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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II ESTABLISHMENT AND REGISTRATION CHAPTER III BUSINESS SCOPE CHAPTER IV MANAGEMENT OF POSITION QUALIFICATIONS CHAPTER V SUPERVISION AND MANAGEMENT CHAPTER VI DISSOLUTION AND LIQUIDATION CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. The present Detailed Rules have been formulated in accordance with 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 the Regulation). Article 2. The "foreign investment" used in Items (1) and (4) of Article 2 of the Regulation shall refer to the investment made by institutions registered outside the territory of the People's Republic of China. The "foreign banks" mentioned in item (2) refer to the commercial banks that are registered outside the territory of the People's Republic of China and that are approved or accredited by the financial authorities of the places where they are located. The "foreign financial institutions" mentioned in item (3) and item (5) refer to the financial institutions that are registered outside the territory of the People's Republic of China and that are approved or accredited by the financial authorities of the places where they are located. Article 3. The "foreign-funded legal person institutions" mentioned in the present Detailed Rules refer to the solely foreign-funded banks, joint equity banks, solely foreign-funded financial companies and joint equity financial companies. Article 4. China Banking Regulatory Commission (hereinafter referred to the CBRC) shall be the administrative organ to administer and supervise the foreign-funded financial institutions. The institutions dispatched by 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 "prudent conditions" mentioned in Articles 6 through 8 shall at least include the following items: (1) Having a reasonable corporate governance structure; (2) With continuous good operating performances; (3) Having formulated financial statements by following the prudent accounting principle, and the accounting firm holding no reservation about the financial statements of the three years prior to filing the application; (4) Without record of serious violation of law or regulation, without bad credit record; (5) With a good reputation and social image; (6) In the establishment of a branch of a foreign bank, the political and economic situation of the country or region where the applicant is located being stable, and the competent financial supervisory authority having established a sound communication mechanism with the CBRC; and (7) Meeting other relevant requirements for financial investors provided for in the laws and regulations. Article 6. As for a solely foreign-funded bank established under Article 6 of the Regulation, the sole or holding shareholder must be a commercial bank. As for a solely foreign-funded financial company established under Article 6 of the Regulation, the sole or holding shareholder must be commercial bank or a financial company. The rate of capital sufficiency of the commercial bank mentioned in this Article may not be lower than 8%. The Items (2) and (3) of Article 6 of the Regulation shall apply to the sole shareholder or the holding shareholder. Article 7. As for a joint-equity bank established under Article 8 of the Regulation, its sole shareholder of foreign party or holding shareholder of foreign party must be a commercial bank. As for a joint-equity financial company established under Article 8 of the Regulation, its sole shareholder of foreign party or holding shareholder of foreign party must be a commercial bank or a financial company. The rate of capital sufficiency of the commercial bank mentioned in this Article may not be lower than 8%. The Items (2) and (3) of Article 8 of the Regulation shall apply to the sole shareholder of the foreign party or the holding shareholder of the foreign party. Article 8. The "representative office established by the applicant or foreign party within the territory of China" refers to the representative office that shall be subject to the supervision of the CBRC. The "end of the year prior to filing the application" refers to the end of the fiscal year prior to filing the application. Article 9. The "prudent conditions" mentioned in Article 20 of the Regulation and Articles 16, 17 and 40 of the present Detailed Rules shall at least include the following conditions: (1) Having a reasonable cooperate governance structure; (2) Having a moderate risk management system; (3) Having a sound internal control system; (4) Having an effective information management system; (5) The managerial personnel having good professional quality and management abilities; (6) The applicant having continuous good operating performances and good asset quality; (7) Without record of serious violation of law or regulation; and (8) Having effective anti-money laundering measures. Article 10. The "report on feasibility study" mentioned in Articles 9 through 11 of the Regulation and Article 18 of the present Detailed Rules shall at least contain the basic information of the applicant, the analysis of the prospective market of the to-be-established institution, the business development planning of the to-be-established institution, the framework of organization and management of the to-be-established institution, and forecast about the asset-liability scale and profit in the future three years after the start of business of the to-be-established institution, etc. The "name of a to-be-established branch of a foreign bank" mentioned in Article 10 (1) of the Regulation shall include the name in Chinese and the one in a foreign language, and its name in Chinese shall give an indication of the nationality and liability form of the foreign bank. Article 11. The "business license (duplicate) " mentioned in the Regulation and the present Detailed Rules refers to the photocopy of the business license or other approval document about engaging in financial business. The business license (duplicate), power of attorney, liability guaranty of the foreign bank for the tax and debt of its branch bank in China, etc. shall be notarized by an institution accredited by the country or region where the foreign financial institution is located and be certified by the embassy or consulate of the People's Republic of China stationed in that country, however, the business license (duplicate) issued by the Chinese administrative department for industry and commerce shall be excluded. Article 12. The "relevant materials of the Chinese party" mentioned in Article 11 (6) of the Regulation refer to the business license (duplicate) of the Chinese party and its annual reports of the recent 3 years. Article 13. The "annual reports" mentioned in the Regulation and the present Detailed Rules shall be audited and shall be accompanied by the auditing opinions issued by the accredited accounting firm of the country or region where the applicant is located. If the annual reports are printed in a language which is not Chinese or English, they shall be accompanied by Chinese or English translations. Article 14. The "other materials" mentioned in Articles 9 through 11 of the Regulation shall at least include the following materials: (1) As for an applicant applying for establishing a foreign-funded institution for the first time, it shall provide the information about the financial system and the provisions of laws and regulations on financial supervision and control of the country or region where it is located; (2) The articles of association of the applicant; (3) Diagram of the organizational structure of the applicant and the group to which it belongs, name list of the main shareholders, list of the overseas branches and associate companies; and (4) The bylaws or rules of the applicant on anti-money laundering. Article 15. Among the application materials as required in the present Detailed Rules, excluding the annual reports, those 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, it shall meet the conditions provided for in Article 7 (2), (3), (4) and (5) of the Regulation. The branch(es) it has already set up in China shall satisfy the prudent conditions specified by the CBRC. Article 17. Where a solely foreign-funded bank or joint-equity bank applies for establishing a branch, it shall meet the following conditions: (1) It has been 3 years or more since it opens business within China, and it has made profits for 2 successive fiscal years prior to filing the application; (2) Its capital adequacy ratio is not less than 8%; (3) The applicant shall allocate convertible currency equivalent to not less than RMB 100 million yuan as the operating fund of each new branch to be established; the total amount of the accumulative operating fund allocated to all its branches within China, including the to-be-established branch, may not exceed 60% of its registered capital; and (4) Other prudent conditions specified by the CBRC. Article 18. Where a solely foreign-funded bank or joint-equity bank applies for establishing a branch, it shall submit the following materials (in triplicate) to the local institution dispatched by the CBRC. After the local institution dispatched by the CBRC issues the preliminary examination opinions, it shall directly submit the application materials to the CBRC for examination and approval, and shall simultaneously send copies to the superior institution dispatched by the CBRC. (1) An application signed by the board chairman or the president (CEO, general manager) of the applicant, of which the contents shall include: the name of the to be established branch, the amount of operating fund to be allocated, and the business types applied for, etc; (2) The resolution of the board of directors about consenting to the application for the establishment of the branch; (3) The report on feasibility study; (4) The business license (duplicate); (5) The annual reports of the recent three years; (6) The articles of association of the applicant; and (7) Other materials required by the CBRC. Article 19. The application for establishing a foreign-funded legal person institution shall bear the signatures of the chairmen or presidents (CEOs, general managers) of all investing parties and shall be submitted to the Chairman of the CBRC. The application for establishing a branch of a foreign bank shall bear the signature of the Chairman or president (CEO, general manager) of the applicant and shall be submitted to the Chairman of the CBRC. Article 20. Anyone who applies for establishing a foreign-funded institution shall submit the application materials (in duplicate) listed in Articles 9 through 11 of the Regulation to the CBRC, and simultaneously submit a complete set of application materials to the institution dispatched by the CBRC in the place where the to-be-established institution is located. Article 21. The CBRC shall make a decision of acceptance or rejection within 6 months from the day when it receives a complete set of 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 it receives an acceptance notice, fetch a formal application form from the institution dispatched by the CBRC in the place where the to-be-established institution is located, and commence the preparatory establishment. Within the period of preparatory establishment, the applicant shall form a preparatory establishment group to take charge of the preparatory establishment and shall submit the name list of the persons-in-charge of the preparatory establishment group to the local institution dispatched by the CBRC. After the preparatory establishment has been completed, the preparatory establishment group shall dissolve voluntarily. The period of preparatory establishment shall be 6 months. Where an applicant fails to fetch an application form within the time limit, it may not reapply for establishing a business institution in a same city within 1 year after it receives the acceptance notice. An applicant who receives a rejection notice may reapply for establishing an institution after it satisfies the requirements for the establishment of a foreign-funded financial institution. Article 22. The "main person-in-charge" mentioned in Article 14 of the Regulation refers to the chairman of the board of directors or president (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 establishment period: (1) To establish an internal control system, including an internal organizational structure, authorization and accreditation, management of credit fund, fund trade, accounting, control policies and operation procedures of computer system, and to report and submit the internal control system and operation procedures to the local institution dispatched by the CBRC; (2) To recruit appropriate number of business personnel, who can satisfy the needs of its business development and have accepted relevant training of policies, regulations and professional knowledge, so as to meet the requirements for effective supervision and control of risks of the main businesses, the graded examination and approval and reexamination of business, the division of work and restraint of each other for the key posts; (3) To print the important vouchers and documents for external use and to submit samples to the institution dispatched by the CBRC; (4) To equip with the safety protection facilities accredited by the relevant departments and submit pertinent certifications to the local institution dispatched by the CBRC; and (5) Before it opens business, its internal control system, accounting system, and computer system shall be subject to the audit by an accounting firm accredited by the local institution dispatched by the CBRC, and shall submit the auditing report to the local institution dispatched by the CBRC. Article 24. Where an applicant applies for extending the preparatory establishment period, it shall file an application to the local institution dispatched by the CBRC not later than 1 month prior to the expiration of the preparatory establishment period. The application shall be signed by the person-in-charge of the preparatory establishment group of the to-be-established institution. Where an applicant fails to file an application for extending the preparatory establishment period within the prescribed time limit, the local institution dispatched by the CBRC shall reject its extension application. The local institution dispatched by the CBRC shall, within 15 days after it receives the application materials for extending the preparatory establishment period, decide on whether to approve the extension. If it makes a decision of disapproval, it shall notify the applicant of the reasons for disapproval in a written form, and send a copy to the CBRC level by level. Article 25. After the preparatory establishment is completed, the applicant shall submit the application form filled out, together with the documents provided for in Article 14 of the Regulation, to the institution dispatched by the CBRC at the place where the to-be-established institution is located. After the institution dispatched by the CBRC at the place where the to-be-established institution is located issues preliminary examination opinions, it shall directly submit the application to the CBRC for examination and approval and shall simultaneously send a copy to the superior institutions dispatched by the CBRC level by level. Article 26. The CBRC shall make a decision of approval or disapproval within 2 months after it receives the complete application form and relevant materials for establishing a foreign-funded financial institution. The applicant shall, within 15 days after it receives the notice of the CBRC, fetch the approval documents concerning the establishment of a foreign-funded financial institution. If it gets documents of disapproval, it may file a new application after it can satisfy the requirements for the establishment of a foreign-funded financial institution. Article 27. An applicant who obtains an approval of establishing a foreign-funded institution, shall submit a business-start check application to the local institution dispatched by the CBRC after it fetches the approval documents concerning the establishment of a foreign-funded institution. The application shall be signed by the chairman of the board of directors or president (CEO, general manager) of the foreign-funded legal person institution, or the president or general manager of the branch of the foreign bank. If the applicant passes the check of the local institution dispatched by the CBRC, it shall fetch a financial business permit from the CBRC. If it fails to pass the check, the foreign-funded institution may apply to the competent check institution for recheck within 10 days after it receives the check notification. Article 28. Before a foreign-funded institution starts business, it shall make announcements on the national newspapers designated by the CBRC and the local newspapers designated by the local institution dispatched by the CBRC, and shall inform the local institution dispatched by the CBRC of the date of start of business in a written form. Article 29. Within 3 months after the CBRC grants approval to the establishment of an institution, the foreign-funded institution shall start business except when the local institution dispatched by the CBRC approves it to postpone the start of business under a special circumstance. Where a foreign-funded institution applies for postponing the start of business, it shall file an application for postponement to the local institution dispatched by the CBRC within 2 months after its application for establishing an institution is approved by the CBRC. The application shall be signed by the chairman or president (CEO, general manager) of the foreign-funded legal person institution, or by the president (general manager) of the branch of the foreign bank. The local institution dispatched by the CBRC shall decide to approve the postponement or not within 15 days after it receives 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 level by level. Where a foreign-funded financial institution fails to file an application for extending the time period for the start of business within the prescribed time limit, the local institution dispatched by the CBRC shall reject its application for postponement. The time period for the start of business may be extended for up to 3 months. If a foreign-funded institution fails to start business at the expiration of the time period for the start of business, the original establishment approval will be invalidated automatically. The foreign-funded institution shall hand back the financial business permit to the CBRC. The applicant may not reapply for establishing a business institution in a same city within 1 year from the day when the original establishment approval is invalidated. Article 30. The principle of legitimacy, prudence and continuous business operation shall be followed when a branch of a foreign bank restructures into a foreign-funded legal person institution, or when a foreign-funded legal person institution restructures into a branch of a foreign bank. When a branch of foreign bank intends to restructure into a foreign-funded legal person institution, it shall apply to the local institution dispatched by the CBRC by referring to the conditions and procedures for the establishment of a branch of a foreign bank. The application shall, via the local institution dispatched by the CBRC, be directly submitted to the CBRC for examination and approval, and a copy shall be sent to the superior institutions dispatched by the CBRC level by level. The application materials shall contain a plan on the disposition of the credits and debts during the restructuring period. CHAPTER III BUSINESS SCOPE Article 31. Where a foreign-funded financial institution undertakes, within the business scope provided for by Article 17 or Article 18 of the Regulation, foreign exchange businesses to overseas institutions, foreign-funded enterprises, foreign institutions stationed in China, representative offices of Hong Kong, Macao or Taiwan stationed in the Mainland, foreigners and compatriots from Hong Kong, Macao or Taiwan and some foreign exchange businesses to non-foreign-funded enterprises, the following conditions shall be met respectively: (1) The operating fund of the branch of a foreign bank shall not be less than the convertible currencies equivalent to RMB 100 million yuan; (2) The registered capital of a solely foreign-funded bank or joint-equity bank shall not be less than convertible currencies equivalent to RMB 300 million yuan; (3) The operating fund of a solely foreign-funded bank's branch or joint-equity bank's branch within China shall not be less than convertible currencies equivalent to RMB 100 million yuan; (4) The registered capital of a solely foreign-funded financial company or joint-equity financial company shall not be less than convertible currencies equivalent to RMB 200 million yuan. Article 32. Where a foreign-funded financial institution undertakes, within the business scope provided for in Article 17 or Article 18 of the Regulation, foreign exchange businesses to various kinds of clients, the following conditions shall be met respectively: (1) The operating fund of the branch of a foreign bank shall not be less than convertible currencies equivalent to RMB 200 million yuan; (2) The registered capital of a solely foreign-funded bank or joint-equity bank shall not be less than convertible currencies equivalent to RMB 400 million yuan; (3) The operating fund of a solely foreign-funded bank's branch or joint-equity bank's branch within China shall not be less than convertible currencies equivalent to RMB 100 million yuan; (4) The registered capital of a solely foreign-funded financial company or joint-equity financial company shall not be less than convertible currencies equivalent to RMB 300 million yuan. Article 33. A foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is approved to undertake, within the business scope provided for by Article 17 or Article 18 of the Regulation, foreign exchange businesses to overseas institutions, foreign exchange businesses and RMB businesses to overseas institutions, foreign-funded enterprises, foreign institutions stationed in China, the representative offices of Hong Kong, Macao or Taiwan stationed in the Mainland, foreigners and compatriots from Hong Kong, Macao or Taiwan as well as some foreign exchange businesses and RMB businesses to non-foreign-funded enterprises shall meet the following conditions respectively: (1) The operating fund of the branch of a foreign bank shall not be less than convertible currencies equivalent to RMB 200 million yuan, of which the RMB operating fund shall not be less than 100 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 100 million yuan; (2) The registered capital of a solely foreign-funded bank or joint-equity bank shall not be less than convertible currencies equivalent to RMB 400 million yuan, of which the RMB capital shall not be less than RMB 100 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 300 million yuan; (3) The operating fund of a solely foreign-funded bank's branch or joint-equity bank's branch within China shall not be less than convertible currencies equivalent to RMB 200 million yuan, of which the RMB operating fund shall not be less than 100 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 100 million yuan; (4) The registered capital of a solely foreign-funded financial company or joint-equity financial company shall not be less than convertible currencies equivalent to RMB 300 million yuan, of which the RMB capital shall not be less than RMB 100 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 200 million yuan. Article 34. A foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake, within the business scope provided for by Article 17 or Article 18 of the Regulation, foreign exchange businesses to various kinds of clients, RMB businesses to foreign-funded enterprises, foreign institutions stationed in China, the representative offices of Hong Kong, Macao or Taiwan stationed in the Mainland, foreigners and compatriots from Hong Kong, Macao or Taiwan as well as some RMB businesses for non-foreign-funded enterprises shall meet the following conditions respectively: (1) The operating fund of the branch of a foreign bank shall not be less than convertible currencies equivalent to RMB 300 million yuan, of which the RMB operating fund shall not be less than 100 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 200 million yuan; (2) The registered capital of a solely foreign-funded bank or joint-equity bank shall not be less than convertible currencies equivalent to RMB 500 million yuan, of which the RMB capital shall not be less than RMB 100 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 400 million yuan; (3) The operating fund of a solely foreign-funded bank's branch or joint-equity bank's branch within China shall not be less than convertible currencies equivalent to RMB 200 million yuan, of which the RMB operating fund shall not be less than 100 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 100 million yuan; (4) The registered capital of a solely foreign-funded financial company or joint-equity financial company shall not be less than convertible currencies equivalent to RMB 400 million yuan, of which the RMB capital shall not be less than RMB 100 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 300 million yuan. Article 35. A foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is allowed to undertake, within the business scope provided for by Article 17 or Article 18 of the Regulation, foreign exchange businesses to various kinds of clients, RMB businesses to foreign-funded enterprises, foreign institutions stationed in China, the representative offices of Hong Kong, Macao or Taiwan stationed in the Mainland, foreigners and compatriots from Hong Kong, Macao or Taiwan and non-foreign-funded enterprises shall meet the following conditions respectively: (1) The operating fund of the branch of a foreign bank shall not be less than convertible currencies equivalent to RMB 300 million yuan, of which the RMB operating fund shall not be less than 100 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 200 million yuan; (2) The registered capital of a solely foreign-funded bank or joint-equity bank shall not be less than convertible currencies equivalent to RMB 600 million yuan, of which the RMB capital shall not be less than RMB 200 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 400 million yuan; (3) The operating fund of a solely foreign-funded bank's branch or joint-equity bank's branch within China shall not be less than convertible currencies equivalent to RMB 200 million yuan, of which the RMB operating fund shall not be less than 100 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 100 million yuan; (4) The registered capital of a solely foreign-funded financial company or joint-equity financial company shall not be less than convertible currencies equivalent to RMB 500 million yuan, of which the RMB capital shall not be less than RMB 200 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 300 million yuan. Article 36. A foreign-funded financial institution that meets the provisions of Article 20 of the Regulation and is approved to undertake, within the business scope provided for by Article 17 or Article 18 of the Regulation, foreign exchange businesses and RMB businesses to various kinds of clients shall meet the following conditions respectively: (1) The operating fund of the branch of a foreign bank shall not be less than convertible currencies equivalent to RMB 500 million yuan, of which the RMB operating fund shall not be less than 300 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 200 million yuan; (2) The registered capital of a solely foreign-funded bank or joint-equity bank shall not be less than convertible currencies equivalent to RMB 1 billion yuan, of which the RMB capital shall not be less than RMB 600 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 400 million yuan; (3) The operating fund of a solely foreign-funded bank's branch or joint-equity bank's branch within China shall not be less than convertible currencies equivalent to RMB 300 million yuan, of which the RMB operating fund shall not be less than 200 million yuan and the foreign exchange operating fund shall not be less than convertible currencies equivalent to 100 million yuan; (4) The registered capital of a solely foreign-funded financial company or joint-equity financial company shall not be less than convertible currencies equivalent to RMB 700 million yuan, of which the RMB capital shall not be less than RMB 400 million yuan and the foreign exchange capital shall not be less than convertible currencies equivalent to RMB 300 million yuan. Article 37. The term "trade of government bonds, financial bonds, and other foreign exchange securities except stocks" mentioned in Article 17 (4) and Article 18 (4) of the Regulation shall include, but not be limited to, the foreign exchange investment businesses 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 standing investigations and consultation services" mentioned in Article 17 (12) and Article 18 (8) of the Regulation refer to the credit standing investigations and consultation services related to banking businesses. Article 39. The term "some foreign exchange businesses for non-foreign-funded enterprises" mentioned in Articles 31 and 33 of the present Detailed Rules refers to the businesses set up to non-foreign-funded enterprises, including transfer of deposits and export settlement under foreign exchange credits, and import settlement and inward remittance under credits. The term "some RMB businesses for non-foreign-funded enterprises" mentioned in Articles 33 and 34 refers to the supporting RMB credits to the non-foreign-funded enterprises that have obtained foreign exchange credits of this foreign-funded financial institution and its transfer of deposits, and guaranties of the non-foreign-funded enterprises who have obtained foreign exchange credits of this foreign-funded financial institution. Article 40. Article 20 of the Regulation prescribes the requirements for a foreign-funded financial institution that applies for undertaking businesses for the first time. Among these requirements, Items (1) and (2) mean that it shall have been 3 years or more since a foreign-funded financial institution, which applies for operating RMB businesses, started business, and it shall have made profits for two successive years prior to filling an application. As for a foreign-funded financial institution that has already been authorized to operate RMB businesses applies for enlarging the range of service objects of RMB businesses, it shall meet the following conditions: (1) Having made profits for two successive years prior to filing an application; and (2) Other prudent conditions prescribed by the CBRC. The sentence "it shall have been 3 years since it started businesses" in this Article means that it shall have been 3 full years by calculating from the day when the financial institution obtains the approval of establishment to the date of application. The sentence "it shall have made profits for two successive years prior to filing an 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. Where a foreign-funded financial institution applies for undertaking RMB businesses for the first time or enlarging the range of service objects of RMB businesses, it shall submit the following materials (in triplicate) to the local institution dispatched by the CBRC. After the local institution dispatched by the CBRC issues preliminary examination opinions, it shall directly submit them to the CBRC for examination and approval, and shall simultaneously send a copy to the superior institutions dispatched by the CBRC level by level: (1) If the application is signed by the chairman of the board of directors or president (CEO, general manager) and is addressed to the Chairman of the CBRC, it shall contain the specific contents of operating RMB businesses or enlarging the range of service objects, to-be-increased capital or to-be-allocated operating fund, etc.; (2) A report on feasibility study; (3) The to-be-modified articles of association (only limited to foreign-funded legal person institution); (4) The operating procedures and internal control system for the to-be-operated businesses; (5) The audited balance sheets and the profit and loss statements of the previous two fiscal years by the date of application; and (6) Other materials required by the CBRC. Article 42. After a foreign-funded financial institution receives the notice of the CBRC about approving its preparing for operating RMB businesses or enlarging the range of service objects of RMB businesses, it shall complete the preparatory work within 4 months: (1) To transfer the increased capital or operating fund to China, to have the increased capital or operating fund verified by the accounting firm accredited by the CBRC, and to submit the capital verification certification to the local institution dispatched by the CBRC; (2) To recruit appropriate number of business personnel that can meet the needs of its business development; (3) To print important business vouchers and documents for external use and to submit relevant samples to the local institution dispatched by the CBRC; (4) Equip with safety protection facilities accredited by the relevant department and submit pertinent certifications to the local institution dispatched by the CBRC; and (5) To establish internal control system and operating procedures for RMB businesses and to submit them to the local institution dispatched by the CBRC. If the foreign-funded financial enterprise fails to complete the preparatory work within 4 months, the original approval of the CBRC shall be invalidated automatically. Article 43. After the foreign-funded financial institution has completed the preparatory work, it shall file an application for check to the local institution dispatched by the CBRC. The application shall be signed by the board chairman or president (CEO, general manager) of the foreign-funded legal person institution, or by the president or general manager of the branch of the foreign bank. If the foreign-funded financial institution passes the check, it shall, upon the strength of the check acceptance opinion and the capital verification certification, fetch the approval document from the CBRC. If it fails to pass the check, it may apply to the check organ for recheck 10 days after it receives the notice. Article 44. Before starting the businesses listed in the approval document, the foreign-funded financial institution shall make announcements on the national newspapers designated by the CBRC and the local newspapers designated by the local institution dispatched by the CBRC. Article 45. The geographic areas where the foreign-funded financial institution is allowed to operate RMB businesses shall be the cities where foreign-funded institutions have already been allowed to operate RMB businesses. Article 46. The term "new categories of businesses" mentioned in Article 21 of the Regulation refers to the new categories of financial businesses that the banks or financial companies within the territory of China haven't provided, or that the banks or financial companies within the territory of China have already provided such financial businesses, but these financial businesses have relatively high operation risks. A foreign-funded financial institution shall submit the following materials (in triplicate) to the local institution dispatched by the CBRC when it applies for operating a new category of financial business. After the local institution dispatched by the CBRC issues the preliminary examination opinions, it shall directly submit these materials to the CBRC for examination and approval and shall simultaneously send a copy to the superior institutions dispatched by the CBRC level by level: (1) An application signed by the person authorized by the head office of the foreign-funded financial institution; (2) A detailed introduction of the business to be launched, necessary preparations for operating the businesses, including operation rules, analysis of risk-proceeds, control measures, professional personnel and computer system, etc; and (3) Other materials required by the People's Bank of China. The CBRC shall make a decision on whether to approve it or not within 60 days from the day when it receives the complete set of application materials from the foreign-funded institution. Article 47. Where a foreign-funded financial institution wishes to launch a new category of businesses in more than two branches within the territory of China, the head office of the foreign-funded institution with legal person status or the principal reporting bank of the foreign bank shall submit the application materials uniformly to the institution dispatched by the CBRC at the place where the principal reporting bank is located. After the aforesaid institution dispatched by the CBRC issues preliminary examination opinions, it shall directly submit the application materials to the CBRC for examination and approval and shall send a copy to the superior institutions dispatched by the CBRC level by level. Upon approval, the foreign-funded financial institution and its branches shall, within 5 days after it starts business, submit a written report to the local institution dispatched by the CBRC. Article 48. The foreign-funded financial institution that intends to undertake "other businesses" specified in Article 17 (13) and Article 18 (10) of the Regulation shall go through the application formalities in accordance with the provisions of Articles 46 and 47 of the present Detailed Rules. Article 49. Where a foreign-funded financial institution or its branch launches any product or service within the business scope and categories upon approval, it shall submit a written report to the local institution dispatched by the CBRC within 5 days after it launches such business. Article 50. A foreign-funded financial institution may undertake settlement and sale of foreign exchange in accordance with relevant provisions. Article 51. The solely foreign-funded banks, joint-equity banks and branches of foreign banks, which are allowed to undertake RMB businesses upon approval, may undertake RMB interbank borrowing business according to relevant provisions. CHAPTER IV MANAGEMENT OF POSITION QUALIFICATIONS Article 52. Any of the senior managerial personnel of a foreign-funded financial institution shall meet the following basic conditions: (1) Being familiar with the laws and regulations of China on financial supervision and control; (2) Having professional knowledge, work experience and organizing and managing ability corresponding to the position assumed; and (3) Without bad record. Article 53. A person, who is under any of the following circumstances, may not take any senior management position in a foreign-funded financial institution: (1) Having criminal record; (2) Having ever been punished severely for violating the law; (3) He is the main liable or direct liable person-in-charge for the bankruptcy, serious violation of rules, revocation of the financial business permit or the business license of the financial institution, enterprise or company, for which he works, and it hasn't been for 5 years since that; or (4) He has ever caused heavy losses to the financial institution, any other enterprise or company, for which he works, during the previous 5 years. Article 54. The CBRC shall adopt two forms, namely the ratification system and the record system, for the examination and verification of the senior managerial personnel of foreign-funded financial institutions. Article 55. The senior managerial personnel of foreign-funded financial institution assuming the following posts shall be subject to the system of ratification and meet the following conditions: (1) The chairman of the board of directors, president (general manager) of a foreign-funded institution with legal person status shall have more than 10 years of financial work experience or more than 15 years of experience of relevant economic work (among which the financial work experience shall be more than 5 years), and have more than 3 years of experience working on the position of a business department manager or on a position equivalent or superior to that of a business department manager; (2) The vice chairman of the board of directors, vice president (vice general manager) of a foreign-funded institution with legal person status, and president (general manager) of a foreign bank's branch bank shall have more than 5 years of financial work experience or more than 10 years of experience of the relevant economic work (among which there shall be more than 3 years of financial work experience), and have more than two years of experience of working on the position of a business department manager or a position equivalent or superior to that of a business department manager; (3) The vice president (vice general manager) of the branch bank of a foreign bank, the president of the sub-branch of a foreign bank, shall have more than 4 years of financial work experience or more than 6 years of experience of the relevant economic work (among which the financial work experience shall be more than 2 years); and (4) Having a university education background or higher; or if he doesn't have a university education background, more than 6 years of experience in the area of finance or more than 8 years of experience in relevant economic work (among which the financial work shall be 4 years) shall be added accordingly. Article 56. The CBRC shall be responsible for ratifying the following personnel to assume their posts or disqualifying them from taking their posts: (1) The board chairman, president (general manager) of a foreign-funded institution with legal person status; (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 institution is located to be responsible for ratifying the qualifications for changing the president (general manager) to assume his position or disqualifying him from taking his position. The banking regulatory bureau shall be responsible for ratifying the following personnel to assume their posts or disqualifying them from taking their positions within its jurisdiction: (1) The vice president (vice general manager) of a foreign-funded institution with legal person status; (2) The vice president (vice general manager) of the branch bank of a foreign bank, and the president of the sub-branch of a foreign bank. Article 57. Where the system of ratification is applied to the position qualifications for senior managerial personnel, the applicant shall submit the following materials (in triplicate) to the local institution dispatched by the CBRC: (1)﹛An application to the CBRC signed by the person authorized by the applicant. 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 institution dispatched by the CBRC, it shall be submitted to the pertinent person-in-charge thereof; (2) The authorization letters signed by the person authorized by a foreign bank to the to-be president (general manager) and vice president (vice general manager) of the branch bank of a foreign bank, and the president of the sub-branch of the foreign bank and the authorization letter of the signer; (3) Resumes of the persons to assume the posts; (4) Photocopies of the identification certifications and education background certifications of persons to take the posts; (5) Where the articles of association of a foreign-funded institution with legal person status provides that the meeting of the board of directors or shareholders' meeting should be held, the resolution of the board of directors or shareholders' meeting shall also be submitted; (6) Declarations of "without bad record" signed by persons to take the posts; and (7) Other materials required by the CBRC. Article 58. After an applicant submits the position qualification application materials about the to-be president (general manager) of the foreign-funded financial institution, the CBRC may have an interview with the to-be president (general manager) of the foreign-funded financial institution before he holds the position. The institution dispatched by the CBRC may have an interview with other senior managerial personnel of the foreign-funded financial institution before they hold the posts. Article 59. The term of office of the senior managerial personnel of a foreign-funded financial institution subject to the system of ratification shall be 2 years or more. The president (general manager) or vice president (vice general manager) of a foreign-funded financial institution may not concurrently take the position responsible for the routine management of business operations in any other business institution. Any of the senior managerial personnel of a foreign-funded financial institution may not concurrently take a position in a representative office within China. Article 60. The "senior managerial personnel" mentioned in Article 33 (7) of the Regulation refer to the senior managerial personnel subject to the system of ratification. Article 61. The senior managerial personnel of a foreign-funded financial institution who take the following positions shall be subject to the record-keeping system: (1) The directors, assistant of the president (general manager), chief financial officer, chief auditing officer, senior compliance manager, chief business supervisor of a foreign-funded financial institution with legal person status; (2) The chief financial officer, compliance manager and chief business supervisor of a branch of a foreign bank; (3) The vice president of the sub-branch of a branch of a foreign bank; and (4) Other senior managerial personnel required for record-keeping by the CBRC. Article 62. With regard to the senior managerial personnel subject to the record-keeping system, the foreign-funded financial institution shall submit the following materials to the local institution dispatched by the CBRC: (1) The authorization letter signed by the person authorized by the foreign-funded financial institution and the authorization letter of the signer; (2) Resumes of the persons to take the posts; (3) Photocopies of the identification certification and education background education certification of the persons to take the posts; (4) The declarations of "without bad record" signed by the persons to take the posts; and (5) Other materials required by the CBRC. Article 63. The resume, identification certification and education background certification of the person to take the post shall be signed by the person authorized by the applicant. Article 64. Where the president (general manager) of a foreign-funded financial institution and the president of its sub-branch leave the position for one month continuously or more, a written report shall be submitted to the local institution dispatched by the CBRC. If they leave for more than 3 successive months or more without special causes, they shall be replaced. Article 65. As for a senior manager who is liable for any of the following circumstances, the CBRC may, in light of the seriousness of the case and its consequences, disqualify him from taking the senior managerial position for a certain time period or for life: (1) Being investigated for criminal liabilities in accordance with the law; (2) Refusing, intervening in, frustrating or seriously impairing the supervision and control carried out by the CBRC in accordance with the law; (3) The imperfect internal management and control system or weak supervision results in serious losses to properties or occurrence of severe financial criminal case; (4) The institution, in which he takes a post, is taken over, merged or declared bankruptcy because of business operations in serious violation of the law or regulations, imperfect internal systems or the long-term poor business operation and management; (5) Serious losses to the institution, in which he takes position, due to the long-term poor business operation and management; (6) As for a person who has been appointed to a senior managerial post of a foreign-funded financial institution, if the CBRC finds that he has ever violated the law or regulation before taking the post, or finds any other circumstance that it is inappropriate for him to take the post; or (7) Other circumstances determined by the CBRC. Article 66. Where the position qualifications of the senior managerial personnel should be subject to the ratification of the CBRC, the CBRC shall give a reply on whether to approve the qualifications within 30 days from the day of receiving the complete application materials. Where the post qualifications of the senior managerial personnel should be subject to the ratification of the local institution dispatched by the CBRC, the institution dispatched by the CBRC shall give a reply on whether to approve the qualifications within 30 days from the day of receiving the complete set of application materials. Where the decision of disapproval is made, the applicant shall be notified of the reasons in writing. With regard to the appointment of a senior manager that shall be subject to record-keeping in the local institution dispatched by the CBRC, if the local institution dispatched by the CBRC fails to raise any objection in writing within 30 days as of receiving the complete set of application materials, the said appointment shall be deemed as ratified. CHAPTER V SUPERVISION AND MANAGEMENT Article 67. Where a foreign bank has established two or more branches within China, its head office or authorized regional head office shall designate the principal reporting bank to be responsible for reporting work of the consolidated financial statements and comprehensive information, shall appoint the compliance manager of China region and shall submit a written report to the CBRC and the institution dispatched by the CBRC at the place where the principal reporting bank is located. The CBRC and its dispatched institution shall conduct supervision over them as a whole. Article 68. The "interest-earning assets" used in Article 24 of the Regulation shall include foreign exchange interest-earning assets and RMB interest-earning assets. 30% of the operating fund for foreign exchange businesses of a branch of a foreign bank shall take the foreign currency deposits of fixed terms of not less than 6 months (including 6 months) as the foreign exchange interest-earning assets. 30% of the operating fund for RMB businesses shall take the national debts in RMB or the RMB deposits of fixed terms of not less than 6 months (including 6 months) as the RMB interest-earning assets. The fixed-term deposits in home currency or foreign currency of not less than 6 months (including 6 months) shall be deposited in 3 or less Chinese commercial banks within China that have steady business operations and considerable strength. The interest rates for the fixed-term deposits as interest-earning assets shall be determined by both parties according to the relevant provisions. The branch of the foreign bank shall report the information about the bank where the interest-earning assets are deposited, amount, interest rate and time period of the interest-earning assets to the local institution dispatched by the CBRC. Without the approval of the local institution dispatched by the CBRC, the branch of the foreign bank may not use the interest-earning assets. It shall go through the formalities for the changes of the interest-earning assets according to the approval document of the local institution dispatched by the CBRC. It may not repurchase the interest-earning assets in the form of national debts in RMB by way of pledge or other methods that may have a bearing on the right to dispose of them. The above-mentioned provisions of this Article shall not apply to the branches of solely foreign-funded banks and the branches of joint-equity banks within the territory of China. Article 69. The term "capital" mentioned in Articles 26 and 28 of the Regulation refers to the balance of the sum of paid-in capital, the capital surplus, surplus reserve, undistributed profit, reserve fund for general loan losses, reserve for reevaluation, and long-term secondary bonds of not less than 5 years (including 5 years) minus the unconsolidated investments made by the financial institution. The "sum of the operating fund and reserve" mentioned in Article 28 of the Regulation refers to the sum of the operating fund, undistributed profits and reserve for general loan losses. The "risk assets" mentioned in Article 28 of the Regulation to the consolidated and unconsolidated risk-weighted assets calculated under the relevant provisions on risk-weighted assets. The "methods to calculate and evaluate the capital adequacy ratio" and the "examination method" mentioned in Article 25 of the Regulation shall be implemented under the pertinent administrative provisions on capital adequacy ratios of commercial banks. The ratio prescribed in Article 28 of the Regulation shall be calculated on the basis of each branch established within China by the foreign-funded financial institution and shall be evaluated on the basis of the average month-end balance every quarter. The CBRC may put forward special requirements for its capital adequacy ratio in light of the risk status of the foreign legal person institution. Article 70. The "connected enterprises" mentioned in Article 26 of the Regulation refer to the enterprises directly or indirectly control or be controlled by other enterprise (s), and 2 or several enterprises (such as parent company, subsidiary company, subsidiary companies controlled by the same parent company); joint ventures; jointly operated enterprises; other enterprises directly controlled by the main individual investors, key managerial personnel or family members who have close relationship with them (including relatives by blood within 3 generations or by marriage within 2 generations); and other enterprises that possibly transfer assets and profits. The "credits" mentioned in Article 26 of the Regulation and Article 95 of the present Detailed Rules include loans, borrowing, trade financing, acceptance and discount, overdraft, factoring, loan commitments, issuance of letter of credit, etc. Article 71. The "proportion" mentioned in Article 26 and Article 27 of the Regulation shall be evaluated on the basis of the balance by the end of each quarter. Article 72. The "liquid assets" mentioned in Article 29 of the Regulation refer to cash, gold, deposits in the People's Bank of China, interbank deposits, interbank loans to be due in one month, interbank lending to be due in one month, net amount of the correspondent assets with overseas associated banks and their affiliated institutions, discounts and other purchased notes to be due in one month, other receivables to be due within one month, loans to be due in one month, bonds to be due in one month and other assets that may be realized in one month. Among the aforesaid assets, those may not be drawn back estimated shall be deducted. The interest-earning assets shall not be included into the liquid assets. The term "liquid debts" mentioned in Article 29 of the Regulation refers to deposits to be due in one month, interbank borrowings to be due in one month, payables to be due in one month, net amount of correspondent liabilities with the foreign associated banks and their affiliated institutions, and other debts to be due in one month. Frozen deposits shall not be included in the liquid debts. Foreign-funded financial institutions shall make computations on the basis of RMB and foreign currencies every day respectively, and shall keep the proportion of liquidity provided for in Article 29 of the Regulation. The CBRC shall examine the liquidity of a foreign-funded institution with legal person status on the basis of consolidated statements and shall examine each branch of a foreign bank as a separate institution. Article 73. The "foreign exchange deposits taken within China" mentioned in Article 30 of the Regulation include the interbank and non-interbank deposits of foreign exchange. The method for calculating the "total foreign exchange assets within China" shall be as follows: Total foreign exchange assets within China=total foreign exchange assets 每 correspondent foreign exchange with offshore associated banks (assets) 每 correspondent foreign exchange with offshore subsidiaries (assets) 每 offshore foreign exchange loans 每 offshore interbank deposits of foreign exchange 每 offshore interbank lending of foreign exchange 每 offshore investments of foreign exchange. The following foreign exchange investment shall not be included in the offshore investments of foreign exchange: bonds of Chinese government issued abroad, bonds of Chinese financial institutions and bonds of Chinese non-financial institutions. The proportion provided for in Article 30 of the Regulation shall be examined on the basis of the balance by the end of each month of a separate institution. Article 74. No foreign-funded financial institution may list false, overlist, underlist assets, debts and owners' rights and interests. Article 75. The credit assets transferred in by the head office or associated bank of a foreign-funded financial institution shall be subject to the approval of the local institution dispatched by the CBRC. Article 76. A foreign-funded financial institution shall establish a system for risk assets classification that can meet the requirements specified in the Principles for Guiding the Classification of Loan Risks at least and shall report the corresponding relationship between its own standards on the classification of risk assets and the classification standards specified in the Principles for Guiding the Classification of Loan Risks to the local institution dispatched by the CBRC. If there is any change in the corresponding relationship, the foreign-funded financial institution shall timely submit a written report to the local institution dispatched by the CBRC. Article 77. A foreign-funded financial institution shall draw loan-loss reserve under the relevant provisions on bank loan-loss reserve. Article 78. A foreign-funded financial institution shall adopt prudent accounting system and shall implement pertinent provisions on financial enterprise accounting system. Article 79. The conditions for granting credit to interested persons may not be more preferential than those for granting the same kind of credit to other borrowers. The interested persons used in this Article shall refer to: (1) the directors of board, inspectors, managers, credit business persons and their close relatives of the foreign-funded financial institutions; (2) the companies, enterprises and other economic organizations in which the aforesaid personnel invest or take senior managerial positions; (3) shareholders and their associated enterprises of the foreign-funded institutions with legal person status. Article 80. The term "Chinese certified public accountants" mentioned in Article 32 of the Regulation refers to Chinese practicing certified public accountants who have passed the annual examination 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, submit the basic materials about the accounting firm and main certified public accountants who will participate in the audit to the institution dispatched by the CBRC at the place where the foreign-funded financial institution is located. Article 81. After the end of each fiscal year, a foreign-funded financial institution shall engage an accounting firm acknowledged by the institution dispatched by the CBRC to conduct annual audit. The foreign-funded financial institution shall submit the audit report and management proposal to the local institution dispatched by the CBRC within 4 months after the end of each fiscal year. In addition, a foreign-funded legal person institution or a foreign bank with 2 or more branches within China shall engage an accounting firm acknowledged by the institution dispatched by the CBRC to conduct consolidated audit over all its business institutions within China. It shall submit the audit report and management proposal to the institution dispatched by the CBRC at the place where the head office of the foreign-funded legal person institution 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, business operation control, compliance business operations and asset quality. The annual audit over a foreign-funded financial legal person institution shall at least cover the information about the capital adequacy, asset quality, internal management, profits, liquidity and market risk management. Article 82. Where a foreign-funded institution with legal person status adjusts or transfers its registered capital, alters the total amount of capital it holds or the shareholders with more than 10% of the total shares, or where a foreign bank applies for altering its operating fund of its branch within China, it shall submit the following materials to the local institution dispatched by the CBRC. After the Institution dispatched by the CBRC puts forward preliminary examination opinions, it shall directly submit them to CBRC for examination and approval and shall simultaneously send a copy to the superior institutions dispatched by the CBRC level by level: (1) An application signed by the board chairman or president (CEO, general manager) of the applicant; (2) The resolution of the board of directors of the foreign-funded institution with legal person status on adjusting, transferring the registered capital or changing the shareholders; (3) Where the foreign investor of the foreign-funded legal person institution changes the amount of investment or the proportion of stock shares, the said foreign-funded financial institution shall provide the resolution of board of directors of the foreign investor and the opinions of its legal representative. If its investor is a financial institution, it shall provide the opinions acknowledged by the financial regulatory 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 person institution; and (5) Other materials required by the CBRC. Article 83. Where a foreign-funded financial institution obtains approval of changing its registered capital or operating fund, altering the total amount of capital it holds or the shareholders with more than 10% of the total shares, it shall, within 30 days after it receives the approval documents of the CBRC, engage a accounting firm acknowledged by the local institution dispatched by the CBRC to verify its capital, and shall submit the capital verification certification to the local institution dispatched by the CBRC. Article 84. A new shareholder of a foreign-funded legal person institution shall meet the requirements prescribed in the Regulation and the present Detailed Rules. Article 85. Where a foreign bank intends to alter the name of its branch within China because of merger or splitting, it may go through the formal procedures for name alteration in two steps or directly. The foreign bank may file a preliminary application to the CBRC and submit the following materials: (1) An application to the Chairman of the CBRC signed by the chairman of the board of directors or president (CEO, general manager) of the foreign bank; and (2) The recognition letter or approval document about the merger or splitting issued by the financial regulatory authority of the country or region where the foreign bank is located. The CBRC shall confirm its application for changing the name by way of signing a letter after it receives the complete set of application materials. The foreign bank shall, within 5 days after it formally changes its name, report to the CBRC and the institution dispatched by the CBRC at the place where its branch within China is located, shall submit the following materials to the CBRC and formally undergo the formalities for changing the name of its branch within China: (1) An application signed by the chairman of the board of directors or president (CEO, general manager) of the new institution to the Chairman of the CBRC; (2) An application printed and distributed by the CBRC and filled out by the new institution under relevant the provisions; (3) Formal approval letter issued by the financial regulatory authority of the country or region where the new institution is located; (4) The business license (photocopy) or other financial business approval documents of the new institution; (5) The liability guarantee letter for the taxes and debts of the branch within China of the new institution signed by the chairman of the board of directors or president (CEO, general manager) of the new institution; (6)The consolidated financial statements of the new institution; (7) The articles of association of the new institution; (8) The list of the board members of the new institution; (9) The diagram of the organizational structure of the new institution; (10) The resume, identification certification, education background certification of the president or general manager of the branch of the new institution within China; and (11) The authorization letter to the president or general manager of the branch within 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 institution dispatched by the CBRC at the place where the branch of the foreign bank within China is located at the same time when it submits the preliminary application and the formal application materials to the CBRC. Article 86. The registered capital or operating fund and business scope of a foreign-funded financial institution after merger or splitting shall be subject to a new ratification of the CBRC. Article 87. Where a foreign-funded financial institution applies for changing its name for other reasons, it shall submit the application signed by the chairman of the board of directors or president (CEO, general manager) to the Chairman of the CBRC, the formal approval document about the change of the name issued by the financial regulatory authority of the country or region where the foreign bank is located, and the business license (duplicate) or photocopies of other financial business approval documents to the CBRC, and shall submit the photocopies of the application materials to the institution dispatched by the CBRC at the place where the foreign-funded financial institution is located. Article 88. Where a foreign-funded financial institution changes its business place in the same city, it shall submit the following materials to the local institution dispatched by the CBRC: (1) An application signed by the chairman of the board of directors or president (CEO, general manager) of the foreign-funded legal person institution or by the president or general manager of the branch of foreign bank to the local institution dispatched by the CBRC; (2) A photocopy of the letter of intent for renting or purchasing to-be-moved-in business place of the foreign-funded financial institution; and (3) Other materials required by the CBRC. The local institution dispatched by the CBRC shall check the new business place of the foreign-funded financial institution under pertinent provisions. If it fails to pass the check, the foreign-funded financial institution may apply to the check institution for re-check within 10 days after it receives the notice. If it passes the check, the local institution dispatched by the CBRC shall issue a document about approving the foreign-funded financial institution's changing of the business place in the same city, and shall simultaneously send a copy to the CBRC and its superior institution dispatched by the CBRC. Before a foreign-funded financial institution is granted a formal approval of changing its business place by the local institution dispatched by the CBRC, it may not conduct external businesses at the to-be-moved-in business place. Article 89. A foreign-funded legal person institution 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 local institution dispatched by the CBRC. After the Institution dispatched by the CBRC put forward preliminary examination opinions, it shall directly submit them to CBRC for examination and approval and shall simultaneously send a copy to the superior institutions dispatched by the CBRC level by level: (1) An application signed by the chairman of the board of directors or president (CEO, general manager) of the applicant; (2) The 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 required by the CBRC. Article 90. Where any of the matters or circumstances listed in Article 33 of the Regulation occurs, and if it is necessary to change the content specified in the financial business permit, the foreign-funded financial institution shall, within 30 days after it receives the formal approval documents, go through the modification formalities under the relevant provisions of the measures for the administration of financial business permits. If it is necessary to verify the capital, the foreign-funded financial institution shall submit the capital verification certification issued by an accounting firm to the local institution dispatched by the CBRC. If it is necessary to check it, the institution dispatched by the CBRC at the place where the foreign-funded financial institution is located shall do it in accordance with the relevant provisions. The foreign-funded financial institution shall undergo the modification registration at the administrative organ for industry and commerce of China upon the strength of the approval documents of the CBRC or the institution dispatched by the CBRC. Where any of the matters or circumstances listed in Article 33 (1), (2), (3), (4) and (7) of the Regulation occurs, the foreign-funded financial institution shall make an announcement on a national newspaper designated by the CBRC and on the local newspaper designated by the institution dispatched by the CBRC at the place where the foreign-funded financial institution is located. The announcement shall be completed within 30 days after an approval is granted. Article 91. A foreign-funded financial institution shall timely report the following matters to the local institution dispatched by the CBRC: (1) The serious problems occurred in the financial status and business operations of the foreign-funded financial institution; (2) The important changes in the operating strategies of the foreign-funded financial institution; (3) The important resolutions of the board of directors of the foreign-funded legal person institution; (4) The changes of the articles of association, registered capital and registered address of the head office of the branch of the foreign bank and the investors of the foreign-funded legal person institution; (5) The merger, splitting and other restructuring matters of the head office of the branch of the foreign bank and the investors of the foreign-funded legal person institution, and changes of the chairman of the board of directors or president (CEO, general manager); (6) The serious problems occurred in the financial status and business operations of the head office of the branch of foreign bank and investors of the foreign-funded financial institution; (7) The important changes of the supervisory regulations of the registered place of the head office of the branch of the foreign bank and the foreign investors of the foreign-funded legal person institution; (8) Except the cases due to forces majeure, where the foreign-funded financial institution suspends business on a day that isn't a legal holiday, it shall submit a written report to the local institution dispatched by the CBRC not later than 7 days before it does so; (9) Other matters required by the CBRC. Article 92. The CBRC and its dispatched institution may, where necessary, designate accounting firms to conduct audit over the foreign-funded financial institutions' operating status, financial status, internal risk control system and implementation of the internal risk control system. Article 93. Where a foreign-funded financial institution needs to convert its capital or operating fund in foreign currency into RMB and vice versa, to convert its profits in RMB into foreign exchange or to handle any other matters relating to the examination and approval of foreign exchange, it shall be subject to ratification of the State Administration of Foreign Exchange and its branches. Article 94. Any matter involving foreign exchange administration of foreign-funded financial institutions shall be handled according to the relevant administrative provisions of the state on foreign exchange. Article 95. Under Article 35 of the Regulation, the CBRC and its dispatched institutions may, in light of the specific situation, take special regulatory measures when any of the following circumstances occurs in a foreign-funded financial institution: (1) If the sum of undistributed profits of a branch of a foreign bank and the net losses and profits of the current year is negative, and if the sum of the absolute negative amount and the insufficient part of loan-loss reserve exceeds 30% of the operating fund, the branch of the foreign bank shall submit a report to the local institution dispatched by the CBRC each quarter; (2) Where the balance of credits of a foreign-funded financial institution granted to all its big clients exceeds 8 times of its capital or operating fund, it shall report to the local institution dispatched by the CBRC. The term "big client" refers to the clients, to whom the balance of credits exceeds 10% of the capital or operating fund of the foreign-funded financial institution. Such rate shall be calculated by consolidating the branches of the foreign-funded financial institution within China, and the average month-end balance shall be reported to the institution dispatched by the CBRC each quarter; (3) Where a foreign-funded financial institution's aggregate outflow of funds from China exceeds its aggregate in-flow of funds from abroad within one month, it shall report to the local institution dispatched by the CBRC each month. The term "outflow of funds from China" refers to deposits in foreign banks, offshore interbank borrowings, offshore interbank credits, transfers between the foreign-funded financial institution and offshore associated banks (asset), transfers between the foreign-funded financial institution and offshore subsidiaries (asset), various offshore loans, offshore investments and purchase of overseas resale securities. The term "inflow of funds from China" refers to offshore interbank deposits, offshore deposits, borrowings from offshore banks, offshore interbank loans, transfers between the foreign-funded financial institution and offshore associated banks (liability), transfers between the foreign-funded financial institution and offshore subsidiaries (liability), offshore notes financing, sale of offshore resale securities, overseas loans, paid-in capital or operating fund and conversion margin of capital items; (4) Other imprudent operating acts of the foreign-funded financial institution. Article 96. The special regulatory measures taken by the CBRC and its dispatched institution against a foreign-funded financial institution shall at least include: (1) having an interview and talk with the person-in-charge 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 about pertinent issues; (3) taking measures to restrict the business operations or outflow of funds of the foreign-funded financial institution; (4) requiring the foreign-funded financial institution to issue a guarantee; (5) putting forward special requirements for the relevant risk control indicators; (6) requiring the foreign-funded financial institution to supplement capital or operating fund within a time limit; (7) accrediting special supervisors to the foreign-funded financial institution to guide and supervise its routine operation and management; (8) requiring the foreign-funded financial institution to change the senior managerial personnel within a time limit; and (9) other prudent regulatory measures. Article 97. Under 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 keep it independent. After an internal audit is finished, it shall submit the internal audit report to the local institution dispatched by the CBRC. The local institution dispatched by the CBRC may communicate with the internal auditors of the foreign-funded financial institution in a proper form; (2) It shall designate a person to be responsible for the compliance work, the duty may not be concurrently undertaken by an internal auditor; (3) It shall submit a business operation report of the previous year and a business operation development plan for the next year to the local institution dispatched by the CBRC within 2 months after the end of each fiscal year. The business operation report shall at least cover the information about the business operations of the previous year, comparison results of the two previous years and reasons for significant disparities; the asset quality and the profits and losses of the previous year, execution of the financial budget and reasons for disparities. The business operation development plan shall at least cover the foreign-funded financial institution's business development strategies, business development emphases, development plan on organizational structure and personnel, and financial budget of next year; (4) It shall formulate an internal control system and business operating procedures in light of the local laws and regulations and shall submit the amendments to its internal control system and business operating procedures to the local institution dispatched by the CBRC not later than the end of March every year. The internal control system, business operating procedures, samples of business vouchers of the foreign-funded financial institution shall be accompanied by Chinese translation. As for other relevant business and management documents, if the supervisory personnel deem necessary, they shall be accompanied by Chinese translation; (5) If a person who isn't an employee of the foreign-funded financial institution undertakes internal strategy planning, business guide or service support of the said institution and if he has already worked for it for more than successive 30 days or for more than accumulative 60 days within 90 days, the foreign-funded financial institution shall report this to the local institution dispatched by the CBRC; and (6) The branch of a foreign bank shall timely submit the annual report of the previous year of its head office to the local institution dispatched by the CBRC. CHAPTER VI DISSOLUTION AND LIQUIDATION Article 98. The dissolution and liquidation mentioned in the Regulation shall include the following circumstances: (1) Where a foreign-funded legal person institution is under any of the following circumstances, it shall be dissolved on its initiative upon the approval of the CBRC: 1.The time period of business prescribed in the articles of association expires or any other dissolution reason prescribed in the articles of association occurs; 2.The shareholders' meeting or board of directors makes the resolution on dissolution; or 3.It is necessary to dissolve because of merger or splitting; (2) The CBRC allows or orders a foreign bank, solely foreign-funded bank or joint-equity bank to close its branch (es) within China. (3) The CBRC revokes the foreign-funded legal person institution; (4) The foreign-funded legal person institution is declared bankruptcy in accordance with the law. Article 99. Where a foreign-funded legal person institution applies for dissolution on its own initiative, it shall submit the following materials to the local institution dispatched by the CBRC. After the local institution dispatched by the CBRC puts forward preliminary examination opinions, it shall directly submit these materials to the CBRC for examination and approval and shall simultaneously send a copy to the superior institutions dispatched by the CBRC level by level: (1) An application signed by the chairman of the board of directors or president (CEO, general manager); (2) The resolution of the shareholders' meeting or board of directors; (3) The confirmation letter signed by the chairman or president (CEO, general manager) of each investor about agreeing on the institution's dissolution on its own initiative; and (4) Other materials required by the CBRC. The CBRC shall decide on whether to approve the application within 3 months after it receives a complete set of application materials. Article 100. Where a foreign bank, solely foreign-funded bank or joint-equity bank applies for closing its branch(es) within China, it shall submit the following materials to the local institution dispatched by the CBRC. After the local institution dispatched by the CBRC puts forward preliminary examination opinions, it shall directly submit these materials to the CBRC for examination and approval and shall simultaneously send a copy to the superior institutions dispatched by the CBRC level by level: (1) An application signed by the chairman of the board of directors or president (CEO, general manager); (2) A solely foreign-funded bank or joint-equity bank shall submit the resolution of the board of directors; (3) A foreign bank shall submit the opinion of the financial regulatory authority of the registered place; and (4) Other materials required by the CBRC. The CBRC shall decide on whether to approve the application within 3 months after it receives a complete set of application materials. Article 101. From the effectiveness date of the decision of the CBRC about permitting a foreign-funded financial institution to dissolve on its own initiative, or allowing or ordering a foreign bank, solely foreign-funded bank or joint-equity bank to close its branch(es) within China, the foreign-funded financial institution allowed to dissolve or close on its own initiative or ordered to close shall cease its business operation immediately, hand back the financial business permit and form a liquidation group within 15 days. Article 102. The liquidation group shall be composed of the president (general manager), chief financial officer, Chinese certified public accountants and other persons designated by the CBRC. The liquidation group of a foreign-funded legal person institution shall have the representative of the shareholders and the chairman of the board of directors in addition to the aforesaid members. The members of the liquidation group shall be subject to the approval of the local institution dispatched by the CBRC. Article 103. A liquidation group shall inform the administrative organ for industry and commerce of China, tax organ, labor and social security department and other relevant departments in written form. Article 104. The other liquidation matters related to a foreign-funded legal person institution that dissolves on its own initiative or a solely foreign-funded bank, joint bank or foreign bank that closes its branch within China shall be handled in accordance with the relevant provisions of the Company Law of the People's Republic of China. Article 105. The institution dispatched by the CBRC at the place where the to-be-dissolved or to-be-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 group shall, within 30 days from the day when it is formed, engage an accounting firm accredited by the institution dispatched by the CBRC to conduct an audit, and shall submit an audit report to the local institution dispatched by the CBRC within 60 days from the day it is engaged. Article 107. With regard to any matter related to the examination and approval or ratification of foreign exchange 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 settling debts, the liquidation group shall give priority to paying the principal and interests of personal savings after it has paid off the liquidation fees, wages and labor insurance premiums due to the employees. Article 109. The liquidation group shall, not later than the 10th date of each month, submit reports about settlement of debts, disposition of assets, repayment of loans, cancellation of credit accounts, etc. Article 110. If the liquidation group applies for drawing the interest-earning assets after the liquidation institution has settled all the debts, it shall submit the following materials to the local institution dispatched by the CBRC for examination and approval: (1) An application bearing the signature of the head of the liquidation group; (2) A liquidation report; and (3) Other materials required by the CBRC. Article 111. After the liquidation is completed, the liquidation group shall make a liquidation report. It shall submit this report to the local institution dispatched by the CBRC for confirmation and to the administrative organ for industry and commercial of China to apply for canceling the registration of industry and commerce, and shall make an announcement on the national newspapers designated by the CBRC and on the local newspapers designated by the local institution dispatched by the CBRC. The liquidation group shall report the contents of the announcement in written form to the local institution dispatched by the CBRC not later than 3 days prior to the date of announcement. Article 112. After the liquidation, the accounting archives and business files shall be disposed in accordance with the pertinent provisions. Article 113. Within 2 years from the day when the liquidation of a branch of a foreign bank is completed, this foreign bank may not apply for establishing any new business institution within the same city in China. Article 114. Where a foreign bank applies for closing a branch within China as well as establishing a representative office in a same city, it shall submit the following materials to the local institution dispatched by the CBRC. After the local institution dispatched by the CBRC 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 superior institutions dispatched by the CBRC level by level: (1) An application signed by the chairman of the board of directors or president (CEO, general manager) of the applicant; (2) An authorization letter bearing the signature of the person authorized by the foreign bank to the chief representative; (3) Resume of the to-be chief representative; (4) Photocopies of the identification certification and education background certification of the to-be chief representative; (5) Declaration of "without bad record" signed by to-be chief representative; and (6) Other materials required by the CBRC. Article 115. In the case of any illegal or poor business performance that poses a serious threat to the order of the financial market and the interests of the public, a foreign-funded legal person financial institution shall be shut down by the CBRC under the Regulation on Shutting down Financial Institutions. The CBRC shall comply with the Company Law of the People's Republic of China when it orders a foreign bank to shut down its branch. Article 116. Where a foreign-funded legal person institution is liquidated due to dissolution, if the liquidation group finds that the properties of the foreign-funded legal person institution aren't enough to the pay off the debts after the clear-ups of properties and formulation of asset-liability statement, it shall, upon approval of the CBRC, apply to the people's court for declaring its bankruptcy without delay. After the foreign-funded legal person financial institution is ruled by the people's court to be declared bankruptcy, the liquidation group shall hand over the liquidation affairs to the people's court. Article 117. Where a foreign-funded financial institution applies for restarting business in accordance with Article 39 of the Regulation, it shall submit the following materials to the local institution dispatched by the CBRC. After the local institution dispatched by the CBRC 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 superior institutions dispatched by the CBRC level by level: (1) An application signed by the chairman of the board of directors or president (CEO, general manager) of the applicant; (2) The resolution of the foreign-funded legal person institution; and (3) Other materials required by the CBRC. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 118. The CBRC shall apply administrative measures to the branches of solely foreign-funded banks or of joint-equity banks within China by referring to the pertinent provisions governing the branches of foreign banks. Article 119. Where a foreign-funded financial institution violates the present Detailed Rules, it shall be punished by the CBRC in pursuance of the Regulation and other relevant provisions. Article 120. The present Detailed Rules shall come 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 abolished simultaneously. |
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