People's Bank of China, Distribution of Short-term Financing Bills Rules

Issued: May 23 2005
Effective: as of date of issue
Interpreting authority: People's Bank of China
Applicability: 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 Administration of Short-term Financing Bills Procedures, and that have repayment of principal and interest within a certain time period specified (Article 2). The term 'Financing Bill distribution business' refers to the act by which qualified financial institutions underwrite or distribute the Financing Bills issued by enterprises in accordance with the agreement (Article 3).

Main contents: The Rules set forth the qualification conditions and record filing procedures for, as well as the rights and obligations of, financial institutions engaging in Financing Bill distribution business. Financial institutions are required to have, among others, obtained the membership of the national inter-bank borrowing market for at least two years (Article 6). Distribution of Financing Bills may take the form of distribution on an agency basis, standby underwriting and full underwriting. The distribution method and the related charges shall be determined between the issuer and the distributor through consultations (Article 12). The two parties may also decide through consultations whether or not a distribution consortium should be organized. The issuer may choose the lead distributor on its own. A lead distributor is prohibited from distributing four or more Financing Bill issues simultaneously.
Related legislation: Administration of Short-term Financing Bills Procedures, May 23 2005, CLP 2005 No.6 p.7