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TABLE OF CONTENTS CHAPTER I GENERAL RULES CHAPTER II ESTABLISHMENT, ALTERATION, AND TERMINATION OF THE INSTITUTIONS CHAPTER III BUSINESS SCOPE, AND SUPERVISION AND ADMINISTRATION CHAPTER IV LEGAL LIABILITIES CHAPTER V SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL RULES Article 1. In order to adapt to the developments of the automobile finance service industry and to regulate non-bank finance institutions engaged in automobile finance business, the present Measures are enacted in accordance with the relevant laws and administrative regulations. Article 2. The term "automobile finance company" mentioned in the present Measures refers to a non-bank financial institution with enterprise legal person status that is established upon the approval of China Banking Regulatory Commission (CBRC) in accordance with the relevant laws and administrative regulations and the present Measures, and that provides loans for the buyers and sellers of automobiles within China. Article 3. CBRC is in charge of the supervision and administration of automobile finance companies. CHAPTER II ESTABLISHMENT, ALTERATION, AND TERMINATION OF THE INSTITUTIONS Article 4. The establishment of a automobile finance company shall be subject to the approval of CBRC. Without the approval of CBRC, no entity nor individual may arbitrarily establish any automobile finance company nor engage in the automobile finance business in any disguised forms, neither may they arbitrarily use in their names words such as "automobile finance" and "automobile credit" that indicates engagement in the automobile finance business. Article 5. A contributor to an automobile finance company shall satisfy the following conditions: (1) Being an enterprise with legal person status established within or outside of China according to law: In the case of a non-financial institution, its total assets of the latest year may not be less than 4 billion RMB or the equivalent in any freely convertible currency, and its annual business income may not be less than 2 billion RMB or the equivalent in any freely convertible currency. In the case of a non-bank financial institution, its registered capital may not be less than 300 million RMB or the equivalent in a freely convertible currency; (2) Having good business performance and having made profits successively for the recent 3 years; (3) Abiding by the law of its place of registration and having not committed any illegal or criminal acts; (4) Its principal contributor being an automobile enterprise or non-bank financial institution. The term "automobile enterprise" refers to an enterprise that produces or sells whole cars. The term "principal contributor" refers to the contributor that has contributed the most capital of which the amount is no less than 30% of the total equity of the automobile finance company to be established; (5) An enterprise with legal person status may not invest in two or more automobile finance companies; and (6) Other prudential conditions provided for by CBRC. Article 6. An automobile finance company established shall satisfy the following conditions: (1) Its registered capital meeting the minimum requirement provided for by the present Measures; (2) Having the articles of association in conformity with the requirements of the Company Law of the People's Republic of China and other relevant laws and the present Measures; (3) Having senior managerial personnel who are familiar with automobile finance and the relevant business; (4) Having sound organizational structure, management systems and risk control systems; (5) Having business sites, security measures and other facilities fit for the business operations; and (6) Other conditions provided for by CBRC. Article 7. The minimum requirement on the registered capital of an automobile finance company is 500 million RMB or the equivalent in a freely convertible currency. The registered capital shall be paid-up monetary capital. CBRC may adjust the minimum requirement on registered capital according to the developments of automobile finance business and the needs of prudential regulation, however, the amount may not be less than that prescribed in the preceding paragraph. Article 8. The establishment of an automobile finance company must undergo two phases, that is, preparation and start of business. If the materials submitted by the applicant for preparation and startup of business are written in different languages, the Chinese version shall prevail in case of any discrepancy. Article 9. To apply for preparation for the establishment of an automobile finance company, the principal contributor shall, as an applicant, submit the following materials to CBRC: (1) An application for establishment preparation, the contents of which shall include: the name of the automobile finance company to be established, the place of registration, the registered capital, the contributors and the amounts of their respective contributions, and the business scope; (2) The feasibility study report on establishment of the automobile finance company, the contents of which shall include: the market prospect analysis, the planning on future business development, the analysis of organizational structure and risk control ability, and the estimated scale of assets and liabilities and profits after 3 years from the company starts its business; (3) Articles of association of the automobile finance company (draft); (4) Particulars of the contributors, including their names, legal representatives, registered addresses, copies of business licenses, and business operations; (5) The contributors' balance sheets, statements of gains and losses, and statements of cash flows of the last 3 years which have been audited by statutory institutions; (6) Name list and resumes of the persons responsible for the preparation; and (7) Other documents to be submitted required by CBRC. Where the applicant is a foreign non-bank financial institution, it shall provide the written opinions of the financial authority of its place of registration. Where the applicant is a non-financial institution, it shall provide the credit rating report of the last year issued by a rating institution. Article 10. CBRC shall, within 6 months from the day of receiving the complete set of materials for establishment preparation, make a written reply on whether or not to approve the preparation. Article 11. The applicant shall finish the preparation work within 6 months from the day of receiving the document of approval of CBRC for establishment preparation. Where the preparation period needs to be extended for good reasons, the applicant shall file a written application for extension with CBRC before the expiration of the preparation period, and the period may be extended for 3 months upon approval. If the applicant fails to file the application for start of business upon expiration of the preparation period or the extended period, the former decision of approval for preparation shall be invalidated automatically. No business activities may be carried out in the name of the automobile finance company within the preparation period. Article 12. The applicant shall, before expiration of the preparation period or the extended period, file the application for start of business with CBRC, and submit the following documents and materials: (1) The report on completion of preparation work and the application for start of business; (2) The certificate of capital verification issued by a statutory capital verification institution of China, and the certificate of preliminary approval and registration of the name of the institution to be established issued by the industry and commerce authority; (3) Articles of association of the automobile finance company; (4) Name list and detailed resumes of the senior managerial persons to be appointed; (5) Names of the shareholders and the amounts of their contributions; (6) Rules and regulations on the business to be operated and the internal risk control system; (7) Certificates of safety examination of the place of business and other relevant facilities related to business operation issued by the relevant authorities; and (8) Other documents required by CBRC. Article 13. CBRC shall make the decision on whether or not to approve the start of business within 3 months from receiving the complete set of application documents and materials for start of business. Where approval is granted, CBRC shall notify the applicant in writing, issue to it the license for financial business, and ratify its business scope. Where approval is not granted, CBRC shall notify the applicant in writing and explain the reasons thereto. The applicant may start business only after it has, on the strength of the license for financial business, made the registration with the industry and commerce authority and drawn the Business License of Enterprise with Legal Person Status. If an automobile finance company fails to start business in 3 month from the day of receiving the business license without justified causes or stops business successively for 6 months after the start of business without authorization, CBRC shall withdraw the license for financial business of that company and make a public announcement. Article 14. An automobile finance company may not set up any branches. Article 15. CBRC shall apply the regime of ratification or record of the competence qualifications of the senior managerial personnel of automobile finance companies. The competence qualifications of the chairman of the board of directors, the general manager and vice general manager(s), the directors, and the chief financial director of an automobile finance company shall be reported to CBRC for examination and approval. The competence qualifications of other relevant senior managerial personnel and the procedures for approval or record thereof shall be provided for separately. Article 16. In the event of any of the following alterations, an automobile finance shall report to CBRC for approval: (1) Alteration of the company's name; (2) Alteration of the registered capital; (3) Alteration of the place of business; (4) Adjustment of the business scope; (5) Change of the organizational structure; (6) Adjustment of the equity structure; (7) Modification of the articles of association; (8) Alteration of senior managerial personnel; (9) Merger or division; or (10) Other alterations provided for by CBRC. Article 17. Where an automobile finance company terminates as a result of dissolution, cancellation according to law, or being declared bankruptcy, its liquidation shall be dealt with pursuant to the relevant laws and regulations. CHAPTER III BUSINESS SCOPE, AND SUPERVISION AND ADMINISTRATION Article 18. An automobile finance company may be engaged in some or all of the following RMB businesses upon approval: (1) Accepting deposits of 3-month or longer term from shareholder entities within China; (2) Providing loans for purchase of automobiles; (3) Providing loans to automobile sellers for purchase of automobiles and operating equipment (including loans for construction of exhibition halls, for purchase of accessories, and for maintenance of equipment); (4) Transferring and selling the receivable payments for automobile loans; (5) Borrowing money from financial institutions; (6) Providing guarantee for automobile finance; (7) Agency business related to automobile financing activities; (8) Other credit businesses approved by CBRC. Article 19. An automobile finance company shall conform to the provisions of the relevant authorities on the administration of individual automobile loans when granting loans to natural persons; and shall abide by the requirements of the General Rules of Loans and other relevant provisions when granting automobile loans to legal persons or other organizations. Article 20. An automobile finance company may not issue bonds to or borrow money from overseas without approval of the relevant regulatory authorities. Where the establishment and business operations of the automobile finance company involve foreign exchange administration matters such as exchange administration, outward remittance of profits, granting automobile consumption loans to non-residents, and capital administration, the relevant regulatory authorities shall formulate relevant provisions in conjunction with the department of foreign exchange administration of the state. Article 21. Automobile finance companies shall be subject to the control of the ratio of risky assets to total capital. The capital adequacy of an automobile finance company may not be lower than 10%, and CBRC may raise the minimum standard of capital adequacy of a single company considering the risk status and risk management capacity of that company. Specific requirements on risk control and management in respect of other kinds of assets shall be separately provided for by CBRC. Article 22. An automobile finance company shall execute the relevant finance polices of finance enterprises. Article 23. An automobile finance company shall, pursuant to the provisions, prepare and submit to CBRC balance sheets, statements of gains and losses, statements of cash flows, and other statements required by CBRC, and shall submit the financial accounting report of the previous year within 3 months from the end of each fiscal year. An automobile finance company may not provide any falsified financial accounting report or any such report that conceals important facts. Article 24. An automobile finance company shall, by referring to the requirements of the Directives on Internal Control of Commercial Banks set forth by CBRC, establish and perfect its business management rules and internal control rules, and shall report to CBRC before implementing such rules. Article 25. An automobile finance company shall voluntarily subject itself to the on-site and off-site examinations conducted by CBRC. Article 26. CBRC may, on the grounds of the problems arising in routine regulation, raise enquiries against the legal representatives and other senior managerial personnel of automobile finance companies, and order those companies to make correction within a prescribed time limit. Article 27. An automobile finance company shall establish the system of fixed external auditing, and shall, within 6 months from the end of each fiscal year, submit to CBRC an annual auditing report confirmed by the legal representative with signature. Article 28. An automobile finance company shall, in emergent events such as difficulty in payment, take emergent self-rescue measures, and shall immediately report to CBRC. Article 29. If an automobile finance company is in any of the following cases, CBRC may order it to make rectification regarding the seriousness of the circumstances: (1) Where the loss of the current year exceeds 50% of the registered capital or the accumulated loss of 3 successive years exceeds 30% of the registered capital; (2) Having difficulty in payment; or (3) Having any other major business risks where CBRC deems rectification is necessary. Article 30. After ordering an automobile finance company to make rectification, CBRC may take any of the following measures with respect to that company: (1) Requiring or prohibiting the replacement of the senior managerial personnel of that company; (2) Suspending part of its business or prohibiting it from opening any new business; (3) Requiring it to increase capital within a prescribed time limit; (4) Ordering it to carry out restructuring by changing the equity structure; (5) Prohibiting distribution of dividends; (6) Any other measures that CBRC deems necessary. Article 31. If an automobile finance company satisfies the following conditions after rectification, it may end the rectification only after reporting to and obtaining approval from CBRC: (1) Its payment capacity has been restored; (2) The losses have been made up; and (3) The major business risks have been resolved. Article 32. The period of rectification of an automobile finance company may not exceed 1 year at the most, and it shall be ordered to withdraw from the market if it fails to achieve the objective of rectification after the said period. Article 33. Automobile finance companies may set up their trade self-regulatory organizations to carry out self-regulation. The self-regulatory organization shall subject it to the direction and supervision of CBRC in its activities. CHAPTER IV LEGAL LIABILITIES Article 34. If any party, without the approval of CBRC, establishes an automobile finance company or illegally engages in automobile finance business, it shall be banned by CBRC, shall be subject to criminal liabilities if a crime has been constituted. If the circumstances are not serious enough to constitute a crime, CBRC shall confiscate the illegal gains and impose on that party a fine ranging from 1 time to 5 times the amount of the illegal gains; and where there is no illegal gains, CBRC shall order that party to correct the act and impose on it a fine ranging from 100,000 Yuan to 500,000 Yuan. Article 35. If any institution, without the approval of CBRC, uses in its name words such as "automobile finance" and "automobile credit". that indicate engagement in the automobile finance business, CBRC shall order it to make correction and impose on it a fine of 1,000 Yuan. Article 36. If an automobile finance company engages in financial business activities beyond the business scope approved by CBRC, it shall be given a warning, with its illegal gains being confiscated, and shall be imposed on a fine ranging from 1 time to 5 times the amount of the illegal gains. Where there are no illegal gains, it shall be imposed on a fine ranging from 100,000 Yuan to 500,000 Yuan, and shall be subject to criminal liabilities if the crime of illegal business operation or any other crimes have been constituted. Article 37. If any automobile finance company, in violation of the relevant provisions of the present Measures, provides any falsified financial accounting report or any such report that conceals the important facts, CBRC shall give it a warning and impose on it a fine ranging from 100,000 Yuan to 500,000 Yuan concurrently. It shall be subject to criminal liabilities if the crime of providing falsified financial and accounting reports or any other crimes have been constituted. Article 38. If an automobile finance company, in violation of the relevant provisions of the present Measures, refuses or obstructs the supervision and examination conducted according to law, CBRC shall give it a warning and impose on it a fine ranging from 10,000 Yuan to 30,000 Yuan. Article 39. If an automobile finance company violates the present Measures and the circumstances are serious, apart from being punished pursuant to the relevant provisions of Articles 34 to 38 of the present Chapter, CBRC may disqualify the senior managerial personnel of that company as senior managerial personnel of financial institutions for 1 to 10 years or even for life. Article 40. Where an automobile finance company violates any other laws and regulations of China, the relevant authorities shall deal with it according to law. CHAPTER V SUPPLEMENTARY PROVISIONS Article 41. The present Measures shall be applicable to the automobile finance companies established in the mainland of China by the investors from Hong Kong Special Administrative Region, Macao Special Administrative Region, and Taiwan area. Article 42. The present Measures shall take effect as of October 3, 2003, and the power to interpret them shall remain with CBRC. |
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