Compliance reviews on mortgage balance asset securitization

Mortgage balance asset securitization refers to the asset-backed securities (ABS) of a business in which cash flow generated by accounts receivable on mortgage balance assets serve as the backing for repayment. As of the end of March 2018, more than 20 mortgage balance ABS products had been successfully offered on the market, amounting to approximately RMB30 billion. This column summarizes the key points of the compliance reviews of the application for such projects by the two major national stock exchanges (the Exchanges).

Anti-corruption compliance in outbound investment

For the past few years, apart from countries and regions with a low level of corruption such as the US, western Europe and Hong Kong, the destinations of Chinese overseas investment have included more and more countries with a high level of corruption. Even though anti-corruption compliance is not a major focus of concern, the consequence of stepping over the red line for overseas non-compliance will be severe. It is increasingly important for Chinese companies to reduce overseas anti-corruption risks and take action to ensure lawful and compliant operations.

Trends in Shanghai administrative penalty cases 2016-2017

With the implementation of the “relaxed access, stringent oversight” strategy by state regulators, non-compliant operational acts by enterprises are more likely to be subject to administrative penalties, directly affecting enterprises’ credibility. The author statistically analysed more than 20,000 administrative penalty decisions for the years 2016 and 2017, published in Shanghai’s industry and commerce system, and, through a big data analysis and comparison, hopes to help enterprises clearly understand the direction of administrative law enforcement and effectively guard against compliance risks.

The Role of the Chinese Community Party in FIEs What is the truth and how to deal with it?

Do SOEs serving as GPs comply with regulations in China?

As private equity funds are booming, state-owned enterprises (SOEs) become increasingly involved in these funds. Arrangements where SOEs serve as general partners (GPs) of partnership funds are not uncommon. However, it seems that these arrangements are not lawful, because Article 3 of the Partnership Law prohibits solely state-owned enterprises (SSOEs) and SOEs from acting as general partners.

China: Environmental protection compliance progress in 2018

On the domestic political scene, “environment” has become one of the most frequent words. The 19th National Congress of the Communist Party of China put forward five major directions for national development, one of which is “beautiful”, pointing to the control of environmental pollution. At the same time, the congress report proposed “treating the environment like treating our lives” and “implementing the strictest eco-environmental protection system”.

How to prevent VAT compliance risks of asset management products

Following the promulgation of the Circular on National Implementation of the Pilot Program of Levying Value-added Tax in lieu of Business Tax (the [2016] No. 36 Circular) that included the financial industry into the pilot program, the Ministry of Finance and the State Administration of Taxation released the Circular on Clarifying Value-added Tax Policies for Financial, Property Development, Education and Auxiliary Services Sectors (the [2016] No. 140 Circular) on 21 December 2016, the Supplementary Circular on Issues Concerning Value-added Tax Policies for Asset Management Products (the [2017] No. 2 Circular) on 10 January 2017 and the Circular on Issues Concerning Value-added Tax on Asset Management Products (the [2017] No. 56 Circular) on 30 June 2017, marking formation of a value-added tax (VAT) framework for asset management products (AMPs). In order to apply VAT policies for AMPs properly and prevent VAT compliance risks, asset managers should keep the following issues top of mind:

Enterprise big data strategy and compliance

There is no time at which an enterprise is not required to access and use big data in its product research and development, precision marketing, customer service, order processing and production management. Big data is one of the core strategies of modern enterprises. The implementation of a big data strategy signifies that an enterprise must become a collector, processor and applier of data, but what runs in parallel to a big data strategy is information security and protection. Data collection, processing and application all touch upon the issue of compliance.

Analysis of the VIE model from a legal perspective

The term “VIE (variable interest entity) model”, often referred to as the “agreement control model” in China, in offshore listings means that a listed entity registered abroad is separate from a domestic business operating entity but the domestic business entity is controlled by the offshore listed entity by way of agreements. The business entity is the VIE of the listed entity.

Compliance review of FI contracts with governments

In its efforts to attract foreign investment, the government often undertakes to provide the investor with preferential tax, fiscal or land treatment in exchange for undertakings relating to place of incorporation, business scope, investment scale, tax amount, output, financial performance, etc. These undertakings are then reflected as rights and obligations in the foreign investment contract concluded between the government or its authorized agency as one party and the investor as the other. It is therefore important for the government to perform compliance review on foreign investment contracts to which it is a party. This article provides an overview of the areas on which the government should focus when reviewing such contracts.