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Chapter I General Provisions Article 1 For the purpose of intensifying the supervision and administration on rural mutual cooperatives, regulating their organization and activities, ensuring the lawful, steady and sound business operations of the rural mutual cooperatives, and improving the rural financial services, these Provisions are formulated in accordance with the Banking Supervision Law of the People¡¯s Republic of China. Article 2 The term ¡°rural mutual cooperative¡± refers to a community-based mutual banking financial institution which is jointly funded by the farmers of a township (town), administrative village, and a rural small enterprises upon approval of the CBRC and which provides their members with financial services such as deposits, loans and settlements. Article 3 A rural mutual cooperative shall be managed in a democratic manner by its members, aim to provide services to them and seek common interests for them. Article 4 A rural mutual cooperative is an enterprise with independent legal person status. It shall have the rights to possess, use, obtain proceeds from and dispose of the legal properties formed by the stock capital and capital accumulation of its members as well as other assets lawfully obtained by its members, and shall bear the liabilities for the debts with the aforesaid properties. Article 5 A rural mutual cooperative¡¯s legitimate rights and interests and lawful business operations shall be protected by law. No entity or individual may interfere in its operations. Article 6 A member of a rural mutual cooperative shall bear liabilities of this cooperative with its (his) stock capital and fund accumulation. Article 7 To carry out business operations, a rural mutual cooperative shall abide by the laws and administrative regulations of the state, implement the financial guidelines and policies of the state, be honest and faithful, operate prudently and be subject to the supervision and administration of the banking regulatory institutions in accordance with the law. Chapter II Establishment of Institutions Article 8 A rural mutual cooperative shall be established in a township (town) or village by way of promotion. Its name shall comprise of the administrative division of the place where it is located, trade name, industry involved and form of organization in sequence. Article 9 To establish a rural mutual cooperative, the following conditions shall be satisfied: (1)Having the articles of association which meet the relevant provisions; (2)Having 10 or more promoters who meet the member requirements of these Provisions; (3)Having the registered capital which meets the requirements of these Provisions. If it is to be established in a township (town), its registered capital shall not be less than 300, 000 yuan. If it is to be established in an administrative village, its registered capital shall not be less than 100, 000 yuan. The registered capital shall paid-in cash capital; (4) Having qualified directors, manager, and employees who meet the relevant requirements for practitioners; (5)Having a business place, safety guarantee measures and other business-related facilities which meet the relevant requirements; (6) Having the essential organizational structure and management rules; and (7)Other conditions as prescribed by the CBRC. Article 10 The establishment of a rural mutual cooperative shall be divided into two stages, namely, the preparatory establishment and the start of business. Article 11 For the preparatory establishment of a rural mutual cooperative, the applicant shall submit the following documents and materials: (1)An application for preparatory establishment; (2) A plan on the preparatory establishment; (3)The promoters agreement; and (4)Other documents and materials as required by the CBRC. Article 12 To apply for the start of business of a rural mutual cooperative, the applicant shall submit the following documents and materials: (1)An application for starting business; (2)A capital verification report; (3)A (draft) articles of association; (4) The main management rules; (5) The applications of the candidate director and manager for the qualifications to assume the positions, as well as qualification certifications of the said candidate director and manager; (6) The relevant materials for the business place and safety guarantee facilities; and (7) Other documents and materials as prescribed by the CBRC. Article 13 The articles of association of a rural mutual cooperative shall cover (1) its name and address; (2) business scope and business aim; (3) registered capital and setup of equities; (4) membership qualifications, admission, withdrawal and removal; (5) rights and obligations of a member; (6) organizational structure and its formation, powers, term of office, and rules of procedures; (7) financial management, distribution of surplus, and handling of losses; (8) dissolution causes and liquidation methods; and (9) other items necessary to be covered. Article 14 The application for the preparatory establishment of a rural mutual cooperative shall be subject to the acceptance and preliminary examination of the banking regulatory branch bureau and shall be decided by the banking regulatory bureau. The application for start of business thereof shall be accepted, examined and decided by the banking regulatory branch bureau. The application for the preparatory establishment of or start of business of a rural mutual cooperative to be established in a township (town) or administrative village locating in the same city of the banking regulatory bureau shall be accepted, examined and decided by this banking regulatory bureau. Article 15 A rural mutual cooperative approved to establish shall be granted a financial permit by the banking regulatory bureau and shall, upon the strength of the financial permit, go through the registration formalities in the administrative department for industry and commerce so as to obtain a business license. Article 16 No rural mutual cooperative may set up any branch. Chapter III Management of Members and Equities Article 17 The term ¡°members of a rural mutual cooperative¡± refers to the farmers and rural small enterprises who meet the share subscription requirements in these Provisions and who recognize and abide by the articles of association. The articles of association may also limit the members to the members of a certain rural economic organization. Article 18 A farmer to subscribe shares of a rural mutual cooperative shall satisfy the following conditions: (1) He has full civil capacity; (2)His permanent residence or habitual residence (having a fixed domicile where he has resided for three years or more) in the township (town) or administrative village where the rural mutual cooperative of which he has subscribed shares is located; (3)He has the self-owned capital of lawful sources as the fund for subscribing shares, which meets the minimum amount for subscribing shares as specified in the articles of association (4) He is honest and faithful and has a good reputation; (5)Other conditions as prescribed by the CBRC. Article 19 Where a rural small enterprise intends to subscribe any shares of a rural mutual cooperative, it shall meet the following conditions: (1)Having its registration place or principal business place in the township (town) or administrative village where the rural mutual cooperative of which it has subscribed shares is located; (2)Having good credit records; (3)Having a favorable balance for the previous year; (4)Having the net capital upon year-end distribution that amounts to 10% of all the assets (according to the criterion on the consolidated accounting statements); (5)Having the lawful self-owned capital as the fund for subscribing shares, which meets the minimum amount for subscribing shares as specified in the articles of association; and (6)Other conditions as prescribed by the CBRC. Article 20 No single farmer or rural small enterprise may hold shares of more than 10% of the total stock capital of a rural mutual cooperative. Any single farmer or rural small enterprise which intends to hold shares of more than 5% of the total stock capital of a rural mutual cooperative shall be subject to the approval of the banking regulatory institution. A member shall subscribe shares in cash. It (he) shall not subscribe any shares in kind, loans or by any other means. Article 21 A rural mutual cooperative shall issue to each member a registered stock capital certificate as the voucher for share subscription. Article 22 A member of a rural mutual cooperative shall enjoy the following rights: (1) To attend the general meeting of members, have the rights to vote, elect and being elected, and to participate in the democratic management of this cooperative according to the articles of association; (2) To enjoy the services furnished by this cooperative; (3) To share the surplus according to the articles of association or under the resolution of the general meeting of members or general meeting of the members¡¯ representatives; (4) To consult the articles of association of this cooperative, the resolutions of the general meeting of members (general meeting of the members¡¯ representatives), or of the council, or of the board of supervisors, as well as the financial statements and reports; (5)To file complaints and expose relevant information to the relevant regulatory institution; and (6)Other rights as prescribed by the articles of association. Article 23 Each member of a rural mutual cooperative shall be entitled to the basic voting right of one vote when attending the general meeting of members. The members, whose amount of capital contribution to this cooperative is relatively large, may enjoy additional voting rights under the articles of association. The total number of the additional voting rights of this cooperative shall not exceed 20% of the total number of basic voting rights of the members of this cooperative. When holding a general meeting of members, the members attending the meeting shall be informed of the members who have the additional voting rights and the number of the additional voting rights. The articles of association may restrict the scope of exercise of the additional voting rights. The agent of a member may attend the general meeting of members and enjoy cast one vote. Any member (members¡¯ representative) who is unable to attend the general meeting of members may authorize any other member (members¡¯ representative) to exercise its (his) voting right on its (his) behalf. The authorization shall be in writing and indicate what are authorized. Article 24 Each member of a rural mutual cooperative shall perform the following obligations: (1)To execute the resolutions of the general meeting of members or of the general meeting of the members' representatives; (2) To make capital contributions under the articles of association; (3)To make full payment for the principal and interests of the loans as scheduled; (4) To bear losses under the articles of association; (5)To actively provide information to this cooperative; and (6)To assume other obligations as specified in the articles of association. Article 25 No member of any rural small cooperative may use the stock capital of this cooperative, which it (he) holds, as a collateral for itself (himself) or others. Article 26 The stock capital and fund accumulation of a member of a rural mutual cooperative may be transferred, inherited and bestowed, but the stock capital or fund accumulation of any director, supervisor or manager shall not be transferred during his term of office. Article 27 If the following conditions are satisfied simultaneously, a member may withdraw its (his) shares: (1)The member files an application for withdrawing its (his) total shares; (2)The rural mutual cooperative has a favorable balance in the current year; (3)The post-share-withdrawal capital adequacy ratio of the rural mutual cooperative is not less than 8%; and (4)This cooperative has no outstanding loan principal or interest. Where a member as a farmer or rural small enterprise intends to withdraw his or its shares, a request shall be made to the council or manager 3 months in advance in the case of a farmer member or 6 months in advance in the case of a rural small enterprise member, and the share withdrawal formalities shall be gone through upon approval. After a member has finished the formalities for the withdrawal of his or its shares, his or its membership terminates. Article 28 Any contract concluded between a member and the rural mutual cooperative before the termination of membership shall be performed continuously, unless it is otherwise provided for in the articles of association or it is otherwise stipulated by this member and this cooperative. Article 29 After a member terminates his (its) membership, the rural mutual cooperative shall, according to the ways, time limit and procedures as described in the articles of association, timely refund the stock capital and fund accumulation of this member. Where a member terminates his (its) membership, he (it) does not enjoy the distribution of surplus of the current year. Chapter IV Organizational Structure Article 30 The general meeting of members of a rural mutual cooperative is formed by all members. It is the power body of this cooperative. If there are more than 100 members, at least 31 members shall be elected by all members to form the general meeting of members¡¯ representatives. The general meeting of members¡¯ representatives shall exercise their powers according to the articles of association. The general meeting of members (members¡¯ representatives) may exercise the following powers: (1)To formulate or modify the articles of association; (2)To elect and change any director, supervisor, or manager if there is no council; (3)To deliberate the basic management rules; (4)To deliberate and approve the annual work reports; (5)To deliberate and decide the purchase of fixed assets and other important business activities; (6)To deliberate and approve the plans on the annual financial budget, final accounts, profit distribution as well as loss recovery; (7)To deliberate and decide the wages and remuneration of the manager and other employees; (8)To make resolutions of merger, split-up, dissolution and liquidation; and (9)Other powers as prescribed in the articles of association. Article 31 Where a rural mutual cooperative holds a general meeting of members (members¡¯ representatives), the number of members (members¡¯ representatives) attending the general meeting shall reach 2/3 or more of the total number thereof. An election or resolution made by the general meeting of members (members¡¯ representatives) shall be subject to the consent of more than half of all the voting rights of the members (members¡¯ representatives) of this cooperative. A resolution about amending the articles of association, or about the merger, split-up or dissolution of the cooperative shall be subject to the consent of 2/3 or more of all the voting rights of the members of this cooperative. If there is a higher requirement in the articles of association, the articles of association shall prevail. Article 32 The general meeting of a rural mutual cooperative shall be held at least once a year under the articles of association. An interim general meeting of members shall be convened within 20 days in any of the following circumstances: (1) It is so proposed by 1/3 or more of the members; (2) It is so proposed by the council or by the board of supervisors or by the manager; or (3) Other circumstances as described in the articles of association. Article 33 The general meeting of members (members¡¯ representatives) of a rural mutual cooperative shall be convened by the council. If there is no council, it shall be convened by the manager. All members shall be informed of the time, place and deliberation items 15 days before the said general meeting is held, unless it is otherwise provided for by the articles of association. Article 34 Where a rural mutual cooperative holds a general meeting of members (members¡¯ representatives), the council shall, 5 working days in advance, notify the local banking regulatory institution. The banking regulatory institution has the power to attend the said general meeting. Any resolution of the general meeting of members (members¡¯ representatives) or of the council shall, within 10 days after the end of meeting, be submitted to the banking regulatory institution for archival purposes. Article 35 No rural mutual cooperative is required to establish a council in principle. If a council is established, it shall have at least 3 directors and 1 director-general. The director-general shall be the legal representative. The functions and rules of procedures of the council shall be prescribed in the articles of association. Article 36 A rural mutual cooperative shall have 1 manager (which may be assumed by the director-general concurrently). If there is no council, the manager shall be the legal representative. The manger shall, according to the articles of association and authorization of the general meeting of members (members¡¯ representatives), be responsible for the business management of this cooperative. Upon approval of the council or board of supervisors, the manager may hire (dismiss) the employees for the financial and credit work. Article 37 The qualifications for the post of director or manager of a rural mutual cooperative shall be subject to the examination and approval of the local banking regulatory institution. The director-general or manager of a rural mutual cooperative shall have an educational background of high school or technical secondary school or higher, and pass the corresponding professional qualification examination before taking the post. Article 38 A rural mutual cooperative shall establish a board of supervisors, which is formed by members, donors, financial institutions which provide funds to it, as well as other interested parties. The board of supervisors shall have at least 3 persons and 1 director-general. It shall supervise over the business activities of the rural mutual cooperative according to the articles of association and authorization of the general meeting of members (members¡¯ representatives). Its functions and rules of procedures shall be prescribed in the articles of association. The manager or any employee of the rural mutual cooperative may concurrently assume the post of supervisor. Article 39 No director, supervisor, manage or employee of a rural mutual cooperative may conduct any of the following acts: (1) To usurp, misappropriate or illegally distribute any assets of this cooperative; (2) To lend the fund of this cooperative to non-member persons or entities, or furnish security for others with assets of this cooperative by violating the articles of association or without approval of the general meeting; or (3) To commit any other act which impairs the economic benefits of this cooperative. The income obtained from any violation of the provisions of the preceding paragraph shall be attributed to this cooperative. If any loss is caused to this cooperative, the violator shall be liable for compensation. Article 40 Any person executing the official affairs relating to the businesses of a rural mutual cooperative shall not assume the post of director-general, manager or employee of this rural mutual cooperative. Chapter V Business Management Article 41 A rural mutual cooperative shall be capitalized by members¡¯ deposits, external endowments, and funds from other financial institutions. Where a rural mutual cooperative intends to accept an endowment, the local banking regulatory institution shall examine the identity of the donor as well as the lawfulness of the source of fund. Where a rural mutual cooperative intends to provide a fund to any other financial institution, it shall satisfy the prudent conditions of these Provisions. Article 42 The capital of a rural mutual cooperative shall mainly be utilized to grant loans to its members, or deposit in other banking institutions or purchase government bonds and financial bonds if it is enough to satisfy members¡¯ funding demand. If the rural mutual cooperative intends to grant a large sum of loan, purchase government bonds or financial bonds, or provide a fund to any other banking financial institution, it shall consult the opinions of the council or board of supervisors in advance. Article 43 A rural mutual cooperate may engage in the settlement of businesses, and may enage in different kinds of vicegerent businesses in accordance with the relevant provisions. Article 44 To engage in any other business, a rural mutual cooperative shall be subject to the approval of the local banking regulatory institution and other relevant departments. Article 45 A rural mutual cooperative shall not receive deposits from or grant loans to non-member persons or entities, or provide other kinds of financial services, neither could it furnish security for other persons or entities with its own assets. Article 46 A rural mutual cooperative shall, according to its business operation needs and taking into consideration the safety factor, reasonably determine the limitation of cash on hand according to a certain proportion of the total amount of deposits and stock capital. Article 47 A rural mutual cooperative shall operate prudently and strictly manage the risks: (1)The capital adequacy ratio shall not be less than 8%; (2)The total amount of loans granted to a single member shall not exceed 15% of the net amount of capital; (3)The total amount of loans granted to a single rural small enterprise member and its affiliated enterprises who are members of the cooperative, or to a single farmer member and to other members on the same register of permanent residence shall not exceed 20% of the net amount of capital; (4)The total amount of the loans granted to the 10 biggest borrowers shall not exceed 50% of the net amount of capital; (5)The asset loss provision adequacy ratio shall not be less than 100%; and (6)Other prudent conditions as prescribed by the banking regulatory institution. Article 48 A rural mutual cooperative shall implement the financial system and accounting rules of the state for financial enterprises, set up accounting items and statutory accounting books, and conduct accounting computation. Article 49 A rural mutual cooperative shall, according to the accounting rules, make a provision for the non-performing debts, and distribute the profits by observing the principle of more accumulation and sustainability. If a rural mutual cooperative has any undistributed profit (loss) during the current year, it shall include the full amount into the accumulation of members and compute the each member¡¯s share of it on the basis of its (his) stock capital. Article 50 The board of supervisors of a rural mutual cooperative shall be responsible for the internal audit of this cooperative, conduct special audits on the director-general and manger as well as audits on their leaving their posts and report the audit results to the general meeting of members (members¡¯ representatives). The general meeting of members (members¡¯ representatives) may also hire an intermediary institution to audit this cooperative. Article 51 A rural mutual cooperative shall, according to the relevant provisions, disclose to the members the information about the members¡¯ stock capital and accumulations, financial statements, loans, business risks, investments, financing, profits, distributions of profits, cases and other important events. Article 52 A rural mutual cooperative shall, submit business and financial statements, reports and other relevant materials to the local banking regulatory institution and shall be responsible for the genuineness, correctness and completeness thereof. Chapter VI Supervision and Administration Article 53 A local banking regulatory institution shall, according to the requirements for prudent supervision, carry out continuous and dynamic supervision over rural mutual cooperatives. Article 54 A banking regulatory institution shall, according to the capital adequacy ratio and asset risk status of a rural mutual cooperative, take different supervisory measures: (1) If the rural mutual cooperative¡¯s capital adequacy ratio is more than 8% and its bad loan ratio is less than 5%, it may provide funds to other banking financial institutions, the local banking regulatory department may put forward corresponding restrictive measures according to its operation status and credit standing. The banking regulatory institution may properly reduce the on-site inspection frequency; (2)If the rural mutual cooperative¡¯s capital adequacy ratio is less than 2%, the banking regulatory institution shall prohibit it from funding any other banking financial institution, restrict its issuance of loans and intensify off-site supervision and on-site inspections; or (3)If the rural mutual cooperative¡¯s capital adequacy ratio is less than 2%, the banking regulatory institution shall order it to increase its stock capital, clear and collect its bad loans and reduce its asset scale within a time limit. If it fails to do so, the banking regulatory institution may require it to dissolve by itself or may cancel it. Article 55 Where a rural mutual cooperative violates other prudent requirements, the banking regulatory institution shall order it to make a rectification within a time limit and take corresponding supervisory measures. Article 56 Where a rural mutual cooperative violates any relevant law or regulation by carrying out any business operation beyond its business scope, conducting any business operation that is not recorded in its account, establishing any branch or illegally changing any statutory modification items, the banking regulatory institution shall order it to make a correction and punish it in pursuance of the Banking Supervision Law of the People¡¯s Bank of China, the Measures for the Punishment of Illegal Financial Acts, and other laws and regulations. Where any director, manager or employee commits any violation, the banking regulatory institution may order the rural mutual cooperative to give it a sanction, and, according to different circumstances, disqualify the director or manager from taking such post for a certain period or even for his lifetime. If any crime is constituted, it may transfer him to the judicial organ for criminal liabilities. Article 57 A banking regulatory institution shall, according to its power, decide the punishments as described in these Measures and organize to execute them. Where any party concerned refuses to accept the punishment decision, it may file an administrative reconsideration application to the institution which is superior to the banking regulatory institution which makes the decision of punishment. If it refuses to accept the decision of administrative reconsideration, it may lodge an administrative lawsuit in the people¡¯s court. Chapter VII Merger, Split-up, Dissolution and Liquidation Article 58 For the merger of a rural mutual cooperative, the creditors shall be notified of the merger resolution within 10 days after it is made. The credits and debts of all parties concerned to the merger shall be inherited by the organization which survives after the merger or which is newly established. Article 59 For the split-up of a rural mutual cooperative, its properties shall be divided correspondingly and the creditors shall be notified of the split-up resolution within 10 days after it is made. The organizations after the split-up shall bear joint and several liabilities for the debts incurred prior to the split-up, unless it is otherwise stipulated in the debt settlement agreements in writing reached between the rural mutual cooperative and the creditors prior to the split-up. Article 60 A rural mutual cooperative shall be dissolved for the following reasons: (1)Any of the dissolution reasons as described in the articles of association occurs; (2)The general meeting of members makes a resolution on dissolution; (3)It is necessary to be dissolved due to merger or split-up; or (4)Its business license is withdrawn or revoked. If a rural mutual cooperative dissolves for the reason as mentioned in Item (1) or (2) or (4) in the preceding paragraph, the general meeting of members shall, within 15 days after the occurrence of the said dissolution reason, choose some members to form a liquidation team to start the liquidation for dissolution. If no liquidation team is formed within the time limit, the members and creditors may file an application with the people¡¯s court for designating some members to form a liquidation team to conduct the liquidation. Article 61 A liquidation team shall take over the rural mutual cooperative from the day when it is formed. It shall be responsible for dealing with the pending businesses relating to the liquidation, settle the properties, credits and debts, distribute the surplus properties after settling the debts, participate in the lawsuit, arbitration or any other legal proceeding on behalf of the rural mutual cooperative. Article 62 If the rural mutual cooperative dissolves for the reason as mentioned in Paragraph 1 of Article 60, no member may withdraw its (his) stock capital from this cooperative. Article 63 The liquidation team is responsible for working a liquidation plan, which includes the settlement of wages and social insurance premiums of the employees of the rural mutual cooperative, the payments of outstanding taxes and other debts, and the distribution of the remnant properties. The liquidation plan shall be executed after it is adopted by the general meeting of members. Article 64 The members of the liquidation team shall be dutiful. They shall perform their liquidation obligations. If their intentional or gross negligence causes any loss to any of the members or creditors of the rural mutual cooperative, they shall be liable for compensation. Article 65 Where a rural mutual cooperative is to be terminated for the reason of dissolution or cancellation, it shall hand back the financial permit to the issuing organ, timely go through the deregistration formalities in the administrative department for industry and commerce, and shall make an announcement. Chapter VIII Supplementary Provisions Article 66 The term ¡°rural areas¡± as mentioned in these Provisions refers to the counties (cities) and areas at and below the county (city) level in the central and western regions, northeast regions, and Hainan Province, the poverty-ridden counties of other provinces (autonomous regions and municipalities) as determined by the state and the poverty counties as determined by the provinces, as well as the areas at and below the county level. Article 67 The power to interpret these Provisions shall remain with the CBRC. Article 68 These Provisions shall come into force as of the date of promulgation. |
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