Ministry of Commerce General Office Circular No.37, 2005 on Strengthening Approval Administration on Non-performing Loans Disposal with Foreign Funds

China import & export Policy  2005-06-17 10:41:12

Administrative commercial sectors in all the provinces, autonomous regions, municipalities, separately listed cities and Xinjiang production and construction corps of CPLA, and state-level economic and technological development zones:      With State Council’s approval, China makes steady development in absorbing foreign funds to dispose financial assets (creditor's assets), achieving good results since the publication of Provisional Regulations on Financial Asset Management Companies Absorbing Foreign Funds for Assets Reorganization and Assets Disposal. Related matters on further standardizing absorbing foreign funds to reorganize and dispose China’s non-performing loans, and maintaining health development of non-performing loans markets are now notified as follows:      1. For the purpose of speeding up non-performing loans disposal of China’s state-owned banks and financial asset management companies, and eliminating loss of state assets, State’s Council approve financial asset management companies to absorb foreign funds to reorganize and dispose assets, as wel l as to transfer non-performing loans such as stock ownership and creditor’s rights to foreign investors in 2001. Financial asset management companies are also allowed to set up foreign invested enterprises to restructure debts and recover creditor’s rights. All above investing measures are policy -related, delicate and cover a wide range of subjects, therefore the examination and approval of which should be very strictly controlled. The setting up of foreign invested enterprises of this kind should be reported to Ministry of Commerce for approval, administrative commercial sectors of differe nt levels and national economic and technological development zones cannot make bold to approve the foundation of enterprises.      2. State Economic and Trade Commission, Ministry of Public Security and State Administration of Industry and Commerce issued Circular No.568, 2000 on Outlawing All Kinds of Debt-demanding Companies and Crack down on Illegal Debt-demanding Activities in 2000, giving a definite regulation to outlaw al l kinds of debt-demanding companies and prohibit all kinds of units and personals from setting up debt-demanding companies in any form. All local administrative commercial sectors and national economic and technological development zones should strictly implement in accordance with above regulations and cannot approve to set foreign-invested debt-demanding companies in any form.      3. All relevant units should require enterprises to promise not to do business of non-performing loans disposal such as debt reorganization and recovery of creditor’s right in written form while approving the setting up of enterprises of economic commitment, business agent, management consultation, financial consultation and asset consultation as well.      4. All enterprises that operate business out of Ministry of Commerce’s permission, or engaged in business of non-performing loans disposal and recovery of creditor’s right will be reported to Ministry of Commerce, and those refuse to be rectified during required time limit will be punished in acco rdance with relevant laws and regulations.      5. Please all units transfer this circular to administrative commercial sectors of same level for implementation. If encounter any problem, please reflect to Ministry of Commerce Department of Foreign Trade immediately.      This circular takes effects as from April 29, 2005         General Office of Ministry of Commerce   April 29, 2005