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the China Banking Regulatory Commission Decree of the China Banking Regulatory Commission No.4 The Detailed Rules for the Implementation of the Regulation of the People's Republic of China on the Administration of Foreign-funded Financial Institutions, which were adopted at the 16th Chairmen's meeting of China Banking Regulatory Commission, are hereby promulgated and shall go into effect as of September 1, 2004. Chairman of the China Banking Regulatory Commission Liu Mingkang July, 26, 2004 Detailed Rules for the Implementation of the Regulation of the People's Republic of China on the Administration of Foreign-funded Financial Institutions Chapter I General Provisions
Article 1 The present Detailed Rules have been formulated according to the Banking Administration Law of the People's Republic of China, the Law of the People's Republic of China on Commercial Banks and the Regulation of the People's Republic of China on the Administration of Foreign-funded Financial Institutions (hereinafter referred to as the Regulation).
Article 2 The "foreign capital" as used in Item 1and 4 of Article 2 of the Regulation refers to the capital contributed by institutions registered outside the territory of the People's Republic of China. The "foreign bank" as mentioned in item (2) refers to a commercial bank that is registered outside the territory of the People's Republic of China and that are approved or accredited by the financial supervisory authority of the place where it is located. The "foreign financial institution" as mentioned in Item 3 and 5 refer to a financial institution that is registered outside the territory of the People's Republic of China and is approved or accredited by the financial supervisory authority of the places where it is located.
Article 3 The "foreign-funded legal entity" as mentioned in the present Detailed Rules refers to a wholly foreign-funded bank, a Sino-foreign joint equity bank, a wholly foreign-funded finance company and a Sino-foreign joint equity finance company as mentioned in the Regulation.
Article 4 China Banking Regulatory Commission (hereinafter referred to as the CBRC) is the competent authority responsible for administering and supervising the foreign-funded financial institutions. The local offices of the CBRC shall be responsible for the routine supervision and administration of the foreign-funded financial institutions within their respective jurisdiction.
Chapter II Establishment and Registration
Article 5 The "prudential requirements" as mentioned in Articles 6 through 8 shall include but not limited to the following: (1) Sound corporate governance structure; (2) Persistently sound operational performance; (3) Financial statements drawn up in line with the prudent accounting principle, and clean report by the accounting firm on the financial statements for three consecutive years prior to filing the application; (4) No record of serious violation of laws or regulations, and no record of bad credit; (5) Favorable reputation in the banking sector and good social image; (6) Stable political and economic situation in the home country or region of the applicant in the case of the establishment of a branch by a foreign bank, and a sound communication mechanism between the home financial supervisory authority and the CBRC; and (7) Other relevant requirements on investors in the financial sector as provided for in the laws and regulations.
Article 6 The shareholder or the largest shareholder of a wholly foreign-funded bank established under Article 6 of the Regulation must be a commercial bank. The sole shareholder or the largest shareholder of a wholly foreign-funded finance company established under Article 6 of the Regulation must be a commercial bank or a finance company. The capital adequacy ratio of the commercial bank as mentioned in this Article may not be lower than 8%. The Item 2 and 3 of Article 6 of the Regulation shall apply to the sole shareholder or the largest shareholder.
Article 7 As for a joint-equity bank established under Article 8 of the Regulation, its sole shareholder of foreign party or largest shareholder of foreign party must be a commercial bank. As for a joint-equity finance company established under Article 8 of the Regulation, its sole shareholder of foreign party or largest shareholder of foreign party must be a commercial bank or a finance company. The capital adequacy ratio of the commercial bank as mentioned in this Article may not be lower than 8%. The Item 2 and 3 of Article 8 of the Regulation shall apply to the sole foreign shareholder of the foreign party or the largest foreign shareholder.
Article 8 The "representative office established by the applicant or foreign party within the territory of China" refers to a representative office established under the supervision of the CBRC. The "end of the year prior to the submission of the application" refers to the end of the fiscal year prior to the date of application.
Article 9 The "prudential requirements" as mentioned in Article 20 of the Regulation and Articles 16, 17 and 40 of the present Detailed Rules shall include but not limited to the following: (1) Sound cooperate governance structure; (2) Sound risk management system; (3) Sound internal control system; (4) Effective information management system; (5) The managerial personnel having good expertise and management capacity; (6) Persistently sound operational performances and good asset quality of the applicant; (7) No record of serious violation of laws or regulations, and; (8) Effective measures for fighting money laundering.
Article 10 The "feasibility study report" as mentioned in Articles 9 through 11 of the Regulation and Article 18 of the present Detailed Rules shall at least include the basic information of the applicant, the analysis of the market prospect of the institution to be established, the business development plan of the institution to be established, as well as the organizational framework, and projection of asset-liability size and profit for the first three years, etc. The "name of a to-be-established branch of a foreign bank" as mentioned in Item 1 of Article 10 of the Regulation shall include both the Chinese name and the foreign name, and the Chinese name shall indicate the nationality and form of liabilities of the foreign bank.
Article 11 The "photocopy of business license" as mentioned in the Regulation and the present Detailed Rules refers to the photocopy of the business license or other approval document on financial business. The photocopy of business license, power of attorney, letter from the foreign bank to discharge the tax and debt obligation of its branch bank in China, etc. shall be either notarized by an institution accredited by the home country or region or certified by the embassy or consulate of the People's Republic of China in that country, except the photocopy of business license as issued by the Chinese industry and commerce administration authority.
Article 12 The "relevant materials about the Chinese party" as mentioned in item 6 of Article 11 of the Regulation refers to the photocopy of business license of the Chinese party and its annual reports of the latest 3 years.
Article 13 The "annual reports" as mentioned in the Regulation and the present Detailed Rules shall be audited with the auditing opinions issued by the accredited accounting firm of the home country or region of the applicant. Annual reports printed in a language other than Chinese or English shall be accompanied by Chinese or English translations.
Article 14 The "other materials" as mentioned in Articles 9 through 11 of the Regulation shall include but not limited to the following: (1) An applicant applying for establishing a foreign-funded institution for the first time shall provide the information about the financial system and the financial supervision laws and regulations of it home country or region; (2) The articles of association of the applicant; (3) The organizational chart of the applicant and the group it belongs to, the name list of the major shareholders, overseas branches and associated companies; (4) Policies or rules of the applicant on fighting money laundering.
Article 15 Except the annual reports, all application materials as required in the present Detailed Rules, if written in a foreign language, shall be accompanied by Chinese translations.
Article 16 Where a foreign bank intends to establish a new branch in China, its existing branches in China shall meet the prudential requirements as specified by the CBRC and the conditions as provided for in Item 2, 3, 4 and 5 of Article 7 of the Regulation.
Article 17 A wholly foreign-funded bank or a Sino-foreign joint-equity bank shall meet the following conditions when applying for the establishment of a branch: (1) It has operated in China for more than 3 years, and it has made profits for 2 successive fiscal years prior to the application; (2) Its capital adequacy ratio is not less than 8%; (3) The applicant shall allocate the minimum amount of convertible currency equivalent to RMB 100 million yuan as the working capital of each new branch to be established; the aggregate amount of the working capital allocated to all its branches within China, including the to-be-established ones, may not exceed 60% of its registered capital; and (4) Other prudential requirements as specified by the CBRC.
Article 18 When a wholly foreign-funded bank or joint-equity bank applies for the establishment of a branch, it shall submit the following materials (in triplicate) to the CBRC local office. After issuance of the preliminary examination opinions by the local office of the CBRC, the application materials shall be directly sent to the CBRC for examination and approval with a copy sent to the CBRC local office at a higher level. (1) Letter of application signed by the board chairman or the president (CEO, general manager) of the applicant, which shall include the name of the to-be-established branch, the amount of working capital to be allocated, and intended business types, etc; (2) The resolution of the board of directors on approval of the establishment of the branch; (3) A feasibility study report; (4) A photocopy of business license; (5) The annual reports of the latest three years; (6) The articles of association of the applicant; and (7) Other materials as required by the CBRC.
Article 19 The letter of application for the establishment of a foreign-funded legal entity shall be signed by the chairmen or president (CEO, general manager) of each investor and addressed to the Chairman of the CBRC. The letter of application for the establishment of a branch of a foreign bank shall be signed by the Chairman or president (CEO, general manager) of the applicant and addressed to the Chairman of the CBRC.
Article 20 For the establishment of a foreign-funded financial institution, the applicant shall submit to the CBRC the application materials (in duplicate) as required in Articles 9 through 11 of the Regulation, and simultaneously submit a copy to the CBRC local office of the place where the to-be-established institution will be located.
Article 21 The CBRC shall make a decision of acceptance or rejection within 6 months as of the date of receiving all application materials for establishing a foreign-funded financial institution and shall inform the applicant of the decision in writing. The applicant shall, within 15 days after receiving an acceptance notice, fetch a formal application form from the relevant CBRC local office of the place where the to-be-established institution will be located, and start the preparatory work for the establishment. During the preparatory period, the applicant shall form a preparatory team to take charge of the preparatory work and shall submit the name list of team leaders to the relevant CBRC local office. When the preparatory work is finished, the preparatory team shall be dissolved automatically. The preparatory period is 6 months. Where the applicant fails to fetch the formal application form within the prescribed time limit, it may not apply again for establishing an operational office in the same city within 1 year as of the date of receipt of the acceptance notice. An applicant who receives a rejection notice may apply again for establishing an operational office when satisfying the requirements of the establishment of a foreign-funded financial institution.
Article 22 The "principal person" as mentioned in Article 14 of the Regulation refers to the chairman or president of a foreign-funded legal entity (CEO, general manager), or the president of a branch of a foreign bank (general manager).
Article 23 An applicant shall complete the following tasks within the preparatory period: (1) Establishing an internal control system, including an internal organizational structure, authorization and accreditation, management of credit funds as well as the control policies and operational procedures for capital transaction, accounting and computer system. The internal control system and operational procedures shall be sent to the relevant CBRC local office. (2) Staffing an appropriate number of business personnel that meet the needs of its business development and have received relevant training on policies, regulations and professional knowledge, so as to meet the requirements for effective supervision and control of the major business risks, examination, approval and reexamination of business at different levels, the division of work and balance of the key posts; (3) Printing the main business vouchers and receipts used for external transactions and submitting samples thereof to the relevant CBRC local office; (4) Equipping with the security facilities accredited by the relevant departments, the pertinent certifications of which shall be submitted to the relevant CBRC local office; (5) Completing the audit on its internal control system, accounting system, and computer system by an accounting firm accredited by the relevant CBRC local office before it opens business, and the audit report shall be submitted to the relevant CBRC local office.
Article 24 Where an applicant applies for the extension of the preparatory period, it shall submit an application to the relevant CBRC local office not later than 1 month prior to the expiration of the preparatory period. The letter of application shall be signed by the person in charge of the preparatory team of the to-be-established institution. Where an applicant submits an application for the extension of the preparatory period beyond the prescribed time limit, the application will be rejected the relevant CBRC local office. The relevant CBRC local office shall, within 15 days after the date of receiving the application for extending the preparatory period, decide on whether or not to approve such an extension. In the case of rejection, it shall give a written notice to the applicant explaining the reasons for the rejection, and send a copy to the CBRC level by level.
Article 25 Upon the completion of the preparatory work, the applicant shall submit the letter of application signed by the person in charge of the preparatory team, the application form filled out, as well as the documents as provided for in Article 14 of the Regulation, to the CBRC local office of the place where the to-be-established institution will be located. After the issuance of preliminary examination opinions by the CBRC local office, the application shall be directly submitted to the CBRC for examination and approval with a copy sent to the CBRC local office at a higher level.
Article 26 The CBRC shall make a decision of approval or disapproval within 2 months as of the date of the complete application form and relevant materials. The applicant shall, within 15 days as of the date of receipt of the notice from the CBRC, fetch the documents of whether to approve the establishment of a foreign-funded financial institution. In the case of disapproval, it may apply again when satisfying all the requirements for the establishment of a foreign-funded financial institution.
Article 27 If the application for establishing a foreign-funded institution is approved, the applicant shall apply for a prior opening inspection to the relevant CBRC local office after obtaining the approval documents from the CBRC headquarters. The letter of application shall be signed by the chairman or president of the board of directors (CEO, general manager) of the foreign-funded legal entity, or the president or general manager of the branch of the foreign bank. After the applicant passes the inspection conducted by the relevant CBRC local office, it shall fetch a financial business certificate from the CBRC. If it fails to pass the inspection, the foreign-funded financial institution may apply to the competent office for a new inspection within 10 days as of the date of receiving the notice of the inspection failure.
Article 28 Before a foreign-funded institution starts business, it shall make a public announcement of its opening of business on the national newspapers as designated by the CBRC headquarters and the local newspapers as designated by the relevant CBRC local office, and shall inform the relevant CBRC local office of the date of start of business in writing.
Article 29 The foreign-funded financial institution shall start business within 3 months after obtaining approval of its establishment granted by the CBRC, except in the case when the relevant CBRC local office approves it to postpone the start of business under special circumstances. Where a foreign-funded institution applies for postponing the start of business, it shall submit an application for the postponement to the relevant CBRC local office within 2 months after the application for its establishment is approved by the CBRC. The letter of application shall be signed by the chairman or president (CEO, general manager) of the foreign-funded legal entity, or the president (general manager) of the branch of the foreign bank. The relevant CBRC local office shall make a decision on whether or not to approve the postponement within 15 days after receiving the application materials. If it makes a decision of disapproval, it shall notify the foreign-funded institution of the reasons for disapproval in a written form and send a copy to the CBRC headquarters level by level. Where a foreign-funded financial institution submit an application for postponing the start of business beyond the prescribed time limit, the relevant CBRC local office shall reject its application for postponement. The start of business may be postponed for no more than 3 months. If a foreign-funded institution fails to start business within the time limit, the approval of establishment will become invalid automatically. The foreign-funded institution shall hand over the financial business certificate to the CBRC. The applicant may not apply again for establishing an operational office in the same city within 1 year as of the day when the last establishment approval becomes invalid.
Article 30 Restructuring of a branch of a foreign bank into a foreign-funded legal entity shall in carried out in compliance with the principle of legitimacy, prudence and continuous operation and vice versa. Where a branch of a foreign bank intends to restructure into a foreign-funded legal entity, it shall apply to the relevant CBRC local office in accordance with the requirements and procedures of the establishment of a foreign-funded legal entity. Where a foreign-funded legal entity intends to restructure into a branch of a foreign bank, it shall apply to the relevant CBRC local office in accordance with the requirements and procedures of the establishment of a branch of a foreign bank. The application shall be directly submitted to the CBRC for examination and approval through the relevant CBRC local office and a copy to the CBRC local office at a higher level at the same time. The application materials shall include a plan on the resolution of claims and liabilities during the restructuring process.
Chapter III Business Scope
Article 31 Where a foreign-funded financial institution conducts, within the business scope as provided for by Article 17 or Article 18 of the Regulation, foreign exchange businesses with overseas institutions, foreign-funded enterprises, permanent missions of foreign countries in China, representative offices of Hong Kong, Macao or Taiwan in the Mainland, and foreigners and compatriots from Hong Kong, Macao or Taiwan as well as some prescribed foreign exchange businesses with non-foreign-funded enterprises, it shall meet the following applicable condition: (1) The working capital of the branch of a foreign bank shall not be less than the equivalent of RMB 100 million yuan in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB 300 million yuan in freely convertible currencies; (3) The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB 100 million yuan in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or joint-equity finance company shall not be less than the equivalent of RMB 200 million yuan in freely convertible currencies.
Article 32 Where a foreign-funded financial institution conducts foreign exchange businesses within the scope as provided for in Article 17 or Article 18 of the Regulation with various kinds of clients, it shall meet the following applicable condition: (1) The working capital of a branch of a foreign bank shall not be less than the equivalent of RMB 200 million yuan in freely convertible currencies (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB 400 million yuan in freely convertible currencies, (3) The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than the equivalent of RMB 100 million yuan convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or joint-equity finance company shall not be less than the equivalent of RMB 300 million yuan in freely convertible currencies.
Article 33 For a foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake the businesses as specified in Article 17 or Article 18 of the Regulation, it shall meet the following applicable condition when applying for conducting foreign exchange businesses with overseas institutions, foreign exchange businesses and RMB businesses with overseas institutions, foreign-funded enterprises, permanent missions of foreign countries in China, representative offices of Hong Kong, Macao or Taiwan in the Mainland, and foreigners and compatriots from Hong Kong, Macao or Taiwan as well as some prescribed foreign exchange businesses and RMB businesses with non-foreign-funded enterprises: (1) The working capital of a branch of a foreign bank shall not be less than RMB 200 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 100 million yuan in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 400 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of RMB 300 million yuan in freely convertible currencies; (3) The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 200 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 100 million yuan in convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall not be less than RMB 300 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of RMB 200 million yuan in freely convertible currencies.
Article 34 For a foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake the businesses as specified in Article 17 or Article 18 of the Regulation, it shall meet the following applicable condition when applying for conducting foreign exchange businesses with all kinds of clients, RMB businesses with foreign-funded enterprises, permanent missions of foreign countries in China, representative offices of Hong Kong, Macao or Taiwan in the Mainland, foreigners and compatriots from Hong Kong, Macao or Taiwan as well as some prescribed RMB businesses with non-foreign-funded enterprises: (1) The working capital of a branch of a foreign bank shall not be less than RMB 300 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 200 million yuan in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 500 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of RMB 400 million yuan in freely convertible currencies; (3) The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 200 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 100 million yuan in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall not be less than RMB 400 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that a in foreign currency shall not be less than the equivalent of RMB 300 million yuan in freely convertible currencies.
Article 35 For a foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake the foreign exchange businesses as specified in Article 17 or Article 18 of the Regulation with all kinds of clients, it shall meet the following applicable condition when applying for conducting RMB businesses with foreign-funded enterprises, permanent missions of foreign countries in China, representative offices of Hong Kong, Macao or Taiwan in the Mainland, foreigners and compatriots from Hong Kong, Macao or Taiwan and non-foreign-funded enterprises: (1) The working capital of a branch of a foreign bank shall not be less than RMB 300 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 200 million yuan in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 600 million yuan, of which the capital in RMB shall not be less than 200 million yuan and that in a foreign currency shall not be less than the equivalent of RMB 400 million yuan in freely convertible currencies; (3) The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 200 million yuan, of which the capital in RMB shall not be less than 100 million yuan and that in a foreign currency shall not be less than the equivalent of 100 million yuan in freely convertible currencies; (4) The registered capital of a wholly foreign-funded finance company or a joint-equity finance company shall not be less than RMB 500 million yuan, of which the capital in RMB shall not be less than 200 million yuan and that in a foreign currency shall not be less than the equivalent of RMB 300 million yuan in freely convertible currencies.
Article 36 A foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake the businesses as specified in Article 17 or Article 18 of the Regulation shall meet the following applicable condition when applying for conducting foreign exchange businesses and RMB businesses with all kinds of clients: (1) The working capital of a branch of a foreign bank shall not be less than RMB 500 million yuan, of which the capital in RMB shall not be less than 300 million yuan and that in a foreign currency shall not be less than the equivalent of 200 million yuan in freely convertible currencies; (2) The registered capital of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 1 billion yuan, of which the capital in RMB shall not be less than 600 million yuan and that in a foreign currency shall not be less than the equivalent of RMB 400 million yuan in freely convertible currencies; (3) The working capital of a branch of a wholly foreign-funded bank or a joint-equity bank shall not be less than RMB 300 million yuan, of which the capital in RMB shall not be less than 200 million yuan and that in a foreign currency shall not be less than convertible currencies equivalent of 100 million yuan in freely convertible currencies; (4) The registered capital of a solely foreign-funded finance company or joint-equity finance company shall not be less than RMB 700 million yuan, of which the capital in RMB shall not be less than 400 million yuan and that in a foreign currency shall not be less than the equivalent of RMB 300 million yuan in freely convertible currencies.
Article 37 The term "trade in government bonds, financial bonds, and other foreign exchange securities except stocks" as mentioned in Article 17 (4) and Article 18 (4) of the Regulation shall include, but not be limited to, the following foreign exchange investments such as bonds of Chinese or foreign governments, bonds of Chinese financial institutions and bonds of Chinese non-financial institutions that are issued abroad.
Article 38 The "credit investigation and consultation service" as mentioned in Article 17 (12) and Article 18 (8) of the Regulation refers to those related to banking businesses.
Article 39 The term "some prescribed foreign exchange businesses for non-foreign-funded enterprises" as mentioned in Articles 31 and 33 of the present Detailed Rules refers to the businesses of transferring foreign exchange loans into deposits, and engagement in export settlement, import settlement related to the loans and inward remittances, which are set up for non-foreign-funded enterprises . The term "some prescribed RMB businesses for non-foreign-funded enterprises" as mentioned in Articles 33 and 34 refers to the business of providing matching RMB loans as part of foreign exchange loan agreements, as well as transferring the loans into deposits, and providing guarantee for the non-foreign-funded enterprises that have obtained foreign exchange loans issued by the same foreign-funded financial institution.
Article 40 Article 20 of the Regulation set the requirements on a foreign-funded financial institution for its initial application for RMB businesses. Among these requirements, Item1 and 2 require that a foreign-funded financial institution, which applies for conducting RMB businesses, has operated for at least 3 years, and has made profits for two consecutive years prior to the application. If a foreign-funded financial institution that has already been authorized to conduct RMB businesses applies for expansion of the customer base of RMB businesses, it shall meet the following conditions: (1) Having made profits for two consecutive years prior to the application; and (2) Other prudential requirements as prescribed by the CBRC. "Operated for at least 3 years" in this Article refers to the period from the date when the financial institution obtains the approval of establishment to the date of application. "Having made profits for two consecutive years prior to the application" means that profits are shown in the financial statements of the previous two fiscal years up to the day when an application is filed.
Article 41 A foreign-funded financial institution shall submit the following materials (in triplicate) to the relevant CBRC local office when filing an initial application for RMB businesses or the expansion of RMB businesses. The relevant CBRC local office shall issue preliminary examination opinions, and then submit them to the CBRC for examination and approval, and a copy to the CBRC local office at a higher level: (1) The letter of application signed by the chairman of the board of directors or president (CEO, general manager) and addressed to the Chairman of the CBRC, which shall contain the detailed contents of RMB businesses or expansion of customer base, and proposed increase of capital or working capital, etc.; (2) A feasibility study report; (3) The prospective revision of the articles of association (applicable to foreign-funded legal entity); (4) Operating procedures and internal control system for the prospective businesses; (5) Audited balance sheets and the income statements of the previous two fiscal years prior to the date of application; and (6) Other materials as required by the CBRC.
Article 42 A foreign-funded financial institution shall complete the following preparatory work within 4 months after receiving the notice from the CBRC on approving its preparing for operating RMB businesses or expanding the customer base of RMB businesses: (1) To expatriate the increased capital or working capital to China, and to submit to the relevant CBRC local office the capital verification certificate issued by the accounting firm which is accredited by the CBRC,; (2) To staff a appropriate number of business personnel that can meet the needs of its business development; (3) To print the major business vouchers and receipts used for external transactions and to submit relevant samples thereof to the relevant CBRC local office; (4) To equip with security facilities accredited by the relevant department and submit pertinent certificates thereof to the relevant CBRC local office; (5) To establish internal control system and operational procedures for RMB businesses and to submit them to the relevant CBRC local office. If the foreign-funded financial enterprise fails to complete the preparatory work within 4 months, the approval of the CBRC will become invalid automatically.
Article 43 A foreign-funded financial institution shall file an application for inspection to the relevant CBRC local office upon completion of its preparatory work. The application shall be signed by the board chairman or president (CEO, general manager) of the foreign-funded legal entity, or by the president or general manager of the branch of the foreign bank. If the foreign-funded financial institution passes the inspection, it shall obtain the approval document from the CBRC headquarters upon the strength of the inspection certificate and the capital verification certificate. If it fails to pass the check, it may apply for re-inspection to the inspection office 10 days after receiving the notice of inspection result.
Article 44 A foreign-funded financial institution shall, before starting the businesses listed in the approval document, make a public announcement in the national newspapers as designated by the CBRC and the local newspapers as designated by the relevant CBRC local office.
Article 45 The geographic scope for RMB businesses by the foreign-funded financial institution shall be limited to the cities where foreign-funded financial institutions are allowed to undertake RMB businesses.
Article 46 The term "new business products" as mentioned in Article 21 of the Regulation refers to the new financial products that have not yet been provided by the banks or finance company in China or those that have been already provided by the banks or finance company in China but have relatively high operation risks. A foreign-funded financial institution shall submit the following materials (in triplicate) to the relevant CBRC local office when it applies for operating a new financial product. The relevant CBRC local office shall issue the preliminary examination opinions, and then shall directly submit these materials to the CBRC for examination and approval and simultaneously send a copy to the CBRC local office at a higher level: (1) A letter of application signed by the representative authorized by the head office of the foreign-funded financial institution; (2) Detailed introduction of the business to be launched, necessary preparations for operating the businesses, including operational procedures, analysis, control measures, professional staff and computer system, etc; (3) Other materials as required by the People's Bank of China. The CBRC shall make a decision on whether or not to approve the application within 60 days from the date of receiving the complete application materials from the foreign-funded institution.
Article 47 Where a foreign-funded financial institution intends to launch new business products in no less than two branches in China, the head office of the foreign-funded legal entity or the principal reporting bank of the foreign bank shall submit the application materials uniformly to the CBRC local office of the place where the principal reporting bank is located. After the aforesaid CBRC local office shall issue preliminary examination opinions, and then shall directly submit the application materials to the CBRC for examination and approval and a copy to the CBRC local office at a higher level. Upon approval, the foreign-funded financial institution and its branches shall, submit written reports to the relevant CBRC local offices within 5 days from the date of starting the new businesses.
Article 48 The foreign-funded financial institution shall follow the application procedures in accordance with the provisions of Articles 46 and 47 of the present Detailed Rules when applying for other businesses as specified in Item 13 of Article 17 and Item 10 of Article 18 of the Regulation.
Article 49 A foreign-funded financial institution or its branch shall submit written reports to the relevant CBRC local offices within 5 days from the date of launching the business products or services within the approved business scope and products.
Article 50 A foreign-funded financial institution may engage in the business of settlement and sale of foreign exchange in accordance with relevant provisions.
Article 51 The wholly foreign-funded banks, joint-equity banks and branches of foreign banks, which are allowed to conduct RMB businesses upon approval, may engage in RMB inter-bank borrowing business according to relevant provisions.
Chapter IV Management of Position Qualifications
Article 52 Any of the senior management personnel of a foreign-funded financial institution shall meet the following qualifications: (1) Being familiar with and observant of the laws and regulations of China on financial supervision; (2) Having professional knowledge, work experience and organizational capabilities compatible with the positions assumed; and (3) No record of misconduct.
Article 53 A person under any of the following circumstances may not assume the post of senior management in a foreign-funded financial institution: (1) Having criminal record; (2) Having ever been penalized severely for violation of the laws and regulations; (3) Bearing major or direct management responsibility for the bankruptcy, serious violation of regulations, revocation of the financial business certificate or the business license of the financial institution, enterprise or company, where he or she has worked for and the penalty has been imposed for less than 5 years; or (4) Having caused heavy serious damages or losses due to fateful mistakes, to the financial institution, the enterprise or company where he or she has worked for in the last 5 years.
Article 54 The CBRC adopts the approval system and the record-keeping system for the examination and verification of the senior management personnel of foreign-funded financial institutions.
Article 55 The senior management personnel of foreign-funded financial institution assuming the following posts shall be subject to the approval system and meet the following applicable condition: (1) The board chairman, president (general manager) of a foreign-funded legal entity shall have more than 10 years of experience in the financial sector or more than 15 years of experience in related economic sector (including over 5 years of experience in the financial sector) with manager position of a business department or above for more than 3 years; (2) The vice board chairman, vice president (vice general manager) of a foreign-funded legal entity, and president (general manager) of a branch of a foreign bank shall have more than 5 years of experience in the financial sector or more than 10 years of experience in related economic sector (including over 3 years of experience in the financial sector) with manager position of a business department or above for more than 3 years; (3) The vice president (vice general manager) of a branch of a foreign bank, the president of a sub-branch of a foreign bank, shall have more than 4 years of experience in the financial sector or more than 6 years of experience in related economic sector (including over 2 years of experience in the financial sector); (4) Having at least a bachelor degree; or if the academic degree requirement is not met, an extra over 6 years of experience in the financial sector or over 8 years of experience in related economic sector (among which the financial work shall be 4 years) is required.
Article 56 The CBRC shall be responsible for approving or revoking the qualification of the following personnel: (1) The board chairman, president (general manager) of a foreign-funded legal entity; (2) The president (general manager) of a branch of a foreign bank; The CBRC authorizes the local banking regulatory bureau of the place where the foreign-funded financial institution is located to be responsible for approving the qualifications for the change of the president (general manager) of a branch of a foreign bank: The banking regulatory bureau shall be responsible for approving the qualifications of the following personnel within its jurisdiction: (a) The vice president (vice general manager) of a foreign-funded legal entity; (b) The vice president (vice general manager) of a branch bank of a foreign bank, and the president of a sub-branch of a foreign bank.
Article 57 Where the approval system is applied to the qualifications of senior management personnel, the applicant shall submit the following materials (in triplicate) to the relevant CBRC local office: (1) A letter of application to the CBRC signed by the authorized representative. If it shall be subject to the examination and approval of CBRC, it shall be submitted to the Chairman of the CBRC; if it shall be subject to the examination and approval of the CBRC local office, it shall be submitted to the head of the CBRC local office; (2) Power of attorney signed by the authorized representative of a foreign bank for the proposed president (general manager) and vice president (vice general manager) of its branch bank, and the president of its sub-branch and the power of attorney for the authorized representative; (3) Resume of the candidate; (4) Photocopies of the identification card and education diploma of the candidate; (5) The resolution of the board of directors or shareholders' meeting shall also be submitted if the meeting of the board of directors or shareholders' meeting is required according to the articles of association of a foreign-funded legal entity; (6) Statement of non-misconduct record signed by the candidate; and (7) Other materials as required by the CBRC.
Article 58 After an applicant submits the application materials about the qualifications of the candidate president (general manager) of the foreign-funded financial institution, the CBRC may have an interview with the candidate president (general manager) of the foreign-funded financial institution before his or her tenure. The CBRC local office may have such an interview with other senior management personnel of the foreign-funded financial institution before their tenure.
Article 59 The minimum tenure of the senior management personnel of a foreign-funded financial institution subject to the approval system shall be 2 years. The president (general manager) or vice president (vice general manager) of a foreign-funded financial institution may not take executive posts in any other business institution during the tenure. Any of the senior management personnel of a foreign-funded financial institution may not concurrently take any post in a representative office in China.
Article 60 The "senior management personnel" as mentioned in Article 33 (7) of the Regulation refers to the senior management personnel subject to the approval system.
Article 61 The record-keeping system shall apply to senior management personnel who take the following positions in a foreign-funded financial institution: (1) The directors of board, assistant to the president (general manager), chief financial officer, chief auditing officer, senior compliance manager, chief operation officer of a foreign-funded financial legal entity; (2) The chief financial officer, compliance manager and chief operation officer of a branch of a foreign bank; (3) The vice president of a sub-branch of a foreign bank; and (4) Other senior management personnel required to be subject to record-keeping system by the CBRC.
Article 62 With regard to the senior management personnel subject to the record-keeping system, the foreign-funded financial institution shall submit the following materials to the relevant CBRC local office: (1) Power of attorney signed by the authorized representative of the foreign-funded financial institution and the power of attorney for the authorized representative; (2) Resume of the candidate; (3) Photocopies of the identification card and academic diploma of the candidate; (4) Statement of non-misconduct record signed by the candidate; and (5) Other materials as required by the CBRC.
Article 63 The photocopies of the resume, identification card and academic diploma of the candidates shall be signed by the authorized representative of the applicant.
Article 64 In case the president (general manager) of a foreign-funded financial institution and the president of its sub-branch is absent from office for over one month, he or she shall report to the relevant CBRC local office in writing; and he shall be replaced in the case of his absence from office for more than 3 consecutive months without justified explanations.
Article 65 As for a senior management member who is liable for any of the following circumstances, the CBRC may disqualify him from taking the senior managerial position for a period up to lifelong in light of the severity and aftermath: (1) Being investigated for criminal liabilities according to law; (2) Refusing, intervening, hampering or seriously impairing the legitimate supervision conducted by the CBRC; (3) Serious property damages and losses or serious financial criminal cases have been uncured as a result of poor internal management and control system or weak supervision; (4) The institution, which he or she works for, is taken over, acquired and merged or declared bankrupt because of business operations in serious violation of the law or regulations, inefficient internal systems or the persistently poor management; (5) The institution where he or she works for suffers from heavy losses due to persistently poor management; (6) The CBRC has discovered illegal or rule-breaking activities conducted by the senior management member prior to his or her appointment, or any other circumstance that makes him/her inappropriate to take the post; (7) Other circumstances as identified by the CBRC.
Article 66 Where the qualifications of the senior management personnel should be subject to the approval of the CBRC, the CBRC shall give a reply as to whether or not to approve the qualifications within 30 days from the date of receiving the complete application materials. Where the qualifications of the senior management personnel should be subject to the approval of the relevant CBRC local office, the CBRC local office shall give a reply as to whether or not to approve the qualifications within 30 days from the date of receiving the complete application materials. In the case of disapproval, the applicant shall be notified of the reasons for disapproval in writing. With regard to the appointment of a senior management member that shall be filed in the relevant CBRC local office for record, the appointment shall be deemed as approved if the relevant CBRC local office does not take any objection in writing within 30 days from the date of receiving the complete application materials.
Chapter V Supervision and Administration
Article 67 Where a foreign bank has established two or more branches in China, its head office or regional head office shall designate the principal reporting bank to be responsible for reporting the consolidated financial statements and comprehensive information, shall appoint a compliance manager for the China region and report the appointment in writing to the CBRC and the CBRC local office of the place where the principal reporting bank is located. The CBRC and its local offices shall conduct supervision over them on a consolidated basis.
Article 68 The "interest-bearing assets" as mentioned in Article 24 of the Regulation shall include interest-bearing assets in foreign exchange and RMB. 30% of the foreign exchange working capital of a branch of a foreign bank shall be maintained in the form of the foreign currency time deposits with a maturity of not less than 6 months (including 6 months) as the foreign exchange interest-bearing asset. 30% of the RMB working capital shall be maintained in the form of the RMB government bonds or the RMB time deposits with a maturity of not less than 6 months (including 6 months) as the RMB interest-bearing asset. The above-mentioned time deposits in home currency or foreign currencies with a maturity of not less than 6 months (including 6 months) shall be deposited in no more than 3 Chinese commercial banks in China with sound operation and strong financial strength. The interest rate of the time deposits of interest-bearing assets shall be determined by both parties according to the relevant regulations. The branch of the foreign bank shall report to the relevant CBRC local office the information about the banks where the interest-bearing assets are deposited, as well as the amount, interest rate and maturity. Without the approval of the relevant CBRC local office, the branch of the foreign bank may not use the interest-bearing assets. It shall handle the change of the interest-bearing asset according to the approval document issued by the relevant CBRC local office. It may not hypothecate and repurchase the interest-bearing assets in the form of the RMB government bonds or adopt any other solutions that may influence the dominance of the interest-bearing asset. The above-mentioned provisions of this Article are not applicable to the branches established by wholly foreign-funded banks and joint-equity banks in China.
Article 69 The term "capital" as mentioned in Articles 26 and 28 of the Regulation refers to the aggregate of paid-in capital, the capital surplus, surplus reserve, undistributed profit, general loan loss provisions, reevaluation reserve, and subordinated bonds with a maturity of not less than 5 years (including 5 years) subtracting the capital investments in non-consolidated financial institutions. The term "sum of the working capital and reserves" as mentioned in Article 28 of the Regulation refers to the sum of the working capital, undistributed profits and general loan loss provision. The term "risk assets" as mentioned in Article 28 of the Regulation refers to the risk-weighted assets on and off balance sheet calculated according to the relevant provisions on risk-weighted assets. The "methods of calculation and review of the capital adequacy ratio" as mentioned in Article 25 of the Regulation shall be in line with the relevant administrative provisions on capital adequacy ratios of commercial banks. The ratio as prescribed in Article 28 of the Regulation shall be calculated for each individual branch of the foreign-funded financial institution within China by and shall be reviewed quarterly on the basis of the average balance at the end of each month. The CBRC may make special requirements on capital adequacy ratio in light of the risk profile of the foreign-funded legal entity.
Article 70 The term "associated enterprises" as mentioned in Article 26 of the Regulation refers to the enterprise that directly or indirectly controls the other enterprise or that is controlled by the other enterprise, or 2 or several enterprises that are under the control of one party (such as parent company, subsidiary company, subsidiary companies under the same parent company); joint ventures; affiliated enterprises; enterprises directly controlled by other enterprise's major investors, key management personnel or their close relatives (including relatives by blood within 3 generations or by marriage within 2 generations); and other enterprises to which the assets and profits can be transferred to. The term "credit authorization" as mentioned in Article 26 of the Regulation and Article 95 of the present Detailed Rules include loans, borrowing, foreign trade finance, acceptance and discount of bills, overdraft, factoring, guarantee, loan commitment, issuance of letter of credit, etc.
Article 71 The "proportion" as mentioned in Article 26 and Article 27 of the Regulation shall be examined on the basis of the balance at the end of each quarter.
Article 72 The term "current assets" as mentioned in Article 29 of the Regulation refers to cash, gold, deposits with the People's Bank of China, inter-bank deposits, inter-bank placing with a maturity of no more than one month, inter-bank lending with a maturity of no more than one month, net asset balance of the creditor resulted from inter-bank transaction with overseas corresponds and their affiliated institutions, discounts and other purchased notes immature within one month, other account receivables mature within one month, loans with a maturity of no more than one month, bonds immature within one month and other assets that may be cashed in within one month. The foreseeable irrevocable part shall be deducted from the above-mentioned assets. The above-mentioned current assets do not include the interest-bearing assets. The term "current liabilities" as mentioned in Article 29 of the Regulation refers to deposits, inter-bank borrowings, account payables and other liabilities that shall become due within one month as well as the net debt balance of the debtor resulted from transactions with the foreign associated banks and their affiliated institutions. The above-mentioned current liabilities do not include the frozen deposits. Foreign-funded financial institutions shall calculate the liquidity ratio each day in RMB and foreign currencies respectively, and maintain the liquidity ratios as provided for in Article 29 of the Regulation. The CBRC shall examine the liquidity ratio of a foreign-funded legal entity on the consolidated basis and shall examine the ratio of the branches of a foreign bank individually.
Article 73 The "foreign exchange deposits taken within China" as mentioned in Article 30 of the Regulation include the inter-bank and non-inter-bank foreign exchange deposits. The "total foreign exchange assets within China" shall be calculated in the following way: Total foreign exchange assets within China=total foreign exchange assets ?Cforeign exchange transactions with foreign associated banks (assets) ?C transactions with overseas affiliated institutions (assets) ?C overseas foreign exchange loans ?Cforeign exchange deposit in overseas banks ?Cforeign exchange lending to overseas banks ?C overseas foreign exchange investment. The overseas foreign exchange investment does not include the following foreign exchange investment: securities of Chinese government, Chinese financial institutions and Chinese non-financial institutions issued overseas. The ratio as provided for in Article 30 of the Regulation shall be examined for each institution on the basis of the balance at the end of each month.
Article 74 The foreign-funded financial institutions shall report their assets, liabilities and owners' equity in a truthful manner.
Article 75 The transfer of credit assets from the head office or associated bank of a foreign-funded financial institution shall be subject to the approval of the relevant CBRC local office.
Article 76 A foreign-funded financial institution shall establish a risk asset classification system that can meet the minimum requirements as specified in the Guidelines on the Loan Classification by Risks and shall report to the relevant CBRC local office the corresponding relationship between its own criteria and the criteria as specified in the Guidelines on the Loan Classification by Risks. If there is any change in the corresponding relationship, the foreign-funded financial institution shall timely report such a change in writing to the relevant CBRC local office.
Article 77 A foreign-funded financial institution shall set aside loan loss provisions according to the relevant provisions on bank loan-loss reserve.
Article 78 A foreign-funded financial institution shall adopt prudent accounting system and shall implement relevant provisions on financial enterprise accounting system.
Article 79 The terms of credit provided by a foreign-funded financial institution to related parties may not be more preferential than the terms of similar credits to other borrowing parties. The related parties as mentioned in this Article refers to (1) Directors, supervisors, managers, credit officers of the foreign-funded financial institutions and their close relatives; (2) Companies, enterprises and other economic organizations in which the parties as mentioned in Item 1 have investment or take senior managerial posit; (3) Shareholders of a foreign-funded legal entity and their associated enterprises.
Article 80 The "Chinese certified public accountants" as mentioned in Article 32 of the Regulation refers to Chinese certified public accountants who have passed the annual auditing and have financial audit experience. A foreign-funded financial institution shall, not later than 1 month before it hires Chinese certified public accountants to conduct annual audit, report in writing to the relevant CBRC local office the basic information about the accounting firm and main certified public accountants who will conduct the audit.
Article 81 At the end of each fiscal year, a foreign-funded financial institution shall hire an accounting firm as recognized by the CBRC to conduct annual audit and submit the audit report with management proposal to the relevant CBRC local office within 4 months after the end of each fiscal year. In addition, a foreign-funded legal entity or a foreign bank with 2 or more branches within China shall hire an accounting firm as recognized by the CBRC local office to conduct consolidated audit over all its operational offices within China. It shall submit the audit report with management proposal to the CBRC local office of the place where the head office of the foreign-funded legal entity or the principal reporting bank of the foreign bank is located. The annual audit over a branch of foreign bank shall at least cover the financial statements, risk management, operational control, compliance and asset quality. The annual audit over a foreign-funded financial legal entity shall at least cover the capital adequacy, assets quality, internal management, profitability, liquidity and market risk management.
Article 82 Where a foreign-funded legal entity adjusts or transfers its registered capital, changes shareholders who hold more than 10% of the total amount of capital or total shares, or where a foreign bank applies for changing the total amount of its working capital of its branch in China, it shall submit the following materials to the relevant CBRC local office. After the CBRC local office puts forward preliminary examination opinions, these materials shall be submitted directly to CBRC for examination and approval with a copy sent to the CBRC local office at a high level. (1) Letter of application signed by the board chairman or president (CEO, general manager) of the applicant; (2) Resolution of the board of directors of the foreign-funded legal entity on adjustment or transfer of registered capital or change of shareholders; (3) If the foreign investor of the foreign-funded legal entity changes the amount or the percentage of its equity investment, the said foreign-funded financial institution shall provide the resolution issued by board of directors and the letter of opinions signed by its legal representative on the proposed changes. If its investor is a financial institution, it shall provide the letter of opinions from the financial supervisory authority of the country or region where it is located. (4) A transfer agreement or contract concluded by the relevant shareholders of the foreign-funded legal entity; and (5) Other materials as required by the CBRC.
Article 83 Where a foreign-funded financial institution obtains the approval of changing its registered capital or working capital, changing shareholders who hold more than 10% of the total amount of capital or total shares, it shall, within 30 days from the date of receiving the approval documents from the CBRC, hire a certified public accounting firm recognized by the relevant CBRC local office to verify its capital, and submit the capital verification certificate to the relevant CBRC local office.
Article 84 The new shareholders of a foreign-funded legal entity shall meet the requirements as prescribed in the Regulation and the present Detailed Rules.
Article 85 Where a foreign bank intends to change the name of its branch in China because of merger, split or other reasons, it may go through the formal procedures for renaming in two steps or directly: The foreign bank may file a preliminary application to the CBRC and submit the following materials: (1) Letter of application addressed to the Chairman of the CBRC and signed by the board chairman or president (CEO, general manager) of the foreign bank; (2) Letter of confirmation or approval document on the merger, split, other matters issued by the financial supervisory authority of the country or region where the foreign bank is located. The CBRC shall confirm its application for changing the name in a signed letter after receiving the complete application materials. The foreign bank shall, within 5 days after it formally changes its name, report to the CBRC headquarters and the CBRC local office of the place where its branch in China is located, and submit the following materials to the CBRC within 30 days so as to formally undergo the formalities for changing the name of its branch in China: (1) Letter of application signed by the board chairman or president (CEO, general manager) of the new institution and addressed to the Chairman of the CBRC; (2) Application form printed and distributed by the CBRC and filled out by the new institution according to relevant the provisions; (3) Formal approval letter issued by the financial supervisory authority of the country or region where the new institution is located; (4) Photocopy of the business license or other financial business approval documents of the new institution; (5) Letter of guarantee for tax and debt obligations incurred by the branch in China of the new institution signed by the board chairman or president (CEO, general manager) of the new institution; (6) Consolidated financial statements of the new institution; (7) The articles of association of the new institution; (8) Name list of the board members of the new institution; (9) Organizational charts of the new institution; (10) Resume, identification certificate, academic diploma of the president or general manager of the branch of the new institution in China; and (11) Power of attorney to the president or general manager of the branch in China signed by the board chairman or president (CEO, general manager) of the new institution. The foreign bank shall submit the copies of the application materials to the CBRC local office of the place where the branch of the foreign bank in China is located while it submits the preliminary application and the formal application materials to the CBRC headquarters.
Article 86 The registered capital or working capital and business scope of a foreign-funded financial institution after merger or split shall be reconfirmed by the CBRC headquarters.
Article 87 Where a foreign-funded financial institution applies for changing its name due to other reasons, it shall submit to the CBRC headquarters the following documents: a letter of application signed by the board chairman or president (CEO, general manager) to the Chairman of the CBRC, the formal approval document on the change of the name issued by the financial supervisory authority of the country or region where the foreign bank is located, and photocopies of the business license of the new institution or other documents of approval for operating financial business. In the meantime, the photocopies of the application materials shall submitted to the CBRC local office of the place where the foreign-funded financial institution is located.
Article 88 Where a foreign-funded financial institution intends to change its business place in the same city, it shall submit the following materials to the relevant CBRC local office: (1) Letter of application signed by the board chairman or president (CEO, general manager) of the foreign-funded legal entity or by the president or general manager of the branch of foreign bank and addressed to the relevant CBRC local office; (2) Photocopy of the letter of intent for renting or purchasing the new business place of the foreign-funded financial institution; and (3) Other materials as required by the CBRC. The relevant CBRC local office shall inspect the new business place of the foreign-funded financial institution according to relevant provisions. If the applicant fails to pass the inspection, the foreign-funded financial institution may apply to the inspection institution for re-inspection within 10 days after receiving the notice. If the applicant passes the inspection, the relevant CBRC local office shall issue an approval document for the change of business place by the foreign-funded financial institution in the same city, and shall simultaneously send a copy to the CBRC headquarters and the CBRC local office at a higher level. The foreign-funded financial institution may not conduct external businesses at the new business place unless it is granted a formal approval of changing its business place by the relevant CBRC local office.
Article 89 A foreign-funded legal entity shall, within 1 year after it changes the content of its articles of association, modify the articles of association. When applying for modifying the articles of association, it shall submit the following materials to the relevant CBRC local office. After the CBRC local office issues the preliminary examination opinions, the application material shall be directly submitted to CBRC for examination and approval with a copy to the CBRC local office at a higher level. (1) Letter of application signed by the board chairman or president (CEO, general manager) of the applicant; (2) Resolution of the shareholders' meeting or board of directors of the applicant; (3) The original articles of association and the draft of new articles of association; and (4) Other materials as required by the CBRC.
Article 90 Where any of the matters or circumstances as listed in Article 33 of the Regulation occurs, and make it necessary to change the content specified in the financial business license, the foreign-funded financial institution shall, within 30 days from the date of receiving the formal approval documents, go through the formalities to effect such change according to the relevant provisions of the measures for the administration of financial business licenses. If it is necessary to verify the capital, the foreign-funded financial institution shall submit to the relevant CBRC local office the capital verification certificate issued by an accounting firm. The relevant CBRC local office shall, if necessary, conduct the inspection on the foreign-funded financial institution in accordance with the relevant provisions. The foreign-funded financial institution shall, upon the strength of the approval documents of the CBRC or the CBRC local office, register the change with the administrative department for industry and commerce of China and apply for renewal of business license. Where any of the matters or circumstances as listed in Item 1, 2, 3, 4 and 7 of Article 33 of the Regulation occurs, the foreign-funded financial institution shall make an public announcement on the national newspaper designated by the CBRC headquarters and on the local newspaper designated by the relevant CBRC local office. The announcement shall be made within 30 days from the date of entry into force of the new business license.
Article 91 A foreign-funded financial institution shall timely report the following matters to the relevant CBRC local office: (1) Major problems occurring in the financial conditions and business activities of the foreign-funded financial institution; (2) Major adjustment of business strategies of the foreign-funded financial institution; (3) Major resolutions passed by the board of directors of the foreign-funded legal entity; (4) Amendment of the articles of association, or change registered capital and registered address of the head office of the foreign bank branch and the investors of the foreign-funded legal entity; (5) The merger, split and other restructuring matters of the head office of the foreign bank branch and the investors of the foreign-funded legal entity, and changes of the board chairman or president (CEO, general manager) thereof; (6) Major problems occurring in the financial conditions and business activities of the head office of the foreign bank branch and investors of the foreign-funded legal entity; (7) Major changes of the supervisory regulations of the country or region where the head office of the foreign bank branch and the foreign investors of the foreign-funded legal entity are registered; (8) Except the cases due to forces majeure, where the foreign-funded financial institution suspends business on days other than official holiday, it shall submit a written report to the relevant CBRC local office not later than 7 days prior to the suspension of business; (9) Other matters as required by the CBRC.
Article 92 The CBRC and its local offices may, where necessary, designate accounting firms to audit the business operation, financial conditions, internal risk control system and implementation of the internal risk control system of a foreign-funded financial institution.
Article 93 Foreign exchange settlement and other activities conducted by a foreign-funded financial institution that are subject to approval by the State Administration of Foreign Exchange, such as conversion of its capital or working capital between RMB and foreign currencies and conversion of its profits in RMB into foreign exchange, shall be subject to examination and approval of the State Administration of Foreign Exchange and its branches.
Article 94 Any matter related to foreign exchange administration in a foreign-funded financial institutions shall be handled according to the relevant provisions of the State on foreign exchange administration.
Article 95 According to Article 35 of the Regulation, the CBRC and its local office shall, as appropriate, take special regulatory measures when a foreign-funded financial institution is under any of the following circumstances: (1) The branch of the foreign bank shall submit a report to the relevant CBRC local office quarterly if the aggregate of its undistributed profits and annual net income is negative, and the aggregate of the absolute value of this negative amount and the inadequate part of its loan-loss provision exceeds 30% of its working capital; (2) A foreign-funded financial institution shall report to the relevant CBRC local office if the balance of credit authorization to its large clients exceeds 8 times of its capital or working capital. The above-mentioned large clients refer to the clients to whom the balance of credit authorization exceeds 10% of the capital or working capital of the foreign-funded financial institution. Such ratio shall be calculated by consolidating the date of all its branches in China, and the average balance at the end of each month shall be reported to the CBRC local office quarterly; or (3) A foreign-funded financial institution shall report to the relevant CBRC local office monthly if its accumulated outflow of capital from China exceeds its inflow of capital from abroad within one month; The above-mentioned "outflow of capital from China" refers to overseas inter-bank deposits, overseas inter-bank placing, overseas inter-bank lending, overseas intra-bank transactions with overseas affiliates on the assets side, overseas loans, investments and purchase of overseas repurchase securities. The term "inflow of capital from China" refers to inter-bank deposits and deposits from overseas, overseas inter-bank taking and borrowing, intra-bank transactions and transactions with overseas affiliates on the liability side, overseas notes financing, sale of overseas repurchase securities, overseas borrowings, differences in paid-in capital or working capital and other capitals resulted from exchange rate changes. (4) Other impolitic business activities of the foreign-funded financial institution.
Article 96 The special measures taken by the CBRC and its local offices to supervise foreign-funded financial institutions shall at least include: (1) Having an interview with the executive of the foreign-funded financial institution or relevant person-in-charge of the foreign bank so as to give him a warning; (2) Requiring the foreign-funded financial institution to regularly submit written reports on relevant issues; (3) Taking restrictive measures on the business operations or capital outflow of the foreign-funded financial institution; (4) Requiring the foreign-funded financial institution to submit letter of guarantee; (5) Imposing special requirements on the relevant risk control indicators; (6) Requiring the foreign-funded financial institution to replenish capital or working capital within a time limit; (7) Accrediting special supervisors to foreign-funded financial institutions to provide supervisory guidance on their daily operation and management; (8) Requiring the foreign-funded financial institution to change the senior management personnel within a time limit; and (9) Other prudential supervisory measures.
Article 97 According to Articles 34 and 36 of the Regulation, a foreign-funded financial institution shall satisfy the following requirements: (1) It shall establish an internal audit system and maintain its independence. After an internal audit is finished, it shall submit the internal audit report to the relevant CBRC local office. The relevant CBRC local office may communicate with the internal auditors of the foreign-funded financial institution in proper ways; (2) It shall designate certain personnel to be responsible for compliance, a duty that may not be performed by an internal auditor; (3) It shall submit a business report of the previous year and a business development plan for the next year to the relevant CBRC local office within 2 months after the end of each fiscal year; The business report shall at least cover the information about the operation of businesses in the first half of the year, changes in the operation of these businesses compared with the previous years and reasons for significant changes, assets quality and income of the first half of the year, execution of the financial budget and reasons for the difference between the budget and the actual situation . The business development plan shall at least cover the business development strategies of the foreign-funded financial institution, priorities of business development, development plan of organization and personnel, and financial budget for next year. (4) It shall formulate an internal control system and business operational procedures in light of the local laws and regulations and shall report the amendment of its internal control system and business operating procedures to the relevant CBRC local office not later than the end of March every year. The internal control system, business operational procedures, and samples of business vouchers of the foreign-funded financial institution shall be accompanied by Chinese translation. Other relevant business and management documents, if required by the supervisory personnel, shall be accompanied by Chinese translation; (5) If external personnel provides the foreign-funded financial institution with internal strategy planning, operational guidance , relative services and support work continuously in the institution for more than 30 days or for an accumulate of more than 60 days within 90 days, the foreign-funded financial institution shall report this to the relevant CBRC local office; and (6) The branch of a foreign bank shall timely submit the annual report of the previous year of its head office to the relevant CBRC local office.
Chapter VI Dissolution and Liquidation
Article 98 The dissolution and liquidation as mentioned in the Regulation shall include the following circumstances: (1) Where a foreign-funded legal entity is under any of the following circumstances, it shall dissolve on its initiative upon the approval of the CBRC:(a) The business term as prescribed in the articles of association expires or other reasons for dissolution as prescribed in the articles of association occur;(b) The shareholders' meeting or board of directors makes a resolution of dissolution;(c) It is necessary to dissolve because of merger or split. (2) The CBRC allows or orders a foreign bank, wholly foreign-funded bank or joint-equity bank to close its branch (es) in China. (3) The CBRC closes a foreign-funded legal entity; or (4) The foreign-funded legal entity is declared bankruptcy according to law.
Article 99 Where a foreign-funded legal entity applies for dissolution on its own initiative, it shall submit the following materials to the relevant CBRC local office. After the relevant CBRC local office puts forward the preliminary examination opinions, these materials shall be directly submitted to the CBRC for examination and approval with a copy sent to the CBRC local office at a higher level. (1) Letter of application signed by the board chairman or president (CEO, general manager); (2) Resolution passed by the shareholders' meeting or board of directors; (3) Letter of confirmation signed by the chairman or president (CEO, general manager) of each investor on dissolution of the entity on its own initiative; (4) Other materials as required by the CBRC. The CBRC shall decide on whether to approve the application within 3 months from the date of receiving the complete application materials.
Article 100 Where a foreign bank, wholly foreign-funded bank or joint-equity bank applies for closing its branch(es) in China, it shall submit the following materials to the relevant CBRC local office. After the relevant CBRC local office puts forward the preliminary examination opinions, it shall directly submit these materials to the CBRC for examination and approval and a copy to the CBRC local office at a higher level. (1) Letter of application signed by the board chairman or president (CEO, general manager); (2) A wholly foreign-funded bank or joint-equity bank shall submit the resolution passed by the board of directors; (3) A foreign bank shall submit the opinion of the financial supervisory authority of the country or region of registration; and (4) Other materials as required by the CBRC. The CBRC shall decide on whether to approve the application within 3 months from the date of receiving the complete application materials
Article 101 From the effectiveness date of the decision of the CBRC on approving the voluntary dissolution of a foreign-funded legal entity, or the voluntary or mandatory closing of the branch of a foreign bank, wholly foreign-funded bank or joint-equity bank, the foreign-funded financial institution to be dissolved or closed shall cease its business operation immediately, return the financial business license, and, within 15 days, form a liquidation team.
Article 102 The liquidation team shall include the president (general manager), chief financial officer, Chinese certified public accountants and other personnel designated by the CBRC. The liquidation team of a foreign-funded legal entity shall include the representative of the shareholders and the board chairman as well. The members of the liquidation team shall be subject to the approval of the relevant CBRC local office.
Article 103 The liquidation team shall notify in writing the administrative department for industry and commerce, the tax authority, the labor and social security department and other relevant departments of the liquidation.
Article 104 Other liquidation matters related to dissolution of a foreign-funded legal entity or closing of the branches of a wholly foreign-funded bank, joint equity bank or foreign bank shall be handled in accordance with the relevant provisions of the Company Law of the People's Republic of China.
Article 105 The CBRC local office of the place where the dissolved or closed foreign-funded financial institution is located shall be responsible for supervising the dissolution and liquidation process, and shall report the important matters and the liquidation results to the CBRC level by level.
Article 106 The liquidation team shall, within 30 days after its formation, hire an accounting firm accredited by the CBRC local office to conduct audit of the foreign-funded financial institution to be liquidated, and shall submit the audit report to the relevant CBRC local office within 60 days from the date of hiring the accounting firm.
Article 107 Matter related to the foreign exchange approval or verification during the process of dissolution or liquidation, it shall be subject to the approval of the State Administration of Foreign Exchange or its branches.
Article 108 During the process of debt liquidation, the liquidation team shall give priority to the payment of the principal and interest of individual deposits after it has paid off the liquidation cost, due staff salaries and labor insurance.
Article 109 The liquidation team shall, not later than the 10th day of each month, submit to the relevant CBRC local office reports on debt liquidation, assets disposal, loan collection, account closing, etc.
Article 110 If the liquidation team applies for the withdrawal of interest-bearing assets after liquidating all the debts, it shall submit the following materials to the relevant CBRC local office for examination and approval: (1) Letter of application signed by the head of the liquidation team; (2) A liquidation report; and (3) Other materials as required by the CBRC.
Article 111 The liquidation team shall make a liquidation report upon the completion of the liquidation work and submit this report to the relevant CBRC local office for verification and to the industry and commerce administration authority to apply for canceling the industry and commerce registration, and shall make an public announcement on the national newspaper designated by the CBRC headquarters and on the local newspaper designated by the relevant CBRC local office. The liquidation team shall report the contents of the announcement to the relevant CBRC local office 3 days before the date of announcement.
Article 112 The post-liquidation accounting archives and business documents shall be disposed in accordance with the relevant provisions.
Article 113 A foreign bank may not apply for establishing any new operational office in the same city in China within 2 years from the day when the liquidation of its branch is completed.
Article 114 In case a foreign bank applies for establishing a representative office in the city where it has closed a branch, it shall submit the following materials to the relevant CBRC local office. After the relevant CBRC local office puts forward the preliminary examination opinion, it shall directly submit these materials to the CBRC for examination and approval, and simultaneously send a copy to the CBRC local office at a higher level: (1) Letter of application signed by the board chairman or president (CEO, general manager) of the applicant; (2) Power of attorney for the chief representative signed by an authorized representative of the foreign bank; (3) Resume of the designated chief representative; (4) Photocopies of the identification certificate and academic diploma of the designated chief representative; (5) Statement of "no bad record" signed by the designated chief representative; and (6) Other materials as required by the CBRC.
Article 115 In the case that a foreign-funded legal entity is found any illegal or poor operation, which may cause serious damage to the order of the financial market and the interests of the public, the foreign-funded legal entity shall be closed down by the CBRC in accordance with the Regulation on Closure of Financial Institutions. In case the CBRC orders a foreign bank to close down its branch, such closing shall comply with the Company Law of the People's Republic of China.
Article 116 Where a foreign-funded legal entity is liquidated due to dissolution, if the liquidation team finds that the assets of the foreign-funded legal entity aren't enough to the pay off the debts after checking the assets and compiling the balance sheet and assets list, it shall, upon approval of the CBRC, apply to the people's court for declaring its bankruptcy without delay. Once the foreign-funded legal entity is declared bankruptcy pursuant to the verdict made by the people's court , the liquidation team shall hand over the liquidation work to the people's court.
Article 117 Where a foreign-funded financial institution applies for resuming business in according to Article 39 of the Regulation, it shall submit the following materials to the relevant CBRC local office. After the relevant CBRC local office puts forward a preliminary opinion, it shall directly submit these materials to the CBRC for examination and approval, and simultaneously send a copy to the CBRC local office at a higher level: (1) Letter of application signed by the board chairman or president (CEO, general manager) of the applicant; (2) Resolution passed by the board of directors of the foreign-funded legal entity; and (3) Other materials as required by the CBRC.
Chapter VII Supplementary Provisions
Article 118 The CBRC shall apply administrative measures to the branches of wholly foreign-funded banks or of joint-equity banks in China by referring to the relevant provisions administration of the branches of foreign banks in China.
Article 119 Where a foreign-funded financial institution violates the present Detailed Rules, it shall be punished by the CBRC in accordance with the Regulation and other relevant provisions.
Article 120 The present Detailed Rules shall go into effect as of September 1, 2004. The Detailed Rules for the Implementation of the Regulation of the People's Republic of China on the Administration of Foreign-funded Financial Institutions issued on January 25, 2002 by the People's Bank of China shall be repealed simultaneously. |
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