China Banking and Insurance Regulatory Commission: Expand the scope of financial non-performing asset acquisition in an orderly manner and accelerate the clearing of non-performing assets.

Recently, the China Banking and Insurance Regulatory Commission released the "Regulation on the Management of Non-performing Assets Business of Financial Asset Management Companies" (hereinafter referred to as the "Regulation"), which came into effect upon its release. Officials from the relevant regulatory authorities answered questions from reporters. The officials stated that the "Regulation" starts from the entire process of non-performing asset acquisition, management, and disposal by financial asset management companies, systematically expanding the scope of non-performing asset acquisition, specifying and detailing the standards for non-financial institution non-performing assets that can be acquired. The "Regulation" further clarifies regulatory requirements for key processes such as due diligence, disposal pricing, and disposal announcements. Additionally, it stipulates that financial asset management companies can conduct light asset business related to non-performing assets, such as consulting services and entrusted disposal, to cultivate differentiated core competitiveness, play a role in counter-cyclical rescue, especially in reforming and resolving risks for small and medium-sized financial institutions. The China Banking and Insurance Regulatory Commission issued the "Regulation on the Management of Non-performing Assets Business of Financial Asset Management Companies" to deepen the implementation of the spirit of the central financial work conference, regulate the non-performing asset business of financial asset management companies, guide these companies to focus on their main responsibilities, enhance their professional capabilities in acquiring and disposing of assets, and play a role in financial rescue and counter-cyclical adjustment. The "Regulation" consists of 8 chapters and 70 articles, including general principles, non-performing asset acquisition, management, disposal, other related businesses, risk management, supervision, and supplementary provisions. The key points include focusing on main responsibilities, standardizing business processes, enhancing risk prevention and control, and improving comprehensive service levels to support the high-quality development of the economy. The issuance of the "Regulation" is an important measure to implement the spirit of the central financial work conference, guiding financial asset management companies to leverage their unique functional advantages, focus on non-performing asset business, revitalize existing assets of financial institutions, and ensure the stable and long-term development of the financial market. The China Banking and Insurance Regulatory Commission will continue to strengthen supervision, guide financial asset management companies in implementing the "Regulation," and encourage them to embody the political and people-oriented nature of financial work, adhere to their functional positioning, cultivate differentiated core competitiveness, and contribute to the prevention and resolution of financial risks and support the development of the real economy in the new situation.Assets or corresponding shares of public debt.(Six) In addition to the above-mentioned assets, non-financial institutions, local financial organizations, overdue public debt assets that have been confirmed by people's courts or arbitration institutions, as well as physical assets and equity assets formed by the disposal of the above-mentioned debt assets. (Seven) Other assets approved by the China Banking Regulatory Commission. For the purposes of these measures, non-financial institutions refer to domestic legal entities, institutions, social organizations, non-legal entities or other organizations excluding various financial institutions regulated by the central financial management department and its dispatched institutions, as well as local financial organizations regulated by local financial regulatory institutions. The term "obvious value depreciation" refers to assets that cannot maintain their value or create value for the holder, and whose market value is significantly lower than the principal or face value of the debt assets. Article 7 Financial asset management companies shall strictly follow the principles of authenticity and transparency when acquiring assets, objectively and reasonably pricing assets through due diligence, evaluation and valuation procedures, and ensuring the real transfer of assets and risks. They shall not provide channels for financial institutions to evade asset quality supervision or provide financing for various institutions in violation of regulations. Article 8 Financial asset management companies shall acquire the assets specified in Article 6 of these Measures through public transfer or agreement transfer in accordance with national laws, regulations and regulatory policies. In cases where only one qualified intending transferee is generated through public transfer, agreement transfer may be adopted for the acquisition. Assets for which national laws, regulations and regulatory requirements require transfer through public transfer shall be acquired through public transfer. Article 9 Financial asset management companies acquiring non-performing assets shall fulfill necessary procedures such as project application, due diligence, valuation, pricing, scheme formulation, project approval, and project implementation. Article 10 Before initiating the acquisition work, financial asset management companies shall conduct preliminary investigations based on preliminary acquisition intentions, develop project proposal reports, and conduct preliminary reviews of project feasibility and compliance. Financial asset management companies shall rigorously review project sources, not using fund intermediaries to connect projects, and ensuring project sources are in compliance with the law. Article 11 Financial asset management companies shall conduct independent, objective, and comprehensive due diligence on the non-performing assets to be acquired, ensuring the ownership of the assets is authentic and effective and meets the requirements of assets that can be acquired under these Measures, and forming conclusions that truly and comprehensively reflect the value and risk of the assets. Due diligence should strictly adhere to the "double-person principle," and may engage intermediary institutions such as legal, evaluation, and audit institutions as needed to assist in the work, but the substantial responsibilities of due diligence such as feasibility studies and onsite collateral verification shall not be outsourced to third-party institutions. The transferring party shall provide necessary conditions for due diligence by financial asset management companies for the acquisition, and shall provide a minimum of fifteen working days for due diligence. Article 12 Based on due diligence, financial asset management companies shall use appropriate valuation methods to value the assets to be acquired. For assets with large amounts or whose value is difficult to evaluate independently, qualified evaluation institutions may be hired to provide evaluation reports or value consultancy and analytical reports, and ensure that the valuation results are genuine, objective, and fair. Article 13 Based on valuation, financial asset management companies shall prudently and reasonably price the assets to be acquired, without pricing first and then valuing, and shall not significantly deviate from the due diligence and valuation results in determining the acquisition price. Article 14 Financial asset management companies shall formulate acquisition plans based on due diligence, valuation, and asset pricing results, and shall strictly approve the acquisition plans in accordance with the decision-making process, without circumventing the approval decision process in any way. Article 15 Financial asset management companies shall acquire assets in accordance with the approved plan, ensure that the acquisition agreement is complete and all elements are in place, promptly handle asset reception and document collection work, and ensure the real transfer of assets. Without fulfilling the investment conditions, funds shall not be disbursed. Article 16 After acquiring non-performing debt assets, financial asset management companies shall promptly notify the debtor and guarantor in cooperation with the transferring party using reasonable means. If the debtor and guarantor cannot be contacted, notifications may be made through publication in nationally or provincially influential newspapers or accredited non-performing asset registration and trading platforms. Financial asset management companies shall retain materials proving that notification obligations have been met. Article 17 During the transitional period from the transaction benchmark date to the asset delivery date, financial asset management companies shall clarify their respective management responsibilities with the transferring party and maximize asset preservation. Chapter III Management of Non-Performing Assets Article 18 Financial asset management companies shall establish sound asset management systems, classify and formulate appropriate management strategies for debt, equity, and physical assets, clarify management responsibilities, improve management efficiency, promptly assert rights, and prevent asset value depreciation due to improper management. Article 19 Financial asset management companies shall avoid long-term holding of debt, equity, and physical assets, conduct regular inventory checks, reconcile accounts, timely monitor changes in asset value and risks, formulate rational disposal plans, and expedite disposal and realization. Financial asset management companies shall regularly assess the reasonableness and feasibility of disposal plans, and adjust and improve them in a timely manner. Article 20 To improve property rights and functionality and create conditions for transfer, financial asset management companies may make additional investments in assets already held. Financial asset management companies shall establish internal management systems for additional investments, control the scale of additional investments reasonably, choose appropriate ways of additional investment within the scope permitted by laws, regulations, and regulatory policies, formulate clear post-investment disposal plans, and promptly promote disposal according to the plan after completing the investment. Additional investments shall not be used as a way to simply provide financing. Article 21 Financial asset management companies shall determine the scope of assets to be evaluated and the specific form of valuation according to relevant laws, regulations, and internal management system requirements. Assets affected by significant unexpected events, sudden increases in credit risk, or significant value depreciation shall be evaluated promptly. External intermediary institutions may be hired to evaluate assets if necessary. Article 22 The department responsible for asset pricing and valuation review within financial asset management companies shall be independent of the department responsible for asset disposal in terms of organization and personnel.Independently analyze and evaluate asset valuation reports issued; in cases where conditions are restricted and necessary asset valuation procedures cannot be performed, independently analyze and evaluate asset value advisory or analysis reports issued by intermediaries.Chapter IV Disposal of Non-performing Assets Article 24 When a financial asset management company disposes of non-performing assets, it should adhere to the principles of legality, transparency, openness, competition, and excellence. The company should improve its internal systems for due diligence, asset valuation, disposal announcements, asset pricing, plan development, and plan approval for asset disposal. The disposal must strictly follow the approval and operating procedures, and must not violate or shorten the procedures for disposal. Article 25 Financial asset management companies should follow the principles of cost-effectiveness and risk control and choose the best methods to dispose of assets, such as debt recovery, debt restructuring, debt-to-equity conversion, leasing, write-off, transfer, entrusted disposal, and asset securitization. Relevant justifications should be provided. Article 26 When financial asset management companies pursue debt repayment for debt assets, they can use methods such as direct collection, litigation (arbitration) for recovery, and bankruptcy settlement. (1) When using direct collection, they should monitor changes in the debtor's (guarantor's) repayment ability, send collection notices in a timely manner, and recover the principal and interest as much as possible. If direct collection is not successful, then the disposal method should be adjusted promptly. (2) When using litigation (arbitration) for debt recovery, they should assess the feasibility of litigation (arbitration), determine the timing, method, and subject of litigation based on the debtor's (guarantor's) financial situation, and change the legal subject promptly. They should require the debtor (guarantor) to fulfill obligations or apply for enforcement according to legal documents, and recover cash and other assets as soon as possible. If there are judgments, rulings, or decisions that are believed to be incorrect or if there is disagreement with the judgments, rulings, or decisions, they should take judicial relief measures promptly and keep records accordingly. (3) When using bankruptcy settlement of debtors (guarantors), they should participate in creditors' meetings, closely monitor the bankruptcy process, prevent debtors from using bankruptcy to evade debts, and protect their own interests against behaviors that damage creditors' interests or unfair rulings during the bankruptcy process. Article 27 When financial asset management companies restructure debt assets, they can use debt-to-asset swaps, modify debt terms, asset exchanges, or a combination of these methods. (1) When using debt-to-asset swaps, they should focus on the ownership and condition of the swapped assets, evaluation values, maintenance costs, appreciation (depreciation) trends, and liquidity, carefully determine the amount of debt assets to be offset with swapped assets, and retain the right to continue to recover the remaining debt assets. They should prioritize assets with clear ownership, complete certificates, and easy realization for debt offsetting. They should handle transfers or ownership changes promptly while considering cost-effectiveness and asset risks. (2) When using debt term modification, they should analyze the debtor's (guarantor's) repayment capability, determine new debt terms carefully, clearly specify the conditions triggering the termination and restoration of the original debt terms, sign agreements with debtors (guarantors), implement relevant guarantee terms and protective measures, and urge debtors (guarantors) to fulfill obligations. (3) When using asset exchanges, they should ensure that the assets to be exchanged are legally sourced, have clear ownership, and are fairly valued. (4) When using debt restructuring based on the separation, merger, or bankruptcy of debtors, they should establish operation and approval systems to protect their legitimate rights effectively. Article 28 When financial asset management companies use debt-to-equity conversion to dispose of non-performing assets, they should carefully price the equity conversion and clearly define the exit strategy. Article 29 When financial asset management companies lease non-performing assets, they should determine lease conditions and terms rationally to ensure the safety and rental income of the leased assets, create conditions for timely disposal and realization. Article 30 When financial asset management companies write off qualified assets, they should comply with relevant laws and regulations, establish procedures for writing off operations, strictly follow the write-off procedures and conditions, and establish sound management systems for written-off assets, enhance management, and dispose of them at opportune times. Article 31 Financial asset management companies should transfer non-performing assets legally and in compliance with laws and regulations on a basis of openness, fairness, competition, and excellence. (1) When using auction to dispose of assets, they should comply with relevant laws and regulations on auctions and strictly supervise the auction process. (2) When using competitive bidding to dispose of assets, they should refer to relevant laws and regulations on bidding to standardize the bidding process. (3) When using competitive bidding to transfer assets, they should provide equal bidding opportunities to all bidders. For transfers of non-performing assets through auctions, competitive bidding, or bidding, it should disclose information related to the transferred assets according to regulations, fulfill disclosure obligations, improve transparency in the transfer process, and prohibit collusion to reduce prices, cheating, and exclusion of competition. Article 32 Financial asset management companies are not allowed to agree on the transfer of assets without following the public transfer disposal procedures, except in the following cases: (1) Certificates issued by the municipal or higher levels of the government stating that public transfer is not suitable; (2) Financial asset management companies temporarily holding assets for risk control, asset revitalization, etc., and have pre-determined exit strategies; (3) Other situations recognized by laws, regulations, rules, or normative documents. For the agreed transfer of assets, financial asset management companies should adhere to the principle of prudence, transparent operations, accurate records, and effectively prevent risks. Article 33 Except for transfers to government departments, debtors' enterprise shareholders, and their designated institutions, financial asset management companies may not transfer the following assets: (1) Debts owed to government departments; (2) Assets related to national security and sensitive information, such as national defense and military industry; (3) Assets that cannot be transferred due to other laws and regulations. Article 34 Financial asset management companies are prohibited from transferring assets to the following individuals or institutions and are required to indicate this in the disposal announcement: (1) Government officials, employees of financial asset management companies; (2) Personnel related to intermediary institutions involved in the asset disposal work; (3) If the debtor or guarantor is a natural person, include the individual and their direct relatives; (4) Controlling shareholders of debtor companies, actual controllers and their controlled subsidiaries, guarantor companies and their controlled subsidiaries, debtor companies' other related companies; (5) Legal entities or special purpose entities formed by the above parties; (6) Other entities that the China Banking Regulatory Commission identifies as unsuitable transferees. Article 35Financial asset management companies should include eligibility prompts for transferees in disposal announcements and bidding notices, require transferees to sign relevant commitment letters before confirming the transaction, and rigorously review the eligibility of the transferee. At the same time, they should also require the trading venue to provide eligibility prompts and eligibility reviews for transferees.Article 36 After the financial asset management company transfers assets, the transfer price should be paid in full at one time. If it is necessary to adopt an installment payment method, the down payment ratio, payment period, agreed interest rate, etc. should be carefully determined under the premise of controllable risks; after effective implementation of performance protection measures, part or all of the asset ownership certificates should be transferred to the transferee based on the collection progress, and the receivables formed after the transfer of asset ownership certificates should be classified into the risk category based on the credit status of the transferee. The down payment ratio for installment payments should not be lower than 30% of the transfer price, and the total payment period should not exceed two years in principle. Article 37 When a financial asset management company entrusts the disposal of assets, it should clarify the authorization scope and period of the entrusted institution through an agreement, clarify the disposal progress and termination terms, and continuously monitor and manage it. When entrusting a financial institution as the selling party or its designated institution to dispose of assets, clauses with guaranteed minimum recovery obligations should not be agreed upon, and disposal decisions that have a significant impact on the asset recovery situation should not be delegated to the entrusted party; non-financial institutions as the selling party or its designated institution should not be entrusted to dispose of assets; benefit transfer is strictly prohibited through entrusted disposal. Article 38 Before a financial asset management company disposes of non-performing assets, it should fully utilize existing archival materials and effective information obtained in daily management, conduct preliminary market research and analysis on the assets to be disposed of based on the actual situation through special investigations, key investigations, on-site investigations, or random investigations, record the investigation process, keep the investigation materials, and create a written investigation report. The financial asset management company should ensure that the investigation report does not contain false records, major omissions, or misleading statements about important factors that may affect asset value judgment and disposal method selection. Market research by the financial asset management company should be mainly performed by internal personnel or departments, and if necessary, may be entrusted to intermediary institutions for implementation or participation. When a financial asset management company entrusts intermediary institutions to conduct market research, independent judgment should be adhered to, and intermediary institution research reports should not simply replace the company's own analysis and investigation work. Article 39 When a financial asset management company evaluates non-performing assets for disposal, it should adhere to the principle of "separating evaluation and disposal," ensuring that asset evaluation and disposal are independent of each other, and use scientifically reasonable valuation methods based on the characteristics of different types of assets to determine asset value. When disposing of assets by converting debt into equity, selling equity assets, or selling real estate, except for listed company tradable equity, external independent evaluation institutions should generally assess the assets. For assets where evaluation work is severely limited, on-site investigation procedures cannot be performed, and essential evaluation materials cannot be obtained, if they are to be traded openly, market mechanisms should be fully utilized to discover the assets' fair value. The financial asset management company should not replace its own investigation, evidence collection, and analysis work with external evaluation or consulting results, and should independently analyze and assess evaluation or consulting reports provided by external institutions. Article 40 Based on due diligence investigation and valuation, a financial asset management company should comprehensively consider factors such as feasibility, costs, and time of realization, and price the assets to be disposed of, specifying the minimum price. When there is a significant difference between the evaluation results and the inquiry results or negotiation results, the reasons should be analyzed and explained in detail, and the reviewing personnel should independently express written opinions on the reasons in the approval decision-making process. (1) When transferring tradable equity of listed companies, follow the relevant rules of the stock exchange; (2) The initial disposal price of non-listed company equity should not be lower than 90% of the evaluation result, and the initial disposal price of movable property, real estate, or other property rights should not be lower than 80% of the evaluation result; (3) If there is no successful transaction for a planned reduced-priced disposal, the reasons for the price reduction should be explained in the disposal plan, and the price reduction should not exceed 20% of the previous disposal price, with an interval of no less than five working days. Article 41 When disposing of assets, a financial asset management company should develop a disposal plan. The main contents of the asset disposal plan should include asset information, timing of disposal, disposal methods, pricing basis, etc. The personnel responsible for the plan should be responsible for the truthfulness and completeness of the plan content and should provide written confirmation that there are no false records, major omissions, or misleading statements. Article 42 A financial asset management company should establish internal procedures for asset disposal announcements to ensure standardized and orderly announcements. At least seven working days before the asset disposal plan is submitted for review, the financial asset management company should publish a disposal announcement on the company's website. Projects with a target asset value of over CNY 50 million should also be announced in newspapers with provincial-level influence in the asset's location or on network platforms included in the list of providers of online judicial auction services by the Supreme People's Court. When disposing of assets through public transfers, at least two or more investors must participate in the bidding. If there is only one bidder, an additional announcement must be made according to the announcement procedure. After three working days of the announcement, if no new bidders participate, the transaction can be completed. When a project is disposed of using the method specified in Article 27(2) of this Regulation, in addition to meeting the above announcement requirements, an announcement should also be made on the company's website, newspapers with provincial-level influence in the asset's location, or network platforms included in the list of providers of online judicial auction services by the Supreme People's Court, at least five working days before signing the restructuring agreement. If no other investors express purchase intentions or the purchase conditions proposed by other investors are inferior to the existing plan, the disposal can proceed according to the existing plan. Article 43 When a previously announced disposal project has a change in the disposal plan, if the announcement content remains unchanged or the disclosed assets are reduced, a new announcement may not be necessary; however, if new assets are added to the disposal plan, a supplementary announcement should be made at least seven working days before the asset disposal plan is submitted for review. Article 44 The following disposal projects may not require public announcements in accordance with this Regulation: (1) Projects disposed of using debt recovery, leasing, debt-to-equity swap, write-off, or entrusted disposal methods; (2) Cases where the debtor voluntarily fulfills court judgments or settles through enforcement during the lawsuit process, as well as projects settled under the supervision of the court through a settlement agreement; (3) Projects entering bankruptcy proceedings in accordance with the law; (4) Projects involving debtors who are government agencies; (5) Projects approved by the relevant.Projects related to national security and sensitive information in the defense and military industries, as well as other projects that are not suitable for public disclosure, must provide proof issued by government departments.(Six) Acquire non-performing asset projects simultaneously agreed to be restructured and dispose of according to the agreement stated in Article 6 of these regulations; (Seven) Other projects identified by the China Banking Regulatory Commission as unsuitable for public disclosure. Article 45 Financial asset management companies should establish a dedicated asset disposal review committee and other operational decision-making bodies, and establish a comprehensive asset disposal review process. The corresponding operational decision-making bodies should adhere to principles such as collective deliberation, professional review, independent voting, and avoidance of conflicts of interest, strictly following the asset disposal review process for approval decisions. (1) Establish and improve authorized review and approval systems, clarifying the review and approval powers of various entities at different levels. (2) Establish a mechanism for separating asset disposal from review, with specialized approval bodies (positions) or full-time approval personnel objectively and independently reviewing disposal plans within authorized scope according to procedures. (3) Asset disposal review personnel should possess the professional qualifications and experience necessary for the industry, be honest, diligent, independent in offering opinions. (4) Asset disposal review personnel should review the legality, compliance, rationality, and feasibility of disposal plans. The asset disposal review process and various opinions during the review should be accurately, comprehensively, and detailed recorded and documented, with the approval bodies and personnel responsible for the review opinions. Article 46 If changes are necessary within six months of approval of a disposal plan and the new conditions are better than the original plan, the project should be reported to the original approval authority; if the new conditions are worse or the plan has not been implemented for more than six months, the approval process should be restarted. Article 47 Financial asset management companies must strictly implement the approved disposal plan. For approved projects with additional conditions, these conditions must be implemented before execution. During the implementation of disposal plans, financial asset management companies should continuously monitor factors that may affect recovery, track the progress of contract performance or litigation cases. In the case of any interference or resistance, financial asset management companies should take legal measures to protect their legitimate rights. Financial asset management companies should clearly define management responsibilities to ensure that assets are genuinely and cleanly removed from the balance sheet. The accounting treatment of asset transfers should comply with relevant accounting standards regarding the termination of financial assets and for complex transactions or contracts, accounting firms or other intermediary institutions may be hired to provide professional opinions on asset termination recognition. Article 48 When disposing of assets to affiliated parties, financial asset management companies must comply with relevant regulations on related-party transactions and provide full disclosure of relevant information. Chapter Five Other Business Related to Non-Performing Assets Article 49 Financial asset management companies may engage in the following other business related to non-performing assets: (1) Consultancy services; (2) Entrusted disposal of non-performing assets; (3) Custody of high-risk institutions; (4) Acting as a bankruptcy manager or member of a bankruptcy liquidation team; (5) Acting as the trustee manager of corporate credit bonds. Article 50 Financial asset management companies can leverage their experience, data, and human resources advantage in non-performing asset disposal to provide professional advisory services such as financial risk mitigation, reform and restructuring of small and medium financial institutions, and corporate bankruptcy restructuring. Article 51 When undertaking entrusted disposal business, financial asset management companies should conduct due diligence according to the relevant provisions in Chapter Four of these regulations, and establish reasonable fee standards and methods. The fees charged should be commensurate with the quality of service provided, and fees should not be charged for services that do not provide substantial benefits or improve efficiency for clients. Financial asset management companies undertaking entrusted disposal business should not advance funds for clients or promise disposal earnings or bear shortfall obligations. Article 52 When entrusted by government, institutions, shareholders, or regulatory authorities to custody risk institutions, financial asset management companies should obtain valid written authorizations and relevant authorizations, and strictly fulfill custody responsibilities according to the entrusted tasks and authorizations during the custody period. Article 53 When acting as a bankruptcy manager or a member of a bankruptcy liquidation team, financial asset management companies should strictly comply with relevant laws and regulations and faithfully and diligently fulfill their management responsibilities. Article 54 Financial asset management companies meeting the requirements acting as the trustee manager of corporate credit bonds should strictly adhere to relevant laws, regulations, and normative documents. They should sign trust management agreements with clients, play a central role in bond default resolutions, and dutifully fulfill their trustee management responsibilities impartially. Article 55 When engaging in the business outlined in this chapter, financial asset management companies should establish a firewall between such activities and their proprietary business. Financial asset management companies should treat other clients in related business fairly and should not seek undue benefits or engage in illicit activities. Article 56 When engaging in the business outlined in this chapter, financial asset management companies should promptly take effective measures to prevent and eliminate conflicts of interest with other businesses. They should not engage in related activities until the conflicts of interest are resolved, except when accepting assignments or regulations from government or supervisory authorities. Chapter Six Risk Management Article 57 Financial asset management companies should establish a comprehensive risk management system, internal control system, and business information system appropriate to the nature, scale, and complexity of non-performing asset business activities according to these regulations and related laws and regulations. They should have staff with relevant knowledge and skills to fulfill risk management and compliance duties, and strictly guard against ethical risks in key processes such as asset acquisitions, pricing, intermediary selection, and asset disposal, preventing against undue influence. Article 58 The board of directors of financial asset management companies bears ultimate responsibility for the risks of non-performing asset business activities. They should periodically assess the risks of non-performing asset business activities directly or through authorized professional committees, incorporating assessment results into comprehensive risk management reports. Senior management should understand the risks involved in non-performing asset business activities, establish a sound management and risk control system to effectively identify, monitor, and alert various risks associated with non-performing asset business activities, and devise specific risk control measures. Article 59 Financial asset management companies should strictly regulate the authorization approval system, constructing a clear and effective approval decision-making mechanism with clear delineation of responsibilities, transparent processes, and efficient operations.Strictly implement the requirements of "separation of evaluation and decision-making" and "separation of examination and decision-making". Under no circumstances and by no means should normal approval decision-making procedures be circumvented. It is strictly prohibited to influence the audit work through unauthorized actions, procedural violations, false assessments, falsification of records, or tampering with records.Financial asset management companies should establish a dedicated approval system, selecting employees with excellent business level, compliance awareness, and strong discipline as dedicated approval personnel to enhance the professional level of business approval. At the same time, strengthen the supervision and management of dedicated approval personnel to ensure their independent and objective performance of approval responsibilities. Article 60 Financial asset management companies should strengthen authorization and management of non-performing asset business in branch offices, reasonably determine authorization limits based on branch office business level, risk management, and internal control capabilities, and establish a dynamic authorization adjustment mechanism. Evaluate and adjust authorizations in a timely manner. Financial asset management companies should define major risks in their risk management system, and for branch offices that encounter major risks, timely adjust authorization for non-performing asset business. The board of directors of financial asset management companies should clearly define the authorization arrangements for senior management personnel, regularly assess the reasonableness of authorizations and adjust them timely. The board of directors should establish standards for major (high-risk) businesses, clarify the review procedures for major (high-risk) non-performing asset businesses, and strictly prohibit senior management personnel from evading review procedures by splitting quotas. If senior management personnel exceed their authority or engage in improper behavior within their authorized scope, they should be held accountable. Article 61 Financial asset management companies should establish an internal inspection and supervision system for non-performing asset business, set up or designate independent supervision departments or positions, clarify responsibilities and requirements, and allocate personnel according to their responsibilities. Develop standardized work procedures and conduct internal inspection and supervision on the source of non-performing asset projects, due diligence, valuation pricing, review and approval processes. Internal inspection and supervision can be conducted on-site or off-site. Projects with complex underlying assets, difficult valuation judgment, and large amounts involved should be inspected on-site. If necessary, external experts may be hired or intermediary institutions may be commissioned to carry out specific audit reviews and provide independent review opinions. If significant flaws or ethical risks are identified, the project should be halted promptly. Internal inspection and supervision should be conducted at least every six months, and major projects should be inspected promptly. The process and results of disposing of loss-making projects should be promptly reviewed. Article 62 Financial asset management companies should establish and improve mechanisms for selecting, managing, and evaluating intermediary institutions, set strict standards and a negative list for selecting intermediary institutions, track and evaluate their services, and hold them accountable if they violate regulations or fail to fulfill their duties, according to the law. If there are specific regulations by the industry regulatory department regarding the selection and management of intermediary institutions, they should be followed. Intermediary institutions involved in inspection and supervision should not simultaneously participate in asset acquisition, management, or disposal. Article 63 Financial asset management companies should establish a system for post-project management, strictly implement post-management requirements, regularly conduct post-management, and focus on examining and analyzing the performance, financial status, creditworthiness, and collateral status of debtors. When adverse situations that may affect asset security arise, risk assessment should be promptly conducted and targeted measures should be taken. Article 64 Financial asset management companies should establish a sound business information system for non-performing asset business, integrating all aspects of the non-performing asset business into the information management system for processing, timely and accurately entering business information, enhancing the procedural and standardized operation of business management, strengthening network security and data security management, and preventing procedural, operational, and information security risks. Financial asset management companies should strengthen archive management, timely archive project materials, establish a connection between the archive management system and the non-performing asset business information system, conduct regular inspections and maintenance, and improve the quality of basic data. Chapter 7 Supervision and Management Article 65 Financial asset management companies should report relevant statistical reports and related reports on non-performing asset business to the National Financial Regulatory Authority or its local agencies regularly, and ensure the truthfulness, accuracy, completeness, and timeliness of the information submitted. Article 66 Financial asset management companies that violate the provisions of these regulations in conducting non-performing asset business may be ordered to rectify their actions by the National Financial Regulatory Authority and its local agencies in accordance with the laws and regulations such as the Banking Supervision and Management Law of the People's Republic of China. Depending on the situation, regulatory measures may be taken or administrative penalties may be imposed. Chapter 8 Miscellaneous Article 67 The meanings of the following terms in these regulations: The term "above" refers to the current number. And the term "year" refers to the accounting year. The term "related parties" for financial asset management companies refers to those who control each other or exert significant influence over each other, as well as natural persons, legal persons, or non-legal person organizations who are controlled by the same entity or exert significant influence by the same entity as specified in the "Regulations on the Management of Related Party Transactions of Banking and Insurance Institutions" (Banking Insurance Regulatory Commission Order No. 1, 2022) Article 68 Financial asset management companies should formulate internal business management systems according to these regulations and their actual circumstances, and report them to the National Financial Regulatory Authority. If the non-performing asset business conducted by financial asset management companies involves the need to comply with the state-owned financial capital management procedures, they should also abide by the regulations of the state-owned financial capital management. Article 69 Financial asset management companies participating in market-oriented debt-to-equity swaps should refer to the relevant business rules and risk management requirements specified in the "Administrative Measures for Financial Asset Investment Companies (Trial)" (Banking Insurance Regulatory Commission Order No. 4, 2018), except for unless otherwise specified by laws, regulations, and financial regulatory authorities. These regulations shall come into effect from the date of publication. The "Notice on Risk Warning for Financial Asset Management Companies to Accept the Divestiture of Non-Performing Assets from Commercial Banks" (Yinjian Tong [2005] No. 23) is hereby abolished simultaneously. If any system regulations issued before the implementation of these regulations are inconsistent with the provisions of these regulations, they should be implemented in accordance with these regulations. Senior officials of the relevant departments of the National Financial Regulatory Authority answered questions from reporters on the "Regulations on the Management of Non-Performing Asset Business of Financial Asset Management Companies." Recently, the National Financial Regulatory Authority promulgated the "Regulations on the Management of Non-Performing Asset Business of Financial Asset Management Companies" (referred to as the "Regulations"), and senior officials of the relevant departments answered questions from reporters on related matters.Je suis dsol, je ne parle pas franais.1. What is the background of the establishment of the "Regulations"? Since the commercialization transformation of financial asset management companies, under the guidance of regulatory authorities, they have been based on their functional positioning and focused on their main responsibilities. They have utilized their professional expertise in resolving risks of financial institutions and real enterprises, effectively maintaining the stable operation of the national economy. Considering the significant changes in the characteristics of financial institutions' asset risks, in order to align with relevant policies and systematically broaden the scope of financial asset management companies' asset acquisitions in an orderly manner to help financial institutions revitalize their existing assets, the China Banking and Insurance Regulatory Commission formulated and issued the "Regulations". The issuance of the "Regulations" is an important measure to thoroughly implement the spirit of the Central Financial Work Conference, which is conducive to guiding financial asset management companies to focus on their non-performing asset business, improve their professional capabilities in acquisition, management, and disposal, and play a positive role in financial rescue and counter-cyclical regulation functions in preventing and resolving financial risks and supporting the development of the real economy under new circumstances. 2. What are the main contents of the "Regulations"? The "Regulations" consist of 8 chapters and 70 articles, including general provisions, non-performing asset acquisitions, non-performing asset management, non-performing asset disposal, other businesses related to non-performing assets, risk management, supervision and management, and supplementary provisions. The "Regulations" start from the entire process of non-performing asset acquisition, management, and disposal by financial asset management companies, systematically broaden the scope of financial non-performing asset acquisitions, clarify and elaborate on the standards for non-financial institutions' non-performing assets that can be acquired, and further specify the regulatory requirements for key aspects such as due diligence, disposal pricing, and disposal announcements. At the same time, the "Regulations" stipulate that financial asset management companies can carry out light asset businesses related to non-performing assets such as consulting and trust disposal, cultivate differentiated core competitiveness, play a role in counter-cyclical rescue, especially in actively supporting the reform and risk mitigation of small and medium-sized financial institutions. 3. What are the new adjustments to the scope of non-performing asset acquisitions for financial asset management companies in the "Regulations"? In recent years, there have been significant changes in the asset structure of commercial banks and other financial institutions in China, and the corresponding risk classification regulatory system has also been adjusted. To align with related policies such as the "Regulations on the Classification of Financial Assets Risks of Commercial Banks", the "Regulations" systematically broaden the scope of financial asset management companies' acquisitions of financial non-performing assets, allowing them to acquire restructured assets held by financial institutions, other assets that have already incurred credit impairment, etc., to help financial institutions revitalize existing assets and release more credit resources into key areas supported by national policy directions. At the same time, in order to guide financial asset management companies to further support the development of the real economy, the "Regulations" clearly define the standards for acquiring non-financial institution non-performing assets, encourage financial asset management companies to effectively play a role in financial rescue and counter-cyclical regulation functions. 4. How does the "Regulations" promote financial asset management companies to enhance their professional capabilities? The "Regulations" adhere to the premise of legality, compliance, openness, and transparency, based on the business practice experience of financial asset management companies in recent years and the requirements of the non-performing asset market, refine the operational norms for the entire process of non-performing asset acquisition, management, and disposal, clarify the regulatory requirements for key aspects such as due diligence, disposal pricing, and disposal announcements, guide financial asset management companies to improve their professional capabilities in acquisitions and disposals, balance asset value, economic value, and social value comprehensively. At the same time, the "Regulations" also emphasize that financial asset management companies should establish a sound internal control and risk management system, build a clear division of rights and responsibilities, clear processes, and effective operational approval and decision-making mechanisms, strictly implement requirements such as separating evaluation and disposal, separating review and disposal, effectively prevent moral risks. 5. What is the main consideration for the "Regulations" stipulating that financial asset management companies can engage in consulting and other businesses related to non-performing assets? Currently, there is a demand in China's non-performing asset market for services such as consulting, entrusted disposal, etc. In order to fully leverage the comparative advantages of financial asset management companies in professional knowledge, talent teams, disposal experience, etc., the "Regulations" stipulate that financial asset management companies can, based on their own resource endowments, engage in consulting services, entrusted disposal, and other light asset, high value-added businesses related to non-performing assets, comprehensively utilize various means to help clear risks in the financial and real economy and improve the effectiveness of resolving and disposing of financial risks.