Author: Han Kun Law Offices, Zhu Jun |Sun Yunjia |Qin Wei |Ma Chengfu |Zhao Yuehan.
In the context of the current complex domestic and foreign financial environment and the overall financial de-risking, financial leasing companies are facing stricter regulatory requirements and law enforcement. This article mainly reviews the 2023 State Administration of Financial Supervision and Administration (formerly the China Banking and Insurance Regulatory Commission) (hereinafter referred to as the "State Administration of Financial Supervision and Administration) (hereinafter referred to as the "State Administration of Financial Supervision and Administration) (hereinafter referred to as the "China Banking and Insurance Regulatory Commission").General Directorate of Financial Supervision"Penalty cases for financial leasing companies, interpret the main compliance risk points of financial leasing companies and put forward compliance suggestions.
1. Big data on penalty cases of financial leasing companies in 2023
(1) Big data** and statistical time intervals
We have counted the period from January 1, 2023 to December 12, 2023 ("Statistical intervalAdministrative penalty cases against financial leasing companies made public by the State Administration of Financial Supervision and its local supervision bureaus.
(2) The total number of punishments
In the statistical period, we have inquired about a total of 22 cases of penalties imposed by the State Administration of Financial Supervision and local regulatory bureaus on financial leasing companies and related individuals from public channels.
Compared with the 15 fines received by the financial leasing industry in 2022, the number of penalties has increased by nearly 50%.
(3) Targets of punishment
Of the total 22 penalty cases, only 3 were imposed on the company and 1 was only for the individual. There were 18 cases of double fines imposed on companies and individuals. Double penalty cases accounted for 80% of the total number of penalties.
In recent years, the regulators have insisted on paying equal attention to corrections and fines, fines and confiscations, and the "double penalty system" for institutional personnel.
In the case of individual punishment, the individual who is punished includes the company's senior executives, as well as the personnel in charge and responsible for the corresponding project or financial processing.
(4) The geographical distribution of punishment cases
In 2023, Tianjin and Shanghai each had 4 penalties, Guangdong and Beijing had 2 penalties each, and other provinces (Liaoning, Yunnan, Qinghai, Gansu, Zhejiang, Hubei, Anhui, Henan, Shandong and Heilongjiang) had only 1 penalty case.
(5) Top 10 reasons for punishment
A total of about 30 reasons for punishment were mentioned in the 22 punishments, and the top 10 reasons for punishment include:
Ownership of the leased property has not been obtained or the ownership is defectiveThe supervision of the use of funds is not strict, and the funds are used in violation of regulationsThe leased property does not meet regulatory requirementsViolation of prudential business rulesThe adjustment of the five-level classification of asset quality is not timelyDue diligence on leasing business is not in placeLeased property is bought at a low value and at a high priceFinancial accounting issuesThe term of office of directors and supervisors exceeds the time limitThe management of leased property has not been rectified in place(6) Categorization and summary of the causes of punishment
In terms of specific regulatory requirements, the relevant penalties mentioned in the 22 penalties include:
(7) The type and industry of the leased property involved in the penalty case
The vast majority of the fines do not mention the type of leased property or industry involved in the penalty. Some of the industry sectors mentioned in the penalty cases include:
Real estate, construction in progress and land:The main violations involved are "funds used to pay land deposits", "illegal inflow of leasing funds into the real estate sector", and "financial leasing business carried out with projects under construction as leased objects".Public Hospitals:The main violation is "providing construction funds for county-level public hospitals".Passenger car financial leasing:The main violation is "failure to verify the customer's identity document through a valid method".Ship chartering:The main violation is "the form of business operation that does not comply with regulatory provisions in carrying out ship leasing business".(8) Citations of the basis for punishment
(9) Punishment measures
According to the interval statistics of the fine amount, the amount of the fine against the financial leasing company:
If the fine is less than 500,000 yuan, there will be two penalties;There are 9 penalties with fines between 500,000 yuan and 1 million yuan;There are 5 penalties for fines between $1 million and $2 million;There are 5 penalties for fines of 2 million yuan or more. There are seven penalties for fines between 50,000 yuan and 100,000 yuan for those directly responsible. In addition to fines, the administrative penalties taken by the regulatory authorities against the responsible personnel also include: lifelong prohibition of the person directly in charge, warnings and orders to make corrections.
2. Implications of penalty cases for the compliance of financial leasing companies
(1) Management of leased property ownership
In the process of carrying out financial leasing (especially sale and leaseback) business, a financial leasing company may take the following ways and measures to establish and maintain the effective ownership of the leased property before and after the capital is invested:
Comprehensive review of leased property ownership documents
The financial leasing company shall conclude a sound contract document, especially the lease agreement, the sale and purchase agreement or the sale and purchase agreement transfer agreement and other major legal documents, and according to the transaction background, focus on reviewing the important supporting materials of the whole path of the change of ownership of the leased property.
According to the specific leased property and transaction Xi, the financial leasing company shall require the transaction party to provide written documents including invoices for the leased property, purchase contracts, registration certificates, payment vouchers, property rights transfer vouchers, etc., and review whether the substance of the leased property is clearly corresponding to the subject matter, whether the transaction documents are complete and standardized, and whether there are any gaps in the ownership transfer chain.
Adequate access to asset registers
After clarifying the ownership chain of the leased property through the ownership document, the financial leasing company should further inquire about the registration of the rights of various types of leased items through public channels to investigate whether there is any prior security interest and other information in the leased property.
As far as common movable property leasing is concerned, if the leased property is a motor vehicle, the registration information of motor vehicle registration, alteration, transfer, mortgage and cancellation can be queried through the vehicle management office. If the leased property is a ship, it can be queried in the "Maritime One-Net Communication Platform". If the leased property is a civil aircraft, you can check the ownership, mortgage, possession and priority registration information of the aircraft in the civil aircraft rights registration and aircraft international interest registration authorization application system. In addition, in aircraft finance lease transactions, the "international interest" search for fuselage and engines should also be carried out on the International Registry** (, depending on the location of the lessor and lessee.
In addition to the ownership registration inquiries listed above, financial leasing companies can also use the unified registration system for movable property financing of the Credit Information Center of the Chinese People's Bank of China (hereinafter referred to as "the "People's Bank of ChinaZhongdeng.comInquire about the registration status of movable property financing, including but not limited to financial lease registration, retention of title registration, hire purchase registration, lien registration, movable property trust, etc.
Through the inquiry at the registration authority, the leasing company can have a more comprehensive understanding of the ownership information of the leased property, whether there are third-party rights or co-owners, whether there is a mortgage and seizure, etc. If necessary, the financial leasing company shall also conduct an on-site review of the actual possession and use of the leased property to fulfill its duty of prudent review.
Complete the registration of valid and the identification of rights
For leased items that need to be registered in accordance with the law, the financial leasing company shall, according to the nature of the specific leased items, promptly register the ownership with the corresponding competent authority or official platform specified in paragraph (2) above, and handle the financial lease registration on Zhongdeng.com in a timely manner, so as to clarify the ownership and obtain the corresponding certificates through publicity channels to reduce transaction risks.
(2) Qualified management of leased items
The leased object applicable to financial leasing transactions shall be fixed assets, and when selecting qualified leased objects, the financial leasing company shall make a comprehensive judgment based on at least the following characteristics, so as to avoid being deemed to carry out credit-like business in the name of financial leasing:
Ownership is clear and transferable
The ownership of the leased property should be complete and transferable, that is, the seller has the right to possess, use, benefit and dispose of the leased thing in accordance with the law, and there is no defect in rights. At the same time, the chain of transfer of ownership of the leased property should be clear and free of disputes, and the effect of the change of property rights should occur in accordance with the law.
Real and specific
The determination of whether the leased property is real and specific is a factual judgment. Real existence, i.e. the leased thing should be physically physical and, in principle, tangible movable property. Specificity indicates that the leased object should be unique and specific, and should be distinguished from other similar items through registration and publicity. Generally speaking, the model, specification, name, technical performance, size, and production code of the movable property are all important bases for determining the specificity of the leased property.
Disposable and capable of generating revenue
The disposability of the leased property requires that it should be a negotiable object, and not an asset that is expressly prohibited from being circulated and traded by laws and regulations.
Since the leased object of a financial lease essentially has the function of guaranteeing the rental claim, the items that cannot generate income or the low-value consumables are not eligible, and the qualified leased items should be non-expendable items that can be used repeatedly, have a certain service life value, and have the value of use and income.
It is worth noting that the Notice on Promoting the Standardized Operation and Compliance Management of Financial Leasing Companies (Jin Gui [2023] No. 8, hereinafter referred to as "the Notice on Promoting the Standardized Operation and Compliance Management of Financial Leasing Companies" issued by the State Administration of Financial Supervision in October 2023Circular No. 8(i) it is strictly forbidden to use antiques and jade, calligraphy and paintings, desks and chairs, newspaper and periodical bookshelves, and low-value consumables as leased items, reflecting the requirements of the regulatory authorities for the liquidity and value of eligible leased items;(ii) It is strictly forbidden to use consumer goods other than passenger cars as leased objects, which is essentially to encourage financial leasing companies to focus their customers on commercial matters rather than natural persons;(iii) It is strictly forbidden to add new non-equipment products for sale and leaseback, which is different from the Notice on Issues Concerning Strengthening the Compliance Supervision of Financial Leasing Business of Financial Leasing Companies (Yin Bao Jian Ban Fa [2022] No. 12, hereinafter referred to as "the "Notice").Circular No. 12Regarding the prudent caliber that structures that meet certain conditions (such as railway tracks, highways and parking spaces, etc.) can be used as leased objects, it emphasizes the regulatory attitude of the regulators to require financial leasing to return to the source of financing and strictly prohibit the addition of new local debts.
(3) Management of the purchase value of the leased property
Both Circular No. 12 and Circular No. 8 set forth regulatory requirements for the phenomenon of low-value and high-purchase of leased properties, and financial leasing companies should focus on the following matters in the course of business development:
Establish and improve the value evaluation system
Financial leasing companies can scientifically determine the value of leased property by comprehensively considering the dimensions of cost value, market value and economic value, and on the basis of internal pricing, referring to the valuation report issued by a credible and authoritative external appraisal agency, and comparing similar transaction cases in the market in the past.
Separation of evaluation and evaluation and evaluation
Financial leasing companies should ensure that the evaluation and pricing process of leased properties is fair, impartial and transparent, and clarify the division of job responsibilities and confirm the criteria for entry and exit through the separation of professionals in evaluation, pricing, purchase and disposal.
Strengthen internal professionalism and evaluation and forensics
The appraisal staff of the financial leasing company shall have the professional qualifications of appraisal, cooperate with the external appraisal agency and establish effective external supervision, and if necessary, shall improve the scientificity and authenticity of pricing through on-site inspection and investigation and analysis, and deeply analyze the reasonableness and credibility of the appraisal method adopted by the appraisal agency.
(4) Monitoring the use of lease funds
Misappropriation or failure to use lease funds according to the agreed purpose is a common type of risk in financial leasing projects, especially in sale-leaseback projects, if the funds raised by the lessee are not supervised, the relevant risks of using the funds for real estate, ** and other areas and uses restricted by the state will be directly transmitted to the leasing company.
When conducting business, a financial leasing company should conduct comprehensive due diligence and assessment from multiple dimensions for the use of funds proposed by the lessee, such as supplementing the working capital of the enterprise, replacing the existing interest-bearing liabilities or using it for project construction, including the fairness of the leased property, the authenticity of the leased property, the reasonableness of the financing purpose and the reliability of repayment.
In addition, the financial leasing company shall effectively restrict the use of the lessee's leasing funds through the terms of the contract. The parties to the lease shall clearly stipulate in the contract the lawful and reasonable use of funds, and require the lessee to promise not to misappropriate the lease rent or not to use it in areas and purposes prohibited or restricted by the state.
After the leasing funds are invested, the financial leasing company should also grasp the use of the leasing funds through various channels such as the financial report of the lessee and the regular inspection of the leased property.
(5) Risk classification of leased assets
The quality of asset leasing assets is divided into five categories according to their risk level, namely normal, concern, subordinate, doubtful and loss. The classification of leased assets helps financial leasing companies to warn and dispose of risks in a timely manner in post-lease management.
The financial leasing company shall formulate a sound risk control management system, set up professional risk control, financial and business personnel, and conduct comprehensive and regular information collection and combing on the performance of contractual obligations such as rent under the lease contract, the operation of the lessee and other guarantors, credit rating, litigation involvement, equity structure, change of senior management, etc., the quality of the leased property, ownership disputes, insurance, etc., and effectively warn and assess the risk of the leased assets through appropriate risk prevention measures such as timely adjustment of the risk level of the leased assets.
(6) Grasp the requirements of prudent management
As a principled requirement of "bottom-up", prudential operation includes risk management, internal control, capital adequacy ratio, asset quality, loss reserve, risk concentration, related party transactions, asset liquidity and other aspects of financial leasing companies. The high-frequency penalty reasons sorted out above, such as the unsuitability of the leased property, the misappropriation of the leased funds, and the misclassification of the risk of the leased asset, also constitute a violation of the basic principle of prudent operation by the leasing company. Financial leasing companies shall strictly implement the requirements of regulatory indicators such as the proportion of leased assets, leverage ratio, investment ratio, customer concentration and relevance, and implement prudent operation in four aspects: capital management, management quality, risk management, strategic management and professional ability management.
III. Conclusion
It is worth mentioning that the Measures for the Implementation of the Discretionary Power of Administrative Penalties (Draft for Comments) recently issued by the State Administration of Financial Supervision clarifies the different levels of punishment measures for different degrees of violations, and in particular emphasizes that if the same responsible entity violates the same type of illegal acts on the same basis for a certain degree of law again within five years after receiving an administrative penalty or being ordered to make corrections, it will be severely punished in accordance with the law. In this regard, financial leasing companies can learn from the experience of historical penalty cases, grasp the key points of supervision, conduct in-depth research on industry laws, regulations and regulatory policies, and actively respond to possible adjustments in the direction of supervision to ensure the legal and compliant development of their business.
Xi Zhou Yufei also contributed to the writing of this article.