Pilot launch for small and medium-sized enterprise bond placements

In May of 2012, the Shanghai and Shenzhen stock exchanges issued the Tentative Measures for Small and Medium-Sized Enterprise Bond Placements, marking the formal launch of the pilot projects. The term “small and medium-sized enterprise bond placement” means the non-public offering and transfer of corporate bonds, the principal of which and the interest on which is to be repaid within a set period of time, by micro, small and medium-sized enterprises (SMEs) in China.

Convenient and efficient

SME bond placements are a convenient and efficient financing method in terms of approval turnaround times, terms and overall financing costs. The size of the placements can exceed 40% of net assets and there are no hard requirements in respect of the provision of security or ratings. Accordingly, they are the preferred option of numerous SMEs requiring financing.

Legal framework: (1) the Tentative Measures for Small and Medium-Sized Enterprise Bond Placements issued by the Shanghai and Shenzhen stock exchanges; (2) the Guidelines of the Shanghai Stock Exchange for Bond Placements by Small and Medium-Sized Enterprises (for Trial Implementation) and the Guidelines of the Shenzhen Stock Exchange for the Pilot Projects for Bond Placements by Small and Medium-Sized Enterprises; (3) Announcement on the Recordal of Small and Medium-Sized Enterprise Bond Placements (No. 1 and No. 2) issued by the Shanghai Stock Exchange; (4) the Implementing Rules for Registration and Settlement in Connection with the Pilot Projects for Bond Placements by Small and Medium-Sized Enterprises; (5) the Tentative Measures for the Underwriting of Small and Medium-Sized Enterprise Bond Placements by Securities Companies and the Notice on Professional Assessments of Tentative Implementation Plans for the Underwriting of Small and Medium-Sized Enterprise Bond Placements by Securities Companies.