China Banking Regulatory Commission, Guidelines on Business Co-operation between Banks and Trust Companies
中国银行业监督管理委员会银行与信托公司业务合作指引
March 17, 2009 | BY
clpstaff &clp articles &Banks not allowed to provide security for trust products.
Promulgated: December 4 2008
Applicability: The Guidelines apply to the business co-operation between banks and trust companies within the PRC (Article 2).
The term “banks” is defined to include financial institutions established in accordance with the law within the PRC that take deposits from the public such as commercial banks, rural co-operative banks, urban credit co-operatives and rural credit co-operatives, as well as policy banks. The term “trust companies” refers to financial institutions established in accordance with law within the PRC that mainly engage in trust business (Article 3).
The phrase “co-operation in financial management between banks and trust companies” means that a bank hands over the funds under a financial management plan to a trust company, which acts as a trustee and manages, uses and disposes of the funds as specified in the trust document (Article 6).
Main Contents: Trust companies may invest trust property in the equity of financial institutions (Article 20). Banks may not provide security in any form for the trust products involved in the co-operation in financial management between banks and trust companies and the subject for which property under the trust products is used (Article 26). Where a trust company invests in the credit assets, negotiable instrument assets and other assets held by the bank, it shall buy out the assets and the bank may not buy back the said assets by any means (Article 27).
Related Legislation: PRC Banking Regulation Law, Dec 27 2004 No.1 p.45; PRC Commercial Banking Law (Revised), Dec 27 2003, CLP 2004 No.1 p.4 & May 10 1995, CLP 1995 No.5 p.32; and PRC Trust Law, Apr 28 2001, CLP 2001 No.5 p.22
clp reference:3610/08.12.04promulgated:2008-12-04This premium content is reserved for
China Law & Practice Subscribers.
A Premium Subscription Provides:
- A database of over 3,000 essential documents including key PRC legislation translated into English
- A choice of newsletters to alert you to changes affecting your business including sector specific updates
- Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
Already a subscriber? Log In Now