Administrative Measures for the Issuance and Trading of Corporate Bonds
Administrative Measures for the Issuance and Trading of Corporate Bonds
Administrative Measures for the Issuance and Trading of Corporate Bonds
Order of the China Securities Regulatory Commission No.222
October 20, 2023
The Administrative Measures for the Issuance and Trading of Corporate Bonds, deliberated and adopted at the sixth executive meeting in 2023 of the China Securities Regulatory Commission on October 12, 2023, are hereby issued, and shall come into force as of the date of issuance.
Yi Huiman, Chairman of the China Securities Regulatory Commission
Appendix 1: Administrative Measures for the Issuance and Trading of Corporate Bonds
Chapter I General Provisions
Article 1 The Measures are formulated in accordance with the Securities Law of the People's Republic of China (the "Securities Law"), the Company Law of the People's Republic of China (the "Company Law"), and other relevant laws and regulations for the purposes of regulating the issuance, trading or transfer of corporate bonds (including enterprise bonds), and protecting the lawful rights and interests of investors as well as social public interests.
Article 2 Where, within the territory of the People's Republic of China, corporate bonds are publicly issued and traded on stock exchanges or national equities exchange and quotations (the "NEEQ") or corporate bonds are non-publicly issued and transferred on stock exchanges, the NEEQ, or the over-the-counter market of securities companies, the Measures shall apply. The provisions otherwise prescribed by laws, regulations and the China Securities Regulatory Commission (the "CSRC") shall prevail. For the purpose of the Measures, corporate bonds refer to the negotiable securities issued by a company according to statutory procedures with an agreement for paying back the principal plus interest within a period of time.
Article 3 Corporate bonds may be issued in a public manner or in a non-public manner.
Article 4 Issuers and other persons that are obligated to disclose information shall perform the disclosure obligation in a timely and fair manner and the disclosed or submitted information must be authentic, accurate, complete, concise, clear, and easy to understand and shall be free from any false records, misleading statements, or major omissions.
Article 5 Issuers and their controlling shareholders, actual controllers, directors, supervisors and senior officers shall act with integrity, good faith and due diligence and safeguard the rights that bond holders are entitled to as prescribed by law and as agreed upon in the bond prospectus.
Issuers and their controlling shareholders, actual controllers, directors, supervisors, and senior officers shall not neglect to perform their debt repayment obligations or evade debts through property transfer or related transactions, thereby deliberately damaging the rights and interests of bond holders.
Article 6 The underwriting institutions, trustees, credit rating institutions, accounting firms, asset appraisal institutions, law firms and other professional institutions and persons that provide services for the issuance of corporate bonds shall act with due diligence, strictly observe practice criteria and regulatory rules, and perform their obligations in accordance with the relevant provisions and agreements.
Issuers and their controlling shareholders and actual controllers shall fully cooperate with underwriting institutions, trustees, and securities service agencies in the relevant work, timely provide materials and ensure the authenticity, accuracy and completeness thereof.
Article 7 Issuers, underwriting institutions and the relevant personnel thereof shall not violate fair competition, transfer benefits, seek improper benefits directly or indirectly or otherwise impair the market order in the course of issuance pricing and placement.
Article 8 The registration of issuance of corporate bonds by the CSRC, review opinions issued by the stock exchange on the issuance of corporate bonds, or the record-filing of the issuance of corporate bonds with the Securities Association of China in accordance with the Measures does not mean that the CSRC, the stock exchange or the Securities Association of China has made a judgment or given a guarantee as to the business risks, debt repayment risks or lawsuit risks of issuers and the investment risks or proceeds of the corporate bonds. Investors shall bear the investment risks of corporate bonds themselves.
Article 9 The CSRC shall conduct supervision and administration of the activities of issuance, trading or transfer of corporate bonds in accordance with the law. The securities self-disciplinary organizations shall conduct self-disciplinary management of the issuance, listing for trading or transfer, registration and settlement, underwriting, due diligence, credit rating, entrusted management, and credit enhancement of corporate bonds in accordance with the relevant provisions.
The securities self-disciplinary organizations shall formulate the relevant business rules, specifying provisions on issuance, underwriting, record-filing, listing for trading or transfer, information disclosure, registration and settlement, investor suitability management, holders' meetings, and entrusted management of corporate bonds, which shall be submitted to the CSRC for approval or record-filing.
Chapter II General Stipulations on Issuance and Trading or Transfer
Article 10 For the issuance of corporate bonds, an issuer shall pass a resolution on the following matters in accordance with the relevant provisions of the Company Law or the articles of association:
(1) amount of bonds to be issued;
(2) method of issuance;
(3) term of bonds;
(4) usage of proceeds; and
(5) other matters that shall be specified in accordance with laws, regulations and the articles of association. For the issuance of corporate bonds, any arrangement for the credit enhancement mechanism or debt repayment guarantee measures shall also be specified in the resolution.
Article 11 For the issuance of corporate bonds, terms such as warrants or convertibility into the relevant shares may be attached. Shareholders of listed companies or non-listed public companies whose shares are publicly transferred may issue corporate bonds to which the terms of convertibility into the shares of listed companies or non-listed public companies shall be attached. Commercial banks and other financial institutions may issue corporate bonds to supplement capital in accordance with the relevant provisions. The issuance of corporate bonds to which the terms of warrants or convertibility into shares shall be attached by listed companies shall comply with the provisions on administration of the issuance of securities by listed companies. The issuance of corporate bonds to which the terms of warrants or convertibility into shares shall be attached by non-listed public companies whose shares are publicly transferred shall be provided for by the CSRC separately.
Article 12 Investors of corporate bonds may be divided into ordinary investors and professional investors in light of factors such as property status, financial asset status, investment knowledge and experience, and professional capabilities. The standards for professional investors shall be subject to the relevant provisions of the CSRC.
Securities self-disciplinary organizations may set stricter investor suitability requirements on the basis of the relevant provisions of the CSRC.
Directors, supervisors, senior officers and any shareholder holding more than 5% of the shares of the issuer may participate in the subscription, trading, and transfer of the issuer's related corporate bonds as professional investors.
Article 13 Proceeds from corporate bonds issued in a public manner must be used in accordance with the usage of proceeds listed in the corporate bond prospectus; any change in the usage of proceeds must be resolved at the bond holders' meeting. Proceeds from corporate bonds issued in a non-public manner shall be used for agreed purposes; to change the purposes of proceeds, the procedures agreed in the prospectus shall be performed.
Proceeds from the public issuance of corporate bonds are encouraged to be invested in the construction of projects that are in line with national macro-control policies and industrial policies.
Proceeds from corporate bonds issued in a public manner shall not be used to make up for losses or non-productive expenditures. Issuers shall have designated accounts for the receipt, storage and transfer of the proceeds from corporate bonds.
Chapter III Public Issuance and Trading
Section 1 Registration Regulations
Article 14 To apply for public issuance of corporate bonds, an issuer shall meet the following conditions:
(1) it has a sound and well-functioning organizational structure;
(2) its average distributable profits in the recent three years are sufficient to pay the one-year interest on corporate bonds;
(3) it has a reasonable asset-liability structure and normal cash flows; and
(4) other conditions stipulated by the State Council.
The application for public issuance of corporate bonds shall be accepted and reviewed by the stock exchange and submitted to the CSRC for registration.
Article 15 Under any of the following circumstances, corporate bonds shall not be issued again in a public manner:
(1) there are facts of breach of contract or delayed payment of principal plus interest for the issued corporate bonds or for other debts, and the facts still exist; or
(2) the usage of proceeds from the corporate bonds issued in a public manner is changed in violation of the Securities Law.
Article 16 Professional investors and ordinary investors may participate in the subscription of publicly issued corporate bonds that meet the following standards in terms of credit status:
(1) there are no facts of breach of contract or delayed payment of principal plus interest for debts by the issuer in the latest three years;
(2) the average distributable profits of the issuer in the latest three years are not less than one and a half times the one-year interest on the bonds;
(3) the issuer's net assets at the end of the most recent period are not less than CNY25 billion;
(4) the issuer has issued corporate bonds in a public manner three times in total in the most recent 36 months, with an issuance scale of not less than CNY10 billion; and
(5) other conditions stipulated by the CSRC as per the needs of investor protection. Publicly issued corporate bonds that do not meet the standards specified in the preceding paragraph shall be subscribed for by professional investors only.
Section 2 Registration Procedures
Article 17 For the public issuance of corporate bonds, the issuer shall prepare the registration application in accordance with the relevant provisions of the CSRC, and submit the same to the stock exchange.
The stock exchange shall, within five working days of receipt of the registration application, make a decision on whether to accept it.
Article 18 From the date of acceptance of the registration application, the issuer and its controlling shareholders, actual controllers, directors, supervisors, and senior officers, as well as the lead underwriter, securities service agencies and responsible personnel related to the public issuance and listing of bonds shall bear the corresponding legal liability.
Article 19 The registration application, once accepted, shall not be altered without the approval of the CSRC or the stock exchange.
If a major event occurs, the issuer, the lead underwriter, and securities service agencies shall report it to the stock exchange in a timely manner, and update the registration application and information disclosure materials as required.
Article 20 The stock exchange shall be responsible for reviewing the applications for public issuance and listing of corporate bonds filed by issuers.
The stock exchange will conduct the review mainly by means of its putting questions to the issuer and the issuer's answering questions to determine whether the issuer meets the issuance conditions, listing conditions and information disclosure requirements.
Article 21 The stock exchange shall provide review opinions in accordance with the prescribed conditions and procedures.
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Order of the China Securities Regulatory Commission No.222
October 20, 2023
The Administrative Measures for the Issuance and Trading of Corporate Bonds, deliberated and adopted at the sixth executive meeting in 2023 of the China Securities Regulatory Commission on October 12, 2023, are hereby issued, and shall come into force as of the date of issuance.
Yi Huiman, Chairman of the China Securities Regulatory Commission
Appendix 1: Administrative Measures for the Issuance and Trading of Corporate Bonds
Chapter I General Provisions
Article 1 The Measures are formulated in accordance with the Securities Law of the People's Republic of China (the "Securities Law"), the Company Law of the People's Republic of China (the "Company Law"), and other relevant laws and regulations for the purposes of regulating the issuance, trading or transfer of corporate bonds (including enterprise bonds), and protecting the lawful rights and interests of investors as well as social public interests.
Article 2 Where, within the territory of the People's Republic of China, corporate bonds are publicly issued and traded on stock exchanges or national equities exchange and quotations (the "NEEQ") or corporate bonds are non-publicly issued and transferred on stock exchanges, the NEEQ, or the over-the-counter market of securities companies, the Measures shall apply. The provisions otherwise prescribed by laws, regulations and the China Securities Regulatory Commission (the "CSRC") shall prevail. For the purpose of the Measures, corporate bonds refer to the negotiable securities issued by a company according to statutory procedures with an agreement for paying back the principal plus interest within a period of time.
Article 3 Corporate bonds may be issued in a public manner or in a non-public manner.
Article 4 Issuers and other persons that are obligated to disclose information shall perform the disclosure obligation in a timely and fair manner and the disclosed or submitted information must be authentic, accurate, complete, concise, clear, and easy to understand and shall be free from any false records, misleading statements, or major omissions.
Article 5 Issuers and their controlling shareholders, actual controllers, directors, supervisors and senior officers shall act with integrity, good faith and due diligence and safeguard the rights that bond holders are entitled to as prescribed by law and as agreed upon in the bond prospectus.
Issuers and their controlling shareholders, actual controllers, directors, supervisors, and senior officers shall not neglect to perform their debt repayment obligations or evade debts through property transfer or related transactions, thereby deliberately damaging the rights and interests of bond holders.
Article 6 The underwriting institutions, trustees, credit rating institutions, accounting firms, asset appraisal institutions, law firms and other professional institutions and persons that provide services for the issuance of corporate bonds shall act with due diligence, strictly observe practice criteria and regulatory rules, and perform their obligations in accordance with the relevant provisions and agreements.
Issuers and their controlling shareholders and actual controllers shall fully cooperate with underwriting institutions, trustees, and securities service agencies in the relevant work, timely provide materials and ensure the authenticity, accuracy and completeness thereof.
Article 7 Issuers, underwriting institutions and the relevant personnel thereof shall not violate fair competition, transfer benefits, seek improper benefits directly or indirectly or otherwise impair the market order in the course of issuance pricing and placement.
Article 8 The registration of issuance of corporate bonds by the CSRC, review opinions issued by the stock exchange on the issuance of corporate bonds, or the record-filing of the issuance of corporate bonds with the Securities Association of China in accordance with the Measures does not mean that the CSRC, the stock exchange or the Securities Association of China has made a judgment or given a guarantee as to the business risks, debt repayment risks or lawsuit risks of issuers and the investment risks or proceeds of the corporate bonds. Investors shall bear the investment risks of corporate bonds themselves.
Article 9 The CSRC shall conduct supervision and administration of the activities of issuance, trading or transfer of corporate bonds in accordance with the law. The securities self-disciplinary organizations shall conduct self-disciplinary management of the issuance, listing for trading or transfer, registration and settlement, underwriting, due diligence, credit rating, entrusted management, and credit enhancement of corporate bonds in accordance with the relevant provisions.
The securities self-disciplinary organizations shall formulate the relevant business rules, specifying provisions on issuance, underwriting, record-filing, listing for trading or transfer, information disclosure, registration and settlement, investor suitability management, holders' meetings, and entrusted management of corporate bonds, which shall be submitted to the CSRC for approval or record-filing.
Chapter II General Stipulations on Issuance and Trading or Transfer
Article 10 For the issuance of corporate bonds, an issuer shall pass a resolution on the following matters in accordance with the relevant provisions of the Company Law or the articles of association:
(1) amount of bonds to be issued;
(2) method of issuance;
(3) term of bonds;
(4) usage of proceeds; and
(5) other matters that shall be specified in accordance with laws, regulations and the articles of association. For the issuance of corporate bonds, any arrangement for the credit enhancement mechanism or debt repayment guarantee measures shall also be specified in the resolution.
Article 11 For the issuance of corporate bonds, terms such as warrants or convertibility into the relevant shares may be attached. Shareholders of listed companies or non-listed public companies whose shares are publicly transferred may issue corporate bonds to which the terms of convertibility into the shares of listed companies or non-listed public companies shall be attached. Commercial banks and other financial institutions may issue corporate bonds to supplement capital in accordance with the relevant provisions. The issuance of corporate bonds to which the terms of warrants or convertibility into shares shall be attached by listed companies shall comply with the provisions on administration of the issuance of securities by listed companies. The issuance of corporate bonds to which the terms of warrants or convertibility into shares shall be attached by non-listed public companies whose shares are publicly transferred shall be provided for by the CSRC separately.
Article 12 Investors of corporate bonds may be divided into ordinary investors and professional investors in light of factors such as property status, financial asset status, investment knowledge and experience, and professional capabilities. The standards for professional investors shall be subject to the relevant provisions of the CSRC.
Securities self-disciplinary organizations may set stricter investor suitability requirements on the basis of the relevant provisions of the CSRC.
Directors, supervisors, senior officers and any shareholder holding more than 5% of the shares of the issuer may participate in the subscription, trading, and transfer of the issuer's related corporate bonds as professional investors.
Article 13 Proceeds from corporate bonds issued in a public manner must be used in accordance with the usage of proceeds listed in the corporate bond prospectus; any change in the usage of proceeds must be resolved at the bond holders' meeting. Proceeds from corporate bonds issued in a non-public manner shall be used for agreed purposes; to change the purposes of proceeds, the procedures agreed in the prospectus shall be performed.
Proceeds from the public issuance of corporate bonds are encouraged to be invested in the construction of projects that are in line with national macro-control policies and industrial policies.
Proceeds from corporate bonds issued in a public manner shall not be used to make up for losses or non-productive expenditures. Issuers shall have designated accounts for the receipt, storage and transfer of the proceeds from corporate bonds.
Chapter III Public Issuance and Trading
Section 1 Registration Regulations
Article 14 To apply for public issuance of corporate bonds, an issuer shall meet the following conditions:
(1) it has a sound and well-functioning organizational structure;
(2) its average distributable profits in the recent three years are sufficient to pay the one-year interest on corporate bonds;
(3) it has a reasonable asset-liability structure and normal cash flows; and
(4) other conditions stipulated by the State Council.
The application for public issuance of corporate bonds shall be accepted and reviewed by the stock exchange and submitted to the CSRC for registration.
Article 15 Under any of the following circumstances, corporate bonds shall not be issued again in a public manner:
(1) there are facts of breach of contract or delayed payment of principal plus interest for the issued corporate bonds or for other debts, and the facts still exist; or
(2) the usage of proceeds from the corporate bonds issued in a public manner is changed in violation of the Securities Law.
Article 16 Professional investors and ordinary investors may participate in the subscription of publicly issued corporate bonds that meet the following standards in terms of credit status:
(1) there are no facts of breach of contract or delayed payment of principal plus interest for debts by the issuer in the latest three years;
(2) the average distributable profits of the issuer in the latest three years are not less than one and a half times the one-year interest on the bonds;
(3) the issuer's net assets at the end of the most recent period are not less than CNY25 billion;
(4) the issuer has issued corporate bonds in a public manner three times in total in the most recent 36 months, with an issuance scale of not less than CNY10 billion; and
(5) other conditions stipulated by the CSRC as per the needs of investor protection. Publicly issued corporate bonds that do not meet the standards specified in the preceding paragraph shall be subscribed for by professional investors only.
Section 2 Registration Procedures
Article 17 For the public issuance of corporate bonds, the issuer shall prepare the registration application in accordance with the relevant provisions of the CSRC, and submit the same to the stock exchange.
The stock exchange shall, within five working days of receipt of the registration application, make a decision on whether to accept it.
Article 18 From the date of acceptance of the registration application, the issuer and its controlling shareholders, actual controllers, directors, supervisors, and senior officers, as well as the lead underwriter, securities service agencies and responsible personnel related to the public issuance and listing of bonds shall bear the corresponding legal liability.
Article 19 The registration application, once accepted, shall not be altered without the approval of the CSRC or the stock exchange.
If a major event occurs, the issuer, the lead underwriter, and securities service agencies shall report it to the stock exchange in a timely manner, and update the registration application and information disclosure materials as required.
Article 20 The stock exchange shall be responsible for reviewing the applications for public issuance and listing of corporate bonds filed by issuers.
The stock exchange will conduct the review mainly by means of its putting questions to the issuer and the issuer's answering questions to determine whether the issuer meets the issuance conditions, listing conditions and information disclosure requirements.
Article 21 The stock exchange shall provide review opinions in accordance with the prescribed conditions and procedures.
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