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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II DECISION ON CANCELLATION CHAPTER III CANCELLATION LIQUIDATION CHAPTER IV DEBTS REPAYMENT CHAPTER V REGISTRATION REMOVAL CHAPTER VI LEGAL RESPONSIBILITIES CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. These Regulations have been formulated to strengthen the supervision and administration of financial activities, to maintain the financial order and to protect the State interests and public interests. Article 2. The People's Bank of China shall observe these Regulations with respect to cancellation of financial institutions. The "cancellation" used in these Regulations shall refer to the activity of the Peoples Bank of China to take administrative compulsory measures against the financial institutions with the legal person status established upon its approval, to terminate their business activities and to disband them. Article 3. The People's Bank of China and its working staff, and other relevant personnel shall, when performing their duties according to these Regulations, keep secrets for the cancelled financial institutions according to law. Article 4. The local people's governments of the places where the cancelled financial institutions are located shall organize the relevant departments to do a good job in the work related to the cancellation. CHAPTER II DECISION ON CANCELLATION Article 5. A financial institution shall be cancelled if it has been in the situations such as running business against laws and rules, poorly operating, managing the business, etc. and thus the financial order will be seriously harmed and the public interests will be damaged if it is not cancelled. Article 6. The People's Bank of China shall make the letter of cancellation decision when it decides to cancel a financial institution. The decision on cancellation shall come into force on the day of its promulgation by the People's Bank of China. The decision on cancellation shall be publicly announced on the newspapers and be posted at the business premises of the cancelled financial institution. Article 7. A cancelled financial institution shall stop its business activities immediately from the day the decision on cancellation comes into force, and return the license for financial institution with legal person status and the licenses for business of its branches, and its senior managerial personnel, board of directors and shareholders' meeting shall stop exercising their powers immediately. CHAPTER III CANCELLATION LIQUIDATION Article 8. Where a commercial bank is cancelled according to law, the People's Bank of China shall organize the formation of a liquidation group; where a non-bank financial institution is cancelled, the People's Bank of China or the relevant local people's governments entrusted by the People's Bank of China shall organize the formation of the liquidation group. The cancellation shall start from the day the decision on cancellation comes into force. The liquidation group shall be responsible to the People's Bank of China and report the work to it. A liquidation group shall be composed of the representatives of the People's Bank of China, of the relevant departments of finance, auditing, etc., and of the local people's governments, and of the shareholders of the cancelled financial institution, and the relevant professional personnel. The group leader and the members shall be designated by the People's Bank of China or be approved by the People's Bank of China. During the process of liquidation, the liquidation group shall exercise the managerial powers of the cancelled financial institution, and the group leader shall exercise the powers of the legal representative of the cancelled financial institution. Article 9. After a liquidation group is formed, the legal representative and the relevant principals of the cancelled financial institution shall hand over all the seals, account books, vouchers, bills, documents, materials, etc. to the liquidation group, and shall assist the liquidation group in the liquidation. Article 10. During the liquidation, the legal representative, the members of board of directors and board of supervisors, the senior managerial personnel at the level of department principal or above, the financial personnel and other relevant personnel of the cancelled financial institution shall conduct their work according to the requirements of the liquidation group and may not leave their posts or go abroad without authorization. Article 11. A liquidation group shall perform the following duties during the liquidation: (1) Keeping, cleaning up the property of the cancelled financial institution, drawing up the balance sheet and the property list; (2) Giving notice or making public announcement to the depositors and other creditors to confirm the creditor's rights; (3) Handling the unfinished business related to the liquidation of the cancelled financial institution; (4) Cleaning up the creditor's rights, debts, urging the repayment of creditor's rights and disposing of the assets; (5) Making the liquidation scheme and repaying the debts according to the approved liquidation scheme; (6) Paying off the taxes owed; (7) Disposing of the remaining assets after the cancelled financial institution repays the debts; (8) Representing the cancelled financial institution to participate in litigations and arbitrations; (9) Asking the relevant departments to investigate for the legal responsibilities of the senior managerial personnel and other relevant personnel who are directly responsible for the cancellation of the financial institution; and (10) Handling other liquidation matters. Article 12. During the liquidation, a liquidation group may entrust the financial institution designated by the People's Bank of China (hereinafter referred to the entrusted institution) to handle the liquidation matters. The entrusted institution shall not bear the debts of the cancelled financial institution, not pay funds for it in advance, and not be responsible for the arrangement of the personnel of the cancelled financial institution. The expenses incurred by the entrusted institution shall be listed as the liquidation expenses of the cancelled financial institution. Article 13. The local people's government of the place where the cancelled financial institution is located shall establish a leading group of the cancellation work, and the group leader shall be assumed by the principal of the local people's government. The leading group of cancellation work shall support and cooperate with the liquidation group to urge the repayment of creditor's rights and to handle other liquidation matters, and shall organize the relevant departments to maintain the public security order according to law, to deal with the sudden incidents, to look into and punish illegal acts and to investigate for legal responsibilities of the relevant responsible personnel according to law. Article 14. The liquidation group shall, within 10 days from its establishment, notify in written form the creditors to declare the creditor's rights, and shall make public announcement on the newspapers for at least 3 times within 60 days. The creditors shall, within 30 days from the day of receiving the notification, and the creditors who haven't received the notification shall, within 90 days from the day of the first public announcement, declare the creditor's rights to the liquidation group. The liquidation group may decide that the depositors of small amount of deposits may not declare the creditor's rights, and that the liquidation group, based on the account books and relevant vouchers of the cancelled financial institution, confirm and register those deposits. Article 15. When declaring the creditor's right, a creditor shall explain the nature, amount and time of occurrence of his creditor's right, and shall provide the relevant certifications. The liquidation group shall examine the certifications of the declaration of creditor's rights to confirm whether there is guarantee and what the amount of guarantee is if there is, and shall separately register the creditor's rights with guarantee and the creditor's rights without guarantee. Article 16. If a creditor fails to declare the creditor's right within the prescribed period, that shall be treated according to the following provisions: (1) The creditor's right of the creditor already known shall be listed within the liquidation scope; and (2) The creditor's right of the creditor not yet known may be claimed for repayment before the distribution of liquidation property ends. If the distribution of liquidation property of the cancelled financial institution has already ended, no repayment may be claimed any more. Article 17. The calculation of interests of the debts of the cancelled financial institution shall be stopped from the day on which the decision of cancellation takes effect. Article 18. The following property of the cancelled financial institution shall be taken as the liquidation property to pay off the debt: (1) All the property of the cancelled financial institution from the day on which the liquidation starts, including the capital contributed by its shareholders and other rights and interests of them, the property of its sole subsidiary companies and the shares invested by it; (2) The property legally acquired by the cancelled financial institution during the liquidation; and (3) Other property of the cancelled financial institution. The acts of the cancelled financial institution to transfer in bad faith or to transfer in disguised form its property before the day on which the decision of cancellation takes effect shall be invalid; the liquidation group shall be responsible for taking back the property transferred in bad faith or in disguised form, and the property shall be included in the liquidation property. Article 19. When cleaning up the property of a cancelled financial institution, the liquidation group shall evaluate the actual value of its property according to law; where there is any property loss, the amount lost shall be verified. Article 20. The liquidation group may sell the valid assets of the cancelled financial institution according to law; where the valid assets of the cancelled financial institution is auctioned, the auction base price shall be determined according to the evaluation result issued by an intermediary agency with the qualification for assets evaluation. The "valid assets" mentioned in the preceding paragraph shall refer to the property of the cancelled financial institution that have actual value after the cleaning-up and verification. Article 21. The cleaning-up and disposition of property of the cancelled financial institution shall be exempted from taxation and administrative charges. Article 22. After cleaning up and verifying the property of a cancelled financial institution, the liquidation group shall make the liquidation scheme. The liquidation scheme shall include the status of the creditors, the amount of creditor's rights, the amount of liquidation property, the amount to pay the principals and legal interests of personal deposits, the amount to pay off other debts, etc., and the balance sheet, property list, assets evaluation report, etc. shall be attached. The liquidation scheme shall be reported to the People's Bank of China for confirmation after the liquidation group consults with the creditors. CHAPTER IV DEBTS REPAYMENT Article 23. A cancelled financial institution shall, in the liquidation, pay the principals and legal interests of personnel deposits first. Article 24. The remaining liquidation property after a cancelled financial institution pays the principals and legal interests of personal debts shall be used to pay off the debts owed to legal persons and other organizations. Article 25. The remaining liquidation property after a cancelled financial institution pays off the debts shall be distributed according to the proportion of capital contribution of the shareholders or the proportion of shares held by the shareholders. CHAPTER V REGISTRATION REMOVAL Article 26. After the liquidation ends, the liquidation group shall make the liquidation report, the report forms of income and expense occurring during the liquidation and various kinds of financial account books, and submit them to the People's Bank of China for confirmation. Article 27. After the liquidation ends, the liquidation group shall go through the procedures for writing off the registration at the department of industry and commerce administration, the qualification of the shareholders of the cancelled financial institution shall be terminated, the cancelled financial institution shall be disbanded immediately and the People's Bank of China shall make the public announcement. Article 28. After the registration is written off, the agency designated by the People's Bank of China shall be responsible for keeping the various kinds of account vouchers, account books, financial statements and other materials, and the important documents related to the business and liquidation of the cancelled financial institution. Article 29. The auditing organ shall make the auditing of the principal of a cancelled financial institution. CHAPTER VI LEGAL RESPONSIBILITIES Article 30. If the senior managerial personnel and other relevant personnel of a cancelled financial institution take advantage of their posts to accept money and goods from others, to grant loans against the law, to illegally issue financial bills, or to practice favoritism and frauds and thus cause the cancellation of the cancelled financial institution, they shall be investigated for criminal responsibilities according to the provisions of the Criminal Law on the crime of bribery, the crime of granting loans against the law, the crime of illegally issuing financial bills, the crime of causing bankruptcy or loss by practicing favoritism and frauds or other crimes; where the circumstances are not serious enough for criminal penalties, they shall be given the discipline punishment of removal or even dismissal, and may not assume the senior managerial posts or the posts equal to their original posts in any financial institution for their lifetime. Article 31. If any working staff of the People's Bank of China examines and approves the financial institutions against the law, fails to supervise and administrate the financial institutions according to law, fails to investigate and punish the illegal acts according to law and the circumstances are serious, and thus causing the cancellation of the financial institution, he shall be investigated for criminal responsibilities according to the provisions of the Criminal Law on the crime of abusing powers, the crime of neglecting duties or other crimes; where the circumstances are not serious enough for criminal punishment, he shall be given the administration punishment of recording a special demerit, demotion or removal. Article 32. If any working staff of state organs illegally intervenes in the normal business of a financial institution and is directly responsible for the cancellation of that financial institution, he shall be investigated for criminal responsibilities according to the provisions of the Criminal Law of the crime of abusing powers or other crimes. If the circumstances are not serious enough for criminal penalties, he shall be given the administrative punishment of recording a special demerit, demotion or removal. Article 33. If any working staff of the cancelled financial institution during the liquidation commits any of the following acts, he shall be investigated for criminal responsibilities according to the provisions of the Criminal Law on the crime of disrupting public service, the crime of disrupting liquidation or other crimes. If the circumstances are not serious enough for criminal penalties, he shall be given the discipline punishment of removal or even dismissal: (1) Frustrating the liquidation group from performing the duties according to law; (2) Refusing to provide information or providing false information; (3) Spiriting the capital away or hiding the property to evade debts; or (4) Transferring in bad faith or transferring in disguised form the property of the cancelled financial institution. Article 34. If a cancelled financial institution illegally engages in business activities after the decision on cancellation takes effect, the People's Bank of China shall ban it according to the Measures on Banning the Illegal Financial Institutions and Illegal Financial Business Activities; investigate the criminal responsibilities according to the provisions of the Criminal Law on the crime of illegally absorbing public deposits or other crimes. If the circumstances are not serious enough for criminal penalties, administrative punishment shall be given. Article 35. If any staff member of the liquidation group abuses the powers, neglects the duties or practices favoritism in the liquidation and thus causes property losses and damages the interests of the creditors, his criminal responsibilities shall be investigated for according to the provisions of the Criminal Law on the crime of neglect of duties or other crimes. If the circumstances are not serious enough for criminal penalties, the administrative punishment or discipline punishment of demotion or even dismissal shall be given. Article 36. If any staff member of the People's Bank of China and other relevant personnel divulges the state secrets or the commercial secrets he knows when performing the duties according to these Regulations, he shall be investigated for criminal responsibilities according to the provisions of the Criminal Law on the crime of divulging state secrets, the crime of infringing commercial secrets or other crimes. If the circumstances are not serious enough for criminal penalties, administrative punishment or discipline punishment of demotion or even dismissal shall be given. Article 37. If an entrusted agency fails to perform the entrusted duties and thus causes property losses to the cancelled financial institution, it shall bear civil liabilities, and discipline punishment shall be given to its personnel in charge and other directly responsible personnel. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 38. These Regulations shall come into force as of December 15, 2001. |
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