The National Development and Reform Commission ("NDRC") recently issued the Circular on Matters Concerning the Implementation of the Registration System for Corporate Bond Issuance (the "Circular").

The Circular touches upon contents in six aspects as follows: (1) regulating corporate bond issuance through the registration system; (2) stipulating the conditions for issuing corporate bonds; (3) intensifying the information disclosure requirements and the responsibilities of intermediary agencies; (4) urging provincial development and reform commissions to fulfill their regulatory duties; (5) improving coordination and collaboration with relevant departments; and (6) ensuring a smooth transition from the old system to the new one. Among others, the Circular clearly states that issuance of corporate bonds will be subject to the registration system, instead of the previous examination and approval system. The NDRC is the statutory registry in charge of registration of corporate bonds, and issuance of corporate bonds should be registered with the NDRC in accordance with law. In addition, the Circular clarifies that a corporate bond issuer shall meet certain conditions, including having a complete and well-functioning organizational structure and the average distributable profits of the most recent three years being sufficient to cover the one-year interest accrued on corporate bonds. Moreover, the Circular requires that the information-disclosure-centered regulatory philosophy for the registration regime shall be established, and makes it clear that corporate bond issuers are the parties held primarily responsible for information disclosures.

(Source: National Development and Reform Commission)