CBIRC - The Interim Measures for Equity Management of Trust Companies

The China Banking and Insurance Regulatory Commission just issued the Interim Measures to improve the management of shareholdings of trust companies. The Interim Measures were issued following previous similar measures on shareholdings in commercial banks and have set out a management mechanism intending to have more transparency and involve more of the regulator.

Key Points to note on shareholdings

• the requirement of total assets of not less than US $1 bn for foreign
  financial institution as a shareholder of a trust company has been
  abolished, reflecting the principle of national treatment;

• shares may be held through financial products, however, the
  aggregated shareholding through financial products controlled by a
  single investor, an issuer or manager and its actual controller,
  affiliates and persons acting in concert shall not exceed 5% of total
  shares of a trust company;

• investors, their affiliates, and parties acting in concert intend to
  hold shares separately or collectively of a listed trust company
  exceeding 5% must report to the relevant State Council's banking
  regulatory agency for approval in advance; and an approval for
  holding more than 5% of the total shares of a trust company through
  domestic and overseas securities markets will be only valid for six
  months;

• the major shareholders of a trust company shall not hold shares of
  the same trust company through financial products that they have
  issued, managed or controlled; and

• If an investor's controlling shareholder or actual controller is a
  financial product, the investor must not be a major shareholder of
  the trust company.

Reporting and Disclosure requirements

Events to be disclosed and reported (the Relevant Events):

• matters that may affect the qualifications of a shareholder or cause
  changes in the shareholdings of a shareholder;
• occurrence of negative list situation of major shareholders, their
  controlling shareholders, and actual controllers; and
• changes to the controlling shareholder and actual controller of the
  major shareholder.

Disclosure/Reporting entities and process

• the shareholders or major shareholders of a trust company shall
  notify the trust company in writing within 15 days after a Relevant
  Event occurs and provide relevant materials as required;
• the trust company then must publicly disclose Relevant Events in the
  form of semi-annual reports and annual reports; and
• the trust company must also report to the relevant supervisory body
  in writing the changes in shareholdings as a result of the Relevant
  Events within ten days from the date when they become aware of such
  changes.