China Banking Regulatory Commission, Circular on Issues Relevant to Strengthening the Regulation of the Real Property Trust Business of Trust Companies

Issued: February 11 2010

Applicability: Where relevant provisions are inconsistent with this Circular, this Circular shall prevail (Article 7).

Main contents: In the case of a real property pooled fund trust plan in a structured format, the ratio of priority beneficiary rights to inferior beneficiary rights shall not be higher than 3:1 (Article 2). The implementation of the exemption provisions provided in Article 10 of the China Banking Regulatory Commission, Circular on Issues Relevant to Supporting the Innovative Development of Trust Companies on the grant of real property development project loans by trust companies whose regulatory ratings are 2C or above, have sound operations and good risk management level shall be terminated. Where a trust company grants a loan to a real property development project, the project shall fulfil the following criteria: it has obtained all four certificates¹, the developer or its controlling shareholder satisfies grade two qualifications and the project capital ratio reaches the minimum state requirements (Article 3). Trust companies may not use trust funds to grant land reserve loans. Land reserve loans refers to loans granted to borrowers for purchase, and preliminary development and rehabilitation of land (Article 4).