Circular of the China Banking and Insurance Regulatory Commission on Seeking Public Comments on the Interim Measures for the Equity Management of Trust Companies (Draft for Comment)
Circular of the China Banking and Insurance Regulatory Commission on Seeking Public Comments on the Interim Measures for the Equity Management of Trust Companies (Draft for Comment)
Circular of the China Banking and Insurance Regulatory Commission on Seeking Public Comments on the Interim Measures for the Equity Management of Trust Companies (Draft for Comment)
November 22, 2019
With a view to strengthening the equity management of trust companies, regulating the behaviors of trust companies' shareholders, protecting the legitimate rights and interests of trust companies, trust parties, etc., safeguarding shareholders' legitimate interests, and promoting the sustainable and sound development of trust companies, in accordance with laws and regulations including the Company Law of the People's Republic of China, the Law of the People's Republic of China on the Supervision and Administration of the Banking Industry and the Trust Law of the People's Republic of China, the China Banking and Insurance Regulatory Commission has drafted the Interim Measures for the Equity Management of Trust Companies (Draft for Comment) and hereby seeks public comments thereon. The public may submit their comments by the following means:
1. Log onto the legal information website of the Chinese government (http://www.chinalaw.gov.cn) and submit comments through the column "Collection of Comments on Legislation" under the main menu on the homepage.
2. Send comments by email to: lvhongwei_a@cbirc.gov.cn.
3. Send comments by letter to: Trust Department, the China Banking and Insurance Regulatory Commission, A15 Jinrong Street, Xicheng District, Beijing (100140).
Please mark the fill-in field of the website, the subject of the email or the envelope of the letter, etc., with the words "Comments on the Interim Measures for the Equity Management of Trust Companies".
The deadline for submission of comments is December 22, 2019.
Interim Measures for the Equity Management of Trust Companies (Draft for Comment)
Chapter I General Provisions
Article 1 These Measures are formulated in accordance with laws and regulations including the Company Law of the People's Republic of China, the Law of the People's Republic of China on the Supervision and Administration of the Banking Industry and the Trust Law of the People's Republic of China with a view to strengthening the equity management of trust companies, regulating the behaviors of trust companies' shareholders, protecting the legitimate rights and interests of trust companies, trust parties, etc., safeguarding shareholders' legitimate interests and promoting the sustainable and sound development of trust companies.
Article 2 These Measures shall apply to trust companies legally established within the territory of the People's Republic of China (the "PRC").
Article 3 The equity management of a trust company shall follow the principles of classified management, excellence and stability, clear structure, specific rights and responsibilities, orderly change, transparency and good faith.
Article 4 The banking regulator under the State Council and its local offices shall follow the principle of prudential regulation to conduct penetrating regulation of trust companies' equity in accordance with the law.
Equity regulation shall run through the whole processes covering a trust company's establishment, change in equity or adjustment of equity structure, merger, division, dissolution, liquidation and other matters concerning the trust company's equity management.
Article 5 The banking regulator under the State Council and its local offices shall regulate trust companies' equity in accordance with the law, and investigate and deal with relevant acts in violation of laws and regulations committed by units and individuals including trust companies and their shareholders.
Article 6 A trust company and its shareholders shall fully disclose relevant information and accept social supervision in accordance with laws, regulations and regulatory requirements.
Article 7 Trust companies, the banking regulator under the State Council and its local offices shall strengthen the management of trust companies' principal shareholders.
Any principal shareholder of a trust company refers to any shareholder who holds or controls more than five percent of the shares or voting rights of the trust company, or holds less than five percent of the capital or shares in total but has a significant impact on the trust company's business management.
The term "significant impact" provided for in the preceding paragraph shall include, but be not limited to, dispatching any director, supervisor or senior executive to stay at the trust company, affecting the trust company's financial, operational and managerial decisions through agreements or by other means, and other circumstances as identified by the banking regulator under the State Council and its local offices.
Article 8 Each shareholder of a trust company shall have a distinctive core and principal business and a good social reputation, corporate governance mechanism, credit record, tax record, financial status as well as a clear and transparent equity structure in compliance with laws, regulations and regulatory requirements.
Article 9 The equity structure of a trust company's shareholders shall be traceable back to ultimate beneficiaries level by level, and the relationship between such parties as its controlling shareholder, actual controller, affiliated parties, persons acting in concert and ultimate beneficiaries shall be clear and transparent.
The shareholding ratio of shareholders and their affiliated parties and persons acting in concert shall be calculated on a combined basis.
Article 10 An investor intending to invest in a trust company shall report to the banking regulator under the State Council or relevant local office thereof for approval in advance, except where the shares of a listed trust company held by the investor and its affiliated parties as well as persons acting in concert individually or collectively fail to reach five percent of the company's total shares.
Chapter II Shareholder Responsibilities of Trust Companies
Section 1 Shareholder Qualification
Article 11 Upon the examination and approval of the banking regulator under the State Council or its local offices, domestic non-financial institutions, domestic financial institutions, overseas financial institutions and other investors recognized by the banking regulator under the State Council may become trust companies' shareholders.
The preceding paragraph shall not apply where the shares of the same listed trust company individually or collectively held by an investor and its affiliated parties, and persons acting in concert fail to reach five percent of the trust company's total shares.
Article 12 A domestic non-financial institution acting as a trust company's shareholder shall meet the following conditions:
1. it is legally established and has legal personality;
2. it has a good corporate governance structure or effective organizational and managerial mode;
3. it has a good social reputation, credit record and tax record;
4. it has good management and operation without having any business record of major violation of laws or regulations in the last two years;
5. it has a good financial position, and has been continuously profitable in the last two fiscal years, or in the last three fiscal years if it obtains controlling stakes;
6. after the year-end distribution, its net assets are not less than 30 percent of the total assets (as per the standard of consolidated financial statements), or 40 percent of the total assets (as per the standard of consolidated financial statements) if it obtains controlling stakes;
7. if it obtains controlling stakes, the balance of equity investment shall not exceed 40 percent of the enterprise's net assets (including the amount of such investment, as per the standard of consolidated financial statements), except for investment companies and holding companies recognized by the banking regulator under the State Council; and
8. other prudential conditions prescribed in the rules of the banking regulator under the State Council.
Article 13 A domestic financial institution acting as a trust company's shareholder shall have a good internal control mechanism and a sound risk management system while complying with relevant laws, regulations and regulatory requirements on such type of financial institutions as well as conditions as prescribed in Article 12 hereof (except "it has been continuously profitable in the last three fiscal years if it obtains controlling stakes" of Item 5, Item 6 and Item 7).
Article 14 An overseas financial institution acting as a trust company's shareholder shall meet the following conditions:
1. it has financial operation and management-related international experience;
2. it is identified as having a good or above long-term credit rating in the last two years by any international rating institution recognized by the banking regulator under the State Council;
3. it has a good financial position and has been continuously profitable in the last two fiscal years;
4. it complies with the laws and regulations as well as prudential regulation requirements of the competent regulatory authority of the country or region where it is located without having any business record of major violation of laws or regulations in the last two years;
5. it has a good corporate governance structure, internal control mechanism and sound risk management system;
6. the financial regulatory authority of the country or region where it is located has established a good supervision and management cooperation mechanism with the banking regulator under the State Council;
7. it has effective anti-money laundering measures;
8. the economic situation of the country or region where it is located is good; and
9. other prudential conditions prescribed in the rules of the banking regulator under the State Council.
An overseas financial institution investing in a trust company shall follow the principles of long-term shareholding, optimized governance, business cooperation and competition avoidance, and abide by relevant provisions of the State on foreign investors' investment within the territory of the PRC.
Article 15 Financial products may hold shares of listed trust companies, provided that the total shares of the same listed trust company held by financial products under the control of a single investor, issuer or manager and its actual controller, affiliated parties and persons acting in concert do not exceed five percent of the trust company's total shares.
No major shareholder of a trust company may hold the trust company's shares by virtue of financial products issued, managed or otherwise controlled by it.
A natural person may hold the shares of a listed trust company but may not act as a principal shareholder of the trust company, except as otherwise provided for by the banking regulator under the State Council.
Article 16 Neither an investor nor its controlling shareholder or actual controller may act as any principal shareholder of a trust company under any of the following circumstances:
1.
......
November 22, 2019
With a view to strengthening the equity management of trust companies, regulating the behaviors of trust companies' shareholders, protecting the legitimate rights and interests of trust companies, trust parties, etc., safeguarding shareholders' legitimate interests, and promoting the sustainable and sound development of trust companies, in accordance with laws and regulations including the Company Law of the People's Republic of China, the Law of the People's Republic of China on the Supervision and Administration of the Banking Industry and the Trust Law of the People's Republic of China, the China Banking and Insurance Regulatory Commission has drafted the Interim Measures for the Equity Management of Trust Companies (Draft for Comment) and hereby seeks public comments thereon. The public may submit their comments by the following means:
1. Log onto the legal information website of the Chinese government (http://www.chinalaw.gov.cn) and submit comments through the column "Collection of Comments on Legislation" under the main menu on the homepage.
2. Send comments by email to: lvhongwei_a@cbirc.gov.cn.
3. Send comments by letter to: Trust Department, the China Banking and Insurance Regulatory Commission, A15 Jinrong Street, Xicheng District, Beijing (100140).
Please mark the fill-in field of the website, the subject of the email or the envelope of the letter, etc., with the words "Comments on the Interim Measures for the Equity Management of Trust Companies".
The deadline for submission of comments is December 22, 2019.
Interim Measures for the Equity Management of Trust Companies (Draft for Comment)
Chapter I General Provisions
Article 1 These Measures are formulated in accordance with laws and regulations including the Company Law of the People's Republic of China, the Law of the People's Republic of China on the Supervision and Administration of the Banking Industry and the Trust Law of the People's Republic of China with a view to strengthening the equity management of trust companies, regulating the behaviors of trust companies' shareholders, protecting the legitimate rights and interests of trust companies, trust parties, etc., safeguarding shareholders' legitimate interests and promoting the sustainable and sound development of trust companies.
Article 2 These Measures shall apply to trust companies legally established within the territory of the People's Republic of China (the "PRC").
Article 3 The equity management of a trust company shall follow the principles of classified management, excellence and stability, clear structure, specific rights and responsibilities, orderly change, transparency and good faith.
Article 4 The banking regulator under the State Council and its local offices shall follow the principle of prudential regulation to conduct penetrating regulation of trust companies' equity in accordance with the law.
Equity regulation shall run through the whole processes covering a trust company's establishment, change in equity or adjustment of equity structure, merger, division, dissolution, liquidation and other matters concerning the trust company's equity management.
Article 5 The banking regulator under the State Council and its local offices shall regulate trust companies' equity in accordance with the law, and investigate and deal with relevant acts in violation of laws and regulations committed by units and individuals including trust companies and their shareholders.
Article 6 A trust company and its shareholders shall fully disclose relevant information and accept social supervision in accordance with laws, regulations and regulatory requirements.
Article 7 Trust companies, the banking regulator under the State Council and its local offices shall strengthen the management of trust companies' principal shareholders.
Any principal shareholder of a trust company refers to any shareholder who holds or controls more than five percent of the shares or voting rights of the trust company, or holds less than five percent of the capital or shares in total but has a significant impact on the trust company's business management.
The term "significant impact" provided for in the preceding paragraph shall include, but be not limited to, dispatching any director, supervisor or senior executive to stay at the trust company, affecting the trust company's financial, operational and managerial decisions through agreements or by other means, and other circumstances as identified by the banking regulator under the State Council and its local offices.
Article 8 Each shareholder of a trust company shall have a distinctive core and principal business and a good social reputation, corporate governance mechanism, credit record, tax record, financial status as well as a clear and transparent equity structure in compliance with laws, regulations and regulatory requirements.
Article 9 The equity structure of a trust company's shareholders shall be traceable back to ultimate beneficiaries level by level, and the relationship between such parties as its controlling shareholder, actual controller, affiliated parties, persons acting in concert and ultimate beneficiaries shall be clear and transparent.
The shareholding ratio of shareholders and their affiliated parties and persons acting in concert shall be calculated on a combined basis.
Article 10 An investor intending to invest in a trust company shall report to the banking regulator under the State Council or relevant local office thereof for approval in advance, except where the shares of a listed trust company held by the investor and its affiliated parties as well as persons acting in concert individually or collectively fail to reach five percent of the company's total shares.
Chapter II Shareholder Responsibilities of Trust Companies
Section 1 Shareholder Qualification
Article 11 Upon the examination and approval of the banking regulator under the State Council or its local offices, domestic non-financial institutions, domestic financial institutions, overseas financial institutions and other investors recognized by the banking regulator under the State Council may become trust companies' shareholders.
The preceding paragraph shall not apply where the shares of the same listed trust company individually or collectively held by an investor and its affiliated parties, and persons acting in concert fail to reach five percent of the trust company's total shares.
Article 12 A domestic non-financial institution acting as a trust company's shareholder shall meet the following conditions:
1. it is legally established and has legal personality;
2. it has a good corporate governance structure or effective organizational and managerial mode;
3. it has a good social reputation, credit record and tax record;
4. it has good management and operation without having any business record of major violation of laws or regulations in the last two years;
5. it has a good financial position, and has been continuously profitable in the last two fiscal years, or in the last three fiscal years if it obtains controlling stakes;
6. after the year-end distribution, its net assets are not less than 30 percent of the total assets (as per the standard of consolidated financial statements), or 40 percent of the total assets (as per the standard of consolidated financial statements) if it obtains controlling stakes;
7. if it obtains controlling stakes, the balance of equity investment shall not exceed 40 percent of the enterprise's net assets (including the amount of such investment, as per the standard of consolidated financial statements), except for investment companies and holding companies recognized by the banking regulator under the State Council; and
8. other prudential conditions prescribed in the rules of the banking regulator under the State Council.
Article 13 A domestic financial institution acting as a trust company's shareholder shall have a good internal control mechanism and a sound risk management system while complying with relevant laws, regulations and regulatory requirements on such type of financial institutions as well as conditions as prescribed in Article 12 hereof (except "it has been continuously profitable in the last three fiscal years if it obtains controlling stakes" of Item 5, Item 6 and Item 7).
Article 14 An overseas financial institution acting as a trust company's shareholder shall meet the following conditions:
1. it has financial operation and management-related international experience;
2. it is identified as having a good or above long-term credit rating in the last two years by any international rating institution recognized by the banking regulator under the State Council;
3. it has a good financial position and has been continuously profitable in the last two fiscal years;
4. it complies with the laws and regulations as well as prudential regulation requirements of the competent regulatory authority of the country or region where it is located without having any business record of major violation of laws or regulations in the last two years;
5. it has a good corporate governance structure, internal control mechanism and sound risk management system;
6. the financial regulatory authority of the country or region where it is located has established a good supervision and management cooperation mechanism with the banking regulator under the State Council;
7. it has effective anti-money laundering measures;
8. the economic situation of the country or region where it is located is good; and
9. other prudential conditions prescribed in the rules of the banking regulator under the State Council.
An overseas financial institution investing in a trust company shall follow the principles of long-term shareholding, optimized governance, business cooperation and competition avoidance, and abide by relevant provisions of the State on foreign investors' investment within the territory of the PRC.
Article 15 Financial products may hold shares of listed trust companies, provided that the total shares of the same listed trust company held by financial products under the control of a single investor, issuer or manager and its actual controller, affiliated parties and persons acting in concert do not exceed five percent of the trust company's total shares.
No major shareholder of a trust company may hold the trust company's shares by virtue of financial products issued, managed or otherwise controlled by it.
A natural person may hold the shares of a listed trust company but may not act as a principal shareholder of the trust company, except as otherwise provided for by the banking regulator under the State Council.
Article 16 Neither an investor nor its controlling shareholder or actual controller may act as any principal shareholder of a trust company under any of the following circumstances:
1.
......