Measures for the Administration of Financial Leasing Companies (2024)

Measures for the Administration of Financial Leasing Companies (2024)

(Issued by Order No. 6 [2024] of the National Financial Regulatory Administration on September 14, 2024 and coming into force on November 1, 2024)

Chapter I General Provisions
Article 1 These Measures are developed in accordance with the Civil Code of the People's Republic of China, the Company Law of the People's Republic of China, the Banking Supervision Law of the People's Republic of China, and other applicable laws and regulations for the purposes of regulating the operations of financial leasing companies, preventing financial risks, and promoting the sound operation and high-quality development of financial leasing companies.
Article 2 For the purposes of these Measures, “financial leasing companies” means non-banking financial institutions that are formed with the approval of the National Financial Regulatory Administration (NFRA) and mainly engaged in the financial leasing business.
The name of a financial leasing company shall include the words “financial leasing”. Without the approval of the NFRA, no organization or individual may form a financial leasing company, and no organization may use the words “financial leasing” in its name.
Article 3 For the purposes of these Measures, “specialized subsidiary” means a specialized leasing subsidiary formed by a financial leasing company with the approval of the NFRA to engage in the financial leasing business in specific fields or carry out the financial leasing business in a specific business model.
For the purposes of these Measures, “project company” means a project subsidiary specially formed by a financial leasing company or a financial leasing company's specialized subsidiary for specific purposes, such as engaging in a particular type of financial leasing business.
Article 4 For the purposes of these Measures, “financial leasing” means transaction activities in which a financial leasing company, as the lessor, purchases leased property from the seller according to the lessee's selection of the seller and leased property, and provides leased property to the lessee for use, while the lessee pays the rent. Such transactions are characterized by the nature of financing and involve the transfer of ownership of the leased property from the seller to the lessor.
For the purposes of these Measures, “sale and leaseback” means a form of financial leasing in which the lessee is also the seller, that is, the lessee sells its own property to the lessor and, at the same time, enters into a financial leasing contract with the lessor to lease back the property from the lessor.
Article 5 The types of leased property used by financial leasing companies to carry out the financial leasing business include equipment assets, productive biological assets, and other assets recognized by the NFRA.
Article 6 The NFRA and its local offices shall, in accordance with the law, supervise and administer financial leasing companies, specialized subsidiaries of financial leasing companies, and project companies formed by them.
Chapter II Formation and Modification of Institutions
Section 1 Formation and Modification of Financial Leasing Companies
Article 7 To apply for the formation of a financial leasing company, the applicant shall meet the following conditions:
(1) The bylaws of the financial leasing company comply with the provisions of the Company Law of the People's Republic of China and the rules of the NFRA.
(2) Its principal investors meet the prescribed conditions.
(3) Its registered capital is monetary capital paid up in a lump sum of, at a minimum, one billion yuan or an equivalent in freely convertible currencies, and the NFRA may raise the minimum amount of registered capital of the financial leasing company in light of the company's development and the needs of prudential regulation.
(4) It has directors and officers qualified for their positions, and at least 50% of its total number of employees have three or more years of experience in finance or financial leasing, and it has at least one person with three or more years of experience in finance on key positions such as risk management, fund management, and compliance and internal control management respectively.
(5) It has established effective corporate governance, internal control, and risk management systems.
(6) It has established an information technology framework commensurate with its operations and satisfying the regulatory requirements, has necessary, safe, and compliant information systems to support its operations, and has technologies and measures that guarantee its continuous operations.
(7) It has business premises, security protection measures, and other facilities suitable for its operations.
(8) It meets other prudential conditions specified in the rules of the NFRA.
Article 8 The principal investors of financial leasing companies include commercial banks registered inside or outside China with an independent legal person status, large enterprises registered inside or outside China and mainly engaged in the manufacturing of products suitable for financial leasing transactions, financial leasing companies registered outside China with an independent legal person status, companies invested by and operated with state-owned (financial) capital formed or authorized by law, and other investors recognized by the NFRA.
A financial leasing company shall have, at a minimum, one principal investor that meets the conditions specified in Articles 10 through 13, and the investor's capital contribution shall account for not less than 51% of the total capital stock of the financial leasing company to be formed.
The merger and acquisition or restructuring of a high-risk financial leasing company by an investor or banking financial institution holding financial equity upon authorization by the State Council, an entity as otherwise prescribed by laws and regulations, or an investor approved by the NFRA shall not be subject to the provisions of the preceding paragraph of this article.
Article 9 The principal investor of a financial leasing company shall meet the following conditions:
(1) It has a good corporate governance structure, sound risk management rules, and an effective internal control mechanism.
(2) It has determined definite development strategies and a clear profit model for the financial leasing company to be formed.
(3) It has neither been involved in any major case nor committed any serious violation of laws and regulations in the past two years.
(4) It has a good social reputation, a good integrity record, and a good tax payment record.
(5) The capital to be contributed by it to the financial leasing company is its own capital, and it may not make such capital contribution with funds held as a trustee or borrowed funds.
(6) It shall comply with the laws and regulations of its place of registration if it is registered overseas.
(7) It meets other prudential conditions specified in the rules of the NFRA.
Article 10 To be a principal investor of a financial leasing company, a commercial bank registered inside or outside China with an independent legal person status shall, in addition to satisfying the conditions specified in Article 9 of these Measures, meet the following conditions:
(1) Its regulatory rating is good.
(2) Its total assets at the end of the last accounting year were not less than 500 billion yuan or an equivalent in freely convertible currencies.
(3) Its financial condition is good, with profits earned in the last two accounting years consecutively.
(4) The balance of its equity investment (including the amount of the current investment) shall generally not exceed 50% of its net assets.
(5) It has effective measures for combating money laundering and financing of terrorism.
(6) The regulatory authority of the country or region where the overseas commercial bank is located has established a sound supervision and administration cooperation mechanism with the NFRA.
(7) It satisfies the prudential regulation requirements of the regulatory authority of the country or region where it is located.
(8) It meets other prudential conditions specified in the rules of the NFRA.
Article 11 To be a principal investor of a financial leasing company, a large enterprise registered inside or outside China and mainly engaged in the manufacturing of products suitable for financial leasing transactions shall, in addition to satisfying the conditions specified in Article 9 of these Measures, meet the following conditions:
(1) Its operating revenue in the last accounting year was not less than 50 billion yuan or an equivalent in freely convertible currencies.
(2) Its net assets at the end of the last accounting year were not less than 40% of its total assets.
(3) Its sales revenue from its main business in the last accounting year accounts for, at a minimum, 80% of its total operating revenue.
(4) Its financial condition is good, with profits earned in the last three accounting years consecutively.
(5) The balance of its equity investment (including the amount of the current investment) shall generally not exceed 40% of its net assets.
(6) It meets other prudential conditions specified in the rules of the NFRA.
If an enterprise holds the equity of a financial leasing company through an investment or operating company within the group based on its business management needs, the conditions specified in this article may be determined based on data in the group's consolidated statements.
Article 12 To be a principal investor of a financial leasing company, a financial leasing company registered outside China with an independent legal person status shall, in addition to satisfying the conditions specified in Article 9 of these Measures, meet the following conditions:
(1) It has evident advantages in such aspects as business resources, human resources reserve, and management experience, and has mature experience in financial leasing operations and other aspects.
(2) Its total assets at the end of the last accounting year were not less than 20 billion yuan or an equivalent in freely convertible currencies.
(3) It has a good financial status, with profits earned in the last three accounting years consecutively.
(4) The balance of its equity investment (including the amount of the current investment) shall generally not exceed 40% of its net assets.
(5) A financial leasing company subject to financial regulation shall satisfy the prudential regulation requirements of the regulatory authority of the country or region where it is located.
(6) It meets other prudential conditions specified in the rules of the NFRA.
Article 13 To be a principal investor of a financial leasing company, a company invested by or operated with state-owned (financial) capital as formed or authorized in accordance with the law shall, in addition to satisfying the conditions specified in Article 9 of these Measures, meet the following conditions:
(1) The total assets of a company invested by or operated with state-owned capital shall not be less than 300 billion yuan or an equivalent in freely convertible currencies and its registered capital shall not be less than three billion yuan at the end of the last accounting year. The total assets of a company invested by or operated with state-owned financial capital shall not be less than 500 billion yuan or an equivalent in freely convertible currencies and its registered capital shall not be less than five billion yuan at the end of the last accounting year.
(2) It has a good financial status, with profits earned in the last three accounting years consecutively.
(3) It meets other prudential conditions specified in the rules of the NFRA.
Article 14 To be an ordinary investor of a financial leasing company, any other financial institution shall be subject to the conditions specified in subparagraphs (1), (3), (4), (5), (6), and (7) of Article 9 and subparagraphs (1), (3), (4), (5), (6), and (7) of Article 10 of these Measures.
To be an ordinary investor of a financial leasing company, any other non-financial enterprise shall, in addition to satisfying the conditions specified in subparagraphs (1), (3), (4), (5), (6), and (7) of Article 9 of these Measures, also meet the conditions that the listed company has gained profits for the last two consecutive accounting years, the net assets at the end of the last accounting year shall not be less than 30% of its total assets, and the balance of its equity investment (including the amount of this investment) shall generally not exceed 50% of its net assets.
Article 15 An enterprise that falls under any of the following circumstances shall not serve as an investor of a financial leasing company:
(1) Its corporate governance structure or mechanism is evidently defective.
(2) It has a large number of affiliates, with a complex and non-transparent equity structure and frequent and abnormal affiliated transactions.
(3) Its core business is not prominent and its business scope involves too many industries.
(4) Its cash flow fluctuations are substantially affected by the economic climate.
(5) Its asset-liability ratio or financial leverage ratio is higher than the average level of the industry.
(6) It is included in the list of severely dishonest entities by the relevant authority.
(7) It seriously evades financial debts due.
(8) It provides any false materials or makes any misstatement.
(9) It was investigated and punished by the financial regulatory department or relevant government department due to its violation of laws and regulations, which has adverse effects.
(10) Any other circumstance which may have a significantly adverse impact on the financial leasing company.
Article 16 The nature, organizational form, and organizational structure of a financial leasing company shall comply with the provisions of the Company Law of the People's Republic of China and other relevant laws and regulations and shall be indicated in the company's bylaws.
Article 17 An office qualification confirmation system shall be implemented for directors and officers of financial leasing companies.
Article 18 A financial leasing company that has any of the following modifications shall apply to the NFRA or its local office for approval:
(1) Change of its name.
(2) Adjustment of its business scope.
(3) Change of its registered capital.
(4) Change of equity or adjustment of equity structure.
(5) Amendments to the company's bylaws.
(6) Change of its domicile.
(7) Replacement of any director or officer.
(8) Business combination or division.
(9) Any other modification prescribed by the NFRA.
Section 2 Formation and Modification of Specialized Subsidiaries
Article 19 With the approval of the NFRA, a financial leasing company may form specialized subsidiaries in bonded areas, pilot free trade zones, free trade ports, and other domestic areas within China as well as in overseas regions. If overseas investment matters are involved, the relevant provisions of the state on the management of overseas investment shall be complied with.
Article 20 The business fields of specialized subsidiaries include aircraft (including engines), vessels (including containers), and other financial leasing business fields approved by the NFRA. With the approval of the NFRA, a financial leasing company may form a specialized subsidiary specialized in the manufacturer lease business model.
The business fields involved in the financial leasing business or the business models such as manufacturer lease of a specialized subsidiary shall match the specific business fields or specific business models reflected in its company name.
Article 21 A financial leasing company applying for the formation of a domestic specialized subsidiary shall, in addition to satisfying the conditions specified in Article 9 and subparagraphs (1), (3), (4), and (5) of Article 10 of these Measures, meet the following conditions:
(1) It has good capabilities for consolidated management.
(2) It has certain advantages in such aspects as existing business volume and human resources reserve, has mature experience in such aspects as specialized management and the business operation of project companies, and can effectively support the sound and sustainable development of the specialized subsidiary.
(3) All its regulatory indicators comply with the provisions of these Measures.
(4) It meets other prudential conditions specified in the rules of the NFRA.
Article 22 To apply for the formation of an overseas specialized subsidiary, a financial leasing company shall, in addition to satisfying the conditions specified in Article 21 of these Measures, meet the following conditions:
(1) It is really necessary for its business development and it has clear strategies for overseas development.
(2) Its internal management level and risk management and control ability meet the development needs of its overseas business.
(3) It has a team of professionals suitable for the overseas business environment.
(4) The application complies with the laws and regulations of the relevant country or region.
Article 23 A specialized subsidiary formed by a financial leasing company shall meet the following conditions:
(1) The investor satisfies the prescribed conditions.
(2) Its registered capital is, at a minimum, 300 million yuan or an equivalent in freely convertible currencies.
(3) It has directors and officers who are qualified to hold office and has qualified personnel who are familiar with the financial leasing business.
(4) It has a good corporate governance structure, sound internal control and risk management systems, and a management information system suitable for its operations.
(5) It has business premises, security protection measures, and other facilities commensurate with its operations.
(6) A domestic specialized subsidiary shall have the bylaws in compliance with the Company Law of the People's Republic of China and the rules of the NFRA.
(7) It meets other prudential conditions specified in the rules of the NFRA.
Article 24 A specialized subsidiary formed by a financial leasing company shall generally be 100% held by the financial leasing company. If it needs to introduce any other investor under special circumstances, the shareholding ratio of the financial leasing company shall not be less than 51%.
The introduced investor shall, in principle, meet the conditions for principal investors specified in Articles 10 through 13 of these Measures, be specialized in the specialized subsidiary's specific field of operation, have comparative advantages in such aspects as business development and leased property management, and be conducive to improving the specialized development capability and risk management level of the specialized subsidiary.
Article 25 A specialized subsidiary of a financial leasing company having any of the following modifications shall apply for approval or report it to the NFRA or its local office as required:
(1) Change of its name.
(2) Change of its registered capital.
(3) Change of equity or adjustment ......