LawFlash

China Issues Final Rule on Asset Securitization

April 12, 2013

中国发布资产证券化新规

The China Securities Regulatory Commission (the “CSRC”), aiming to expand its asset securitization program and boost liquidity, recently published Provisions on the Administration of Securities Companies’ Asset Securitization Businesses (the “New Regulation”). The New Regulation became effective on March 15, 2013. Prior to launching the New Regulation, the CSRC issued and sought public feedback on a draft version of the regulation on February 26, 2013 (the “Draft Regulation”), a summary of which can be found in our recent alert on the Draft Regulation. The New Regulation reflects certain comments received by the CSRC from the public. This alert summarizes the major differences between the Draft Regulation and the New Regulation and highlights some of the other provisions of the New Regulation.

1. Background

As noted in our previous Alert on the Draft Regulation, China launched a pilot program for securities companies’ asset securitization business in 2005. Since then, the CSRC had suspended the program during the subprime mortgage crisis and the resulting global financial crisis. China re-launched its asset securitization program in 2012. Fewer than 20 corporate asset securitization projects have been approved by the CSRC to date, and the liquidity of asset-backed securities remains low. The New Regulation allows asset-backed securities to be created based on a wider array of assets, lowers the threshold for a securities company to engage in such business, and provides guidance for the asset securitization industry.

2. Major Differences Between the Draft Regulation and the New Regulation

Under the Draft Regulation, an asset-backed security could be offered through either a public offering or a private offering. However, the option to offer to the retail public has been removed. Under the New Regulation, asset-backed securities may be offered only to “qualified investors” in a private offering, subject to a limitation of no more than 200 offerees. The New Regulation does not define the term “qualified investors” and instead gave the power to the Securities Association of China (“SAC”) to establish the eligibility criteria. Although asset-backed securities may be traded on permitted trading venues where, in some cases, the retail public may trade securities (including recognized stock exchanges in the PRC, the inter-dealer quotation and transfer system of the SAC, the OTC trading markets for securities companies, and other exchange venues approved by the CSRC), they may only be transferred to qualified investors and held by no more than 200 qualified investors at any given time.

Under the Draft Regulation, assets that could be securitized include (i) property rights, including accounts receivable, credit assets, beneficial interests in a trust, and infrastructure income rights, (ii) real property, including commercial properties, and (iii) securities, including commercial paper, bonds, stocks and related derivative instruments. However, securities as an asset class have been removed and do not appear in the New Regulation. Instead, the New Regulation gives the power to the CSRC to approve other types of assets or rights (including securities) that may be securitized. The change is evidently not intended to narrow the types of assets that can be securitized, but is intended to enable the CSRC to better control risks involved.

Certain types of relationships between the originator and the securities company in a securitization transaction that may create a conflict of interest are required to be disclosed to investors. Under the Draft Regulation, such relationships include the ownership of more than 5% of the originator’s shares by the securities company, or vice versa, any provision of underwriting and financial advisory services in the past three years, and any other mutually beneficial relationship that would be considered material between the originator and the securities company. The New Regulation further provides that disclosable relationships include circumstances where the originator or the security company contributes to more than 5% of the securities company’s or the originator’s capital, respectively. In addition, where any such relationship is present, the manager and the originator are required to implement a mechanism to deal with the conflicts of interests and disclose such mechanism, as well as the relevant risks involved, in the offering materials.

Other provisions that have been included in the New Regulation but did not appear in the Draft Regulation include the timeframe (being two months) within which CSRC will decide whether to approve or reject an application, and the prohibition on any early redemption of asset-backed securities by investors at their discretion or on the winding up an SPV at investors’ sole discretion.

3. Asset Securitization Business Under the New Regulation

The New Regulation applies when a securities company establishes a special-purpose vehicle (“SPV”) that obtains assets from an originator and issues asset-backed securities whose returns are derived from cash flows generated from the transferred assets. The SPV may use various forms of credit enhancement to support the payment obligation with respect to all or a portion of the asset-backed securities issued by the SPV. The custodian must be a commercial bank that is licensed to serve as a custodian, the China Securities Depository and Clearing Company Limited, a securities company that is licensed to serve as a custodian, or a custodian approved by the CSRC.

Under the New Regulation, cash generated from the pool of securitized assets may be used to purchase new assets that are of the same type or types as the securitized assets constituting the pool, and the new assets can be added to the pool of securitized assets. The securitized assets must be free from any encumbrances (e.g., mortgage or pledge) or any form of limitation on the originator’s rights to transfer the assets to the SPV, subject to minor exceptions. The SPV may issue different classes of securities, but securities within the same class are required to have the same rights and subject to the same risks.

Compared to previous regulations, the New Regulation lowers the threshold for a securities company to conduct an asset securitization business by, among other things, removing the minimum required net capital size and classified ratings issued pursuant to Provisions on the Classified Supervision and Administration of Securities Companies, thus allowing more securities companies to be eligible to participate in the securitization market. A securities company is eligible to apply to the CSRC to manage a securitization vehicle if it has a securities asset management business license, is not subject to administrative penalties as a result of material violations of laws and regulations in the past year, and has the capacity to control risks effectively.

The securities company has the discretion to invest in the SPV its own assets or the assets of any collective investment scheme, segregated accounts, or securities investment fund that it manages. The New Regulation does not limit the amount of a securities company’s investment in the SPV or the ratio of that investment to the SPV’s total capitalization.

4. Approval Process

A securities company is required under the New Regulation to seek approval from the CSRC before issuing asset-backed securities, and compared to prior regulations, the New Regulation simplifies the review and approval process. A securities company may apply directly to the CSRC without obtaining the prior consent from any relevant stock exchanges.

The New Regulation specifies the respective responsibilities of the CSRC’s agencies, stock exchanges, registration and settlement institutions, and relevant self-regulatory organizations with regard to the asset securitization business. The CSRC will decide whether to approve or reject an application within two months from the time it receives the application. The New Regulation is expected to further develop China’s asset securitization market, boost liquidity in asset-backed securities in general and facilitate capital formation.

Bingham’s securitization practice is widely recognized for its global market leadership. Our presence spans across the U.S., Europe and Asia. Members of our team have regularly been ranked as leaders in the practice area by Chambers Global, Chambers Asia, Chambers USA and IFLR 1000. We have been named 2013 Securitization and Structured Finance Law Firm of the Year by U.S. News & World Report and Best Lawyers and have represented issuers and underwriters on more securitizations than any other law firm in the U.S. in the past five years, according to Asset-Backed Alert and Thomson Financial. Our Capital Markets team enjoys Band 1 ranking in Chambers USA: America’s Leading Lawyers for Business and is the only Band 1 law firm recommended for both client service and commercial awareness.

 


中国发布资产证券化新规

为发展资产证券化业务,提高资本流动性,中国证券监督管理委员会(简称“证监会”)最近公布了《证券公司资产证券化业务管理规定》(以下简称“《新规定》”)。《新规定》自2013年3月15日起施行。《新规定》发布前,证监会在2013年2月26日公布了规定的征求意见稿(以下简称《规定草案》)(具体内容可查阅我们最近的《规定草案》简报),向社会公开征求意见。《新规定》反映了证监会向社会公开征集到的某些意见。本简报总结了《规定》草案》与《新规定》之间的主要差别,以及突出介绍《新规定》的某些新增规定。

1. 背景

正如我们在上次《规定草案》简报所述,中国于2005年开始了证券公司企业资产证券化业务的试点。之后,由于金融危机以及由此带来的全球金融危机,证监会暂停了这一业务。在2012年,中国重新启动了资产证券化业务进程。截至目前,证监会批准的企业资产证券化项目不到二十个,资产支持证券的流动性仍然很低。《新规定》列明了可以证券化的基础资产的具体形态,降低了证券公司从事资产证券化业务的准入门坎,为资产证券化行业提供指引。

2. 《规定草案》与《新规定》的主要差别

根据《规定草案》,资产支持证券可以公开发行,也可以非公开发行。但是,公开发行的途径已被取消。根据《新规定》,资产支持证券只可以向“合格投资者”发行,合格投资者合计不得超过二百人。《新规定》没有对“合格投资者”下定义,但“合格投资者”的具体标准,可由中国证券业协会另行规定。虽然《新规定》允许资产支持证券在证券交易所(包括证券交易所、中国证券业协会机构间报价与转让系统、证券公司柜台市场以及中国证监会认可的其他交易场所)进行转让,但是,资产支持证券只可以转让给合格投资者,而且,持有资产支持证券的合格投资者转让后合计不得超过二百人。

根据《规定草案》,可以证券化的资产包括:(i)财产权利,包括应收账款、信贷资产、信托受益权和基础设施收益权;(ii)不动产,包括商业物业;和(iii)有价证券,包括商业票据、债券及其衍生产品、股票及其衍生产品。《新规定》不包括证券,而是授权中国证监会审批其他可以证券化的财产或财产权利(包括证券)。这一改变显然不是要限制证券化资产的类型,而是要让中国证监会更好地控制风险。

资产证券化交易中原始权益人和管理人(证券公司)的某些关系可能产生的利益冲突需要向投资者披露。根据《规定草案》,有下列情形之一的,管理人应当充分披露下列有关事项并对可能存在的风险进行揭示:证券公司持有原始权益人5%以上的股份、原始权益人持有证券公司5%以上的股份、证券公司与原始权益人之间近三年存在承销保荐、财务顾问等业务关系或管理人与原始权益人存在其他重大利益关系。《新规定》进一步规定应披露的关系还包括证券公司持有原始权益人5%以上的出资份额或者原始权益人持有证券公司5%以上的出资份额。另外,如果管理人与原始权益人存在以上所列情形,管理人应当采取有效措施,防范可能产生的利益冲突,并且在计划说明书中披露可能存在的风险以及说明采取的风险防范措施。

《新规定》新增加(《规定草案》没有)的其他规定还有:中国证监会应当自受理申请之日起2个月内,对申请作出批准或不予批准的书面决定;投资者不得主张分割专向计划资产,以及不得主张要求专项计划回购资产支持证券等。

3. 《新规定》下的资产证券化业务

《新规定》适用于证券公司通过设立专项资产管理计划,从原始权益人获得基础资产,并且以该基础资产产生的现金流为支持,发行资产支持证券的业务活动。专项计划可以采用各种信用增级方式履行其所发行资产支持证券的全部或部分给付义务。托管人应当是具有相关业务资格的商业银行、中国证券登记结算有限责任公司、具有托管业务资格的证券公司或者中国证监会认可的其他资产托管机构。

根据《新规定》,从证券化集合资产获得的现金可以用于购买与原证券化集合资产同一类型的新资产,新资产可以累计到原证券化集合资产。证券化资产不得附带任何担保负担(例如抵押或质押)或者其他权利限制,少数情况除外。同一专项计划发行的资产支持证券可以划分为不同种类。同一种类的资产支持证券,应享有同等权益,承担同等风险。

与之前的规定相比,《新规定》降低了证券公司从事资产证券化业务的准入门坎,取消了净资本规模以及依据《证券公司分类监管规定》确定的分类结果等限制,从而允许更多证券公司进入证券化市场。根据《新规定》,具备证券资产管理业务资格、近一年未因重大违法违规受到行政处罚、能有效控制业务风险等基本条件的证券公司均可向中国证监会申请开展资产证券化业务。

证券公司有权以其自有资产或任何集体投资计划、专项基金账户或由其负责管理的证券投资基金的资产投资专项计划。《新规定》不限制证券公司投资专项计划的总额和该投资占专项计划资本总额的比例。

4. 审核程序

证券公司发行资产支持证券,应当向中国证监会提出申请并获得批准。与之前的规定相比,《新规定》简化了审批流程。根据《新规定》,证券公司可以直接向中国证监会申请,无需事先取得有关证券交易所的论证意见。

《新规定》明确了中国证监会派出机构、证券交易所、证券登记和结算机构以及有关自律组织对资产证券化业务的职责。

《新规定》的实施将有助于推动中国资产证券化市场的发展,提高资本流动性,促进资本的积累。

斌瀚律师事务所的证券化业务被公认为在全球市场上占有领先地位,我们的业务足迹遍及美国、欧洲和亚洲等市场。我们团队的成员多次被《钱伯斯全球》(Chambers Global)、《钱伯斯亚洲》(Chambers Asia)、《钱伯斯美国》(Chambers USA)和《国际金融法律评论1000》(IFLR 1000)评为证券化业务的领军者。我们被《美国新闻与世界报导》(U.S. News & World Report)和《最佳律师》(Best Lawyers)评为2013年“年度最佳证券化和结构性融资律师事务所”。根据《资产支持简报》(Asset-Backed Alert)和《汤姆森金融》(Thomson Financial)的统计,过去五年,我们代表发行人和承销商负责的证券化项目数量超过美国其他任何一家律师事务所。我们的资本市场团队荣居《钱伯斯美国》(Chambers USA)“美国最佳商业律师”第一梯队之列,并且是第一梯队律师事务所中唯一一家同时以优质客户服务和商业意识而获推荐的律师事务所。 

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Isaacson-Laurence
Beglin-Brian
Ye-Xiaowei

This article was originally published by Bingham McCutchen LLP.