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Article 1. The present Rules are formulated in accordance with the "Law of the People's Republic of China on the People's Bank of China", the "Administrative License Law of the People's Republic of China", the "Measures for the Implementation of the Administrative License of the People's Bank of China", the "Measures for the Administration of Bond Transactions in the Nationwide Inter-bank Bond Market" as well as other laws, regulations and rules for the purpose of regulating the check of circulation of bond transaction in the inter-bank bond market, and maintaining the lawful rights and interests of investors. Article 2. The term bond mentioned in the present Rules shall have the same meaning as that prescribed in the "Measures for the Administration of Bond Transactions in the Nationwide Inter-bank Bond Market" promulgated by the People's Bank of China. Article 3. The bonds for which an issuer applies for circulation of transaction in the inter-bank bond market (hereinafter referred to circulation of transaction) shall be reported to the People's Bank of China batch by batch for check. The relevant matters on circulation of transaction of short-term financial notes of securities companies shall be handled in accordance with the "Measures for the Administration of Short-term Financial Notes of Securities Companies" (Announcement No. 12 [2004] of the People's Bank of China). Article 4. In case an issuer applies for the circulation of transaction of bonds it has issued, the following conditions shall be met: (1) The bonds are lawfully and publicly issued; (2) The relationship of credits and debts has been established and registered; (3) The issuer has sound corporate governance and mechanism, and has no major violations of any law or rule two years prior to the application; (4) The actual amount of bonds issued shall be no less than RMB 500 million Yuan; (5) The bonds held by a single investor shall not exceed 30% of the currently issued bonds; and (6) Other conditions prescribed by the People's Bank of China. Article 5. Where an issuer applies for circulation of transaction of the bonds it has issued, it shall submit the following documents to the People's Bank of China: (1) the application report for circulation of transaction; (2) the documents on the competent department's approval of bonds; (3) the articles of association on issuance of bonds or the announcement of issuance; (4) the report on the issuance of bonds; (5) a name list of the top 30 holders in terms of amount of bonds held (or a name list of the actual holders if there are less than 30 bond holders) ; (6) the issuer's audited financial reports of the previous two years and the statement on the major litigation matters involving the issuer; and (7) other materials required by the People's Bank of China. Article 6. Where the application materials are incomplete or do not conform to the legal forms, the People's Bank of China shall, either on site or within five days, inform the applicant once for all of the contents to be supplemented. If the application materials are complete and conform to the legal forms, or the issuer has supplemented all the application materials required, the People's Bank of China shall accept the application. If the People's Bank of China decides to accept the application, it shall, within 20 working days as of acceptance, make a written decision on approval or disapproval. Article 7. Where the People's Bank of China approves an application for circulation of bond transaction, it does not mean that the People's Bank of China has determined the investment value or investment risks of the bonds in any way, and the investors shall still attach importance to the issuer's basic conditions and the information disclosed, independently make judgments of the investment, and bear the investment risks by themselves. Article 8. The issuer shall, within 7 working days as of receipt of the approval documents, meanwhile provide the Nationwide Inter-bank Funding Center (hereinafter referred to the Inter-bank Center) and China Government Securities Depository Trust & Clearing Co. Ltd. (hereinafter referred to CDC) with the announcement on circulation of transaction, with the contents including those in Items (3) and (6) of Article 5 of the present Rules, the credit rating report of the current bonds, the statements on its follow-up rating arrangements, the statements on the guarantor's credit information, and the guaranty agreement (in case of guaranteed issuance) . Article 9. CDC may, immediately after receiving the approval documents, determine the elements of circulation of bond transaction, and meanwhile notify the Inter-bank Center. The Inter-bank Center and CDC shall, on the second working day as of receipt of the issuer's announcement on circulation of transaction, publish the following information to the market participants, and handle the circulation of bond transaction on the third working day: (1) the documents on the approval of circulation of bond transaction granted by the People's Bank of China; (2) the announcement on the circulation of bond transaction; (3) the elements of the circulation of bond transaction; and (4) other information required by the People's Bank of China. Article 10. An issuer shall, within the period of circulation of bond transaction, continuously disclose information to market participants in accordance with the provisions of the People's Bank of China. Article 11. An issuer shall, when submitting the application documents for bonds and disclosing information in accordance with legal provisions, abide by the following basic requirements: (1) The application documents submitted by the issuer in accordance with the legal provisions for circulation of bond transaction and the documents disclosed to market participants shall be authentic, accurate and entire, and shall not have any false record, misleading statement or major omission; (2) the information which the issuer ought to disclose shall include the announcement on circulation of bond transaction, the annual report, the temporary report, and the follow-up credit rating result; and (3) The matters in the information disclosed by the issuer such as accounting, legal affairs, asset valuation, etc. shall be subject to the examination and verification of the professional intermediary institution such as the accounting firm, law firm or asset valuation institution having the corresponding professional qualification, which shall also issue written opinions. Article 12. During the circulation of bond transaction, and before the information to be disclosed by the issuer is published, neither the issuer nor any relevant insider shall divulge any content therein. Article 13. During the circulation of bond transaction, the issuer shall, within 4 months as of the end of each accounting year, (the time limit may be extended upon consent of the People's Bank of China in case of a particular circumstance), disclose its annual report to the market participants. Article 14. An issuer shall, as soon as possible, announce the major events occurring during the circulation of bond transaction to the market participants, and make a report to the People's Bank of China. The term major events mentioned in the present Article shall include but not limited to the following events: (1) the breach of contract concerning major debts or insolvency of due debts; (2) major deficiency or major losses; (3) the issuer's capital decrease, merger, division, dissolution, escrow, suspension of business, and application for bankruptcy; (4) major lawsuits involving the issuer; and (5) the events of modification of the guarantor or the major changes in management or accounting (in case of guaranteed issuance). Article 15. An issuer shall make covenants with a credit rating institution regarding the relevant arrangements on follow-up rating, and shall, prior to July 31 of each year during the circulation of bond transaction, announce its follow-up rating report of the last year to the market participants. Article 16. An issuer's information shall be disclosed via www.chinamoney.com.cn, www.chinabond.com.cn or other news media designated by the People's Bank of China. Article 17. An issuer shall, by the third working day prior to the date of payment of bonds or to the due date, announce the relevant matters on payment of interest of bonds or on redemption, etc. Article 18. During the circulation of bond transaction, an issuer shall not make bond transactions by deeming the bonds it has issued as the underlying assets, unless the issuer redeems the bonds in advance according to the relevant provisions or the contract. Article 19. For the bonds approved for circulation of transaction, the circulation of transaction shall be terminated on the third working day prior to the due date. Article 20. Where an inter-bank bond market participant is under any of the following circumstances, it shall be penalized by the People's Bank of China in accordance with Article 46 of the "Law of the People's Republic of China on the People's Bank of China". With respect to each market participant that timely corrects the relevant illegal conduct on its initiative, it may, in accordance with Article 5 or 27 of the "Administrative Penalty Law of the People's Republic of China", be given a lighter or mitigated penalty. If the illegal conduct is minor and is corrected in time, and has caused no endangering consequence, no administrative penalty needs to be given: (1) The issuer makes bond transactions either without permission or by deeming in a disguised form the bonds it has issued as the underlying assets; the issuer fails to perform the information disclosure obligation in accordance with the provisions of the People's Bank of China, or the issuer or any relevant insider divulges the information to be disclosed during the circulation of bond transaction; or the issuer's conducts violate other provisions in the present Rules; (2) Without being permitted, the inter-bank bond market participant makes transactions of bonds which are issued publicly in accordance with the law but not approved for circulation of transaction; or (3) The Inter-bank Center or CDC fails to comply with the provisions to make circulation of bond transaction or arranges for circulation of bond transaction without permission; or the Inter-bank Center or CDC violates the information disclosure provisions. Article 21. The circulation of transaction of central government bonds, central bank bonds, and bonds of governmental development financial institutions shall subject to no batch by batch checks, instead, the relevant circulation of transaction matters shall be directly handled by the Inter-bank Center and CDC at the time prescribed by the People's Bank of China and pursuant to the procedures prescribed thereby, provided that the abovementioned bonds shall meet the requirements in Items (1), (2) and (4) of Article 4 of the present Rules. An issuer of the bonds of a governmental development financial institution shall, within 5 working days after the credits and debts have been registered, make a written report to the People's Bank of China on the issuance of the current bonds. An issuer of central government bonds or central bank bonds shall be exempted from the information disclosure and credit rating obligations, while an issuer of the bonds of a governmental development financial institution shall be exempted from the credit rating obligation. Article 22. The power and responsibility to interpret the present Rules shall remain with the People's Bank of China. Article 23. The present Rules shall come into force on December 15, 2004. |
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