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In order to regulate the external guaranties provided by listed companies as well as the examination and approval of financial institutions in the banking sector on the loans as guaranteed by listed companies and effectively prevent the risks arising from the external guaranty of listed companies and the credit risks of financial institutions, and, according to the provisions of the laws and regulations such as the Company Law of the People's Republic of China, the Securities Law of the People¡¯s Republic of China, the Measures of the People's Republic of China for the Supervision and Administration of the Banking Sector, and the Guaranty Law of the People's Republic of China, we hereby notify the relevant issues concerning the external guaranty as provided by listed companies as follows: I. We should regulate the external guaranty as provided by listed companies and strictly control the risks that may arise therefrom. (1) Any external guaranty as provided by a listed company shall be subject to the deliberation of the board of directors or the shareholders' assembly. (2) The authority of the shareholders' assembly or the board of directors regarding the examination and approval of an external guaranty as well as the responsibility assuming system in the case of any violation of the said authority of examination and approval or the procedures for examination and deliberation shall be indicated in the Constitution of a listed company. (3) A external guaranty subject to the examination and approval of the shareholders' assembly shall be subject to the deliberation of the board of directors before it is submitted to the shareholders' assembly for examination and approval. A external guaranty that shall be subject to the examination and approval of the shareholders' assembly shall include but not be limited to the following circumstances: 1. Any guaranty as provided after the total amount of the external guaranty of a listed company and its controlling subsidiary companies exceeds 50% of the net assets upon the latest auditing; 2. A guaranty as provided to a guaranteed party whose asset-liability ratio exceeds 70%; 3. A guaranty, in which the amount of a single guaranty exceeds 10% of the net asset upon the latest auditing; and 4. A guaranty as provided to a shareholder, actual controller or the relevant associated party. Where the shareholders' assembly deliberates on a guaranty to be provided by a shareholder, actual controller or the relevant associated party, the shareholder, actual controller or the relevant associated party shall not take part in the voting. A resolution shall be approved by more than half of the other voting shareholders who attend the shareholders' assembly. (4) As to a external guaranty subject to the examination and approval of the board of directors, it shall be subject to approval by more than 2/3 votes of the directors who attend the board of directors upon deliberation, and a resolution shall be made thereafter. (5) An external guaranty subject to the deliberation and approval of the board of directors or the shareholders' assembly of a listed company shall be disclosed in a newspaper for information disclosure as designated by China Securities Regulatory Commission in a timely manner. The content as disclosed shall include the resolution of the board of directors or the shareholders' assembly as well as the total amount of external guaranty of a listed company and its controlling subsidiary companies and the total amount of the guaranty as provided by a listed company to its controlling subsidiary companies until the day when the information is disclosed. (6) Where a listed company undertakes the business operation of providing guaranty for loans, it shall submit such materials as the Company Constitution, the original of the resolution of the board of directors or the shareholders' assembly concerning the guaranty and the designated newspaper, on which the relevant issues concerning the guaranty are published. (7) The external guaranty as provided by a controlling subsidiary company of a listed company shall be implemented according to the aforesaid provisions. The controlling subsidiary company shall, after its board of directors or its shareholders' assembly makes the relevant resolution, inform the listed company of performing the obligations on information disclosure in a timely manner. II. We should regulate the examination and approval of financial institutions in the banking sector for loan guaranties and effectively prevent the credit risks arising from the loans guaranteed by listed companies and granted by financial institutions. (1) All the financial institutions in the banking sector shall, in strict accordance with such laws and regulations as the Guaranty Law of the People's Republic of China, the Company Law of the People's Republic of China, and the Interpretation of the Supreme People's Court on Some Issues Concerning the Application of the Guaranty Law of the People's Republic of China, intensify the examination of the application for loan as guaranteed by a listed company, effectively prevent the relevant credit risks and shall upload the information on loans and guaranties into the administrative system of credit investigation in a timely manner. (2) All financial institutions in the banking sector shall, according to the present Circular, the Constitution of the listed companies concerned as well as other relevant provisions, earnestly examine the following matters: 1. Completeness and compatibility with relevant laws and regulations of the application materials as provided by the listed company for any loan it guarantees; 2. Performance of the listed company concerning the procedures for the examination and approval of the board of directors or the shareholders' assembly on its external guaranty; 3. The performance of the listed company concerning its obligation of information disclosure; 4. The guaranty capability of the listed company; and 5. Any other matter regarding the accommodator's creditworthiness and payment capability. (3) The financial institutions in the banking sector shall, according to such provisions as the Guidance for Commercial Banks on the Fulfillment of Credit Work, improve the internal controlling system so as to control their credit risks. (4) Any application for loans as guaranteed by a controlling subsidiary company of a listed company shall be implemented according to the aforesaid provisions. III. We should intensify the supervision and coordination and intensify the responsibility prosecution for any rule-breaking provision of external guaranty by listed companies. (1) China Securities Regulatory Commission and its dispatched offices shall intensify supervision and coordination with China Banking Regulatory Commission and the dispatched offices thereof, implement the pooling of information, jointly establish a supervision and coordination mechanism, jointly intensify the prosecution of the violation of any listed company by concealing any information on guaranty or rule-breaking guaranty or any violation of a financial institution in the banking sector by unlawfully granting any loan and affix legal liabilities to the relevant parties concerned according to law. (2) Where a listed company or any of its senior managers such as director, supervisor or manager violates the provisions of the present Circular, China Securities Regulatory Commission shall order it to make rectification and correction, and give punishment thereto according to law. Where any suspected crime is involved therein, it shall be transferred to the judicial organ for handling. (3) Where any financial institution in the banking sector violates any law or regulation, China Banking Regulatory Commission shall give a punishment to the relevant institution and the parties concerned. Where any suspected crime is involved therein, they shall be subjected to legal liabilities by means of transfer to the judicial organ. IV. Other Matters (1) All listed companies shall, according to the aforesaid provisions, revise and improve their company constitutions. All financial institutions in the banking sector shall incorporate the external guaranty of the listed companies into the uniform credit granting system and carry out examination and approval as well as administration according to the relevant provisions. (2) The term "financial institutions in the banking sector" as mentioned in the present Circular shall be defined according to that as used in the Law of the People's Republic of China on Supervision and Administration in the Banking Sector. The term "external guaranty" as mentioned herein refers to the guaranty as provided by a listed company to others, including the guaranty as provided by a listed company to its controlling subsidiary companies. The term "the total amount of the external guaranty of a listed company and its controlling subsidiary companies" as mentioned herein refers to the summation of the total amount of the external guaranty of a listed company, including the guaranty as provided to its controlling subsidiary companies, and the total amount of the external guaranty as provided by its controlling subsidiary companies. (3) The provisions of the present Circular shall apply to all listed financial companies. (4) Where the Circular on the Relevant Issues concerning the Provision of Guaranty by Listed Companies to Others (No. 61 [2000] of China Securities Regulatory Commission) and the Circular on Some Issues regarding the Fund Flow Between a Listed Company and its Associated Parties as well as the External Guaranty Provided by a Listed Company (No. 56 [2000] of China Securities Regulatory Commission) has any conflict with the provisions of the present Circular, it shall be implemented according to the present Circular. V. The present Circular shall come into force as of January 1, 2006. |
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