People's Bank of China, Administration of Short-term Financing Bills Procedures

Promulgated: May 23 2005
Effective: as of date of promulgation
Interpreting authority: People's Bank of China
Applicability: These Procedures apply to short-term financing bills issued within the PRC by non-financial enterprises with legal person status in the PRC (Enterprises) (Article 2). The term 'short-term financing bills' (Financing Bills) refers to negotiable securities that are issued on the national inter-bank bond market by Enterprises and traded therein, in accordance with the conditions and procedures stipulated by the Procedures, and that have repayment of principal and interest within a certain time period specified (Article 3). Financial institutions issuing short-term Financing Bills shall be provided separately by the People's Bank of China (Article 39).

Main contents: Financing Bills are issued to institutional investors of the national inter-bank bond market, and are traded only within the market. Financing Bills may not be issued to the public (Article 6). An Enterprise applying for the issue of Financing Bills shall comply with conditions such as: (1) having stable sources of funding for repayment, and having been profitable for the most recent fiscal year; and (2) funds raised from issuing Financing Bills shall be used in production and operations of the Enterprise (Article 10). Financing Bills issued by Enterprises shall be subject to credit rating by rating agencies that have completed commerce and industry registration in China and have the ability to conduct credit ratings for bonds, and the rating results shall be announced to the national inter-bank bond market (Article 11). The balance of the outstanding Financing Bills shall not exceed the net assets of the Enterprise by 40% or more (Article 12). The term of Financing Bills shall be no longer than 365 days (Article 13). The coupon rate or issue price of Financing Bills shall be determined through consultations between the Enterprise and the distributor (Article 14). The Enterprise applying to issue Financing Bills shall submit record filing materials to the People's Bank of China through the lead distributor (Article 15). When significant events concerning the issuer arise that may affect investors of Financing Bills in their realization of claims during the term of the Financing Bills, including substantial losses incurred by the issuer exceeding its net assets by 10% or more, issuers shall publicly disclose the same to the market in a timely manner (Article 32).
Related legislation: PRC People's Bank of China Law (Revised), Dec 27 2003, CLP 2004 No.1 p.4