China Securities Regulatory Commission, Administration of Securities Company Bonds Tentative Measures

Issued: August 29 2003
Effective: October 8 2003
Applicability: "Securities company bonds" is defined as negotiable securities (excluding convertible corporate bonds) whose principal and interest are to be repaid within a specified period by agreement and that are issued by securities companies in accordance with the law (Article 2).
Administrative Measures for issuing of secondary bonds by securities companies shall be formulated separately (Article 58).

Main contents: Securities company bonds may be issued to the public or privately to qualified investors (Article 5). A securities company must have audited period-end net assets of no less than Rmb1 billion of the latest period for issuing bonds to the public and no less than Rmb500 million for private issue to qualified investors (Articles 7 and 8). Qualified investors are those with independent analytical and risk bearing capacity, and should have registered capital of at least Rmb10 million or audited net assets of at least Rmb20 million (Article 9). Issuers shall engage a securities credit rating institution to appraise their bonds of the current issue and arrange for follow-up rating, have a guarantor to provide guarantee or pledge for the bonds, engage a creditors' agent (such as a trust and investment company, fund management company or law firm) for the bond holders, engage a law firm to give legal opinions, and engage a principal distributor to organize the bond distribution (Articles 11-15). The term of securities company bonds may be from one to five years (Article 23). Provisions for custody and transfer of securities company bonds are set out in Part Three. To list securities company bonds, the total par value shall be at least Rmb200 million (Article 26). The Measures also set out the disclosure requirements and debt repayment measures, including setting up of special repayment accounts, repurchase, early repayment, as well as legal liabilities for violation of issuing, underwriting, transfer and information disclosure (Parts Four to Six).
Related legislation: PRC Company Law (Amended), Oc 27 2005, CLP 2005 No.10 p21 and PRC Securities Law (Amended), Oc 27 2005, CLP 2006 No.1 p31