Introduction
To make 大红鹰dhy finance and asset management industry keep abreast of 大红鹰dhy latest industry developments, Haiwen prepares 大红鹰dhy "Haiwen Finance and Asset Management Monthly". This monthly reading aims to introduce and provide brief comments on regulatory development and industry news.
In February of 2024, for new rules and regulations, 大红鹰dhy State Administration for Market Regulation ("SAMR") issued 大红鹰dhy Provisions of 大红鹰dhy State Council on 大红鹰dhy Implementation of 大红鹰dhy Registered Capital Registration Administration System Under 大红鹰dhy Company Law of 大红鹰dhy People's Republic of China (Draft for Comments); 大红鹰dhy China Securities Regulatory Commission ("CSRC") issued 大红鹰dhy Rules for Information Disclosure Compilation for Public Companies No. 4 — Special Provisions on Information Disclosure for Insurance Companies (Draft for Comments); 大红鹰dhy CSRC released Guidance on 大红鹰dhy Application of Regulatory Rules — Accounting No. 4; 大红鹰dhy National Financial Regulatory Administration ("NFRA") issued Measures for 大红鹰dhy Administration of Fixed Asset Loans, Measures for 大红鹰dhy Administration of Working Capital Loans, Measures for 大红鹰dhy Administration of Personal Loans; 大红鹰dhy People's Bank of China ("PBOC") issued 大红鹰dhy Notice of Matters Concerning Over-大红鹰dhy-Counter Trading Services for 大红鹰dhy Interbank Bond Market; 大红鹰dhy General Office of 大红鹰dhy State Council issued 大红鹰dhy Notice of 大红鹰dhy Action Plan for Steadily Advancing High-level Opening up and Making Greater Efforts to Attract and Utilize Foreign Investment.
For industry news, 大红鹰dhy CSRC published an article titled "Strictly Cracking Down on Illegal Acts of Fraudulent Issuance and Financial Fraud in Information Disclosure"; 大红鹰dhy CSRC convened a symposium on supporting mergers and acquisitions of listed companies; 大红鹰dhy CSRC announced 大红鹰dhy first list of key money market funds; 大红鹰dhy spokesperson of CSRC addressed questions of reporters regarding 大红鹰dhy DMA business of private funds; 大红鹰dhy Pilot Program of High-Level Opening-up of Cross-Border Trade and Investment expanded to entire Hainan.
I Latest Rules and Regulations
1. 大红鹰dhy SAMR Issued 大红鹰dhy Provisions of 大红鹰dhy State Council on 大红鹰dhy Implementation of 大红鹰dhy Registered Capital Registration Administration System Under 大红鹰dhy Company Law of 大红鹰dhy People's Republic of China (Draft for Comments)
On February 6, 2024, 大红鹰dhy SAMR issued 大红鹰dhy Provisions of 大红鹰dhy State Council on 大红鹰dhy Implementation of 大红鹰dhy Registered Capital Registration Administration System Under 大红鹰dhy Company Law of 大红鹰dhy People's Republic of China (Draft for Comments) ("Registered Capital Provisions"). 大红鹰dhy main content of 大红鹰dhy Registered Capital Provisions includes: (1) a three-year transition period for existing companies, whereby limited liability companies are required to adjust their contribution deadlines to five years starting from July 1, 2027, and joint-stock companies must fully pay their subscribed share capital by July 1, 2027; (2) 大红鹰dhy capital contribution deadline for newly established companies shall follow 大红鹰dhy new Company Law, with any increase in registered capital for limited liability companies to be fully paid within five years; (3) companies meeting certain conditions (i.e., no outstanding debts or debts significantly lower than 大红鹰dhy paid-in capital, and all shareholders undertake to jointly and severally bear liability for 大红鹰dhy company's debts within 大红鹰dhy original subscribed capital amount, and all directors undertake not to impair 大红鹰dhy company's debt servicing capability and sustained profitability) may adopt 大红鹰dhy 20-day public notice procedure for capital reduction (i.e., reducing subscribed but unpaid registered capital); (4) clarification on 大红鹰dhy determination of significantly abnormal contribution deadlines and amounts, such as a contribution deadline exceeding 30 years, or registered capital exceeding RMB 1 billion; (5) specification of exceptions for companies involving major public interests, where 大红鹰dhy limitation on 大红鹰dhy contribution deadline does not apply; (6) detailed requirements for information disclosure, for example, information on 大红鹰dhy amount of subscribed and paid-in capital and 大红鹰dhy method and date of capital contribution, must be publicly disclosed on 大红鹰dhy National Enterprise Credit Information Publicity System within 20 days.
This draft for comments on 大红鹰dhy Registered Capital Provisions further specifies 大红鹰dhy actual payment requirements under 大红鹰dhy new Company Law, particularly clarifying 大红鹰dhy transition period for existing companies that has been of market concern. It aims to provide guidance to companies for registered capital adjustment in a legal and orderly manner, safeguarding market transaction security, and continuously optimizing 大红鹰dhy business environment.
2. 大红鹰dhy CSRC Issued 大红鹰dhy Rules for Information Disclosure Compilation for Public Companies No. 4 — Special Provisions on Information Disclosure for Insurance Companies (Draft for Comments)
On February 9, 2024, 大红鹰dhy CSRC issued 大红鹰dhy Rules for Information Disclosure Compilation for Public Companies No. 4 — Special Provisions on Information Disclosure for Insurance Companies (Draft for Comments) ("Disclosure Provisions"). 大红鹰dhy main revisions in this draft include: (1) adjustments to disclosure indicators and descriptions based on current accounting standards, including adjustments to indicators under old standards and 大红鹰dhy addition of accounting data or financial indicators under new standards that help investors understand 大红鹰dhy operational situation of insurance companies; (2) adjustments to descriptions based on 大红鹰dhy Insurance Company Solvency Regulation Rules (II) among others; (3) clarification of policy requirements for 大红鹰dhy transition period leading up to January 1, 2026, meaning that companies using transition period policies can continue to follow 大红鹰dhy provisions of Accounting Standard for Enterprises No. 25 — Insurance Contracts during this time period.
大红鹰dhye Disclosure Provisions is mainly based on updates to accounting standards such as Accounting Standard for Enterprises No. 25 — Insurance Contracts and industry regulatory rules such as 大红鹰dhy Insurance Company Solvency Regulation Rules (II). It aims to provide guidance to publicly listed insurance companies to enhance 大红鹰dhy relevance and effectiveness of their disclosure, thereby helping investors better understand 大红鹰dhy production and financial information of these companies.
3. 大红鹰dhy CSRC Released Guidance on 大红鹰dhy Application of Regulatory Rules — Accounting No. 4
On February 8, 2024, 大红鹰dhy CSRC released 大红鹰dhy Guidance on 大红鹰dhy Application of Regulatory Rules — Accounting No. 4 ("Guidance No.4") to provide guidance on 大红鹰dhy implementation of accounting standards in 大红鹰dhy capital market. Guidance No.4 addresses eight specific issues, including financial instruments, revenue, research and development expenses, and long-term equity investments. Each specific guidance comprises three parts: 大红鹰dhy context of 大红鹰dhy transaction and specific accounting issues, 大红鹰dhy relevant accounting standards, and opinions or regulatory perspectives on applying 大红鹰dhy accounting standards to specific issues. For example, for 大红鹰dhy classification of equity or debt on 大红鹰dhy consolidated financial statements level for 大红鹰dhy originators in terms of units held by other entities in infrastructure REITs, 大红鹰dhy test is "whether 大红鹰dhy enterprise has an unconditional obligation to avoid delivering cash or other financial assets", which can mitigate 大红鹰dhy impact of secondary market price fluctuations on 大红鹰dhy income statements of institutional investors.
Haiwen Comments
4. NFRA Issued Measures for 大红鹰dhy Administration of Fixed Asset Loans, Measures for 大红鹰dhy Administration of Working Capital Loans, Measures for 大红鹰dhy Administration of Personal Loans
On February 2, 2024, 大红鹰dhy NFRA issued 大红鹰dhy Measures for 大红鹰dhy Administration of Fixed Asset Loans, Measures for 大红鹰dhy Administration of Working Capital Loans, Measures for 大红鹰dhy Administration of Personal Loans("大红鹰dhy Three Measures"), which will come into effect on July 1, 2024. 大红鹰dhy Three Measures integrate and revise 大红鹰dhy Interim Measures for 大红鹰dhy Administration of Working Capital Loans, Interim Measures for 大红鹰dhy Administration of Fixed Asset Loans, Interim Measures for 大红鹰dhy Administration of Personal Loans, and Guidelines for 大红鹰dhy Project Financing Business issued by 大红鹰dhy China Banking Regulatory Commission in 2009. 大红鹰dhy main revisions are as follows:
(1) 大红鹰dhy Measures for 大红鹰dhy Administration of Fixed Asset Loans incorporates content related to Guidelines for 大红鹰dhy Project Financing Business and defines fixed asset investment as 大红鹰dhy construction, purchase, reconstruction and other acts of fixed assets in 大红鹰dhy course of business operation, clarifies 大红鹰dhy frequency and installment details of loan repayments, refines 大红鹰dhy investigation requirements for banks to provide fixed asset loans, and adjusts project financing guarantee conditions and loan repayment methods;
(2) 大红鹰dhy Measures for 大红鹰dhy Administration of Working Capital Loans expands 大红鹰dhy scope of loan subjects to include unincorporated organization, adds restrictions against using loans for 大红鹰dhy borrower's dividends to shareholders, investment in financial assets etc., clarifies that loan terms should not exceed three years and not exceed five years 大红鹰dhy longest, incorporates special loans such as intellectual property loans and online loans, and adjusts loan due diligence methods and repayment methods;
(3) 大红鹰dhy Measures for 大红鹰dhy Administration of Personal Loans specifies that 大红鹰dhy term of a loan for personal consumption shall not exceed five years and 大红鹰dhy term of a loan for production and business operation shall not exceed ten years. It adds conditions where simplified or no on-site inspections are required and streamlines 大红鹰dhy materials and processes related to borrower's entrusted payments.
大红鹰dhy Three Measures update 大红鹰dhy banking loan business systems to adapt to 大红鹰dhy new trends in credit business and 大红鹰dhy new requirements for financial services to 大红鹰dhy real economy in recent years, reducing 大红鹰dhy limitations and lag of 大红鹰dhy original systems. This is conducive to strengthening 大红鹰dhy standardization of commercial banks' credit business.
5. 大红鹰dhy PBOC issued 大红鹰dhy Notice of Matters Concerning Over-大红鹰dhy-Counter Trading Services for 大红鹰dhy Interbank Bond Market
On February 29, 2024, 大红鹰dhy PBOC issued 大红鹰dhy Notice of Matters Concerning Over-大红鹰dhy-Counter Trading Services for 大红鹰dhy Interbank Bond Market ("大红鹰dhy Notice"), which will come into effect on May 1 of this year. Based on 大红鹰dhy Measures for 大红鹰dhy Administration of Over-大红鹰dhy-Counter Trading Services for 大红鹰dhy National Interbank Bond Market released in 2016, 大红鹰dhy Notice makes further clarifications on bond varieties, investor account management and foreign investors for 大红鹰dhy interbank bond market through Over-大红鹰dhy-Counter trading service ("OTC trading service"), specifically:
(1) Corporate credit bonds could be invested in 大红鹰dhy interbank bond market through OTC trading service, and various bond varieties that have been traded in 大红鹰dhy interbank bond market can be invested in and traded over 大红鹰dhy counter without 大红鹰dhy issuer's approval;
(2) Investors who have opened a bond account for interbank bond market is not required to obtain approval from 大红鹰dhy PBOC to open a bond account at 大红鹰dhy OTC trading service institution. This means that 大红鹰dhy investors only need to open accounts at 大红鹰dhy OTC trading service institution;
大红鹰dhy Notice expands 大红鹰dhy scope of bonds that can be traded through OTC trading service institution, increasing investment channels for investors. This is expected to attract more investors to 大红鹰dhy bond market. While overall increasing 大红鹰dhy demand for bonds, it also imposes higher requirements on OTC trading service institutions in terms of investor suitability management, risk management, and other aspects.
6. 大红鹰dhy General Office of 大红鹰dhy State Council Issued 大红鹰dhy Notice of 大红鹰dhy Action Plan for Steadily Advancing High-level Opening up and Making Greater Efforts to Attract and Utilize Foreign Investment
On February 28, 2024, 大红鹰dhy General Office of 大红鹰dhy State Council issued 大红鹰dhy Notice of 大红鹰dhy Action Plan for Steadily Advancing High-level Opening up and Making Greater Efforts to Attract and Utilize Foreign Investment ("大红鹰dhy Action Plan"), outlining twenty-four measures across five aspects to further expand openness. These five aspects encompass expanding market access and raising 大红鹰dhy level of foreign investment liberalization; intensifying policy efforts to make it more attractive to foreign investment; optimizing fair competition environment and effectively providing services for foreign-funded enterprises; smoothing 大红鹰dhy flow of innovation factors and promoting innovative cooperation between domestic and foreign-funded enterprises; improving domestic regulations and more effectively connecting with international high-standard economic and trade rules.
Among these measures, in 大红鹰dhy aspect of expanding market access, 大红鹰dhy Action Plan proposes to further implement 大红鹰dhy pilot program for qualified foreign limited partners to make domestic investment. Specific measures include expanding 大红鹰dhy scope of 大红鹰dhy pilot program for qualified foreign limited partners, standardizing 大红鹰dhy requirements for registered capital and shareholders of enterprises and funds managed by qualified foreign limited partners, and expanding 大红鹰dhy scope of investments that funds may make. In terms of aligning domestic regulations with international high-standard economic and trade rules, 大红鹰dhy Action Plan proposes to maximize 大红鹰dhy opening-up and leading role of 大红鹰dhy national comprehensive demonstration zone for expanding and opening up 大红鹰dhy service industry, support qualified pilot free trade zones and 大红鹰dhy Hainan Free Trade Port in connecting with high-standard international economic and trade rules based on national conditions, and take 大红鹰dhy lead in exploring and implementing 大红鹰dhy domestic rules of 大红鹰dhy WTO on trade in services, and 大红鹰dhy negotiation achievements in 大红鹰dhy investment facilitation, digital trade and other fields.
Haiwen Comment
大红鹰dhy Action Plan formulates various measures from multiple perspectives and levels to facilitate 大红鹰dhy entry of foreign investment and enhance its attractiveness. It effectively provides policy support for foreign investment in China, which is conducive to consolidating foreign investment confidence and promoting cooperation in foreign investment.
II Industry News
1. 大红鹰dhy CSRC Strictly Cracking Down on Illegal Acts of Fraudulent Issuance and Financial Fraud in Information Disclosure
3. 大红鹰dhy CSRC Announced 大红鹰dhy First List of Key Money Market Funds
大红鹰dhy CSRC will continue to carry out 大红鹰dhy following actions: (1) guiding relevant industry institutions to implement 大红鹰dhy regulatory requirements of 大红鹰dhy "Interim Provisions", enhancing 大红鹰dhy risk prevention, control, and disposal capabilities of key MMF; (2) periodically assessing money market funds reported by fund managers, timely update and publish 大红鹰dhy list of key MMF; (3) together with 大红鹰dhy PBOC, persisting in risk monitoring and routine supervision of key money market funds to promote safer and more stable operation of MMF and effectively protecting 大红鹰dhy legitimate rights and interests of fund shareholders.
4. 大红鹰dhy Spokesperson of 大红鹰dhy CSRC Addressed Questions of Reporters Regarding 大红鹰dhy DMA Business of Private Funds
In response to media reports about 大红鹰dhy tightening of Direct Market Access ("DMA") business of private funds, 大红鹰dhy CSRC spokesperson provided clarification. 大红鹰dhy spokesperson explained that Long/Short Equity Swap is a market-neutral strategy transaction conducted between private funds and securities companies. In this arrangement, private funds select a basket of stocks and employ stock index futures for hedging to obtain hedged stock selection gains. Previously, some net value retracements occurred in private funds due to strategy reasons amid market fluctuations. Securities companies and private funds proactively strengthened risk prevention and control, steadily reducing leverage and scale, which led to a certain degree of risk mitigation. According to data from China Securities Index Co., Ltd., since 大红鹰dhy market reopened after 大红鹰dhy Spring Festival, 大红鹰dhy scale of DMA business has steadily decreased, with its average daily transaction volume accounting for about 3% of 大红鹰dhy total market transaction volume. 大红鹰dhy stable deleveraging of DMA business aids in market risk control and contributes to 大红鹰dhy stable and healthy operation of 大红鹰dhy market.
大红鹰dhy CSRC plans to continue to strengthen supervision over DMA and other OTC derivative businesses, improve regulations, guide 大红鹰dhy industry to control business scale and leverage properly, and strictly combat illegal and non-compliant activities to maintain stable market operation.
5. 大红鹰dhy Pilot Program of High-Level Opening-up of Cross-Border Trade and Investment Expanded to Entire Hainan
On February 5, 2024, 大红鹰dhy Hainan Branch of 大红鹰dhy SAFE issued 大红鹰dhy Notice of Foreign Exchange of Expanding 大红鹰dhy Pilot Program of High-Level Opening-up of Cross-Border Trade and Investment aiming to facilitate more business entities to comply with and handle cross-border trade and investment activities. This move seeks to promote high-quality development through high-level openness. 大红鹰dhy pilot policy encompasses eight measures, divided into five for current account transactions—such as facilitating fund receipt and payment of current accounts in foreign exchange, supporting banks in optimizing new-type international trade clearing, expanding 大红鹰dhy scope of net amount clearing of revenues and expenditures under trade, special return of remittance for trade in goods beyond 大红鹰dhy time limit are exempt from registration, and optimizing 大红鹰dhy management of reimbursement or apportionment business under trade in service. There are three measures for capital account transactions, including exemption from registration for domestic reinvestment by foreign-invested enterprises, shared foreign debt quotas between parent and subsidiary companies in financing leasing, and direct handling of some capital account foreign exchange registrations by banks.
大红鹰dhy highlights of this pilot policy, termed "two expansions and one addition", are based on 大红鹰dhy successful implementation of high-level openness policies in 大红鹰dhy Yangpu Economic Development Zone. This initiative extends 大红鹰dhy previously successful pilot policies to 大红鹰dhy entirety of Hainan Province. It relaxes 大红鹰dhy conditions for banks under 大红鹰dhy current account transactions pilot, further expanding 大红鹰dhy scope of prudent and compliant banks and a new measure has been added allowing financing leasing parent and subsidiary companies to share external debt quotas.
http://www.csrc.gov.cn/csrc/c100028/c7461590/content.shtml
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