China Banking Regulatory Commission, Issues Relevant to Information Disclosure on Consolidated Trust Fund Business by Trust and Investment Companies Circular

Issued: December 8 2004
Effective: as of date of issue

Main contents: The Circular specifies the general requirements for information disclosure on consolidated trust fund business, and the China Banking Regulatory Commission and its local bureaux have the authority to require trust and investment companies to disclose more detailed information to the relevant regulatory department (Section One). When undertaking such business, trust and investment companies shall at minimum disclose in their Information Record such information as the audited annual reports for the recent two years (summary); the responsibilities and obligations of the company and relevant personnel; scope of the use of the funds together with the procedure for and method of valuation of the trust property; due diligence report on the project in which the funds are intended to be invested (where applicable); potential risks and amount of possible loss when such risks arise; risk management strategy, regulatory measures and an explanation thereof; factors affecting the income of the consolidated trust plan and sensitivity analysis; relevant information in the case of management by a third party, investment in securities, a conflict of interest or affiliated transaction, and guarantee provided by a third party for the trust property; measures to be taken when there are major financial problems with the user of the funds, disputes over the contractual obligations, or inability of the guarantor to continue providing a guarantee; and the scope, use of, income from, and relevant expenditure at the end of the pervious financial year (Section Two).
The beneficiaries of consolidated trust plans by trust and investment companies shall have the right to any information concerning their trust property, and the company shall provide accurate and complete information within a reasonable period as long as this does not damage its obligation to confidentiality to others (Section Ten). The directly responsible directors, senior management personnel and other directly responsible persons of a trust and investment company may be liable when there is non-compliance with information disclosure requirements of the company (Section Eleven).
Related legislation: PRC Banking Regulation Law, Dec 27 2003, CLP 2004 No.1 p45; PRC Trust Law, Apr 28 2001, CLP 2001 No.5 p22; Administration of Trust and Investment Companies Procedures, Jun 5 2002, CLP 2002 No.6 p6 and Administration of the Business of Holding Funds in Trust of Trust and Investment Companies Tentative Procedures, Jun 26 2002, CLP 2002 No.7 p15