Securitisation 2025

CHINA Law and Practice Contributed by: Borong Liu, Xiaoli Liu, Jingyi Lu and Zhijie Zhang, Zhong Lun Law Firm

Exchange Market Securitisation A business asset securitisation listed on stock exchanges (an “exchange market securitisa - tion”) adopts an asset-backed special plan (ABSP) as the issuance vehicle, and its basic structure is as follows: • the investors sign subscription agreements with the plan manager and make subscription payments to the plan manager to set up an ABSP; • the plan manager (henceforth representing the ABSP) purchases underlying assets from an originator with the raised funds by signing an underlying asset purchasing agreement with the originator; • the plan manager engages a servicer to be responsible for the recovery and collection of underlying assets, the disposal of defaulted assets and other management work relating to underlying assets, by signing a servic - ing agreement with the servicer (usually the originator); • the plan manager engages a fund custodian bank to safeguard the ABSP account opened in the name of the plan manager and often engages a supervision bank to supervise the collection account of the servicer; and • the plan manager engages the China Securi - ties Depository and Clearing Corporation Lim - ited (CSDC) for the registration and deposi - tory of the securities and the payments of principal and interest on the securities. CIBM Business Asset Securitisation Business asset securitisations carried out in the CIBM (“CIBM business asset securitisations”) adopt a structure similar to credit asset securiti - sations. A few key differences include: • the SPT, instead of the trustee, is deemed the issuing vehicle and it issues notes (often

through an underwriting syndicate) to inves - tors; • the products of a CIBM business asset secu - ritisation include asset-backed notes (ABNs) and asset-backed commercial paper (ABCP), the later are issued on a rolling basis and with a maturity of less than one year; and • the Shanghai Clearing House, as the notes depository and paying agent, provides servic - es in relation to the registration and payments of the notes. 1.3 Applicable Laws and Regulations Credit Asset Securitisation The laws and regulations that have a material effect on the transaction structure of credit asset securitisations include the Civil Code, the Trust Law, the Administrative Measures for the Secu - ritisation of Credit Assets (Announcement of the People’s Bank of China (PBOC) and China Bank - ing Regulatory Commission (CBRC) [2005] No 7), the Measures for Supervising and Adminis - trating the Pilot Securitisation of Credit Assets of Financial Institutions (Order of CBRC [2005] No 3), and the Announcement on Further Regulating the Risk Retention of Originator in Credit Asset Securitisation (Announcement of the PBOC and CBRC [2013] No 21). Exchange Market Securitisation The laws and regulations that have a material effect on the transaction structure of exchange market securitisations include the Civil Code, the Securities Law, the Securities Investment Fund Law, the Administrative Provisions on Asset Securitisation by Securities Companies and Subsidiaries of Fund Management Companies issued by the CSRC, and the list condition con - firmation guidelines for securitisation issued by the Shanghai Stock Exchange (SSE) and Shen - zhen Stock Exchange (SZSE).

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