[16th] No.8

Several Provisions of Shanghai Municipality on Promoting Finance Lease Development in Pudong New Area were adopted at the 4th Session of the Standing Committee of the 16th Shanghai Municipal People’s Congress on July 25, 2023 and are hereby promulgated. They shall be effective as of October 1, 2023.

Standing Committee of Shanghai Municipal People’s Congress

July 25, 2023

Several Provisions of Shanghai Municipality on Promoting Finance Lease in Pudong New Area

(Adopted at the 4th Session of the Standing Committee of the 16th Shanghai Municipal People’s Congress on July 25, 2023)

Article 1 Several Provisions of Shanghai Municipality on Promoting Finance Lease in Pudong New Area (“these Provisions”) are formulated based on the basic principles of relevant laws and administrative rules and in the light of the realities of Pudong New Area (“Pudong”) to promote the quality development of finance lease, ensure the finance serve the real economy and advance the development of central area of Shanghai as an international financial hub.

Article 2 These Provisions shall be applied to the activities concerning promoting, administering and serving the finance lease companies (“Companies”) domiciled in Pudong.

Article 3 The People’s Government of Pudong New Area (“Pudong Government”) shall establish working mechanisms to promote the development, supervision and administration of finance lease industry and formulate policies and measures to advance the industry.

The municipal and Pudong’s departments of financial supervision, development and reform, finance, market supervision, ecology and environment, public security, intellectual property and the like and the Administration of Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone (“Lin-gang Special Area Administration”) shall improve the policies to support and promote the finance lease industry according to their own responsibilities.

The supervision and administration of the finance lease industry in Pudong shall be subject to the relevant provisions of the State and this Municipality.

Article 4 The banking institutions in Pudong are encouraged to increase credit supply for the Companies engaging in services of key sectors including advanced manufacturing, strategic and emerging industries and green industry in line with the requirements of national financial regulatory authorities stationed in Shanghai.

Where the Companies operate in areas that are in line with national and local policy guidelines, the municipal local financial supervision departments may properly relax the regulatory restrictions on its business focus and relevance based on their regulatory ratings and relevant provisions.

Article 5 The Companies are encouraged to incorporate environment, society and governance into internal governance and business decision-making, improve management, boost performance in environment, society and governance, and advance green development of finance lease service.

The finance lease industry association is supported to formulate guidelines on green finance lease business. If the Companies follow the guidelines, the Pudong’s departments of reform and development, financial supervision, ecology and environment, finance and the Lin-gang Special Area Administration will give incentives and support.

Article 6 The national financial regulatory authorities stationed in Shanghai optimize the foreign debt registration system for offshore finance lease, support the Companies to develop offshore finance lease service, and encourage the Companies to prioritize RMB settlements in overseas businesses.

The national financial regulatory authorities stationed in Shanghai support the Companies to collect rents in foreign currencies, encourage the financial institutions in Pudong to improve review process, and support the Companies to explore the methods of using the collected rents in foreign currencies.

Where the Companies in the comprehensive bonded area import and export large equipment including aircraft, vessel and marine engineering structures across customs areas, such import and export may be subject to remote customs control if effective supervision and implementation of current taxation policies are ensured.

Article 7 The Companies engaging in finance lease of intangible assets including patents according to relevant provisions shall possess the rights over the leased assets, establish a sound value assessment and pricing system suitable for intangible assets and reasonably determine the rents.

The Companies shall closely monitor the coverage of intangible assets’ risk on the leased, determine the value of intangible assets in a scientific way and make effective measures against the risks.

Article 8 Where the Companies engaging in marine finance lease of aircraft, vessels and the like, the banking institutions may adopt facilitation measures including the pre-registration exemption for returning foreign exchange for overdue goods.

Where the Companies lease the aircraft, vessels, equipment and the like bought overseas to overseas lessees, the national financial regulatory authorities simplify the approval procedures and optimize the administrative measures if the authenticity of such lease is true.

Article 9 The Companies engaging in the finance lease of vehicles may apply for mortgage registration of their owned license plates issued in this Municipality with the traffic administration of Pudong’s public security authority. When applying for such registration for the first time, the company shall submit the original business license and the sample business seal; a business license copy with the business seal may be allowed in any subsequent mortgage registration or cancellation.

Article 10 The municipal and Pudong’s drug administrations shall improve the medical devices licensing and record-filing mechanisms compatible with finance lease development, and support the Companies to extend finance lease services to all kinds of medical devices that are usually under fixed assets administration.

The Companies may file for Class-II medical devices services at the time when medical devices business license is applied, and no further application form and paper materials are needed.

The Companies engaging the finance lease of medical devices shall establish a full-cycle quality management system and improve the information tracking of the leased medical devices.

Article 11 The Companies are supported to set up subsidiaries according to law, and the market regulation departments shall provide convenience.

The Companies are supported to issue bonds according to relevant provisions and issue debt instruments on the inter-bank market and exchanges.

The Companies are supported to engage in securitization business, to list and trade on multi-level capital markets both domestically and internationally in accordance with the law, and carry out mergers, acquisitions, and restructuring to enhance their financial strength.

Article 12 The national financial regulatory authorities stationed in Shanghai support eligible Companies in applying for access to the financial credit information basic database.

The Companies that have access to the financial credit information basic database shall comply with the regulations and ensure compliance with credit reporting and data security requirements.

Article 13 The Companies shall conduct finance lease business in accordance with the principle of good faith. In the event that the lessee fails to make timely rental payments, the Companies may terminate the financing leasing contract in accordance with legal provisions or contractual agreements.

After the termination of the finance lease contract, the Companies may legally repossess the leased assets and promptly assess the value of such assets through entrusted evaluation or other methods such as public market auctions.

Article 14 The Companies shall standardize service charges. The Companies that have reached an agreement on service charges with the lessee shall provide services that are commensurate with the quality and price as stipulated in the agreement; they shall not violate the agreement by converting obligations that should be borne by the lessor into paid services.

The Companies shall inform lessees of the charging details of service fees, handling fees, and consultation fees and the like according to law.

Article 15 This Municipality fully leverages the role of the people's courts, financial regulatory authorities, financial infrastructure operators, and other relevant entities in collaborative governance, strengthens coordinated financial governance, deepens cooperation in financial governance, prevents and resolves financial risks, supports the effective implementation of regulatory rules in the finance lease industry, and ensures the healthy and regulated development of the finance lease industry.

Article 16 The finance lease industry is supported to establish and improve the dispute resolution mechanism, to strengthen communication and coordination among the people's courts, administration of justice, arbitration agencies, professional mediation organizations, industry associations, and notary organizations, and to enhance the "one-stop" finance lease dispute resolution mechanism that integrates litigation and non-litigation approaches.

The finance lease industry association of this Municipality is supported to play its role in industry regulation, self-discipline, dispute source management, and dispute mediation.

Article 17 The people's courts and arbitration agencies in this Municipality shall respect the transaction practices of the finance lease industry and publish typical cases to create a favorable legal environment for the development of the finance lease industry.

The People’s Court of Pudong New Area is supported to deepen the model judgment mechanism in finance lease litigation, promote effective coordination between the judicial trial and enforcement, and safeguard the legitimate rights and interests of all parties involved in finance lease cases.

Article 18 The Companies domiciled in the Lingang New Area (outside the administrative area of Pudong) shall be subject to these Provisions mutatis mutandis.

Article 19 These Provisions shall be effective as of October 1, 2023.