Translated by SynTao Green Finance
2015-12-22
To accelerate the development of ecological civilization, encourage financial institutions to support green development, and speed up the green transformation of the economic structure, in accordance with the Law of the People's Republic of China on the People's Bank of China and the Administrative Rules for the Issuance of Financial Bonds in the National Interbank Bond Market (PBoC Decree No.1 [2005]), issues concerning issuance of green financial bonds in the interbank bond market are hereby notified as follows:
1. The "green financial bonds" mentioned in this notice refers to the securities issued by financial institutions with legal person status for the purpose of supporting green industries and with principal redemption and interest payment effected as agreed between the parties concerned. For green project scope, please refer to China Green Bond Endorsed Project Catalogue (see ANNEX).
2. The "financial institutions with legal person status" mentioned in this notice include development banks, policy banks, commercial banks, finance companies and other legal financial institutions.
3. Financial institutions with legal person status shall satisfy the following conditions in order to issue the green financial bonds:
(1) having a sound corporate governance mechanism;
(2) making profit in the most recent year (except for development bank and policy bank) and having no record of major violation of laws and regulations in the most recent preceding three years;
(3) meeting the requirements of prudent macro management and with risk management indicators satisfying regulatory requirements;
(4) having comprehensive regulations on green credit issuance, risk control and marketing and with a mature business team.
4. Financial institutions with legal person status shall submit the following documents to the People's Bank of China for the issuance of green financial bonds:
(1) an application report for the issuance of green financial bonds;
(2) the green financial bond prospectus, which includes the green project category that the proceeds of the green financial bonds used for, project selection criteria, decision making procedures, environmental performance target of the project, and the use plan and management system of the proceeds of the green financial bonds;
(3) a written consent produced by the authoritative institution specified in the issuer's charter of association or similar document;
(4) the audited financial statements and the auditing reports of the issuer for the most recent preceding three years;
(5) a commitment letter of the proceeds of the green financial bonds only being used for green projects;
(6) other documents required by the People's Bank of China.
5. In addition to the documents listed in 4 above, the People's Bank of China encourages the financial institutions with legal person status that apply to issue green financial bonds to submit review opinions or certifications from independent professional assessment or certification institutions.
6. The approved issuer of green financial bonds (hereinafter referred to as "issuers") shall file with the People's Bank of China the documents as follows five working days before every installment issuance of the green financial bonds:
(1) the prospectus of current green financial bond to be issued;
(2) the written decision of administrative licensing of green financial bond issuance from the People's Bank of China (hardcopy);
(3) the signed underwriting agreement and underwriting group agreement;
(4) a credit rating report of the financial bonds and relevant information on follow-up credit rating arrangements produced by a credit rating institution;
(5) legal opinions in writing produced by the issuer's counselor;
(6) other documents required by the People's Bank of China.
7. Issuers can choose to issue through tendering or book building. When the issuance is conducted via book building, issuers shall also file book building issuance scheme, including but not limited to the price of book building, principles and methods of placements, measures to avoid operational risks and improper transfer of benefits.
8. The issuance of the green financial bonds can be conducted either once in aggregate or in installments under the specified quotas. For issuers that have issued financial bonds before and that the follow-up monitoring and management have met relevant requirements can apply to issue in installments under the specified quotas.
9. Issuers shall use the proceeds for green projects by the deadline committed in the prospectus. Before allocation, issuers can invest the idle proceeds into green bonds issued by non-financial enterprises and money market instruments with sound credit ratings and market liquidity.
10. Issuers shall open a special account or create a special ledger to manage the collection, allocation, and recovery of proceeds of the green financial bonds, ensuring the proceeds exclusively used for green projects before the maturity of the financial bonds.
11. Issuers shall disclose the use of proceeds quarterly. Issuers shall publish the annual proceeds usage report and auditing report of the previous year and disclose the use of proceeds during the first quarter of the current year by April 30th of the year. The annual proceeds usage report shall be submitted to the People's Bank of China.
12. Before the maturity of the green financial bonds, issuers are encouraged to annually publish a review report prepared by independent professional assessment or certification institutions, conducting continuous review the use of proceeds and environmental performance of the green financial bonds.
13. Issuers can make green financial bond market-making arrangements through an agreement with lead underwriters or other agencies with market maker qualification.
14. The registration, custody and clearing of green financial bonds shall be conducted at agencies that recognized by the People's Bank of China for registration, custody and clearing.
15. The issued green financial bonds can be put in collateral and pledge under relevant monetary policies of the People's Bank of China.
16. Relevant government departments and local governments are encouraged to develop favorable policies and convenient measures to support the development of green financial bonds.
Institutional investors, including financial institutions, securities investment funds and other investment plans, pension funds, annuities, and welfare funds, are encouraged to invest in green financial bonds
17. The People's Bank of China will gather the data related the use of proceeds of the green financial bonds and publish the results regularly.
18. Overseas financial institutions with legal person status that satisfy relevant requirements to issue bonds in the People's Republic of China shall refer to this Notice to issue green financial bonds in China's interbank bond market.
Rules and regulations related to the issuance of debt financing instruments of non-financial enterprises in the interbank market to support green projects shall be developed by China National Association of Financial Market Institutional Investors.
19. People's Bank of China shall be responsible for the interpretation of the Notice. Matters not included in the Notice shall be governed by the other relevant regulations of the People's Bank of China.
20. The Notice shall come into force as of the date of its promulgation.
ANNEX: China Green Bond Endorsed Project Catalogue
People's Bank of China
December 15, 2015