On June 8 2012, The National Development and Reform Commission (“NDRC”) issued the Circular regarding Domestic Non-financial Institutions Issuing RMB Bonds in Hong Kong (Fa Gai Wai Zi [2012]1162) (the “Circular”), which is a follow-up regulation of the Interim Measures for the Administration of the Issuance of RMB Bonds in Hong Kong Special Administrative Region by Domestic Financial Institutions (issued by the People‘s Bank of China on June 8, 2007).

The Circular streamlined the rules for corporate RMB bond issuance in Hong Kong, and includes requirements that prospective issuers need to meet to qualify as an RMB bond issuer, information required in the application and procedures for issuance. Prior to the issuance of this Circular, approvals for the issuance of offshore RMB bonds by Chinese domestic enterprises were given by NDRC on a case-by-case basis.

The requirements of the bond issuer include, sound corporate governance, strong credit status, strong profitability and no default in outstanding debts among other criteria. Applications for the bond issuance should be submitted to the NDRC either at the central level (if the enterprise is centrally-administered) or provincial level. The Circular further stipulates that the issuer shall commence substantive work in relation to the RMB bond issuance within 60 days and complete the RMB bond issuance in Hong Kong within one year, in each case, from the date of the NDRC approval. The issuer shall also submit a written report in relation to the issuance of the RMB bond to the NDRC within 10 days of completion of the issuance.

The relevant Hong Kong rules should also be observed by the bond issuers. The Circular again restates that RMB bonds issued in Hong Kong are considered as foreign debt and subject to the relevant registration procedures with the State Administration for Foreign Exchange.

For the full text of the Circular, please visit the following Chinese language link: http://www.sdpc.gov.cn/zcfb/zcfbtz/2012tz/t20120508_478219.htm