(“Measures”)（金融租赁公司管理办法）(“New Measures”), issued by the China Banking Regulatory Commission (“CBRC”)
The New Measures amend the provisions of 2007 on market-entry criteria, business scope, operation rules, supervision and administration of financial leasing companies. They reflect the trend in the financial leasing market to encourage the entry of different types of investors, introducing the following main changes:
- They lower the entry threshold for creating a financial leasing company and encourage different types of capital to enter the financial leasing market.
- They broaden the financing channels offered to financial leasing companies by extending the business scopes.
- They no longer differentiate between “chief investor” and “ordinary investor,” and they replace “Chief Investor Regime” with “Initiator Regime” for identifying the investors of a financial leasing company.
- They specify five types of institutions that can invest in a financial leasing company as the initiator (“Qualified Initiator”): (i) domestic commercial banks, (ii) overseas commercial banks, (iii) large domestic manufacturers, (iv) overseas financial leasing companies, and (v) other domestic institutions and overseas finance institutions accredited by the CBRC.
- They must all meet the standards under the New Measures.
- They require at least one Qualified Initiator to have an investment of at least 30% of that of all the initiators of a financial leasing company.
- They widen the general business scope of financial leasing companies and relax the requirements for receiving deposits from shareholders that are not banks.
- They enable successful financial leasing companies to upgrade their business with the CBRC’s approval, allowing them to issue bonds, establish project companies in domestic tax bonded zones for financial leasing businesses, offer asset securitization and provide security for controlling subsidiaries and project companies.
- They allow financial leasing companies to create subsidiaries with the CBRC’s approval, as long as the establishment of branches is authorized, as under the 2007 measures. However, the CBRC has not yet indicated the requirements to establish branches and subsidiaries.
- They extend the scope of the assignees of financial leasing assets, relax the requirements for receiving deposits from shareholders that are not banks, cancel the “foreign exchange” restrictions of overseas loans and include securities investment with constant return as a newly permitted business activity.
- They require the initiators of the financial leasing company to agree in the articles of association, that (i) the shareholders must provide liquidity support in the event that the financial leasing company faces solvency problems; and (ii) when , the shareholders must make up for operating losses that take up the registered capital of the financial leasing company, with the aim for financial leasing companies and their shareholders to strengthen their self-aid and self-recovery ability and prevent increased risks.
- They improve the operation rules and supervision requirements by highlighting the importance of the title management and valuation of leased property. They also strengthen the administration of the leased property and its unsecured residual value.
- They tighten the supervision and management requirements for capital adequacy ratio, connected transactions ratio and concentration ratio.
Date of issue: March 13, 2014. Date of effectiveness: March 13, 2014.