Ministry of Finance: State-owned financial institutions shall not convey improper benefits through asset transfer

　　According to the website of the Ministry of Finance, the Ministry of Finance issued the "Notice on Matters Related to Regulating the Transfer of Assets of State-Owned Financial Institutions", which clearly states that state-owned financial institutions shall not improperly convey benefits through asset transfer; unless otherwise provided by the state, state-owned financial institutions may not transfer assets to non-state-owned transferees by direct agreement without public bidding and disposal procedures.

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　　The circular clarifies that the transfer of assets of wholly state-owned, wholly state-owned, state-controlled and actually controlled financial institutions (including their branches and subsidiaries at all levels with actual control, hereinafter collectively referred to as state-owned financial institutions) shall strictly abide by the provisions of national laws, regulations and policies, give full play to the role of the market in allocating resources, follow the principles of equal remuneration and openness, fairness and justice, and shall not improperly convey benefits through asset transfer. In the course of asset transfer, where matters involving government public management are involved, the relevant approval procedures shall be performed in accordance with national provisions.

　　The transfer of equity-like assets by state-owned financial institutions shall be carried out in accordance with the relevant provisions of the Administrative Measures for the Transfer of State-owned Assets of Financial Enterprises (Decree No. 54 of the Ministry of Finance) and other relevant provisions; the transfer of non-equity assets such as real estate, machinery and equipment, intellectual property rights, and related financial assets shall be carried out in accordance with the relevant provisions of this Notice, and the industry regulatory departments shall comply with their provisions if otherwise provided. Where the subject assets of the transfer are outside the territory of the people, they shall be implemented with reference to the provisions of this Notice on the premise of complying with the laws and regulations of the country where they are located, and the provisions of the State shall prevail if otherwise provided. Where the State provides otherwise, such as the transfer and disposal of assets such as collateral (pledge) assets, debt-bonded assets, litigation assets, credit assets, leased assets, non-performing assets, and creditor's rights involved in the carrying out of normal business operations, as well as judicial auction assets and government expropriation assets, the State shall comply with those provisions.

　　Except as otherwise provided by the State, the transfer of financial assets such as trust plans, asset management products, and fund shares involving underlying assets that are all equity assets and enjoy floating income shall be carried out in accordance with the provisions on the transfer of equity assets. Financial institutions included in the management of state-owned financial capital relying on state power and credit support shall implement the provisions of this Notice on matters related to the transfer of assets.

　　The circular requires that state-owned financial institutions should earnestly strengthen the supervision and management of the transfer of assets among branches and subsidiaries at all levels, put an end to black-box operations, ensure the orderly circulation of assets, and prevent the loss of state-owned assets.

　　The notice is clear and strictly limits the scope of direct agreement transfer.

　　In principle, the transfer of assets of state-owned financial institutions shall be carried out in the form of public transactions such as entry transactions, public auctions, online auctions, and competitive negotiations. The transfer of securities and financial derivatives traded in the open market shall be carried out through trading systems and trading venues established in accordance with law. Unless otherwise provided by the State, state-owned financial institutions may not transfer assets to non-state-owned transferees by direct agreement without the public auction disposal procedures. In the case of intra-group asset transfer, exit in accordance with the terms of the investment agreement or contract, exercise of the right of first refusal by a third party in accordance with the contract, transfer of assets in a specific industry to state-owned and state-controlled enterprises, and other circumstances approved by the financial department at the same level, the state-owned financial institution may adopt the method of direct agreement transfer to conduct the transaction after the state-owned financial institution has deliberated and decided in accordance with the authorization mechanism.

　　The circular requires that prices be reasonably determined to effectively prevent the loss of state-owned assets.

　　Where the transfer of assets of a state-owned financial institution requires asset appraisal in accordance with the Interim Measures for the Supervision and Administration of State-owned Assets Appraisal of Financial Enterprises (Decree No. 47 of the Ministry of Finance) and other relevant provisions, the transferor shall entrust an appraisal institution with corresponding qualifications to conduct asset appraisal and perform the corresponding approval and filing formalities, and determine the reserve price of the transfer on the basis of the approved or filed appraisal results. For asset transactions with clear market fair value, asset transactions with a low value of the transfer target (the value of a single asset is less than 1 million yuan), asset transactions between wholly state-owned and wholly-owned financial institutions, asset transactions between state-owned financial institutions and their wholly-owned subsidiaries, and asset transactions between holding subsidiaries of state-owned financial institutions that do not cause changes in the state-owned rights and interests owned by state-owned financial institutions, and which will not cause the loss of state-owned assets after being demonstrated by state-owned financial institutions or third-party intermediary agencies, After performing the decision-making procedures in accordance with laws and regulations, the transfer reserve price may be determined by reference to the fair market value for asset transactions with a clear market fair value, and other asset transactions may be determined with reference to the fair market value, the audited book value, and other methods. For asset transactions for which the investment agreement or contract has agreed on an exit price, after performing the decision-making procedures in accordance with laws and regulations, and it is demonstrated that it will not cause the loss of state-owned assets, it may be implemented at the agreed price.

　　The circular calls for strengthening supervision and inspection and seriously investigating and dealing with violations of laws and regulations.

　　The local supervision bureaus of the Ministry of Finance shall strengthen the supervision and management of the transfer of assets by the central state-owned financial institutions in the territory, and if it is found that the transferor has not implemented or violated relevant regulations or infringed on the rights and interests of the state, it shall require the transferor to immediately suspend or terminate the asset transfer in accordance with law and report to the financial department at a higher level. Where relevant personnel of financial departments at all levels and state-owned financial institutions violate laws, administrative regulations, and the provisions of this Circular, make decisions beyond their authority, neglect their duties, or abuse their powers for personal gain, causing the loss of state-owned assets, they shall bear the liability for compensation in accordance with laws and regulations, and the relevant departments shall give sanctions in accordance with the authority of personnel and cadre management; if a crime is constituted, it shall be transferred to the judicial organs for handling. (Zhongxin Jingwei APP)