Legislation roundup: Preference shares, factoring of commercial banks and outbound investment

Banking

China Banking Regulatory Commission and China Securities Regulatory Commission, Guiding Opinions on the Offering of Preference Shares by Commercial Banks to Replenish Their Tier 1 Capital
中国银行业监督管理委员会、中国证券监督管理委员会关于商业银行发行优先股补充一级资本的指导意见

A commercial bank wishing to offer preference shares is required to have a core Tier 1 capital adequacy ratio of not less than the prudential regulatory requirements of the CBRC. A commercial bank is required to expressly specify in the offer contract that it has the right to cancel the payment of dividends on the preference shares without the same constituting an event of default. A commercial bank may not offer preference shares with sell-back terms.

See the digest for more details.

Further reading
Guiding Opinions on the Launch of the Pilot Project for Preference Shares
Why the IPO reforms don't go far enough

China Banking Regulatory Commission, Tentative Measures for the Administration of the Factoring Business of Commercial Banks
中国银行业监督管理委员会商业银行保理业务管理暂行办法

When accepting factoring business, a commercial bank shall stringently review the credit rating, and business and financial positions of the seller and/or the buyer, analyze the details of the accounts receivables that are to be factored, including whether they have been pledged, transferred and their age structure, etc., rationally evaluate the buyer's intent to pay and payment capacity, and the seller's repurchase capacity, and review the genuineness and lawfulness of the sale and purchase contract and other such materials.

See the digest for more details.

Further reading
Circular on Work Relevant to Pilot Factoring Projects
Several Issues regarding Guarantee Companies in China
Accounting Treatment of Engagement in Such Businesses as Receivables Financing Between Enterprises and Banks or Other Financial Institutions Tentative Provisions


Outbound

Ministry of Commerce, Measures for the Administration of Overseas Investment (Revised) (Draft for Comments)
商务部境外投资管理办法（修订）（征求意见稿）

Where the overseas investment of an enterprise involves a sensitive country (region) or sensitive industry, it is required to report the same to the Ministry of Commerce for approval. Other overseas investments of an enterprise are to be reported to the Ministry of Commerce and the competent local provincial level commerce department for the record.

See the digest for more details.

Further reading
Going outbound: What private companies can learn from SOEs
NDRC's Measures on outbound investment clash with MOFCOM
Why Chinese companies are using Hong Kong for outbound M&A
Outbound unbound?
Measures for the Administration of Outbound Investment