Measures for the Administration of Financial Asset Investment Companies (for Trial Implementation)

Chapter I General Provisions Article 1 These Measures are formulated in accordance with the Banking Supervision Law of the People's Republic of China, the Commercial Bank Law of People's Republic of China (PRC) and the Company Law of People's Republic of China (PRC) in order to promote the healthy and orderly development of market-oriented and legalized bank debt-to-equity swaps and standardize the business behavior of bank debt-to-equity swaps. And the State Council's Opinions on Actively and Steadily Reducing the Leverage Ratio of Enterprises and Guiding Opinions of the People's Bank of China, the Insurance Regulatory Commission of the Bank of China, the China Securities Regulatory Commission and the State Administration of Foreign Exchange on Regulating the Asset Management Business of Financial Institutions. Article 2 The term "financial asset investment company" as mentioned in these Measures refers to a non-bank financial institution established in People's Republic of China (PRC) with the approval of the the State Council Banking Regulatory Authority, which is mainly engaged in the debt-to-equity swap business of banks and supporting services. Article 3 A financial asset investment company shall operate in accordance with the principles of marketization and rule of law, carry out debt-to-equity swap business through voluntary and equal consultation with all participants on the premise of compliance with laws and regulations, ensure clean transfer and true sale, persist in finding reasonable prices through market mechanisms, effectively prevent corporate risks from transferring to banking financial institutions and the public, prevent conflicts of interest and transfer of interests, and prevent related moral hazards. Article 4 A bank's debt-to-equity swap through a financial asset investment company shall be realized by transferring the creditor's rights to the financial asset investment company, which will convert the creditor's rights into the equity of the target enterprise. Banks may not directly convert creditor's rights into equity, unless otherwise stipulated by the state.

Encourage financial asset investment companies to implement debt-to-equity swaps, first acquire the creditor's rights of banks to enterprises, and then convert the creditor's rights into equity. The purchase price shall be determined by both parties through independent consultation in accordance with the principle of marketization. Involving non-performing assets of banks can be handled in accordance with the relevant provisions on the disposal of non-performing assets. Encourage banks to use the accrued provisions to write off the loss of asset transfer in a timely manner. Article 5 Banks and financial asset investment companies shall, in accordance with the principle of fairness, determine the number and price of shares with debt-to-equity swap enterprises and shareholders, establish a reasonable loss sharing mechanism according to law, truly reduce the leverage ratio of enterprises and effectively resolve financial risks.

Encourage the optimization of the ownership structure of enterprises through debt-to-equity swap, write-down of original shareholders' capital and introduction of new shareholders. Support financial asset investment companies to promote enterprise restructuring, effectively exercise shareholder rights, fulfill shareholder obligations, and improve corporate governance. Article 6 The the State Council Banking Regulatory Authority and its dispatched offices shall supervise and manage the financial asset investment companies, their branches and business activities according to law, and carry out consolidated supervision on their subsidiaries. Chapter II Establishment, Change and Termination Article 7 A financial asset investment company shall meet the following conditions:

(1) It has articles of association that conform to the Company Law of People's Republic of China (PRC) and the provisions of the State Council Banking Regulatory Authority;

(2) Having shareholders and registered capital that meet the requirements of these Measures;

(3) Having directors, senior managers and qualified employees who are familiar with the business;

(4) Establishing an effective corporate governance, internal control and risk management system, and having an information technology system suitable for business operation.

(5) Having business premises, safety precautions and other facilities suitable for business operation;

(6) Other prudential conditions as stipulated in the rules and regulations of the State Council Banking Regulatory Authority. Article 8 A financial asset investment company shall be established by a commercial bank registered in People's Republic of China (PRC) as its main shareholder. As a major shareholder, a commercial bank shall meet the following conditions:

(1) Having a good corporate governance mechanism, an internal control system and a sound risk management system;

(two) the main prudential supervision indicators meet the regulatory requirements of local regulatory agencies;

(3) It is in good financial condition and has been making profits continuously in the last three fiscal years;

(4) It has a good regulatory rating and has no major violations of laws and regulations in the last two years;

(5) Clarify the development strategy and profit model of the financial asset investment company.

(6) The capital invested in shares is self-owned, and non-self-owned funds such as creditor's rights funds and entrusted funds shall not be used for shares;

(seven) promise not to transfer the shares held within five years, not to pledge the shares held or set up a trust, and specify it in the articles of association of the financial asset investment company;

(8) Other prudential conditions as stipulated by the rules of the State Council Banking Regulatory Authority.

As a shareholder of a financial asset investment company, a commercial bank shall meet the conditions specified in Items (1), (2), (3), (4), (6), (7) and (8) of the preceding paragraph.

A newly established financial asset investment company of a state-owned commercial bank shall do relevant work in accordance with the Regulations on the Administration of State-owned Financial Assets. Article 9 As shareholders of a financial asset investment company, other legal person institutions at home and abroad shall meet the following conditions:

(1) Having a good corporate governance mechanism;

(2) Having a good social reputation, good credit record and tax payment record;

(3) If other domestic and foreign legal person institutions are non-financial institutions, their total assets at the end of the recent 1 year are not less than 5 billion yuan or the equivalent in a freely convertible currency, and their net assets at the end of the recent 1 year are not less than 30% of the total assets;

(4) If other domestic and foreign legal person institutions are non-financial institutions, the balance of equity investment shall not exceed 50% of their net assets in principle (subject to the consolidated accounting statements);

(5) It is in good financial condition and has been making profits continuously in the last two fiscal years;

(six) good management, no major illegal business records in the last 2 years;

(seven) the capital for the shares is its own capital, and it is not allowed to use debt funds, entrusted funds and other non-owned funds;

(8) Undertaking not to transfer the equity held within 5 years, not to pledge the equity held or to establish a trust, and stating it in the articles of association of the financial asset investment company;

(9) Other prudential conditions as stipulated by the rules of the State Council Banking Regulatory Authority.

If other domestic and foreign legal person institutions are financial institutions, they shall meet the requirements of relevant local laws and regulations and relevant regulatory provisions.