I. Qualification of the Issuer as a Subject

1. Whether the Issuer Possesses Legal Person Status

• Review the internal industrial and commercial files
• Obtain the issuer's business license
• Obtain business operation permits and other supporting documents

2. Whether the Issuer is Legally Established, Validly Existing, and Whether There Are Circumstances for Termination

• National Association of Financial Market Institutional Investors (NAFMII)：Emphasizes the issuing entity
• Stock Exchanges：Public issuance of corporate bonds imposes requirements on both the issuer and its important subsidiaries

3. Whether the Historical Evolution is Legal and Compliant

• NAFMII：Requires the issuer's lawyers to issue a clear conclusive opinion on the legality and compliance of the issuer's historical evolution

• Stock Exchanges：No corresponding requirements

II. Internal and External Resolutions

Issue a clear conclusive opinion on the legality and compliance of the resolution procedures and contents.

The content of the resolution shall generally include the following:

• (1) The amount of bonds to be issued
• (2) The method of issuance
• (3) The term of the bonds
• (4) The purpose of the raised funds
• (5) The validity period of the resolution
• (6) Other matters that need to be clarified in accordance with laws, regulations and the company's articles of association

If there are arrangements for credit enhancement mechanisms and debt service guarantee measures, they shall also be specified in the resolution matters.

III. Substantive Conditions of the Issuer

1. The revised Securities Law stipulates that the public issuance of corporate bonds shall meet the following conditions:

• (1) Having a sound and well-operated organizational structure
• (2) Having average distributable profits in the recent three years sufficient to pay the interest on the corporate bonds for one year
• (3) Other conditions stipulated by the State Council

The funds raised through the public issuance of corporate bonds must be used in accordance with the purpose specified in the corporate bond offering prospectus; any change in the use of funds must be resolved by the bondholders' meeting. The funds raised through the public issuance of corporate bonds shall not be used to make up for losses or non-productive expenditures.

2. Circumstances under which no further public issuance of corporate bonds shall be made:

• (1) Having a record of default or delayed payment of principal and interest on publicly issued corporate bonds or other debts, which is still continuing
• (2) Changing the use of funds raised through the public issuance of corporate bonds in violation of the provisions of this Law

3. The revised Securities Law has abolished the following restrictions:

• The net assets of a joint-stock limited company shall not be less than RMB 30 million; the net assets of a limited liability company shall not be less than RMB 60 million
• The accumulated balance of bonds shall not exceed 40% of the company's net assets
• The investment direction of the raised funds complies with national industrial policies
• The interest rate of the bonds shall not exceed the interest rate level prescribed by the State Council
• The previous public issuance of corporate bonds has been fully subscribed (restriction on further public issuance)

4. Negative List Guidelines

For the private placement of corporate bonds, issuers with the following circumstances shall be focused on:

• (1) Having false records in the company's financial and accounting documents within the recent 24 months, or the company having other major illegal acts.
• (2) Having a record of default or delayed payment of principal and interest on issued corporate bonds or other debts, which is still continuing.
• (3) Having circumstances of illegal external guarantees or illegal occupation of funds by related parties or third parties in the form of loans, debt compensation, advance payments, etc., which is still continuing.
• (4) Having been subject to administrative supervision measures by the China Securities Regulatory Commission (CSRC) for violating relevant provisions on corporate bonds within the recent 12 months, or having been subject to disciplinary sanctions by self-regulatory organizations such as stock exchanges for violating relevant provisions on corporate bonds within the recent 6 months, and failing to complete rectification.
• (5) Having financial statements with qualified opinions issued by certified public accountants within the recent two years where the material impact involved in the qualified opinions has not been eliminated, or having audit reports with adverse opinions or disclaimers of opinion issued by certified public accountants.
• (6) Being identified as a dishonest person subject to enforcement, a dishonest production and operation entity or other dishonest entities by the competent authorities due to serious illegal and dishonest acts, and being suspended or restricted from issuing corporate bonds.
• (7) Unauthorizedly changing the use of funds raised from the previous issuance of corporate bonds without correction.
• (8) The use of funds raised in this issuance violates relevant laws and regulations or does not comply with national industrial policies.
• (9) Except for financial enterprises, the use of funds raised in this bond issuance is for holding financial assets for trading purposes, entrusted financial management and other financial investments, or the use of funds raised in this bond issuance is for direct or indirect investment in companies whose main business is trading in securities.
• (10) Having false records, misleading statements or material omissions in the issuance documents of this time.
• (11) Having circumstances that seriously harm the legitimate rights and interests of investors and the public interest.
• (12)Local Government Financing Vehicles (LGFVs)：As referred to in this Article, local government financing vehicles refer to economic entities with independent legal person status established by local governments, their departments and institutions through fiscal appropriations or injection of assets such as land and equity to undertake the financing function of government investment projects.
• (13)Real estate companies identified by the competent authorities as having illegal acts such as "idle land", "land speculation", "hoarding houses and refusing to sell", "price gouging for housing".
• (14)Pawnbrokers.
• (15)Guarantee companies that fail to meet the following conditions simultaneously:

  • Having engaged in financing guarantee business for 3 years or more
  • Having a registered capital of not less than RMB 600 million
  • Having a corporate credit rating of AA or above (inclusive)
  • Having no major illegal or irregular acts in the recent three years
• (16)Microcredit companies that fail to meet the following conditions simultaneously:

  • Having been approved or filed by the provincial competent authority and having been established for 2 years or more
  • Having achieved the highest level in provincial regulatory ratings or assessment ratings for two consecutive years
  • Having a corporate credit rating of AA or above (inclusive)