钱伯斯印刷版本_英文版_005_CHINA_final

CHINALAWANDPRACTICE:p.2ContributedbyZhongLunLawFirmThe‘Law&Practice’sectionsprovideeasilyaccessibleinformationonnavigatingthelegalsystemwhenconductingbusinessinthejurisdic-tion.Leadinglawyersexplainlocallawandpracticeatkeytransactionalstagesandforcrucialaspectsofdoingbusiness.DefinitivegloballawguidesofferingcomparativeanalysisfromtoprankedlawyersChinaZhongLunLawFirmchambers.comGLOBALPRACTICEGUIDESecuritisationCHINALAwANdPrACtICe2LawandPracticeContributedbyZhongLunLawFirmContents1.StructurallyembeddedLawsofGeneralApplicationp.541.1InsolvencyLawsp.541.2Special-PurposeEntitiesp.551.3TransferofFinancialAssetsp.552.taxLawsandIssuesp.562.1TaxesandTaxAvoidancep.562.2TaxesonSPEsp.572.3TaxesonTransfersCrossingBordersp.572.4OtherTaxesp.572.5ObtainingLegalOpinionsp.583.AccountingrulesandIssuesp.583.1LegalIssueswithSecuritisationAccountingRulesp.583.2DealingwithLegalIssuesp.584.LawsandregulationsSpecificallyrelatingtoSecuritisationp.584.1SpecificDisclosureLawsorRegulationsp.584.2‘CreditRiskRetention’p.614.3PeriodicReportingp.624.4ActivitiesofRatingAgencies(RA)p.634.5TreatmentofSecuritisationinFinancialEntitiesp.644.6UseofDerivativesp.674.7SpecificAccountingRulesp.684.8InvestorProtectionp.684.9BanksSecuritisingFinancialAssetsp.694.10SPEsorOtherEntitiesp.694.11MaterialFormsofCreditEnhancementp.704.12ParticipationofGovernmentSponsoredEntitiesp.714.13EntitiesInvestinginSecuritisationp.715.documentationp.725.1Bankruptcy-RemoteTransfersp.725.2PrincipalWarrantiesp.725.3PrincipalPerfectionProvisionsp.735.4PrincipalCovenantsp.735.5PrincipalServicingProvisionsp.735.6PrincipalDefaultsp.745.7PrincipalIndemnitiesp.745.8OtherPrincipalMattersp.746.enforcementp.746.1OtherEnforcementsp.746.2EffectivenessofOverallEnforcementRegimep.757.rolesandresponsibilitiesofthePartiesp.757.1Issuersp.757.2Sponsorsp.757.3UnderwritersandPlacementAgentsp.767.4Servicersp.767.5Investorsp.767.6Trusteesp.778.SyntheticSecuritisationsp.778.1SyntheticSecuritisationp.779.SpecificAssettypesp.779.1CommonFinancialAssetsp.779.2CommonStructuresp.77LAwANdPrACtICeCHINA3ZhongLunLawFirmhasledthemarketinthepromo-tionandfacilitationofsecuritisationtransactionsinChinasince1995,havingactivelyparticipatedinpilotresearchandrule-makingprocessesrelatingtoallkindsofsecuriti-sationproducts,includingcreditassetsecuritisationandbusinessassetsecuritisation.Thefirmhasalsoactivelyas-sistedregulatorybodieswiththedevelopmentofinforma-tiondisclosureguidelinesandpracticeguidelines,aswellasmodelcontractsfortypicaltypesofsecuritisedassets.Itco-foundedtheChinaSecuritisationForumin2006.BasedinBeijing,thecoreteamconsistsofover30experiencedlawyersledbyBorongLiu;thewidersecuritisationpracticegroupextendstoanetworkofover20partnersbasedinZhongLun’smajorofficesaroundChinaandabroad.Withthestrongsupportofotherpracticegroups,itiscapableofprovidingprompt,valuable,andall-aroundassistancetoallkindsofparticipantsinsecuritisationtransactions,includ-ingbanks,automobilefinancecompanies,leasecompanies,trustcompanies,securitiescompaniesandfundsubsidiarycompanies.AuthorsBorongLiuisapartnerofthefirmandheadofitsFinancialLawdepartment.Hededicateshispracticetosecuritisation,structuredfinanceandassetmanagement,andhasmorethan18years’experienceprovidinglegalservicesinrelatedareas.HechairstheExecutiveCommitteeoftheChinaSecuritisationForum,isaregistrationspecialistforDebtFinancingInstrumentsofNon-FinancialEnterprisesattheNationalAssociationofFinancialMarketInstitutionalInvestors(NAFMII),andsitsontheNAFMIILegalAffairsProfessionalCommitteeandAssetSecuritisationandStructuredFinanceProfessionalCommittee.BorongLiuisanexternalsecuritisationproductevaluationexpertfortheShenzhenStockExchangeandShanghaiStockExchange.XiaoliLiuisapartnerofthefirmanddedicatesherpracticetosecuritisation,structuredfinanceandassetmanagement.Shehasover10yearsofexperienceprovidinglegalservicesintheseandrelatedareas,havingbeenpartofover150securitisationprojectsincludingcreditassetsecuritisation,businessassetsecuritisationandasset-backednotes.Sheisespeciallyfamiliarwithcreditcardreceivablessecuritisation,automobileloansecuritisation,residentialmortgage-backedsecuritisation,consumerloanandothercreditassetsecuritisationsinconsumerfinanceareas.Shehasrichpracticalexperienceanddeeptheoreticalknowledgeinbusinessassetsecuritisationandasset-backednotesrelatingtoallkindsofunderlyingassets,includingbutnotlimitedtoaccountreceivables,factoringassets,property,debtclaimoffinancialleasing,highwaytollrightsandsewagetreatmentfees.XiaoliLiuisco-chairoftheChinaSecuritisationForum’sFutureReceivablesSecuritisationCommittee.JingyiLuisapartnerofthefirm.Hededicateshispracticetosecuritisation,structuredfinanceandassetmanagement,andhasrichpracticalexperienceinsecuritisation,structuredfinanceandassetmanagement.Hehasprovidedlong-termservicestotrustcompaniesandfinancialinstitutionsincludingIndustrialandCommercialBankofChinaandBankofChinarelatingtotheissuanceofasset-backedsecurities.Hisworkhasincludedproductssuchascollateralisedloanobligations,residentialmortgage-backedsecuritisation,commercialmortgage-backedsecuritisation,automobileloansecuritisation,creditcardreceivablessecuritisation,non-performingassetsecuritisation,financialleasingassetsecuritisation,creditassetcirculation,businessassetsecuritisation,asset-backednotesandinsuranceasset-backedplans.JingyiLuisco-chairoftheChinaSecuritisationForum’sSecuritisationLegalIssueResearchCommittee.weiXuisapartnerofthefirmandhasmorethan10yearsofexperienceinsecuritisation,REITsandrelatedareas.OneofthefirstlegalspecialiststoadviseonpilotREITprojectsinChina,shehasbeenleadcounseloninfluentialprojectsincludingtheGohigh-CMS-JinmaoKaichenAsset-BackedSpecialScheme,aswellasotherquasi-REITandCMBSprojectsconcerningvariousunderlyingassets.AftercompletingtheliquidationofChina’sfirstquasi-REITprojectin2017,WeiXurecentlytookanactiveroleinthenewREITspilotprogrammeledbytheChinaSecuritiesRegulatoryCommissionandPeople’sBankofChina.Sheisco-chairoftheAsset-BackedNoteCommitteeoftheChinaSecuritisationForum.CHINALAwANdPrACtICe41.StructurallyembeddedLawsofGeneralApplication1.1InsolvencyLawsSecuritisationisaformofhighlycomplexfinancialproductandisaffectedacutelybyregulatorychanges.ThisisevenmoretruegiventhatthesecuritisationbusinessinChinaremainsapilotprogramme,andthemarketrealityandregu-latoryregimecontinuetobearapidlydevelopinglandscape.Everynowandthennewvariationsofstructureareexperi-mentedwith,newkindsofcollateralareused,andnewkindsofplayersemerge.Thispublicationrepresentstheauthors’bestefforttodescribetheissuestodate,butgiventhegov-ernment’scontinuedlegislativeandregulatoryendeavourtodevelopthesecuritisationmarkets,andtoavoidburdeningthereaderswithanoverextensivelaundrylist,thepubli-cationisnotintendedtobeanall-encompassingencyclo-paediawithregardtoChina’ssecuritisationmarket.Addi-tionally,readersshouldbearinmindthat,thoughlargelycomparable,theChineselegalsystemdifferssometimessubstantiallyfromthoseinthepredominantsecuritisationmarketsincludingtheUSandtheUK.EnglishterminologiesinthispublicationrepresenttheclosesttermstotheactualChineseconcepts,buttheremaybedifferentunderstandingsorinterpretationsundertherespectivelegalsystems.Inter-estedpartiesshouldrelyonprofessionalcounselconcerningspecificissues.Insolvencylawsarecrucialforsecuritisation,becauseapri-marylegalobjectiveformostsecuritisationtransactionsistheinsulationoftheunderlyingassetsfromtheoriginator’sbankruptcyrisks.Whether‘truesale’isapreconditionforthebankruptcyremotenessoffinancialassetsdependsonthetypeandstructureofthetransaction(nb,theconceptof‘truesale’maybeinterpreteddifferentlyfromlegalandaccountingperspectives;apartfromin3AccountingrulesandIssues,below,theanalysesof‘truesale’inthisguidearebasedonthelegalperspective).Fora‘creditassetsecuriti-sation’ora‘trust-typeasset-backednote’transaction(thestructureofwhichiselaboratedin9.2CommonStructures,below)intheInterbankBondMarket,theunderlyingassetsareentrustedbyanoriginatorintoaspecialpurposetrust(SPT),andtheunderlyingassets’bankruptcyremotenessisexplicitlyprovidedforunderArticle15oftheTrustLawofthePeople’sRepublicofChina(the‘TrustLaw’),meaningthat‘truesale’isnotanissueforsuchtransactions.However,inthecaseofa‘businessassetsecuritisation’carriedoutonsecuritiesexchangesandwheretheunderlyingassetsaretransferredfromanoriginatortoaspecialpurposevehicle(SPV),calledan‘asset-backedspecialscheme’,thequestionofwhetherornotthetransferoftheunderlyingassetscon-stitutesa‘truesale’isadecisivefactorindeterminingtheunderlyingassets’remotenessfromtheoriginator’sbank-ruptcyrisks.Atruesaleandasecuredloanaretwodifferentlegalrela-tionships.AccordingtorelevantprovisionsoftheContractLawofthePeople’sRepublicofChina(the‘ContractLaw’),asalescontractisanagreementbywhichasellertransferstheownershipofanunderlyingassettoabuyer,andthebuyerpaysapurchasepricefortheunderlyingasset;aloancon-tractisanagreementwherebyaborrowerborrowsmoneyfromalender,andpaysinterestandrepaystheprincipaluponmaturityoftheloan.Themaindifferencebetweenthetwotransactionsisthatinasalestransaction,theownershipoftheunderlyingassetwillbetransferredfromthesellertothebuyer,whereasinasecuredloantransactionthebor-rowersolelygrantsthelenderasecurityinterestovertheunderlyingasset,insteadoftransferringtheownershipoftheasset.‘Truesale’isahotissueinassetsecuritisationpractice.Chinahasarelativelyshorthistoryofsecuritisation,andjudicialpracticehasnotcometoaclearconsensusoveritsconstitu-tiveelementsoradjudicativestandards.Basedonlimitedjudicialcases,aPeople’sCourt,indecidingthenatureofadeal,tendstorespectpartyautonomy,thustakinganapproachwherebythetextofthecontractiscloselyanalysedtodeterminewhetheritstruemeaningcomplieswiththecharacteristicsofasalescontractasdefinedundertheCon-tractLaw(ie,transferofownershipversusconsideration).Thecourtsseldomusetheequityprinciple(fromtheper-spectiveofthetransferofrisksandrewards)tooverturntheexplicitexpressionsofwillofthepartiestoacontract.How-ever,inatransactionwhereaborrowertransfersanassettoalenderunderaloanagreementorwithapre-existingloanbetweenthem,andbothpartiesagreethattheborrowermaytakebacktheassetafterpayingoffthedebt,aPeople’sCourtmayrecognisethetransferoftheassetasbeingessentiallyasecurityinterestintheformoftitlealienation,andthereforedealwiththeissuewithreferencetothelegalframeworkforsecuredloans.Inrespectofthe‘transferred’assets,atruesaleusuallypro-videsstrongerprotectionfortheacquireroftheassetscom-paredtoasecuredloan.Inasecuredloantransaction,whenaborrowerisunabletorepaytheloan,thelendercannotdirectlygainownershipofthecollateral,butisonlyentitledtotheproceedsfromauction,saleorcompensationbasedontheestimatedpriceofthecollateralforthesakeofrepayingtheloan,andanyproceedsexceedingtheamountofthedebtshouldbereturnedtotheborrower.Inatruesale,ontheotherhand,thetransfereecanassuredlyobtaintheowner-shipoftheunderlyingasset,andallthecashvalueandotherproceedsarisingfromtheunderlyingassetsbelongtothetransferee,unlessthepartiesagreeotherwise.PursuanttoArticle30oftheBankruptcyLawofthePeople’sRepublicofChina(the‘BankruptcyLaw’),iftheunderly-ingassetshavealreadybeenlegallytransferredtootherswhenabankruptcypetitionpertainingtoatransferor(asLAwANdPrACtICeCHINA5thedebtor)isacceptedbyacourt,thentheunderlyingassetswillnotbeheldaspartofthebankruptcyestateofthetrans-feror,unlessthetransferfallswithinthescopeofrevocabletransfers(includingunrequitedtransferandtransactionatmanifestlyunreasonableprice)withinoneyearpriortotheacceptanceofthebankruptcypetition,asprovidedunderArticle31oftheBankruptcyLaw.Ontheotherhand,ifadebtoronlycreatessecurityrightsovercertainassets,thenaccordingtoapplicablelaws,whenthedebtorentersintoabankruptcyproceeding,theseassetsshallbepartofthedebtor’sbankruptcyestate,butthesecuredpartyhasaprior-ityclaimontheassets.UnderArticle19oftheBankruptcyLaw,afteracourtacceptsabankruptcypetition,preservationmeasurespertainingtothedebtor’sestateshallbeliftedandenforcementproceduresovertheestateshallbesuspended,whichmeansthesecuredpartymustdelaytheexerciseofsecurityrightsovertheestateandwaitfortheliquidationoftheestate.Toconclude,inasecuredloantransaction,acreditor’srightsoverthecollateralwillbeaffectedbythedebtor’sbankruptcyprocedureintermsofthetimedelayandthedecision-makingprocessesoftheliquidation;inatruesalesituation,bycontrast,atransferor’sbankruptcywillnothaveanyimpactonthetransferee’sexerciseofrightsovertheunderlyingassets.Inasecuritisationtransaction,legalcounselwillnormallyberequiredtoissueanopiniononthebankruptcyremote-nessoftheunderlyingassets.Whetherthelegalcounselcanissueaclearopiniongenerallydependsontwoaspects,thefirstbeingthelegalcharacteroftheunderlyingassets,andthesecondthedesignofthedealstructure.Asforthefirstaspect,iftheunderlyingassetsarefuturereceivables,orthepaymentonthereceivablesdependsonthecontinuingoperationorperformanceofdutiesontheoriginator’sside(likefreewaytollrightsandpropertyrentclaims),thenitwillbedifficultforthelegalcounseltoissueanopinionthattheunderlyingassetscanachievebankruptcyremoteness.Inthistypeofprojects,iftheoriginatorcanprovidestrongcreditenhancementwithitsownorthird-partycorporatecreditasasupplement,investorsmayacceptsuchassets.Withregardtothedealstructure,theissueofobtaininglegalopinionsalsodependsontheparticularsituation.Forcreditassetsecuritisationandtrusttypeasset-backednotestransactionscarriedoutintheInterbankBondMarket,legalcounselisusuallyabletoissueanopinionconfirmingbank-ruptcyremotenesspursuanttoArticle15oftheTrustLaw,providedthatthetrusthasbeenlawfullyandeffectivelysetupandthetrustpropertieshavebeenactuallydelivered,thesettlorisnotthesolebeneficiaryofthetrust,andthecreationofthetrustdoesnotjeopardisetheinterestsofthesettlor’screditors.Forbusinessassetsecuritisationcarriedoutonthesecuritiesexchanges,theissuanceofanopinionaffirmingbankruptcyremotenessisconditionalontheinclusionoftrueandexplicitexpressionsofthetransferor’swilltotransfertheunderlyingassetsintherelevanttransactiondocuments,andthesatisfactionoftheconditionsprovidedinthetrans-actiondocumentsforthetransferoftheunderlyingassets,includingbutnotlimitedtothepaymentofthepurchaseprice.Meanwhile,asunrequitedtransferandbelow-market-pricetransfermayjeopardisetheinterestsoftheoriginator’screditorsandcanberevokedpursuanttoArticle74oftheContractLawandArticle31oftheBankruptcyLaw,legalcounselissuingaffirmativeopinionsonbankruptcyremote-nessintheaforementioneddifferenttypesofsecuritisationtransactionusuallymakestheassumptionthattheorigina-torreceivesreasonableconsiderationforthetransferoftheunderlyingassets.1.2Special-PurposeentitiesInChina,thestructuresthatasecuritisationdealmayadoptarelimitedtothosedefinedunderrelevantregulations;namely,onlySPTs(forcreditassetsecuritisationandtrusttypeasset-backednotes)orasset-backedspecialschemes(forbusinessassetsecuritisation)canbeusedtoachievethebankruptcyremotenessofunderlyingassets.NeitherSPTsnorasset-backedspecialschemedconstitutelegalentities(thisiswhyitmaynotbeappropriatetorefertothemas‘special-purposeentitiess’),butratherformcontractualrelationships,wherethetrusteeorschememanagercon-ductstransactionsoradministrativeactivitiesonbehalfofthetrustorthespecialscheme,andmayfurtherengagetheservicer,fundcustodianandotherinstitutionstoprovideservicesfortheSPV.Though,inpractice,investorsmaypur-chasevariousfinancialassetsthroughprivateequityfundsintheformoflimitedpartnerships,thesetransactionsareclassifiedasprivateequityfundbusinessinsteadofstandardsecuritisation,andarethereforesubjecttodifferentlawsandregulations.1.3transferofFinancialAssetsUnderPRClaws,thetransferofacreditor’sclaimcanhaveboth‘internaleffect’and‘externaleffect’.Theinternaleffectofthetransferreferstoitseffectinrelationtothetransferor(includingitscreditors)andthetransferee.Inthisregard,aslongasthecontractprovidingforthetransferofassets(transferagreement)hascomeintoeffect,andtheprecon-ditionsofthetransferprovidedinthetransferagreement(suchastheestablishmentoftheSPVthatwillreceivetheassets,andthepaymentofthepurchaseprice)havebeenmet,thenthetransferoftheassetswillbeeffectiveagainstthetransferoranditscreditors.Correspondingly,theancil-laryrightsofthecreditor’sclaim(includingrightsderivedfromguaranty,mortgage,pledge,etc)willbetransferredtothetransfereealongwiththecreditor’sclaim.Theexternaleffectofthetransferofacreditor’sclaimgener-allymeanstheeffectofthetransferinrelationtothedebtor.AccordingtoArticle80oftheContractLaw,anytransferofacreditor’sclaimisinvalidagainstthedebtorunlessthedebtorhasbeeninformed.Thismeansthatifadebtorhasnotreceivednoticeofthetransferofthecreditor’sclaim,theCHINALAwANdPrACtICe6transfereecannot,onitsown,asserttherightagainstthedebtor.Theissueofexternaleffectoftransferofacreditor’sclaimcanalsoextendtotheeffectonanyunknownthirdpar-ties.Forexample,ifatransferorsignsatransferagreementwithatransferee,andbeforetheactualtransferoftheclaim,itassignsthesameclaimtoathirdparty,thenthequestionofwhichpartycanassertarightontheclaimispotentiallyfraught.Chinahasnotestablishedapublicnoticesystemforthetransferofcreditor’sclaims.AlthoughthePeople’sBankofChina(PBOC)hasreleasedtheMeasuresforthePledgeRegistrationofAccountReceivables,whichallowpartiestoregisterthetransferofaccountreceivableswiththeregistra-tionandpublicnoticesystemrunbytheCreditReferenceCentreofthePBOC,thelegalforceoftheregistrationisuncertainduetoalackofsupportinhigher-levellaw.Thus,atpresent,arelativelysecuremeasuretoavoidthelegalrisksofmultipletransfersistonotifythedebtor.Inaddition,astothemortgageandpledgesecuringthecreditor’sclaim,astransferofsuchsecurityinterestsoftenrequiresachangeofregistrationortransferofpossessionasamethodofnoticeandperfectionagainstunknownbona-fidethirdparties,ifthetransferor,withoutconsentfromthetransferee,dispos-esofthecollateralsonitsownorincollaborationwiththemortgagor/pledgorbeforesuchchangeofregistrationandtransferofpossessioncouldbeeffected,thenthetransferorislikelytoloseitsclaimagainstthebona-fidethirdpartythatobtainssuchcollaterals.Asmentionedabove,atransferoffinancialassetsdoesnotneedanyfurtherperfectionmeasuresforittobeeffectiveagainstthetransferoranditscreditors.Buttomakesuchtransferenforceableagainstthedebtorsandabona-fidethirdparty,perfectionmeasuresmayberequired.Theseusuallyincludenotifyingthedebtorsofthetransfer,changeofmortgage/pledgeregistration,transferofpossessionofthepledgedmovables,etc.Formoredetailedanalysis,see5.3PrincipalPerfectionProvisions,below.Inatruesale,forthepurposeoftransfereeprotection,theperfectionmeasuresmentionedaboveareusuallyforeseenforcertaincircumstances.Inthecaseofsecuredloans,sincethereisnotransferoffinancialassets,therearenosuchrequirements.InnormalsecuritisationpracticeinChina,withaviewtofacilitatingthecollectionofthefinancialassets,maintainingtheoriginators’clientrelationship,andkeepingthetransac-tioncostsundercontrol,perfectionmeasuresareoftennotrequiredatthedeliveryoftheunderlyingassets,andareonlyrequiredupontheoccurrenceofeventsunfavourableforthetransaction(oftencalled‘perfectionevents’).Asmentionedabove,atransfereecannotdirectlyassertaclaimagainstadebtoruntilthedebtorhasbeengivennoticeofthetransfer,butthetransfereemayrequirethetransferor(oftenactingastheservicer)toremitthecollectionsaris-ingfromtheassets.Withrespecttothemortgageorpledgesecuringthecreditor’sclaim,thetransfereemaybeharmedbythetransferor’sdisposalofthecollaterals,andthetrans-feree’srightmaynotbeenforceableagainstabona-fidethirdparty.Tomitigatesuchrisks,responsibilitiesforactsinbreachoftheagreementareoftenprovidedinthetransac-tiondocuments,includingthoserequiringthetransferortorepurchasethedamagedassetsasineligibleassets.2.taxLawsandIssues2.1taxesandtaxAvoidanceAtpresent,Chinahasonlyoneregulationthatdealsexclu-sivelywi