Securities Association of China, Measures for a Pilot Project for Bonds Privately Offered to Carry Out Mergers and Restructurings

Where a wealth management product offered to investors by a financial institution that has been established with the approval of the relevant financial regulator participates in a Bond offering or transfer, it shall be counted as a single qualified investor (Article 3).

To offer Bonds on the quotation system, the following conditions shall be complied with:

(1) the issuer being a limited liability company or joint stock limited company registered in China, but, for the time being, excluding companies listed on the Shanghai and Shenzhen Stock Exchanges;

(2) the proceeds to be used to support merger and restructuring activities, including but not limited to paying the merger/restructuring moneys, repaying merger/restructuring loans, etc.; and

(3) the offering coupon rate not exceeding four times the benchmark interest rate for bank loans of equivalent term (Article 6).

The issuer shall complete the offering within six months after completion of record filing. If it fails to do so within the six months, it shall carry out record filing anew (Article 13).

Bonds shall be transferred by a means recognised by the quotation system, such as negotiated closing, click closing or market making (Article 16).

Qualified investors participating in the subscription for and transfer of Bonds shall be limited to institutional investors, and shall satisfy any one of the following conditions:

(1) being a financial institution established with the approval of the relevant regulator, including banks, securities companies, fund management companies, trust companies and insurance companies;

(2) being a wealth management product offered to investors by a financial institution as specified in the preceding item, including but not limited to bank wealth management products, trust products, investment-linked insurance products, fund products and securities company asset management products;

(3) being a qualified foreign institutional investor (QFII) or renminbi qualified foreign institutional investor (RQFII);

(4) being a private fund filed or registered with the industry self-regulation organisation or a private fund manager that satisfies the provision of Item (5) or (6) of this Article;

(5) being an enterprise with legal personality having registered capital of not less than Rmb10 million;

(6) being a partnership whose total capital contribution amount subscribed for by partners is not less than Rmb50 million and whose total paid-in capital contribution amount is not less than Rmb10 million (Article 18).