With a view to giving full play to the important role of financing guarantee in promoting financing of small and medium enterprises, strengthening the supervision and management of the financing guarantee company, normalizing the financing guarantee behavior and promoting the healthy development of this Municipality's financing guarantee industry, these Procedures are formulated in accordance with the Company Law of the People's Republic of China, the Guarantee Law of the People's Republic of China, the Contract Law of the People's Republic of China, and the Interim Procedures for Management of Financing Guarantee Companies (BRD[2010]No.3), and in the light of the actual circumstances of this Municipality.

I. Application Scope

1. These Procedures apply to the financing guarantee company established in the area of this Municipality, the conduct of financing guarantee business and relevant management.

2. The financing guarantee in these Procedures means the behavior of the guarantor making an agreement with banking financial institutions and other creditors on assuming according to law the guarantee responsibility stipulated in the contract when the guarantee defaults the financing debts to the creditors.

3. The financing guarantee company in these Procedures means the company with limited liability and company limited by shares that is established according to law and conducts financing guarantee business.

II. General Requirements

1. A financing guarantee company shall follow the principles of honesty and trustworthiness, fair competition, law and regulations compliance in operation, pay attention to grasping security, liquidity and profitability to give play an active role in promoting the development of small and medium enterprises.

2. Relevant departments and the district/county people's government of this Municipality shall form a joint force, further increase policy support and services to create good conditions for the continuous and healthy development of financing guarantee companies.

3. The supervision and management of this Municipality's financing guarantee companies shall carry out the mechanisms of cooperation of departments and joint action of the municipality, district and county. Relevant departments shall earnestly discharge duties, do well in routine supervision and management of financing guarantee companies, risk control and disposition work, to ensure the healthy and steady development of financing guarantee industry.

III. Working Mechanisms

1. Perfect the normalized development of this Municipality's financing guarantee industry and the system of joint meeting of business supervision (hereinafter referred to as the municipal joint meeting). The municipal joint meeting mainly assume two functions: one, directing the conduct of normalized development of this Municipality's financing guarantee industry, and examining and determining major issues regards the industry supervision; two, urging this Municipality's financing guarantee industry to further support and serve financing to small and medium enterprises, studying and making policy measures to promote the industry development, directing and advancing the district/county people's government's work related to launching financing guarantee, establishing and perfecting the scientific and rational mechanisms of performance evaluation and comprehensive check of policy-related financing guarantee business, and coordinating in solving problems in the development of financing guarantee industry.

The member units of the municipal joint meeting shall each perform its own functions, form a joint force and jointly propel the healthy development of this Municipality's financing guarantee industry.

2. The Municipal Office of Finance Service shall, as the supervision department of this Municipality's financing guarantee companies and business, the office of the municipal joint meeting, exercise administrative permit according to regulations to this Municipality's financing guarantee companies and business, issue and manage business license, be responsible for access, withdrawal, routine supervision, risk handling and such other work, and report to the inter-department joint meeting of supervision of financing guarantee business (hereinafter referred to as the inter-department joint meeting); as required, timely submit the statistical statement, general view of institutions, and reports on the annual development and supervision situation of this Municipality's financing guarantee industry and make permanent tracking and monitoring of this Municipality's financing guarantee business risks.

The Municipal Office of Finance Service shall give direction to the district/county people's governments work related to launching financing guarantee.

3. The district/county people's governments shall submit the report on their application for conducting financing guarantee business management to the Municipal Office of Finance Service, which shall, upon examination and approval by the municipal joint meeting, take specific charge of the preliminary examination of the establishment and risk handling of the financing guarantee company registered in the corresponding area under jurisdiction. The district/county people's governments shall do well in routine supervision over financing guarantee companies registered in their area and report on their work to the municipal joint meeting and its office.

The district/county people's governments shall define the competent administrative department and assign special force to earnestly assume management duties.

IV. Establishment, Alteration and Termination

1. Establishment of Company

(1) A financing guarantee company established in this Municipality shall be sponsored and organized by one to two enterprise legal persons or natural persons as the principal sponsor.

As the principal sponsor, the enterprise legal person shall meet the following requirements:

A. Normalized management, good credit, and great strength.

B. Doing continuous business for over three years, making profits over the past two accounting years in row with accumulated net profits over ten million Yuan over the past three years, and with asset-liability ratio not exceeding 70% and net assets not lower than fifty million Yuan; in principle, after making investment in this project, the long-term investment amount shall not exceed 60% of the net assets.

As the principal sponsor, a natural person shall meet the following requirements:

A. Having economic strength for sponsoring financial contribution, with a certain industrial background and influence in the corresponding industry and being able to produce a corresponding valid certificate.

B. Having no major bad credit record or practice record or law-breaking criminal record.

(2) For the establishment of a financing guarantee company in this Municipality, the minimum amount of registered capital shall be 0.1 billion Yuan in currency capital actually paid. As for a financing guarantee company established with dominance of the district/county people's government and for the purpose of providing financing guarantee service for small and medium enterprises in the corresponding jurisdiction area, the requirement for registered capital may be properly lowered.

As for such a company organized by an individual enterprise legal person as the principal sponsor, the share-holding ration shall be in principle not lower than 30%, and if by two enterprise legal persons as the principal sponsors, not lower than 20% respectively in principle; a natural person as the principal sponsor to the organization shall hold an appropriate proportion of equity.

A general sponsor shall have a certain industrial background, and the capability of continuous financial contribution and risk bearing, with an amount of financial contribution not lower than five million Yuan in principle.

(3) The establishment of a financing guarantee company shall comply with the following provisions:

A. meeting the requirements for the principal and general sponsors set out in the preceding articles;

B. having articles of association in compliance with the Company Law of the People's Republic of China;

C. having shareholders with capability of continuous financial contribution;

D. having registered capital as required by these Procedures;

E. having office-qualified directors of board, supervisors, senior managers and qualified employees; 

F. having a sound organizational institution and the system of internal control and risk management;

G. having business premises as required; and

H. other prudential conditions.

(4) Directors, supervisors and senior managers shall have qualifications as required by the inter-department joint meeting, observe law and discipline, be honest and trustworthy, and shall have specified knowledge, working experience and organizational capability corresponding to their post .

(5) Employees shall take special training on financing guarantee, have specified skills corresponding to their post, and shall have good awareness of law and regulation compliance and prudential business operation.

(6) To establish a financing guarantee company, the principal sponsor shall submit an application for establishment to the district/county people's government in the place where registration is to be made. The application shall include,

A. application letter, which shall state the description, location, registered capital and business scope of the financing guarantee company to be established;

B. a feasibility study report;

C. draft articles of association;

D. a list of shareholders and their contribution amount and equity structure;

E. verification certificate of shareholders contribution, credit certificate of shareholders and relevant materials;

F. CVs and qualification certificates of directors, supervisors and senior managers to be appointed;

G. business development strategy and planning;

H. certification of business premises;

I. legal statements and audit reports issued by law firms and accounting firm; and

J. other documents and materials to be submitted as required.

The district/county people's governments that conduct management of financing guarantee business shall make preliminary examination of the above-mentioned application materials as required and after passing the preliminary examination, submit the application materials and the statement of preliminary examination to the Municipal Office of Finance Service. The Municipal Office of Finance Service, after soliciting opinions from relevant member units of the municipal joint meeting, issue an approval document for organization, if in opinion of compliance with relevant regulations.

(7) The applicant shall complete the preparations within six months from the date of obtaining the approval document of the Municipal Office of Finance Service for organization. If failing to complete the preparations within the set period, reasons shall be given, and the period may be properly prolonged after the competent administrative department of the local district/county where registration is to be made makes examination and obtains approval from the Municipal Office of Finance Service. If the preparations are still not completed in the prolonged period, the approval document for organization issued by the Municipal Office of Finance Service shall become invalid automatically.

The preparing body shall not undertake any activity of financing guarantee business.

(8) The applicant, after completing the preparations, shall request in writing the competent administrative department of the district/county to make preliminary acceptance check. After passing the preliminary acceptance check, the competent administrative department of the district/county shall request in writing the Municipal Office of Finance Service to make official acceptance check of the preparations. After passing the official acceptance check, the Municipal Office of Finance Service give a reply of preparation acceptance of the financing guarantee company and issue the business license. The financing guarantee company that has passed the acceptance check of the preparations approved shall apply to the industrial and commercial department for registration by the approval document and business license.

If a financing guarantee company fails to go through the formalities for registration with the industrial and commercial department within three months from the date of obtaining the business license without any proper reason, the business license issued by the Municipal Office of Finance Service shall become invalid automatically.

The time limit for specific examination and approval of application materials made by the district/county competent administrative department and the Municipal Office of Finance Service shall comply with relevant provisions of the Law of Administrative Licensing.

The description of a financing guarantee company established with approval of this Municipality shall be composed of administrative area, name, industrial expression, organizational form in order. Among them, the administrative area means 鈥淪hanghai; the name determined by the company itself; the industrial expression shall state 鈥渇inancing guarantee; the organizational form shall be company with limited liability or company limited by shares. Without approval, the wording of 鈥渇inancing guarantee shall not be used in the description.

2. Establishment of Branches

(1) A financing guarantee company registered in this Municipality, if intending to set up branches, shall meet the following requirements:

A. registered capital not lower than 0.3 billion RMB Yuan;

B. conducting continuous business for over three years and making profits over the past two accounting years in row;

C. conducting business in a steady and healthy manner and in compliance with regulations, having no law or regulation-breaking or other bad records;

D. a financing guarantee company that sets up each new branch shall increase corresponding registered capital accordingly; and

E. other relevant requirements.

A financing guarantee company registered in other province that intends to set up a branch in this Municipality shall, in principle, follow the preceding article. For each branch newly set up, corresponding operation funds shall be allocated.

(2) A financing guarantee company registered in this Municipality that intends to set up a branch in other province shall be filed with the competent administrative department in the district/county where the financing guarantee company is located, and shall be approved by the Municipal Office of Finance Service and examined and approved by the provincial-level supervision department in the place where the branch is to be established. 

(3) A financing guarantee company established and registered in other provinces which intends to set up a branch in this Municipality shall obtain approval from the provincial-level supervision department in the place where the said company is located, and after preliminary examination by the district/county people's government in the place where the branch to be set up is located, shall be examined and approved by the Municipal Office of Finance Service.

The procedure for application for setting up a branch shall follow the relevant provisions of these Procedures for the establishment of a company.

3. Alteration and Termination

1. A financing guarantee company with one of the following alterations shall be subject to preliminary examination by the district/county competent administrative department:

A. alteration of description;

B. alteration of organizational form;

C. alteration of registered capital;

D. alteration of company residence;

E. adjustment of business scope;

F. alteration of directors, supervisors and senior managers;

G. alteration of shareholders that possess over 5% of equity;

H. split-up or merge;

I. revision of articles of association; or

J. other alterations provided.

The district/county competent administrative department shall be responsible for submission of altered application materials and preliminary examination statement of a financing guarantee company that has passed the preliminary examination to the Municipal Office of Finance Service for examination and approval.

A financing guarantee company that has alterations involving the company's registration items shall, upon approval of the Municipal Office of Finance Service, apply to the industrial and commercial department for alteration registration according to regulation.

(2) A financing guarantee company in need for dissolution because of split-up, merge or reasons for dissolution stipulated in the articles of association shall apply for the preliminary examination by the district/county people's competent administrative department, after passing the preliminary examination by the district/county competent administrative department, apply to the district/county government, which shall request the Municipal Office of Finance Service to make examination, and upon approval, the financing guarantee company shall by the approval document timely apply to the industrial and commercial department for handling relevant registration formalities.

(3) A financing guarantee company that has major illegal business behavior, if not cancelled, will seriously jeopardize the market order and damage public interests, shall be cancelled by the supervision department, except where laws and administrative regulations provide otherwise.

(4) If a financing guarantee company is dissolved or cancelled, a team of liquidation shall be set up according to law to conduct liquidation, timely pay off relevant debts according to the debt settlement plan. The Municipal Office of Finance Service and district/county competent administrative department shall direct and urge the process of liquidation.

Before release of guarantee responsibility, shareholders of the company shall not distribute the company's property or take any profit from the company.

(5) A financing guarantee company that cannot repay mature debts and has assets not enough to repay all debts or is obviously insolvent, shall go bankrupt according to law.

V. Business Scope

1. A financing guarantee company, upon approval by the Municipal Office of Finance Service, may conduct the following financing guarantee business in part or in whole:

(1) loan guarantee;

(2) bill acceptance guarantee;

(3) trade financing guarantee;

(4) project financing guarantee;

(5) letter of credit guarantee; and

(6) other financing guarantee services.

2. A financing guarantee company, upon approval by the Municipal Office of Finance Service, may concurrently conduct the following business in part or in whole:

(1) procedural preservation guarantee;

(2) bidding guarantee, advances guarantee, project performance guarantee, repayment of tail payment as agreed on guarantee and other performance guarantee services;

(3) intermediary services such as financing consultation and financial advisory related to guarantee business;

(4) making investment with equity fund; and

(5) other services as may be provided.

3. A financing guaranteed company may provide re-guarantee for guarantee liability of other financing guarantee company and handle stock issuance guarantee service but shall meet the following requirements at the same time:

(1) registered capital not lower than 0.3 billion Yuan;

(2) continuous operation over two years;

(3) having no law or regulation breaking or other bad records; and

(4) other requirements as may be provided.

4. A financing guarantee company shall not conduct the following activities:

(1) taking in deposits;

(2) extending loans;

(3) being commissioned with granting of loans;

(4) being commissioned with making investment; and

(5) other activities that shall not be conducted as required.

VI. Risk Control

1. A financing guarantee company shall establish a sound legal person-governed structure, perfect rules of procedure, the decision-making procedure and the internal examination system; it is imperative to institute such systems of service regulation, decision-making procedure, post-guarantee supervision, risk early warning and disposition in compliance with the principle of prudent operation.

2. A financing guarantee company shall institute and perfect the financial accounting system according to requirements of the financial regulations of financial enterprises and accounting criteria for enterprises, truthfully record and reflect the financial situation, operating results and cash flow of the company.

3. The guarantee fees collected by a financing guarantee company may be determined through independent negotiation between the financing guarantee company and the guarantee according to the degree of risk of the guaranteed project, but shall not violate relevant state regulations.

4. The financing guarantee liability balance that a financing guarantee company provides for a single guarantee shall not exceed 10% of the said company's net assets; the financing guarantee liability balance provided for a single guarantee and its associated party shall not exceed 15% of the said company's net assets; and that provided for a single guarantee issuing stocks shall not exceed 30% of the company's net assets.

5. The financing guarantee liability balance of a financing guarantee company shall not exceed 10 times net assets of the company, except where the state provides otherwise.

6. A financing guarantee company making investment with equity fund is limited to investment in treasury bonds, financial bonds and financial products with higher credit rating and fixed returns such as large enterprise debt financing instrument and other investment without interest conflict and with a total sum not higher than 20% of the net assists.

7. A financing guarantee company shall not provide financing guarantee for its parent company or subsidiaries.

8. A financing guarantee company shall draw immature liability reserve by 50% of the current-year guarantee fee income and draw guarantee compensation reserve by not lower than 1% of guarantee liability balance at current year-end. Difference draw shall be made when the guarantee compensation reserve accumulates to 10% of the current-year guarantee liability balance.

9. A financing guarantee company shall conduct risk classified management for the guarantee liability to accurately measure the risk of guarantee liability.

VII. Supervisory Management

The Municipal Office of Finance Service shall, jointly with relevant member units of the municipal joint meeting, do well the supervision over this Municipality's financing guarantee companies and business. The district/county competent administrative department shall take specific charge of routine supervision, statistics, summary and analysis of financing guarantee companies registered in its jurisdiction area.

The contents of supervision include non-on-site supervision, on-site inspection, information disclosure, report on major risk incidents and emergency management.

1. Non-on-site Supervision

(1) Establish an information system for management of financing guarantee companies, bring such information as the submission of materials, business situation, credit situation, supervision situation and risk early warning of the whole Municipality's financing guarantee companies and their branches in the system to conduct comprehensive management.

(2) The district/county competent administrative department shall, as required by these Procedures, establish and perfect the system of collecting, sorting, statistics and analysis of information on financing guarantee companies and the system of supervision scoring, conduct continuous monitoring of operation and risk situation, and do well the routine non-on-site supervision. The district/county competent administrative department shall, at every year-end, conduct compete analysis and evaluation of the annual development and supervision situation of the financing guarantee industry in its jurisdiction area, and before the end of January every year submit to the district/county people's government and the Municipal Office of Finance Service the development and supervision situation of the financing guarantee industry in its jurisdiction area in the previous year, and before the end of March every year, complete a report on the institutional general view of financing guarantee companies under supervision in the previous year.

(3) A financing guarantee company shall, before the 10th day of every month, submit to the district/county competent administrative department a business report and a financial accounting report in the previous month, and before the 15th day of the first month of every quarter submit to the district/county competent administrative department a report on compliance operation and use of capital in cash. The district/county competent administrative department shall, after receiving the said report, submit it to the Municipal Office of Finance Service within five days.

The Municipal Office of Finance Service shall, according to the need of prudent supervision, put forward in good time the requirements for capital quality and capital adequacy rate of financing guarantee companies.

(4) After a financing guarantee company is established and has conducted business, the bank that has cooperation relation with the company shall make real-time tracking on the relevant fund flow and promptly report to relevant departments if finding any abnormality.

(5) The Municipal Office of Finance Service and the district/county competent administrative department, according to the need of supervision, have the power to request a financing guarantee company to provide special materials or summon its director, supervisor or senior manager for supervision talk, asking for explanation for relevant situation and problem or for necessary rectification. If necessary, the Municipal Office of Finance Service and the district/county competent administrative department may notify creditors of the irregularity or risk situation of the relevant financing guarantee company under supervision.

2. On-site Inspection

(1) The Municipal Office of Finance Service and the district/county competent administrative department, may, according to the need of supervision, make on-site inspection over a financing guarantee company, and the company shall give cooperation and shall, as required, provide relevant documents and materials. In doing on-site inspection, there shall not be fewer than two inspectors, and a notice of inspection and relevant certificate shall be produced to the financing guarantee company.

(2) If necessary, the Municipal Office of Finance Service and the district/county competent administrative department may engage the social intermediary agencies including the accounting firm, law firm and credit rating institution to make special auditing, due diligence investigation or credit rating and submit the results to the municipal joint meeting.

3. Information Disclosure

(1) A financing guarantee company shall institute an information disclosure system, disclosing regularly the information on its finance and operation to the Municipal Office of Finance Service and the district/county competent administrative department, shareholders of the company and the cooperation bank.

(2) A financial guarantee company shall timely submit the important decision of the general meeting or meeting of shareholders and the meeting of directors to the Municipal Office of Finance Service and the district/county competent administrative department.

4. Report on Major Risk Incidents and Emergency Management

(1) The Municipal Office of Finance Service and the district/county competent administrative department shall establish the emergency management mechanisms for major risk contingencies, institute the system of discovering, reporting and handling contingencies of the financing guarantee industry, make preplan for handling contingencies of the financing guarantee industry, define the handling body and its duties, handling measures and procedures to timely, effectively handle contingencies of the financing guarantee industry.

(2) A financing guarantee company shall submit to the district/county competent administrative department a brief report within three hours and a detailed report within twelve hours after occurrence of a major risk incident. According to the provisions of the inter-department joint meeting, a major risk incident includes the following situations:

A. A financing guarantee company causes a communal incident.  

B. A financial guarantee company makes a guarantee swindle with a sum that possibly reaches to over 5% of its net assets in guarantee compensation or investment damage.

C. A financing guarantee company has difficulty in liquidity due to its major mature creditor's rights not repaid or its insolvency.

D. A financing guarantee company has its principal assets sealed up, detained or frozen.

E. A financing guarantee company is placed in file for investigation by the administrative organ or judicial organ for suspected violation of law or regulation.

F. The principal investor of a financing guarantee company makes false investment or flight of capital, or the principal investor causes other major harmful influence to the company.

G. The board of directors, the board of supervisors or senior management of a financing guarantee company has over half its members resign within three months.

H. The chief person-in鈥揷harge of a financing guarantee company is missing or dies unnaturally or is put under coercive measure by the judicial organ according to law.

I. Other matters in need for reporting

(3) The district/county competent administrative department shall make timely and accurate judgment on the nature, situation changes and risk degree of a major risk incident of a financial guarantee company in its jurisdiction area, shall promptly report to the district/ county people's government on a major risk incident that jeopardizes the financial order, affects social stability and might cause systematic risk, and shall make timely disposition according to relevant regulations meanwhile reporting to the Municipal Office of Finance Service.

(4) The Municipal Office of Finance Service shall, jointly with relevant parties, handle a major risk incident of this Municipality's financing guarantee industry promptly according to regulations and promptly report to the municipal joint meeting and inter-department joint meeting.

VIII. Legal Liability

In the case of violation of law and regulation, treatment shall be given according to relevant laws and regulations and the Interim Procedures for Management of Financing Guarantee Companies.

1. Any person engaged in the supervision of this Municipality's financing guarantee companies that has one of the following situations shall be given administrative sanctions; if a crime is constituted, the wrongdoer shall be prosecuted for criminal liability:

(1) examining and approving, in contravention of regulations, the establishment, alteration, termination and business scope of a financing guarantee company; 

(2) making on-site inspection in contravention of regulation over a financing guarantee company; 

(3) failing to report on a major risk incident and handling matters according to relevant regulations; and

(4) other behavior in contravention of law and regulations and relevant provisions.

2. A financing guarantee company that violates laws, regulations or the Interim Procedures for Management of Financing Guarantee Companies shall be punished according to relevant provisions if there are such provisions in relevant laws and regulations, if not, the Municipal Office of Finance Service shall order for correction, and may give warning and impose fines; if a crime is constituted, the wrongdoer shall be prosecuted for criminal liability.

3. Any person who operates without authorization the financing guarantee business in contravention of provisions in Article 8 of Interim Procedures for Management of Financing Guarantee Companies shall be banned and punished according to law by the relevant department; for arbitrary use of the wording of 鈥渇inancing guarantee, the Municipal Office of Finance Service shall, along with relevant departments, make an order for correction and give punishment according to law.

IX. Other Matters

1. The existing financing guarantee company with great capital strength and business at a certain scale, and with leading position in the industry that has reconfirmed registration as required, or the would鈥揵e new financing guarantee company whose principal sponsor has great capital strength and influence in the industry at home and abroad, may apply to the district/county people's government where registration is made and send a copy to the Municipal Office of Finance Service at the same time; after examination by the district/county people's government and approval by the Municipal Office of Finance Service, the Municipal Office of Finance Service shall be directly responsible for their establishment and management and such other matters, and the district/county people's government shall cooperate in relevant work.

2. The municipal relevant departments and the district/county people's governments shall further increase support, study, make and carry out policy measures to promote the healthy and steady development of financing guarantee industry.

3. the municipal guarantee industry association shall strengthen self-building, strengthen industrial self-discipline management, earnestly perform self-discipline, rights protection, service, guidance and other duties, and give play to its active role in pushing forward the healthy and orderly development of this Municipality's financing guarantee industry.

4. These Procedures apply to financing guarantee companies with foreign investment and such companies shall comply with existing relevant laws and regulations on foreign investment. The applicant shall obtain approval document of the Municipal Office of Finance Service for preparations and after the completion of the preparations and the passage of acceptance check by the supervision department, the Municipal Office of Finance Service shall affirm the passage of acceptance check of the preparations of a financing guarantee company and issue the business license. The applicant shall go through the registration formalities with the industrial and commercial department after completing relevant formalities with the Municipal Commerce Commission.

5. A non-company financing guarantee institution established in this Municipality shall follow these Procedures in principle.

6. A financing guarantee company already established before the implementation of these Procedures shall make rectification according to relevant state regulations and shall be up to the prescribed requirements.

7. Matters not covered in these Procedures shall follow the Interim Procedures for Management of Financing Guarantee Companies.

8. These Procedures shall be effective as of February 1, 2016, and be effective until December 31, 2020.