article 2 the term "merger" as mentioned in these measures refers to the transaction behavior of the domestic acquirer's enterprises to realize merger or actually control the established and going-concern target enterprise by transferring the existing equity, subscribing for new equity, or acquiring assets and undertaking debts. M&A can be carried out directly between the acquirer and the target enterprise, or indirectly by the acquirer through its wholly-owned or holding subsidiary (hereinafter referred to as specialized subsidiary) with no other business activities.
article 3 the m&a loan mentioned in these measures refers to the loan issued to meet the needs of the acquirer or its specialized subsidiaries for paying the price of the m&a transaction, with the cash flow generated by the enterprise after the merger, the comprehensive income of the acquirer or other legitimate income as the repayment source.
article 4 the principle of compliance with laws, prudent operation, controllable risks and sustainable business shall be followed in handling the loan business for mergers and acquisitions.
Chapter II Handling Conditions and Loan Purpose
Article 5 The acquirer applying for M&A loan shall meet the following basic conditions:
(1) Opening a basic account or general deposit account with our bank;
(2) It operates in compliance with laws and regulations, has a good credit status, and has no bad records such as credit default and evasion of bank debts;
(3) outstanding main business, steady operation, good financial position, strong liquidity and profitability, and obvious competitive advantage and good development potential in the industry or a certain region;
(4) The credit rating is above AA- level (inclusive);
(5) It conforms to the national industrial policy and the industrial credit policy of the Bank;
(6) There is a high industrial correlation or strategic correlation with the target enterprise, and the acquirer can obtain strategic resources such as R&D capability, key technologies and processes, trademarks, franchises, supply or distribution networks of the target enterprise through mergers and acquisitions to improve its core competitiveness;
(7) If the M&A transaction is legal and compliant, and involves matters such as national industrial policies, industry access, anti-monopoly and transfer of state-owned assets, it shall obtain or be about to obtain approval from relevant parties in accordance with applicable laws, regulations and policies.
Article 6 When applying for M&A loans, borrowers shall submit relevant materials according to the Detailed Rules for Due Diligence of M&A Loans (see Annex).
article 7 if the borrower is a specialized subsidiary of the acquirer, the acquirer shall provide joint liability guarantee. If the M&A loan is used to transfer, subscribe for equity or acquire assets, the corresponding equity or assets shall be pledged or mortgaged to the Bank, except that it shall not be pledged or transferred according to laws and regulations.
article 8 m&a loans are used to meet the financing needs of the acquirer's enterprises for the purpose of merging or actually controlling the target enterprises, and are limited to the payment of the m&a transaction price by the acquirer or its specialized subsidiaries, and shall not be used for other payments made by the acquirer or its specialized subsidiaries under the m&a agreement, nor for other purposes other than m&a. M&A loans shall not be used for financial M&A activities with short-term investment income as the main purpose.
Chapter III Amount, Term, Interest Rate and Total Amount Control
Article 9 The amount of M&A loans shall be reasonably determined by comprehensively considering the financing needs of the acquirer, debt level, operating ability, solvency, profitability, risk status of M&A transactions, the forecast of post-merger integration, and the financing situation of other banks for this M&A transaction, and the sum of the loans of the Bank and other banks for this M&A transaction shall not exceed 5% of the funds required for this M&A transaction.
Article 1 The term of M&A loans shall generally not exceed 5 years.
Article 11 M&A loans should generally be repaid in installments on an annual, semi-annual or quarterly basis, with interest paid monthly or quarterly.
article 12 m&a loans shall be subject to the bank's interest rate policy, and the interest rate shall reflect the complexity of m&a transactions, loan risks and other factors, and shall generally be higher than the interest rate of project loans with the same term.
article 13 the balance of m&a loans to the same borrower shall not exceed 5% of the bank's net core capital in the same period.
article 14 the balance of all m&a loans shall not exceed 5% of the bank's net core capital in the same period.
Chapter IV Loan Investigation
Article 15 To handle the M&A loan business, it is necessary to investigate and analyze the M&A parties and M&A transactions in accordance with the conditions stipulated in these Measures and the Detailed Rules for Due Diligence of M&A Loans, including but not limited to the following contents:
(1) Basic information, operation and financial status of both parties;
(2) whether both parties to the merger have the qualifications of the main body of the merger and acquisition transaction, and whether they have the qualifications to engage in the industry or business projects established in the business license;
(3) the basic contents of the M&A agreement, the internal examination and approval of the M&A agreement by both parties, and the examination and approval and progress of the relevant government agencies and regulatory authorities;
(4) whether there is a relationship between the acquirer and the acquired party, and whether both parties are controlled by the same actual controller;
(5) whether the purpose of M&A is true, whether it is legal and compliant, whether there is speculation in M&A and the corresponding risk control countermeasures;
(6) the total amount of transaction funds involved in the M&A transaction, the plan and method of fund raising, and the transit risk of overseas funds involved in the M&A transaction;
(7) the possibility for the new management team to achieve new strategic objectives after the merger;
(8) Follow-up plans and integration plans of M&A transactions, their prospects and risks, and forecasts of financial data and major financial indicators after M&A;
(9) whether there are rights restrictions such as pledge, seizure or freezing of the equity involved in the M&A transaction, and whether there are restrictions on the transaction or transfer;
(1) if the transfer of state-owned shares, mergers and acquisitions of listed companies, management buyouts or cross-border mergers and acquisitions are involved, the legal compliance and business risks of related transactions shall also be investigated and analyzed.
article 16 when applying for merger and acquisition loans to merge or control the target enterprise by transferring existing shares or subscribing for new shares, the feasibility and risk status of equity merger and acquisition transactions shall be independently analyzed and evaluated by qualified personnel with experience in mergers and acquisitions.
Chapter V Examination and Approval
Article 17 Examiners shall follow the principle of prudence and conduct examination according to the requirements of these Measures. The examination focuses on but not limited to the following contents:
(1) Whether the contents of the investigation report are comprehensive, clear and accurate, whether the business and financial forecasts of the enterprise after the merger are prudent and reasonable, whether the risks are fully and reasonably revealed, and whether the proposed risk prevention and control measures are perfect and effective;
(2) If the M&A transaction involves national industrial policies, industry access, anti-monopoly, transfer of state-owned assets, whether it has been or will be approved by the competent authorities in accordance with the requirements of applicable laws, regulations and policies, and whether it has gone through necessary registration and announcement procedures;
(3) whether the purpose of the M&A transaction conforms to the provisions of these Measures, that is, to achieve merger or actually control the established and going-concern target enterprise through the M&A transaction;
(4) For the relationship between the acquirer and the target enterprise, especially in the case that the acquirer and the target enterprise are controlled by the same actual controller, it is important to examine whether the purpose of the M&A transaction is true, legal and compliant, and whether the price of the M&A transaction is reasonable;
(5) Whether it is reasonable to determine the amount, term, interest rate level and mortgage (pledge) rate of M&A transactions; Whether the source, amount and payment method of the acquirer's own funds are legal and compliant, and the impact on the repayment source of M&A loans;
(6) whether both parties to the merger have the ability to achieve synergy through the integration of development strategy, organization, assets, business, culture and human resources;
(7) the competitive advantage, governance structure, operation and management of the enterprise after the merger, and whether there are any subsequent major investment plans;
(8) whether the acquirer has strong comprehensive debt repayment ability, whether the M&A transaction is conducive to increasing the future income of the acquirer or the target enterprise, the cash flow of the acquirer and its impact on the repayment source of the M&A loan, whether the repayment source is sufficient, whether it matches the repayment plan, and whether the repayment ability and willingness are good; If the loan is adversely affected, whether the proposed response measures or exit strategies are effective; (9) If the merged enterprise or its controlling shareholder has a loan in our bank, it shall also examine the influence of the sale of its equity or assets on the original loan repayment source, repayment ability and repayment willingness of our bank.
article 18 m&a loans are included in the unified credit management. If the relationship between related customers changes due to M&A transactions, unified credit granting shall be conducted according to the new relationship.
article 19 the approval authority of m&a loans shall be implemented in accordance with the provisions of the credit authorization document of the head office.
Chapter VI Prerequisite Approval, Loan Issuance and Accounting
Article 2 To handle M&A loan business, a written M&A loan contract, guarantee contract and other relevant legal documents shall be concluded with the borrower and relevant guarantors. If the loan issuance preconditions and loan management requirements put forward in the credit business approval letter need to be implemented in the form of legal documents, they should all be reflected in the contract or other relevant legal documents to prevent the important terms of the contract from not being agreed, unclear or invalid.
article 21 when handling m&a loan business, it should be agreed with the borrower in the loan contract. if the m&a transaction is not completed according to the standards agreed in the relevant m&a agreement in the end, the bank has the right to announce that the loan is due in advance, and the borrower should immediately repay the loan already issued by the bank.
article 22 when handling merger and acquisition loan business, the payment of loan funds shall be managed and controlled in the way agreed in the contract. The borrower shall meet the following conditions at the same time before granting loans to it:
(1) The relevant merger and acquisition transactions have been approved according to regulations, and the necessary registration and announcement procedures have been fulfilled;
(2) The self-raised funds of the acquirer have been fully put in place and paid on schedule; If the transaction price is paid in installments, the self-raised funds of the acquirer shall be paid in advance at least in the same proportion as the M&A loan;
(3) Other withdrawal conditions stipulated in the M&A loan contract.
article 23 m&a loans shall be included in the corresponding accounts respectively according to the time limit.
Chapter VII Post-loan Management
Article 24 After the issuance of M&A loans, post-loan managers such as account managers should regularly conduct on-site inspections on the acquirer and the post-merger enterprises, and the inspection focuses mainly on but not limited to the following aspects:
(1) the implementation progress of M&A transactions;
(2) the performance of the loan contract terms;
(3) whether the state or local government has issued relevant policies that have an impact on the acquirer or the post-merger enterprise, and analyze the impact degree;
(4) changes in corporate governance structure and senior management personnel of the acquirer and the enterprise after the merger; Changes in production and business activities such as brands, customers and market channels; Financial status, and changes in financial policies such as dividend strategy;
(5) whether the progress and changes of the subsequent major investment plans of the acquirer will adversely affect its operation;
(6) the debt service of the acquirer and the enterprise after the merger, and the predictability and stability of the future cash flow;
(7) if the acquired party or its controlling shareholder has a loan in our bank, it shall check whether the income obtained after the sale of equity or assets will repay the loan of our bank according to the contract;
(8) If a repayment account is set up, attention should be paid to whether the lower limit of the balance agreed in the contract has been reached, so as to ensure that the principal and interest of the loan are fully recovered on schedule;
(9) regularly evaluate the value of the collateral in accordance with the relevant regulations, and analyze its degree of guarantee for the Bank's loans, as well as its disposal and liquidity.
article 25 if the assets or equity to be acquired are pledged (pledged), after the merger transaction is completed, the relevant guarantee change procedures shall be handled in time to ensure the continuity and effectiveness of the bank's guarantee rights and interests. For those who can't go through the relevant formalities, they should recover the loan in time or ask customers to provide other full, effective and legal guarantees.
Article 26 Post-lending management personnel shall require the acquirer and the post-merger enterprise to provide financial statements on a regular basis according to the contract, and make a forecast of their operation and cash flow in the coming year.
article 27 during the loan period, if the acquirer obtains additional cash flow under certain circumstances (such as initial public offering and asset sale) agreed in the loan contract, it shall urge the borrower to repay the loan of our bank in advance according to the contract.
article 28 during the loan period, if the acquirer or the post-merger enterprise suffers from deterioration of important financial indicators (such as asset-liability ratio, EBITDA, etc.) and touches the protective clauses of the contract, measures shall be taken in time to ensure the loan safety of our bank.
Article 29 When the NPL ratio of M&A loans rises, the inspection and evaluation should be strengthened from the following aspects:
(1) The way, composition and coverage of loan principal and interest of M&A loans;
(2) collection and preservation measures for non-performing loans;
(3) the disposition of the pledged equity;
(iv) write-off of bad debts of M&A loans.
Article 3 Each bank shall check the M&A loan business with internal memory at least once a year, and comprehensively evaluate the risk status. When the concentration of M&A loans tends to be high and the quality of loans deteriorates, the frequency of inspection and evaluation should be increased.
Chapter VIII Supplementary Provisions
Article 31 The Bank shall act as an M&A consultant or financing consultant for M&A loans, actively participate in and monitor M&A transactions, and keep abreast of risk changes. However, M&A transactions do not employ M&A consultants or financing consultants.
Article 32 When handling M&A loans, according to the complexity, professionalism and technicality of M&A transactions, an intermediary agency or an independent consultant may be hired to conduct relevant investigations, and the investigation results of the intermediary agency may be used in the loan investigation, risk assessment or review.
the legal responsibilities of the intermediary agencies or independent consultants hired should be clearly defined through written contracts.
article 33 the investigation and review contents may be appropriately simplified for merger and acquisition loan applications of target enterprises through acquisition of assets, undertaking debts, etc., and merger and acquisition loan applications with some super-large and high-quality customers as acquirers and their comprehensive income as the main repayment source, mainly analyzing the future cash flow of acquired assets, the future repayment sources of debts undertaken, or the operating financial status and comprehensive repayment ability of acquirers.
article 34 for those who do not conform to the provisions of these measures, but really need to handle M&A loan business, they must be approved by the Head Office or specially authorized.
article 35 these measures shall be implemented as of the date of issuance. The Opinions of China Industrial and Commercial Bank on Using Medium-and Long-term Loans to Support Enterprise Mergers and Acquisitions (G.Y.F. [2] No.5) shall be abolished at the same time. Where other relevant provisions are inconsistent with these Measures, these Measures shall prevail.
attachment: detailed rules for due diligence of M&A loans. In order to do a good job in the due diligence of M&A loan business (including the risk assessment of equity M&A transactions, the same below), improve the quality of due diligence, and identify and control the risks of M&A loans, the due diligence personnel of M&A loans (including the risk assessment personnel of equity M&A transactions, the same below) should comprehensively, accurately and deeply investigate and analyze the relevant situation and risk factors of both parties and M&A transactions according to the contents suggested in these Detailed Rules, and form an investigation report (equity transaction risk assessment report). The data cited in the report shall provide sources of information, and the judgments made shall be based on full objectivity and impartiality.
1. Information to be submitted by both parties to the merger
(1) Basic information concerning both parties to the merger
mainly including but not limited to:
1. Registration (or approval of establishment), relevant documents for change of registration, business license and agency representative of both parties to the merger.