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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II ESTABLISHMENT OF INSTITUTIONS CHAPTER III ESTABLISHMENT OF STOCK RIGHTS CHAPTER IV ORGANIZATIONS AND INSTITUTIONS CHAPTER V BUSINESS OPERATIONS AND MANAGEMENT CHAPTER VI MODIFICATIONS AND TERMINATION CHAPTER VII PENALTY PROVISIONS CHAPTER VIII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. In order to protect the legitimate rights and interests of the rural commercial banks, depositors and other clients, to regulate the acts of rural commercial banks, to strengthen the supervision and management and to ensure that rural commercial banks operate steadily and soundly, the present Provisions are formulated in accordance with the Law of the People's Republic of China on Commercial Banks and the Company Law of the People's Republic of China. Article 2. A rural commercial bank is a local financial institution promoted and established by farmers, rural industrial and commercial entities, legal person enterprises and other economic organizations on the basis of cooperative shares system. Its main task is to provide financial services for farmers, agriculture and rural economic development, and to promote the harmonious development of urban and rural economy. Article 3. Rural commercial banks shall be established mainly on the basis of the rural credit cooperatives and the rural credit cooperative unions of the counties (cities). The present Provision shall be applicable to the establishment of rural commercial banks at (above) the level of county (city). Article 4. A rural commercial bank is an independent enterprise with legal person status, which shall be entitled to enjoy the entire property right of the legal person formed by the capital contributions of the shareholders and the civil rights thereof pursuant to law, and shall bear independent civil liabilities with all the assets of legal person. The shareholders of a rural commercial bank shall be entitled to enjoy the returns on the assets of the proprietors, to participate in making important decisions and to choose managerial personnel in proportion to their respective shares, and shall be liable for the debts of the rural commercial bank to the extent of all their shares. Article 5. A rural commercial bank shall consider the benefits, safety and fluidity as its operational principle, shall conduct independent business management, bear risks by itself, and assume sole responsibility for its profits or losses and discipline itself. A rural commercial bank shall operate in accordance with the law, with which no entity or individual may interfere. Article 6. A rural commercial bank shall ensure that none of the legitimate rights and interests of the depositors is infringed on by any entity or individual. Article 7. Rural commercial banks shall abide by the laws and administrative regulations of the state, shall implement the financial guidelines and policies of the state, and shall be subject to the supervision and management of China Banking Regulatory Commission (hereinafter referred to CBRC) in accordance with the law. CHAPTER II ESTABLISHMENT OF INSTITUTIONS Article 8. When establishing a rural commercial bank, the applicant shall: (1) have the Articles of Incorporation in line with the present Provisions; (2) comprise of not less than 500 promoters; (3) have a registered capital of no less than 50 million yuan, and the capital adequacy rate shall reach 8%; (4) have a total asset of 1 billion yuan or more owned by the rural credit cooperatives prior to the establishment of the bank and have a ratio of non-performance credits below 15%; (5) have senior professional and experienced managerial personnel; (6) have sound and perfect organizations and management system; (7) have a business place, safety guarantee measures and other facilities related to its business in line with the relevant requirements; and (8) meet other requirements provided by the CBRC. Article 9. A rural commercial bank shall be established by promoters and take the form of a company limited by shares. The promoters shall subscribe to all the shares issued by the rural commercial bank. The promoters of a rural commercial bank shall be based on the members of the former rural credit cooperatives, and shall be comprise of farmers, rural industrial and commercial households, legal person enterprises and other economic organizations. Article 10. When establishing a rural commercial bank, the applicant shall file a preparatory establishment application to the local bureau of the CBRC at the level of prefecture (city). The application shall be submitted to the CBRC for examination and approval upon level-by-level examinations of the bureau of the prefecture (city) and that of the province, autonomous region, municipality directly under the Central Government or city under separate state planning. The bureaus of the CBRC of all provinces, autonomous regions, municipalities directly under the Central Government and cities under separate state planning shall accept and examine the preparatory applications, on the basis of the cities at the levels of province and prefecture, for the establishment of rural commercial banks, and submit them to the CBRC for examination and approval. The CBRC shall decide to approve or disapprove the preparatory establishment within 3 months from the day when it receives the application Article 11. When applying for the preparatory establishment of a rural commercial bank, the applicant shall submit the following documentary materials: (1) An application for preparatory establishment, which shall specify the name, address, registered capital and business scope of the to-be-established rural commercial bank; (2) A feasibility study report; (3) A plan for preparatory establishment; (4) The name list of the preparatory establishment personnel and their resumes; (5) The balance sheets and the profit and loss statements of the recent 3 years; and (6) Other materials required by the CBRC. Where an applicant fails to meet the requirements for the start of business within 6 months from the day when the CBRC approves the establishment, it shall be disqualified automatically from establishment and shall not file a second preparatory establishment application within 3 months. Article 12. After the preparatory establishment of a rural commercial bank is finished, an application for the start of business shall be filed to the CBRC, to which the following materials shall be also submitted: (1) An application for starting business operations; (2) A report on the establishment work; (3) Draft articles of incorporation; (4) Capital verification report; (5) Materials for the inspection of the professional qualifications of the to-be-appointed senior managers; and (6) Other materials required by the CBRC. The procedures for examining and approving the applications for the start of business shall be the same as those specified in Article 10. Article 13. As for a rural commercial bank established upon approval, it shall be issued a financial license by the local bureau of the CBRC at the level of province, autonomous region, municipality directly under the Central Government or city under separate state planning and shall go through the registration formalities in the administrative department for commerce and industry for obtaining the business license. Article 14. A rural commercial bank may, in light of the development of its business, establish branch banks, sub-offices and savings houses and other branches. When establishing a branch, the rural commercial bank shall appropriate it a running fund adaptive to its business scale. The total amount of the funds appropriated to all of the branches shall not exceed 60% of the total capital of the rural commercial bank. Article 15. The establishment of a branch by a rural commercial bank shall be subject to the examination and approval of the local bureau of the CBRC at the level of prefecture (city), then be reported and submitted to the local bureau of the CBRC at the level of province, autonomous region, municipality directly under the Central Government or city under separate state planning for examination and approval. As for a branch of a rural commercial bank established upon approval, it shall be issued a financial license by the local bureau of the CBRC of the prefecture (city) and shall go through the registration formalities at the administrative department for commerce and industry for obtaining the business license. CHAPTER III ESTABLISHMENT OF STOCK RIGHTS Article 16. A rural commercial bank shall set up natural person shares and legal person shares according to its source and ownership. A shareholder of a rural commercial bank shall meet the requirements for subscribing to the shares of financial institutions. Article 17. All the capital stock of a rural commercial bank shall be divided into equivalent shares with each at the value of 1 yuan. The shareholders of a rural commercial bank who hold the same amount of shares shall enjoy the same rights and returns. Article 18. The proportion of the shares held by a single natural person shareholder (including an employee) shall not be more than 5% of the total amount of the registered capital of a rural commercial bank. The total amount of the shares held by a single legal person and its affiliated enterprises shall be not more than 10% of the registered capital. The total amount of the shares held by the employees of the bank shall be not more than 25% of the registered capital. The term "affiliated enterprises" mentioned in the preceding paragraph refers to the enterprises among which there exists a direct or indirect control relationship, or which are subject to the control or substantial influence of the same enterprise. The board of directors of a rural commercial bank shall timely report and submit the name list of the first 10 shareholders of the bank to the local banking regulatory institution. Article 19. With the exception of the members of a former rural credit cooperative who, under the principle of free will, transform the shares, after the verification of assets and capital, evaluation and quantification, into the capital stock of the rural commercial bank, other promoters shall subscribe to the capital stock in a lump sum with monetary fund. Article 20. A rural commercial bank shall print and issue registered stock right certificates as the ownership evidence of shareholders. Article 21. No shareholder of a rural commercial bank may make feigned investment or illegally withdraw his contributions, nor could he withdraw the capital stock. No rural commercial bank may accept its own shares as the subject matter of a pledge. The shares held by a promoter shall not be transferred within 3 years from the day when the rural commercial bank is established. Where a shareholder of a rural commercial bank adopts the shares of the bank as guaranty for himself or others, he shall inform the board of directors in advance. The shares held by the directors, supervisors, president and vice president of the rural commercial bank shall not be transferred or pledged within their terms of office. CHAPTER IV ORGANIZATIONS AND INSTITUTIONS Article 22. The shareholders of a rural commercial bank shall have the general shareholders' meeting, which shall be its organ of power. Article 23. The general shareholders' meeting of a rural commercial bank exercises the following functions: (1) To formulate or modify the articles of incorporation; (2) To adopt the rules of procedures for the general shareholders' meeting upon deliberation; (3) To elect and change the directors and the supervisors served by the shareholders' representatives, and decide the remunerations to the relevant directors and supervisors; (4) To deliberate and approve the working reports of the board of directors and board of supervisors; (5) To deliberate and approve the development program of the rural commercial bank, to decide the operational policy and investment plan of the rural commercial bank; (6) To deliberate and approve the annual financial budget, final accounts plan, profits distribution plan and loss recovery plan; (7) To make decision about increasing or reducing the registered capital; (8) To make decisions about the division, merger, dissolution, liquidation and other matters of the rural commercial bank; and (9) To make other important decisions. Article 24. The general shareholders' meeting shall be held within 6 months after the end of each fiscal year, which shall be convened by the board of directors. A provisional meeting may be held under any of the circumstances provided in Article 104 of the Company Law of the People's Republic of China. Article 25. At the general shareholder's meeting, the shareholders shall exercise their voting rights in proportion to their respective shares. The voting right shall be exercised on the basis of "one share, one vote". A shareholder may authorize a proxy to attend the general shareholders' meeting. The proxy shall submit a power of attorney to the rural commercial bank and exercise his voting right within the scope of authorization. No resolution may be made by the general shareholders' meeting unless adopted by the shareholders' representatives with half or more of the voting rights present at the meeting. No resolution about amendments to the articles of incorporation, merger, division or dissolution of the rural commercial bank may be made unless adopted by the shareholders' representatives with two thirds of the voting rights present at the meeting. Article 26. The general shareholders' meeting of a rural commercial bank shall adopt the lawyer-witness system so that legal opinions are issued by lawyers. Article 27. The minutes of the meetings and resolutions of the general shareholder's meeting of the rural commercial bank and other documents shall be submitted to the local banking regulatory institution for archival purposes. Article 28. The general shareholders' meeting may, by way of election, establish the board of directors consisting of 7 ¨C 19 members, among whom the shareholders who are employees of the bank shall be no less than one fourth but not exceed one third of all the directors, the other directors who are other natural person shareholders excluding the employees of the bank shall not be less than one fourth of all the directors. Each term of office of a director is three years and he may be re-elected to serve another term. Article 29. The board of directors of a rural commercial bank shall have independent directors. There shall be no relationship between an independent director and the rural commercial bank or its main shareholders that could interfere with his independent judgment. When performing the duties, the independent directors shall pay particular attention to the interests of the depositors and the middle and small shareholders. Article 30. The board of directors of a rural commercial bank shall have 1 chairman, 1 or 2 vice chairman (chairmen), with the chairman being the legal representative. Each term of office of the chairman, or vice chairman (chairmen) shall be 3 years. They may be reelected to serve another term upon expiration of each term and shall accept auditing when leaving their post. Article 31. The board of directors is responsible for the general shareholders' meeting, and exercises the following functions: (1) To convene meetings of shareholders and report work to the general shareholders' meeting; (2) To execute the resolutions passed by the meetings of the general shareholders; (3) To decide on the operation, stock and investment plans; (4) To formulate plans of annual financial budget and final accounts, profit distribution and losses recovery for the rural commercial bank; (5) To formulate plans of increasing or decreasing registered capital; (6) To decide on the establishment of the interior management institutions of the rural commercial bank; (7) To formulate the basic management system for the rural commercial bank; (8) To draft plans of merger, division and dissolution for the rural commercial bank; (9) To appoint and dismiss the president of the rural commercial bank, to appoint or dismiss the vice presidents and the heads of finance and credit nominated by the president, and to decide their salaries; and (10) Other powers specified in the articles of incorporation and those granted by the general shareholders' meeting. Article 32. The board of directors of a rural commercial bank shall hold at least 4 regular meetings, which shall be summoned and presided over by the chairman of the board of directors. The board of directors shall inform the board of supervisors so as to send supervisors to attend the meeting of the board of directors as non-voting members. The directors (including independent directors) of a rural commercial bank shall attend at least two meetings of the board of directors. Any one in violation of the preceding paragraph shall be disqualified from serving as directors, subject to the approval of the general shareholders' meeting. Article 33. The board of directors of a rural commercial bank shall establish standardized and open procedures for the election of directors, which shall be implemented upon the approval of the general shareholders' meeting. One month before the general shareholders' meeting is held, the board of directors shall disclose the detailed information of the director candidates to the shareholders. Article 34. Any resolution of the board of directors of a rural commercial bank shall include the signatures of all the directors present at the meeting, which shall, within 10 days after the meeting is ended, be submitted to the local banking regulatory institution for archival purposes. No resolution may be valid unless it is adopted by half or more of the directors. Where a resolution in violation of the law, regulation or the articles of incorporation causes serious losses to the rural commercial bank, the directors who participate in making the resolution but fail to raise an objection to it shall be liable for compensations. Article 35. When the board of directors dismisses the president before his term of office expires, it shall inform the board of supervisors and the local banking regulatory institution in time and shall make explanations in written form. Without nomination given by the president, the board of directors shall not directly appoint or dismiss the vice presidents and principals of finance and credit. Article 36. A rural commercial bank shall have 1 president, 2-3 vice presidents. The president shall be responsible for the board of directors, shall perform the following duties: (1) To propose the appointment or dismissal of vice presidents, principals of finance and credit, and other senior managerial members; (2) To appoint or dismiss the heads of the interior functional departments and its branches excluding those who shall be appointed or dismissed by the board of directors; (3) To submit operational and investment plans to the board of directors on behalf of the senior managers, and organize the implementation thereof upon the approval of the board of directors; (4) To authorize senior managers and principals of the interior functional departments and the branches to carry out business activities; (5) To take urgent measures when emergencies, such as bank panic withdrawals, occur in the rural commercial bank and to report to the banking regulatory institution, the board of directors and the board of supervisors immediately; and (6) Other powers that shall be exercised by the president under the law, regulation, rules, and the articles of in corporation of the rural commercial bank. Article 37. The president candidates of a rural commercial bank shall be nominated by the directors and appointed by the board of directors. The vice president candidates shall be nominated by the president and appointed by the board of directors. Each term of office of the president and vice presidents shall be 3 years, and they may be re-appointed to serve another term upon the expiration of each term. The chairman of the board of directors shall not concurrently serve as the president of the rural commercial bank. Article 38. The president of a rural commercial bank shall accept the special auditing of the board of supervisors every year, and the auditing results shall be reported to the board of directors and the general shareholders' meeting. The president and vice presidents shall accept auditing when leaving their posts. Where the president and vice presidents make an operational decision beyond the powers granted by the board of directors, or in violation of the law, regulation or articles of incorporation, and causes serious losses to the rural commercial bank, the president and vice presidents who participate in making the decision shall bear relevant liabilities. Article 39. A rural commercial bank shall establish a board of supervisors consisting of 5-9 members, who shall be the representatives of the employees and the shareholders, among whom the employee supervisors shall not exceed one third of all the supervisors. The employee supervisors shall be elected by the employees' representative assembly and the non-employee supervisors shall be elected by the general shareholders' meeting. The term of office of the supervisors is 3 years, and the supervisors may be reelected to serve another term upon the expiration of each term. The members of the board of directors, the president, vice presidents and the principal of finance shall not serve as supervisors. Article 40. The board of supervisors exercises the following functions: (1) To supervise the performance of the members of the board of directors and the senior managers; (2) To demand the directors, the chairman of the board of directors and the senior managers to set right their acts that infringe upon the interests of the rural commercial bank; (3) To conduct special auditing and leaving-post auditing to the directors and senior managers; (4) To conduct inspection and supervision over the financial activities of the rural commercial bank; (5) To audit the operations and resolutions, risk management and interior control of the rural commercial bank, and to offer guidance to the work of interior audit of the rural commercial bank; (6) To question the directors, the chairman of the board of directors and other senior managers; (7) To propose to hold provisional general shareholders' meeting, and (8) Other functions that shall be exercised by the board of supervisors in accordance with the law, regulation, rules and the articles of incorporation of the rural commercial bank. Article 41. Where the board of directors and senior managers refuse or delays the execution of the corrective measures and opinions raised by the board of directors, the board of directors shall report to the local banking regulatory institution and the general shareholders' meeting. Article 42. The requirements for the positions of senior managers of the rural commercial banks shall be implemented by referring to those provided for the positions of the senior managers of the city commercial banks. The relevant requirements shall be subject to the approval of the CBRC. CHAPTER V BUSINESS OPERATIONS AND MANAGEMENT Article 43. Upon approval of the CBRC, a rural commercial bank may engage in some or all of the operations provided in the Law of the People's Republic of China on City Commercial Banks. Article 44. The management of the asset-liability ratio of a rural commercial bank shall be in line with the Law of the People's Bank of China on Commercial Banks. In the calculation of the ratio between the balance of the loans extended to a loanee and the balance of the capital of the rural commercial bank, the loans extended to the affiliated enterprises of the loanee shall be included concurrently. Article 45. A rural commercial bank shall establish and perfect an interior control system concerning savings, loans, settlements and other operations, and shall set up an incentive mechanism and constraint mechanism by which the salaries, the benefits of the commercial bank and personal performances link with one another. Article 46. A rural commercial bank shall grant a certain proportion of its credits to support the farmers and the development of agriculture and rural economy. The specific proportion shall be determined by the general shareholders' meeting in light of the situation of the local industrial structure and shall be reported to the local banking regulatory institution at level of province for archival purposes. The banking regulatory institution shall regularly evaluate the progress of the rural commercial bank's grant of loans to support the farmers and the development of agriculture and rural economy, and may take the evaluation results as elements in examining and approving the applications of the bank for establishing new branches and operations. Article 47. No credit may be granted to the shareholders (excluding the farmer shareholders) and the interested parties of a commercial bank by itself. The requirements for loans under guaranty shall not be more favorable than those for the same type of loans granted to other loanees. Article 48. The Law of the People's Republic of China on Commercial Bank shall be applicable to the rural commercial bank' grant of loans to the interested parties. Article 49. A rural commercial bank shall implement the uniform financial enterprise accounting system of the state, and shall, pursuant to the relevant regulation of the state, keep authentic and overall records of its operations and financial status, and shall pay taxes in accordance with the law. Article 50. A rural commercial bank shall, in accordance with the relevant regulation, submit its accounting statements, statistic statements and other materials to the local banking regulatory institution. The rural commercial bank shall be liable for the authenticity, exactness and integrity of the aforesaid statements and materials submitted by it. A rural commercial bank shall, pursuant to the relevant regulation, disclose information such as financial statements, various kinds of risk management, corporation governance, major matters of the year, etc. Article 51. In accordance with the relevant regulation of the CBRC, a rural commercial bank shall disclose the information about the loans granted to its shareholders and the interested parties, which shall be calculated together with those granted to its affiliated enterprises. Article 52. A rural commercial bank shall make financial and accounting statements by the end of each fiscal year, which shall, under entrustment of the board of supervisors, be subject to the auditing of an accounting firm acknowledged by the CBRC. The audit report shall be submitted to the local banking regulatory institution for archival purposes after it has been accepted by the board of supervisors and has been deliberated by the general shareholders' meeting. Article 53. The financial and accounting statements of a rural commercial bank shall be accessible to the shareholders for reference 20 days before the general shareholders' meeting is held. CHAPTER VI MODIFICATIONS AND TERMINATION Article 54. A rural commercial bank shall have obtained the approval of the CBRC before it modifies any of the following items: (1) Name; (2) Registered capital; (3) Place of business; (4) Business scope; (5) Replace of senior managers; (6) The articles of incorporation; or (7) Other modifications provided for by the CBRC. The CBRC may, in light of the actual circumstances, approve of or authorize the banking regulatory bureau at the level of province, the autonomous region, or the city under separate state planning to approve of the above-mentioned modifications. Article 55. The taking-over, dissolution, cancellation and bankruptcy of a rural commercial bank shall be conducted in accordance with the Law of the People's Republic of China on Commercial Banking Law and the relevant administrative regulations. Article 56. Where a rural commercial bank is terminated as the result of dissolution, cancellation or bankruptcy, it shall return the Financial License to the local bureau of the CBRC at the level of province, autonomous region or city under separate state planning, and upon the strength of the notice of the local bureau of the CBRC at the level of province, autonomous region or city under separate state planning, it shall cancel the registration in the administrative department for industry and commerce and for which it shall make an announcement. CHAPTER VII PENALTY PROVISIONS Article 57. No rural commercial bank may be established without approval of the CBRC. Any one that establishes a rural commercial bank without approval shall be banned by the CBRC, which shall confiscate its illegal gains and impose upon it an administrative punishment; if the violation constitutes a crime, it shall be transferred to the judicial organ for criminal liabilities. Where a rural commercial bank establishes, merges or cancels any branch without the approval of the CBRC, it shall be given a warning and shall be imposed a fine of 50,000 yuan up to 300,000 yuan, and the directly liable senior managers shall be given a disciplinary sanction such as removal from office or even dismissal. Article 58. Where a commercial bank modifies any of the items listed in Article 56 without approval of the CBRC, it shall be given a warning and shall be imposed on a fine of 10,000 yuan up to 100,000 yuan. If it replaces any senior manager without approval, the directly liable senior managers shall be given a disciplinary sanction such as removal from office or even dismissal. Article 59. Where a rural commercial bank engages in operations beyond the business scope approved by the CBRC, it shall be given a warning, be fined not less than the same amount of but not more than five times the illegal gains, and its illegal gains shall be confiscated. Where there are no illegal gains, it shall be imposed on a fine of 100,000 yuan up to 500,000 yuan, and the directly liable senior managers shall be given a disciplinary sanction such as removal from office or even dismissal, while other directly liable principals and personnel shall be given a disciplinary sanction such as being recorded a demerit or even dismissal. If the circumstance is serious, the rural commercial bank shall be ordered to stop business for rectification, or its Financial License shall be withdrawn. If the violation constitutes a crime of illegal operation or any other crime, it shall be subject to criminal responsibilities. Article 60. Where a rural commercial bank violates any relevant law or administrative regulation in handling operations such as savings, loans, settlements, etc., it shall be dealt with in accordance with the Law of the People's Republic of China on Commercial Banks and the Measures for Punishing Financial Violations and other relevant laws and administrative regulations. Article 61. Where a rural commercial bank is in violation of Articles 47 and 50 of the present Provisions, it shall be punished in accordance with the Law of the People's Republic of China on Commercial Banks and the Measures for Punishing Financial Violations. If a violation constitutes a crime, the rural commercial bank shall be subject to criminal responsibilities. Article 62. Any of the personnel of a rural commercial bank who commits violations such as embezzlement, misappropriation or bribery, he shall be subject to the legal liabilities provided in relevant laws and administrative regulations. Article 63. Where a rural commercial bank and its personnel violates any of the laws and the administrative regulations of the state, they shall be subject to punishments given by the CBRC. Article 64. Where a rural commercial bank or any of its personnel refuses to accept a decision on punishment given by the CBRC, it or he may file a lawsuit in the people's court in accordance with the Administrative Procedural Law of the People's Republic of China. CHAPTER VIII SUPPLEMENTARY PROVISIONS Article 65. The power to interpret the present Provisions shall remain with the CBRC. Article 66. The present Provisions shall be implemented as of the day when it is promulgated. |
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