In order tostandardize activities of international development institutions’ issuance of RMB bonds and promote development of China’s bond market, the People’s Bank of China, the Ministry of Finance, the State Development and Reform Commission and the China Securities Regulatory Commission jointly formulated the Provisional Administrative Rules on the Issuance of RMB Bonds by International Development Institutions and hereby enact them.
The People’s Bank of China
The Ministry of Finance
The State Development and Reform Commission
The China Securities Regulatory Commission
February 18, 2005
Provisional Administrative Rules on the Issuance of RMB Bonds by International Development Institutions
Article 1 These rules are formulated according to the “Law of the People’s Republic of China on the People’s Bank of China” and the “Securities Law of the People’s Bank of China” and other relevant laws and regulations, so as to standardize international development institutions’ issuance of RMB bonds and protect legitimate interest of bond holders.
Article 2 International development institutions in these rules refer to international financial institutions lending or investing for development purposes.
Article 3 RMB bonds issued by international development institutions (referred to as RMB bonds hereinafter) in these rules refer to RMB denominated bonds legally issued by international development institutions in China, committing to pay the interests and repay the principal within a specified period of time.
Article 4 International Development institutions that intend to issue RMB bonds in China shall apply for the issuance permit to the governing authority, such as the Ministry of Finance. The authority accepting the application shall then reviewit along with the People’s Bank of China, the State Development and Reform Commission, the China Securities Regulatory Commission and submit it to the State Council for approval.
Article 5 The State Development and Reform Commission shall review the issuance size of RMB bonds and the use ofraised funds along with the Ministry of Finance, according to the industrial policy of the State, developments of foreign capital and debt, macroeconomic performance and the balance of payments.
Article 6 The People’s Bank of China regulates the interest rates of RMB bond issues.
Article 7 The State Administration of Foreign Exchange is responsible for administration of non-resident RMB accounts specially opened for fund raised by RMB bond issues and the conversion of such funds.
Article 8 The Ministry of Finance and relevant authority on foreign capital and debt management regulate the lending and investment financed by the RMB bond issues.
Article 9 An international development institution shall meet the following criteria when applying for the issuance of RMB bonds in China:
(1) It shall be financially sound and registered in China, with good credit worthiness and a credit rating above AA obtained from a credit rating agency that is competent of credit rating for RMB denominated bonds.
(2) Its total lending to and investment in domestic projects or enterprises has exceeded USD1 billion.
(3) The raised funds shallbe used to finance the medium and long-term fixed asset lending to or equity investment in projects in China, which are consistent with the industrial policy, foreign capital policy and the administrative rules on fixed asset investment of the State. Projects funded by sovereign borrowing shall be included in the corresponding foreign borrowing plan.
Article 10 When applying for issuing RMB bonds, an international development institution shall provide following materials:
(1)Application report for issuance of RMB bonds;
(2)Prospectus of the bond issue;
(3)Audited financial statements and appendix of the past three years;
(4)Report of the RMB bond’scredit rating and an explanation of measures to maintain the credit rating;
(5)Overview of the lending to and investment in domestic projects or enterprises;
(6)List of projects to be funded by the lending and equity investment and corresponding certificate and legal papers;
(7)Legal advice provided by lawyers who engage in the business in accordance with the “Law of the People’sRepublic of China on Lawyers”;
(8)Other important materials related to the bond issue.
Article 11 When issuing a RMB bond, an international development institution shall have its financial statements audited according to Chinese accounting standards by accountant chartered inline with “Law of the People’s Republic of China on Chartered Accountants”.
Article 12 International development institutions issuing RMB bonds shall be legally verified by lawyers who engage in the business in accordance with the “Law of the People’s Republic of China on Lawyers” with their written legal advice.
Article 13 International development institutions shall organize a underwriting group for their RMB bond issues in China. Eligible underwriters shall be limited to securities firms registered in China.
Article 14 After the initial offering, RMB bonds may be traded on the market with the approval of relevant market regulators.
Article 15 International development institutions gaining the approval of issuing RMB bond (referred to as issuers hereafter) shall abide by relevant rules and regulations on information disclosure and fulfil the information disclosure obligations faithfully.
Article 16 Interest rate of RMB bond’s initial offering is determined by the issuer in reference to the yield of treasury bonds issued at the same time and reviewed by the People’s Bank ofChina.
Article 17 Funds raised by issuers’RMB bonds issuance shall be used in projects in China and are not allowed to be converted into foreign currencies and transferred overseas. The issuer shall use and manage the unused funds according torelevant laws and regulations in China.
Article 18 The issuer shall opennon-resident RMB accounts for funds raised by RMB bond issues one month before the date of the initial offering of RMB bonds. The opening, closure of the accounts and the conversion of such funds shall be approved by the State Administration of Foreign Exchange.
Article 19 After the issuance of RMB bonds, in the case of repayment of foreign exchange funds transferred previously from overseas with RMB proceeds arising from collection of loans and withdrawal of equity investment, or issuers’ repatriation of investment gains, permission of purchase and remittance of foreign exchange by the State Administration of Foreign Exchange is required.
Article 20 If the issuer can not service the RMB bond as scheduled, due to delayed loan collection or othercauses, it is allowed to transfer foreign exchange funds from overseas and open special foreign exchange account in accordance with relevant rules. The conversion of foreign exchange funds shall be approved by the State Administration of Foreign Exchange in advance.
Article 21 The issuer shall report to the State Administration of Foreign Exchange its use of funds raised by RMB bond issuance, collection of loans and withdrawal of investment.
Article 22 Chinese should be the governing language of paperwork for the international development institutions’ issuance of RMB bonds.
Article 23 Chinese law is the applicable law in the case of defaults or other disputes arising from international development institutions’ issuance of RMB bonds.
Article 24 These rules are to beinterpreted jointly by the People’s Bank of China, the Ministry of Finance, the State Development and Reform Commission, and the China Securities Regulatory Commission.
Article 25 These rules take effects on the date of promulgation.
