State Council, Circular on Strengthening the Administration of the Investment Capital in Fixed Asset Investment Projects

If an investment project that applies the investment capital system is a government investment project, the relevant departments shall, when examining the feasibility study, review the method of raising the investment capital for the investment project and the documents evidencing the source of the funds for compliance, and confirm the percentage of the investment capital of the investment project and the method of raising the same in the approval document; if the investment project is one of an enterprise, the relevant financial institution that provides financing services shall strengthen its review and monitoring of the source, percentage and payment of the investment capital of the investment project (Article 3).

For port, coastal and inland water transport projects, the minimum investment capital percentage is reduced from 25% to 20% (Article 4).

The minimum investment capital percentage for airport projects remains unchanged at 25%, and that for other infrastructure projects remains unchanged at 20%. Where the investment return mechanism is clear, the income reliable and the risks controllable, the minimum investment capital percentage for projects for making up the weak links in infrastructure in areas such as highways (including government toll highways), railways, urban development, logistics, eco-environmental protection and people's livelihoods may be suitably reduced, provided that such reduction does not exceed 5%.

The approval authority may, for a project subject to the examination and approval system, specify the percentage of the investment capital of the investment project that the project entity may reasonably determine based on the aforementioned specified percentages. For a project subject to the check and approval or record filing system, the project entity and the financial institution may adjust the percentage of the investment capital of the investment project at their own discretion based on the aforementioned specified percentages (Article 5).

Where the various types of funds raised through means such as the offering of financial instruments are required in accordance with the uniform national accounting system to be classified as equity instruments, the same may be certified as investment capital of the investment project, provided that the same do not exceed 50% of the total investment capital. In any of the following circumstances, the same may not be certified as the investment capital of an investment project:

(i)         conditions, such as a principal and interest buyback undertaking and minimum guarantee, are attached to the returns;

(ii)        dividends may be paid or returns obtained before repayment of the debt-type funds of the period in question; or

(iii)       at liquidation, the same enjoy a more favorable repayment priority than other debt-type funds (Article 8).

When certifying the investment capital of an investment project, a financial institution shall strictly separate the investment project from the project investors, determine its equity or debt nature depending on the different sources of funds and the rights and responsibility relationships in the investment project, comprehensively review the genuineness and compliance of the investment capital as well as the investment returns and loan risks, and decide at its own discretion whether to extend loans as well as the amount of the loan and its percentage (Article 11).