Unformatted text preview: nt company may undertake the following functions:
1. Recovery of debt;
2. Leasing or transferring and reorganizing the assets formed with purchased bad loans in
3. Debt-equity swap, and holding enterprise equity for a certain period of time.
4. Listing sponsorship and bond/stock underwriting or companies within the scope of asset
5. Issuing financial bonds and asking for loans for financial institutions; 6. Financial and legal consulting, and assets and project appraisal, and
7. Other businesses approved by the PBOC and CSRC;
8. A financial asset management company may apply to the PBOC for a new loan. Chapter III: Scope, Amount and Capital Source for Purchasing Bad Loans
Article 11: A financial asset management company purchases bad loans of state-owned banks
according to the scope and amount stipulated by the State Council. Purchase beyond the
stipulated scope and amount shall by submitted to the State Council for special examination and
Article 12: Within the amount stipulated by the State Council, a financial asset management
company purchases at book value related loan principal and corresponding interest claims
receivable charged to profit and loss. Interest claims receivable not charged to profit and loss
shall be transferred without compensation.
Article 13: Having purchased the bad loans, a financial asset management company acquires all
rights of the original creditor over the debtor. The debtor, guarantor and parties concerned in the
original loan contract shall continue to fulfill their obligations as stipulated by the contract.
Article 14: Sources of funds for a financial asset management company to purchase bad loans
include the following:
1. Transfer of part of the loans issued to solely state-owned commercial banks by the PBOC.
2. Issuance of financial bonds.
The PBOC loans to solely state-owned commercial banks, when being transferred to a financial
asset management company, shall have a fixed annual interest rate of 2.25%. Article 15: The issuance of financial bonds by a financial asset management company shall by
subject to the examination and approval of the PBOC and the Ministry of Finance.
Chapter IV: Debt-Equity Swap
Article 16: A financial asset management company may swap the creditor's rights obtained from
purchasing the bad loans of state-owned banks for equities from the borrowing enterprises.
The equity holding of a financial asset-management company is not limited by its net asset value
or registered capital
Article 17: The debt-equity swap shall accord with the state's industrial policies and facilitate
the optimization of economic structure and the related enterprise's technical progress and
Article 18: The State Economic and Trade Commission (SETC) shall recommend enterprises to
a financial asset management company for debt-equity swaps. The financial asset management
company conducts an independent evaluation and examination of the recommended enterprises,
drafts a plan for the debt-equity swap a...
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- Spring '14