China: The new Administrative Measures for Financial Leasing Companies lower the market-entry barriers

Last Updated: 26 March 2014

The China Banking Regulatory Commission ("CBRC") released the newly amended Administrative Measures for Financial Leasing Companies (Order of China Banking Regulatory Commission [2014] No. 3) (the "New Measures") on March 13, 2014. Comparing with the amended version in 2007 (the "Old Measures"), the New Measures mainly revise the provisions concerning the market-entry requirements, business scope, operation rules, supervision and administration of financial leasing companies. The New Measures came into effect as of the date of promulgation while the Old Measures ceased to be effective on the same day.

Comparing with the Old Measures, the New Measures lower the entry barriers for setting up a financial leasing company and encourage capitals from various systems of ownership to enter into the financial leasing industry. The New Measures also broaden the financing channels for financial leasing companies by extending their permitted business scope, which is conducive to relieving the capital pressure of financial leasing companies. Meanwhile the New Measures set forth a more improved regulatory system which requires financial leasing companies to strictly manage and control the risks by both internal governance and external supervision. The highlights of the New Measures mainly are:

  • Switching from "Chief Investor System" to "Initiator System". The Old Measures differentiate between the "chief investor" and the "ordinary investor", stipulating that the chief investor shall be the applicant when applying to establish a financial leasing company with the CBRC, while the New Measures abolish such a division and provide that anyone that falls within the five types of institutions (i.e. domestic and overseas commercial banks, domestic large manufacturers, overseas financial leasing companies, other domestic institutions and other overseas finance institutions) prescribed in the New Measures and that meets the relevant criterion can apply to establish a financial leasing company as an initiator. Moreover, the New Measures require at least one eligible commercial bank, domestic large manufacturer or overseas financial leasing company among the initiators having an investment proportion no less than 30%. Besides, the New Measures list some circumstances where an institution is not eligible to be an initiator of financial leasing companies.
  • Extending the business scope of financial leasing companies. In addition to the eleven kinds of permitted business items for financial leasing companies provided in the Old Measures, the New Measures extend the scope of the assignees of financial leasing assets, reduce the requirements for receiving deposits from non-bank shareholders, cancel the "foreign exchange" restrictions of the overseas borrowings and add securities investment with constant return as a newly permitted business item. Meanwhile, the New Measures set up a classified management system, where any well-operated and eligible financial leasing companies can, with the approval from CBRC, carry out upgrading businesses in addition to the basic ones. Such upgrading businesses include issuing bonds, establishing project companies in domestic tax bonded zones for financial leasing business, assets securitization and providing security for its controlling subsidiaries and project companies. It is noteworthy that that in the lately released Administration of Foreign Exchange for Cross-border Guarantee by State Administration of Foreign Exchange (Draft for Comments), it is provided that the financing institutions providing securities for external debt shall be qualified to do so, while the New Measures explicitly set forth requirements for financial leasing company engaged in business of providing securities for its controlling subsidiaries and project companies. If the Administration of Foreign Exchange for Cross-border Guarantee was implemented at a later stage, it will be well connected with the New Measures in this aspect.
  • Enhancing the shareholders' sense of risks and duties. The New Measures require that the initiators shall agree in the articles of association of the financial leasing company that when the financial leasing company encounters solvency problems, its shareholders shall provide liquidity support; when operating losses takes up the registered capital, the shareholders shall timely make up the shortfall. Such provision is conducive to urging financial leasing companies and their shareholders to enhancing their self-aid and self-recovery ability and preventing the risks from over-spilling.
  • Improving the operation rules and prudential supervision requirements. The provisions in the Old Measures concerning operation rules, supervision and management are relatively simple, which mainly refer to the internal governance, connected transactions, sale and leaseback activities and accounting etc. The New Measures incorporate improved provisions concerning the operation rules, emphasize the importance of the title management and valuation of leased property and strengthen the administration of the leased property and its unsecured residual value. Moreover, the New Measures perfect the prudential supervision and management requirements concerning the capital adequacy ratio, connected transactions ratio and concentration ratio.
  • Permitting financial leasing companies to set up subsidiaries. The Old Measures allow financial leasing companies to establish branches with the approval of CBRC. The New Measures, on the other hand, provides that financial leasing companies are permitted to establish branches and subsidiaries with CBRC's approval. Such a new change adapts to the need of the financial leasing market development and is bound to boost financial leasing companies' appetite and presence in certain industries (e.g. aviation and shipping).

The New Measures are a positive response to the need of the latest development in the financial leasing market and are conducive to encouraging and guiding capitals from various systems of ownership to flow into the financial leasing industry and promoting the steady development of the financial leasing industry.

However, we have also noticed that some parts of the New Measures remain to be detailed. For instance, the New Measures provides that the specific requirements for the establishment of branches and subsidiaries will be separately formulated by CBRC, but the only regulation to follow so far is the Notice of the China Banking Regulatory Commission on Issues concerning Financial Leasing Companies' Establishment of Project Companies in Domestic Bonded Zones to Carry Out Financial Leasing Business (the "Notice") published by CBRC in 2010. It remains to be further clarified by CBRC on whether the related provisions in the Notice (such as those concerning the qualification of the parent company and the business scope of the project company etc.) should be in line with those of the New Measures and whether the establishment of subsidiaries and branches can be extended from domestic tax bonded zones to abroad. Furthermore, it is prescribed in the New Measures that relevant CBRC regulations shall be abided by a financial leasing company intending to carry out assets securitization business, however, there still no explicit regulations and implementing rules for a financial leasing company to follow in practice. With respect to these issues, we will keep tracking the impact of the New Measures on financial leasing business. Subsequent newsletters will be delivered once available.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.