisors shall exercise control of the solely state-owned commercial banks over the quality of credit funds, the ratio of assets and liabilities, the hedging and appreciation of the state-owned assets and other relevant matters of the bank and the behavior of its high ranking managerial personnel violating the law, administrative decrees and regulations or statute or acts damaging the interests of the bank. Article 19 A commercial bank may set up its branches within and outside the territory of the People's Republic of China in keeping with its business needs. A branch thereof shall be set up with the approval of the People's Bank of China. Branches of a commercial bank inside the People's Republic of China need not be set up in conformity with administrative divisions. A commercial bank in setting up a branch within the territory of the People's Republic of China shall allocate to it a working capital in keeping with the business scope thereof as is stipulated. The total sum of the working capital to be allocated to all branches shall not exceed sixty percent of the total capital of the commercial bank proper. Article 20 For the establishment of a branch, the applying commercial bank shall submit the documents and information listed below: (1) an application for establishing a commercial bank branch whereby should be specified the name, amount of working capital, business scope and the locations of the headquarters and branch of the commercial bank; (2) a financial report of the last two years of the applicant; (3) certificates of qualifications of the senior managerial officials to be appointed; (4) the business guideline and plan; (5) information related to the business site, safety measures and other facilities relevant with the business thereof; (6) other documents and information required by the People's Bank of China. Article 21 Having been approved to be established, a commercial bank branch shall be granted a banking permit by the People's Bank of China, and with the permit shall register with the Administration for Industry and Commerce and obtain a business license. Article 22 A commercial bank shall apply to its branches a financial system of unified accounting and centralized fund allocation and level-by-level management. The branch of a commercial bank shall not be qualified as a body corporate and it shall do business within the scope authorized by the headquarters which shall assume the civil responsibilities thereof. Article 23 Having been approved to be established, a commercial bank and its branches shall be announced to the public by the People's Bank of China. When a commercial bank or its branch has not started operation for over six months from the date of being granted a business license without proper reason or has automatically suspended operation for over six consecutive months after starting its operation, the People's Bank of China shall revoke its banking permit and make a public announcement thereof. Article 24 In the event of one of the changes listed below, a commercial bank shall need to obtain the approval from the People's Bank of China: (1) change of the name of the commercial bank; (2) change of the registered capital; (3) change of the business sites of the head office and/or its branch(es) of the bank; (4) readjustment in business scope; (5) change of share holders, each holding more than ten percent of the total capital or total shares of the commercial bank; (6) revision of the statute; (7) other changes specified by the People's Bank of China. When a commercial bank needs to replace its chairman of the board of directors, or general manager with a new one, the qualifications of the appointee shall be reported to the People's Bank of China for examination. Article 25 The Company Law of the People's Republic of China is applicable to the split and merger of commercial banks. The split or merger of commercial banks shall require the examination and approval by the People's Bank of China. Article 26 A commercial bank shall use the banking permit pursuant to law and administrative decrees and regulations. It is prohibited to counterfeit, tamper with, transfer, lease or lend the banking permit. Article 27 Anyone who has one of the following backgrounds shall not be fit for high managerial positions in a commercial bank: (1) having once been sentenced to punishment for the crimes of embezzlement, bribery, illegal possession of property, misappropriation of public property or disruption of social economic order, or having been deprived of political rights for crimes; (2) having served as a director of the board of directors, the director or manager of a company which went bankrupt because of mismanagement and having been personally responsible for the bankruptcy; (3) having been the legal representative of a company whose business license had been revoked on account of violation of the law and having been personally responsible thereof; (4) having failed to repay a fairly large debt already due. Article 28 Any organization or individual intending to buy more than ten percent of the shares of a commercial bank shall have to obtain the approval from the People's Bank of China. Chapter III Protection of Depositors Article 29 A commercial bank in its savings deposit business shall abide by the principle of voluntariness in depositing, freedom of withdrawal, interest on every deposit and keeping secret for the depositor. With regard to savings deposits of individuals, a commercial bank has the right to reject the demand of any department or individual for investigation, freezing, withholding or transferring a savings deposit, unless it is otherwise defined by the law. Article 30 With regard to deposits of any organization, a commercial bank has the right to reject the demand of any other organization or individual for investigation; unless it is otherwise defined by the law or administrative decrees and regulations; it has the right to reject the demand of any other organization or individual for freezing, withholding or transferring such a deposit, unless it is otherwise defined by the law. Article 31 A commercial bank shall fix its interest rates for deposits pursuant to the ceiling and floor of interest rates defined by the People's Bank of China and make public announcement thereof. Article 32 A commercial bank shall place a required reserve with the People's Bank of China and keep adequate standby reserve in accordance with the stipulations by the People's Bank of China. Article 33 A commercial bank shall guarantee the payment of the principal and interests of every deposit and shall not delay or refuse the payment thereof. Chapter IV Basic Principles for Loans and Other Businesses Article 34 A commercial bank shall conduct its loan business in accordance with the need for the development of the national economy and social progress and under the guidance of the state industrial policy. Article 35 A commercial bank shall conduct strict examination of the usage, capability and form of repayment as well as other relevant matters of a borrower in order to extend a loan. A commercial bank shall implement a system in which the examination and the actual extending of a loan are conducted by separate departments and the examination and approval of a loan are conducted at different levels. Article 36 A commercial bank shall extend a loan against a security, and conduct strict examination of the repaying capability, the ownership and value of the mortgage or pledge, and the feasibility of the realization of the mortgage or pledge. A borrower may be exempted from securities after the commercial bank has conducted examination and found it to have a high credit rating and to have the capability of repayment. Article 37 A commercial bank shall sign a written contract with its borrower on the extending of a loan. The contract shall specify the category, usage, amount, rate of interest, date and form of repayment, default liabilities and other matters deemed as necessary by the two parties. Article 38 A commercial bank shall fix its interest rates for loans in accordance with the ceiling and floor for the rates of interest for loans fixed by the People's Bank of China. Article 39 A commercial bank in its loan business shall abide by the regulations on the ratios of assets and liabilities listed below: (1) the capital adequacy rate shall not fall short of eight percent; (2) the ratio of the outstanding balance of loans to that of deposits shall not exceed seventy-five percent; (3) the ratio of the outstanding balance of liquid assets to that of liquid liabilities shall not fall short of twenty-five percent; (4) the ratio of the outstanding balance of loans to one borrower to that of the capital of the bank shall not exceed ten percent; (5) other stipulations by the People's Bank of China on asset and liability management. When a commercial bank which was established prior to the promulgation of this Law is found to have its ratios of assets and liability at variance with the stipulations hereinbefore, it is required to conform to the stipulations within a designated time limit. Concrete rules for the implementation shall be defined by the State Council. Article 40 A commercial bank shall not extend unsecured loans to related persons; and shall not provide related persons with secured loans on conditions more favorable than those to a borrower of a similar loan. The related persons mentioned in the previous paragraph refer to: (1) the members of the board of directors, members of the board of supervisors, managerial personnel and staff of the credit business department of a commercial bank, and their close relatives; (2) the company, enterprise or other economic organization wherein the aforesaid persons have made investment or assumed senior managerial positions. Article 41 No organization or individual may force a commercial bank to extend a loan or provide guarantee for a loan. A commercial bank shall have the right to refuse any organization's or individual's demand for a loan or guarantee. A commercial bank owned solely by the state should provide loans for special projects approved by the State Council. Losses resulting from such loans shall be compensated with appropriate measures taken by the State Council. Concrete measures shall be defined by the State Council. Article 42 A borrower shall repay the principal and interest of a loan on schedule. When a borrower fails to repay a secured loan, the commercial bank has the right to be repaid the principal and interest of the loan or the priority of getting paid with the collateral thereof. A commercial bank shall dispose of the real estate or stocks on mortgage or pledge within a year from the date of obtaining. A borrower shall assume the responsibility for failure to repay the unsecured loan falling due in accordance with the contract thereof. Article 43 A commercial bank shall not engage in trust investment or stock business, or invest in real estate not for its own use within the People's Republic of China. A commercial bank shall not invest in non-bank financial institutions or enterprises within the People's Republic of China. A commercial bank which has made investment in non-bank financial institutions or enterprises prior to the promulgation of this Law shall be subject to other provisions stipulated by the State Council. Article 44 A commercial bank in handling settlements such as acceptance, remittance and collection shall make timely cashing and entries pursuant to relevant provisions without detaining bills or instruments or dishonoring them in violation of regulations. The relevant provisions for the time limit for bill acceptance and entries in accounting books should be made public. Article 45 A commercial bank shall apply for approval for issuing financial bonds or seeking loans outside China in accordance with the law and administrative decrees. Article 46 Inter-bank loan shall be subject to the time limit defined by the People's Bank of China and the maximum time for such financing shall not exceed four months. It is prohibited to use call money to extend loans on fixed assets or to make investment. The call money for lending shall be only the idle fund after depositing required reserve, leaving adequate standby reserve and repayment of loans falling due to the People's Bank of China. The call money for borrowing shall be used to meet the position shortage in interbranch settlement and interbranch remittance and temporary needs for turnover of funds. Article 47 A commercial bank shall not receive money deposits or extend loans by raising or lowering interest rates or by other unjustifiable means in violation of regulations. Article 48 An enterprise or undertaking may open a principal account with a commercial bank of its own choice for day to day transfer and settlement of accounts and cash receipt and payment, but it shall not open two or more principal accounts. No organization or individual shall deposit the fund of an organization in an account opened in the name of an individual. Article 49 A commercial bank shall fix its business hours to the convenience of its clients and make public announcement thereof. A commercial bank shall conduct its business during its announced business hours and shall not suspend business or shorten its business hours at will. Article 50 A commercial bank shall collect commission fees on handling business and providing services in accordance with the stipulations of the People's Bank of China. Article 51 A commercial bank shall preserve all the financial statements, business contracts and other information for a specified period in accordance with relevant state regulations. Article 52 The staff of a commercial bank shall abide by the law, administrative decrees and regulations and other rules for the administration of various businesses and shall not have wrong conducts listed below: (1) taking advantage of their positions to demand or accept bribes, or violating relevant state regulations to accept commissions or service fees under any pretext; (2) taking advantage of their positions to commit embezzlement, misappropriation or unlawful possession of the funds of the bank or of clients; (3) providing loans or guarantee to relatives or friends in violation of regulations; (4) holding positions concurrently at other economic institution(s); (5) other acts in violation of the law, administrative decrees and regulations and rules in business management. Article 53 The staff of a commercial bank shall not disclose state secrets or commercial secrets which they come into possession during their service in the bank. Chapter V Financial Accounting Article 54 A commercial bank shall establish and improve its financial accounting system in accordance with the law and the state unified accounting standards as well as the relevant stipulations of the People's Bank of China. Article 55 A commercial bank shall, in accordance with relevant state regulations, truthfully and in an all-round way record and reflect its business activities and financial position, produce its annual financial accounting report and timely submit its financial statements to the People's Bank of China and the treasury department. A commercial bank shall not establish accounting books other than those legally specified. Article 56 A commercial bank shall announce its business performance and audited statement of the previous fiscal year within three months after the end of every fiscal year in accordance with the stipulations of the People's Bank of China. Article 57 A commercial bank shall retain a reserve against bad and doubtful accounts and write off bad debts in pursuance of relevant state regulations. Article 58 The fiscal year of a commercial bank begins on the first of January and ends on the thirty-first of December of the Gregorian calendar. Chapter VI Supervision and Administration Article 59 A commercial bank shall formulate its business rules, establish and improve its business management, the system of cash control and its security system in accordance with the stipulations of the People's Bank of China. Article 60 A commercial bank shall establish and improve its systems of examining and checking deposits, loans and settlement, bad and doubtful accounts and other business activities. A commercial bank shall conduct regular examination and checks on its branches. Article 61 A commercial bank shall periodically submit to the People's Bank of China balance sheets, profit and loss statements and other financial statements and information. Article 62 The People's Bank of China is authorized to exercise examination of and supervision over the deposits, loans, settlements and bad and doubtful accounts of a commercial bank at any time in accordance with the provisions of Chapter III, Chapter IV and Chapter V of this Law. The personnel in charge of the examination and supervision should produce legitimate certificates at the time of conducting examination and supervision. A commercial bank shall provide financial accounting information, business contracts and other information about its business and management at the request of the People's Bank of China. Article 63 A commercial bank is subject to the audit control by the auditing authorities in accordance with the audit law and regulations. Chapter VII Takeover and Termination Article 64 When a commercial bank is in or is liable to be in a credit crisis thus seriously threatening the interests of the depositors, the People's Bank of China may take over the said bank. The purpose of the takeover is to take necessary measures with regard to the commercial bank taken over in order to protect the interests of the depositors and help the commercial bank resume its normal operation. The debtor-creditor relationship of the commercial bank existing before the takeover remains unchanged. Article 65 The People's Bank of China shall determine a takeover and organize its implementation. The People's Bank of China shall specify the following contents in its takeover decision: (1) the name of the commercial bank to be taken over; (2) the reason(s) for the takeover; (3) the organization of the takeover; (4) the time limit of the takeover. The decision for the takeover shall be made public by the People's Bank of China. Article 66 A takeover begins on the day of implementation of the takeover decision. The organization in charge of the takeover shall begin exercising the power over the management of the commercial bank from the day of implementing the takeover decision. Article 67 On expiration of the term of the takeover, the People's Bank of China may determine to prolong the takeover, but the term shall not exceed two years to the maximum. Article 68 Takeover shall be terminated in any of the following cases: (1) that the term of the takeover expires or the prolonged term of takeover determined by the People's Bank of China expires; (2) that prior to the expiration of the term of takeover, the commercial bank has recovered its capacity of normal operation; or (3) that prior to the expiration of the term of takeover, the commercial bank has been merged or declared bankrupt in accordance with the law. Article 69 When a commercial bank splits, or merges with another one, or dissolves on reasons for dissolution pursuant to the statute of the bank, it shall submit an application to the People's Bank of China with reasons for the dissolution and a plan for liquidation, including repaying the principals and interests of deposits. It shall be dissolved with the approval from the People's Bank of China. A liquidation group shall be formed to conduct liquidation and repayment of the principals and interests of deposits shall be made in time according to the plan for liquidation when a commercial bank is to be dissolved. The People's Bank of China shall oversee the liquidation through. Article 70 When a commercial bank is closed down by order on account of its banking permit having been revoked, the People's Bank of China shall lose no time to form a liquidation group to conduct liquidation and repay the principals and interests of deposits in time according to the plan for liquidation in accordance with the law. Article 71 When a commercial bank is incapable of repaying its mature debts, may, with the consent of the People's Bank of China, be declared bankrupt by the People's Court. When a commercial bank is declared bankrupt in accordance with the law, the People's Court may organize the People's Bank of China and other relevant departments and personnel to form a liquidation group to conduct liquidation. At the time of bankruptcy liquidation, a commercial bank shall give priority to paying the principal and interests of savings deposits after paying the liquidation fees and its staff wages and labor insurance fees in arrears. Article 72 A commercial bank shall be terminated on account of dissolution, being closed down by order or declared bankrupt. Chapter VIII Legal Liability Article 73 A commercial bank shall assume the responsibility of paying interest accrued and other civil responsibilities of compensation for damages to the property of depositors or other clients under one of the situations listed below: (1) delaying or refusing repayment of the principal and interests of a deposit with no proper reason; (2) refusing to cash checks and to debit or credit accounts in violation of regulations regarding bill acceptance and other settlements or intentionally delaying to accept bills or instruments or dishonoring a bill in violation of the regulations; (3) illegally investigating, freezing or withholding and transferring the savings deposit of an individual depositor or the deposit of an institutional depositor; and (4) other actions inflicting damages to depositors or other clients in violation of the provisions of this Law. Article 74 Where one of the situations listed below occurs, the people's Bank of China may order the commercial bank to make corrections, confiscate the illegitimate gains if there is any, and mete out a fine ranging from one to five times the amount of the illegitimate gain; or, if there is no illegitimate gains, mete out a fine ranging from l00,000 yuan to 500,000 yuan; if the case is particularly serious or the offender fails to make correction within the specified time, the People's Bank of China may order it to suspend business and make rectification and consolidation, or revoke its banking permit; and if the case constitutes a crime, the commercial bank shall be investigated for criminal responsibilities: (1) issuing financial bonds or borrowing funds from outside China without official approval; (2) dealing in government bonds, or dealing in or acting as agent in dealing in foreign exchanges without official approval; (3) engaging in trust investment and stock business in the country, or making investment in real estate not for its own use; (4) making investment in non-bank financial institutions or enterprises in the country; (5) extending unsecured loans to related persons or extending loans against a collateral on more favorable conditions than to other borrowers of similar loans; (6) submitting false financial statements or financial statements which conceal important facts; (7) refusing to accept the supervision and examination by the People's Bank of China; (8) leasing or lending banking permit. Article 75 When one of the situations cited in Article 73 of this Law or one of the situations listed below occurs, the People's Bank of China may order the commercial bank to make corrections, confiscate the illegitimate gains if there is any, and mete out a fine ranging from one to three times the amount of the illegitimate gain; or, if there is no illegitimate gains, mete out a fine ranging from 50,000 yuan to 300,000 yuan: (1) having failed to place required reserve for deposits in pursuance of the stipulations of the People's Bank of China; (2) having failed to abide by the stipulations on capital adequacy, the ratio between deposit and credit, the liquidity ratio, the credit ratio of a single borrower, and other rules regarding asset and liability ratio management stipulated by the People's Bank of China; (3) setting up a branch without official approval; (4) making splits or merges without official approval; (5) using call money longer than the designated time or using call money to extend loans on fixed assets; (6) receiving money deposits or extending loans by raising or lowering interest rates or by other improper means in violation of regulations. Article 76 When a commercial bank has behavior referred to in Articles 73, 74 and 75 of this Law, the person in charge with direct responsibility and other personnel with direct responsibility shall be given disciplinary punishment; and if the case constitutes a crime, the offender(s) shall be investigated for criminal responsibilities. Article 77 When one of the situations listed below occurs, the People's Bank of China may order the commercial bank to make corrections, confiscate the illegitimate gains if there is any, and mete out a fine ranging from one to three times the amount of the illegitimate gain; or, if there is no illegitimate gains, mete out a fine ranging from 50,000 yuan to 300,000 yuan: (1) using the word "bank" without official approval; (2) buying more than ten percent of the total shares of a commercial bank without official approval; (3) opening a bank account in the name of an individual with the fund of an organization. Article 78 When a commercial bank fails to submit the relevant information to the People's Bank of China according to the relevant stipulations, or fails to report changes for approval in violation of Article 24 of this Law, the People's Bank of China shall order it to make corrections, and, if it fails to make corrections in time, mete out a fine ranging from 10,000 yuan to 100,000 yuan. Article 79 Anyone who sets up a commercial bank without official approval or illegally receives money deposit from the public or receives money deposit from the public in disguised form shall be investigated for criminal responsibilities in accordance with the law and the said bank shall be banned by the People's Bank of China. Anyone who counterfeits, alters or transfers the banking permit of a commercial bank shall be investigated for criminal responsibilities in accordance with the law. Article 80 A borrower who obtains a loan by fraud thus constituting a crime shall be investigated for criminal responsibilities in accordance with the law. Article 81 Any of the staff of a commercial bank who, by taking advantage of the convenience provided by his position in the bank, extorts or accepts bribes, or accepts commissions or other fees under any pretext in violation of state regulations shall be investigated for criminal responsibilities in accordance with the law. If a loan extended or guarantee provided in connection with a behavior cited in the previous paragraph causes a loss, the offender shall assume all or part of the responsibility for compensation. Article 82 Any of the staff of a commercial bank who taking advantage of the convenience of the position in the bank commits embezzlement, or misappropriation or unlawfully possesses the fund of the bank or a client shall be investigated for criminal responsibilities in accordance with the law if the case constitutes a crime, or be given disciplinary punishment if it does not constitute a crime. Article 83 Any of the staff of a commercial bank who causes a loss to the bank on accurate of his dereliction of duty shall be given disciplinary punishment; and if the case constitutes a crime, shall be investigated for criminal responsibilities in accordance with the law. Any of the staff of a commercial bank who causes a loss by extending a loan to or providing a guarantee to a relative or friend in violation of regulations shall assume all or part of the responsibility for compensation. Article 84 Any of the staff of a commercial bank who discloses state or commercial secrets which come into his or her possession during his or her service in the bank shall be given disciplinary punishment and, if the case constitutes a crime, shall be investigated for criminal responsibilities in accordance with the law. Article 85 When an organization or individual forces a commercial bank to extend a loan or provide guarantee on a loan, the person in charge directly responsible and other personnel directly responsible for the incident shall be given disciplinary punishment, and, if a loss is incurred, shall be held responsible for compensation for all or part of the loss. Any of the staff of a commercial bank failing to reject forceful demands of any organization or individual for a loan or guarantee shall be given disciplinary punishment and, if a loss is incurred, shall be held responsible for appropriate compensation. Article 86 If a commercial bank and its staff are not reconciled to the penalty meted out by the People's Bank of China, they may bring a suit to the People's Court in accordance with the Administrative Procedure Law of the People's Republic of China. Chapter IX Supplementary Provisions Article 87 Commercial banks which have been established with official approval in pursuance of the stipulations by the State Council prior to the promulgation of this Law may not undergo formalities for examination and approval again. Article 88 If laws and administrative decrees have special stipulations regarding banks of foreign capital, Chinese-foreign joint banks and branches of banks of foreign countries under jurisdiction of the provisions of this Law, those special stipulations shall apply. Article 89 The relevant provisions of this Law are applicable to urban and rural credit cooperatives in their deposit, loan and settlement businesses. Article 90 The relevant provisions of this Law are applicable to the postal deposit and remittance business of postal enterprises. Article 91 This Law shall enter into force as of July 1,1995. |
Public Notice Regarding Further Opening Up China's Banking Industry
December 8, 2006
The following translation was retrieved from the PRC central government <a href="https://english.gov.cn/2005-12/08/content_121356.htm">Web site</a> on May 22, 2006. The Chinese text was retrieved from the China Banking Regulatory Commission <a href="https://www.cbrc.gov.cn/mod_cn00/jsp/cn004002.jsp?infoID=1765&type=1">Web site</a> on July 10, 2006. <hr> Notice on opening up banking industry issued Public Notice of the CBRC on Further Opening up China's Banking Industry China Banking Regulatory Commission (December 5, 2005) In a bid to honor China's WTO commitments and improve standard of opening up to the outside world, China Banking Regulatory Commission (CBRC) is herein making the following announcements on further opening up China's banking industry: I. Effective on December 5, 2005, foreign-funded financial institutions are permitted to engage in renminbi businesses in additional two cities of Shantou, and Ningbo. At the same time, in order to encourage the foreign-funded financial institutions to participate in the strategy of developing west China and revitalizing northeast China as well as other old industrial bases, another five cities, namely, Harbin, Changchun, Lanzhou, Yinchuan and Nanning, with the approval of the State Council, are also opened to the foreign-funded financial institutions ahead of the schedule (thus bringing the number of opened cities from 18 to 25). From then on, foreign-funded financial institutions located in these cities may apply to conduct renminbi businesses. The application shall be prepared in compliance with the Regulation of the People's Republic of China Governing Foreign-funded Financial Institutions (hereinafter referred to as the Regulation) and the Rules for Implementing the Regulation of the People's Republic of China Governing Foreign-funded Financial Institutions (hereinafter referred to as the Implementation Rules). The application shall be filed with the relevant CBRC local office for preliminary review and then be forwarded to the CBRC headquarters for final approval. The foreign-funded financial institutions that have been licensed to operate renminbi businesses are automatically allowed to conduct renminbi businesses in the above seven cities. II. The CBRC decides to lower minimum operating capital requirements for foreign banks in China to conduct renminbi businesses to an appropriate level: 1) for a foreign bank branch to conduct renminbi businesses with all kinds of customers (including Chinese individuals), the minimum operating capital requirement for the highest level is reduced from RMB500 million to RMB400 million; and, 2) for a branch of either a wholly-foreign-funded bank or a Sino-foreign joint-equity bank to conduct renminbi businesses with all kinds of customers, the minimum operating capital requirement is reduced from RMB300 million to RMB200 million. III. The CBRC will make further study of relaxing market entry criteria for foreign banks to conduct renminbi businesses in the central, western and northeastern area of China and will continuously support the foreign banks' application to set up establishments or businesses in these regions. IV. According to the Regulation, the CBRC will in 2006 make some adjustments to the proportion of the foreign exchange deposits taken within Chinese territory by a foreign-funded financial institution in its total foreign exchange assets within Chinese territory. |
Temporary Provisions Regarding Strengthening Intellectual Property Law Enforcement Cooperation (Chinese Text)
December 8, 2006
The following text of the Temporary Provisions Regarding Strengthening Intellectual Property Law Enforcement Cooperation jointly issued by the Ministry of Public Security and the General Administration of Customs was retrieved from the General Administration of Customs Web site on May 19, 2006. |