Securities association’s notice regulates co-operation between banks and companies

On 17 July 2013, the Securities Association of China issued the Notice on Matters Relevant to Regulating Co-operation Between Securities Companies and Banks in Engaging in Targeted Assets Management Business (Draft for Comments), triggering quite a reaction within the industry.

Main provisions

The objective of the notice is to regulate the co-operation between securities companies and banks in engaging in the channelling-type targeted assets management business. Its main provisions are set out below.

The following circumstances may not apply to a securities company if it wishes to engage in targeted business in co-operation with a bank: i) having an entity, such as a branch, business or office that does not have assets management business qualifications independently engaging in a disguised manner in targeted assets management business; ii) engaging in fund pool business; iii) investing in an industry in which investment is prohibited by the state, such as one that is highly polluting or high energy consuming; iv) engaging in funnelling of benefits; or v) another prohibited circumstance.

Li Min is a partner at Zhonglun W&D Law Firm