Financial Crime World

Bank Ownership Restrictions in China

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Step 1: Identify Relevant Laws and Regulations

In order to understand bank ownership restrictions in China, it’s essential to familiarize ourselves with the relevant laws and regulations. These include:

  • Laws on Commercial Banks: This law provides a comprehensive framework for the regulation of commercial banks in China.
  • Bankruptcy Law of the PRC (the Bankruptcy Law): This law outlines the procedures for bankruptcy and insolvency, which is crucial in understanding how banks are managed when they experience financial difficulties.
  • Interim Measures for the Equity Management of Commercial Banks: Issued by the banking regulatory authorities under the State Council, these measures provide specific guidelines on bank ownership and equity management.

Step 2: Determine What Constitutes a Controlling Interest

While the laws and regulations do not explicitly define what constitutes a controlling interest, it can be inferred that any major shareholder or group of shareholders who collectively hold more than 50% of the voting shares would be considered to have control over the bank.

Step 3: Identify Entities and Individuals Prohibited from Owning a Controlling Interest

Entities and individuals are prohibited from owning a controlling interest in banks if they fall under any of the following categories:

  • State-owned enterprises under supervision: Any state-owned enterprise that is currently under supervision or has been subject to disciplinary actions is not eligible to own a controlling interest.
  • Individuals with criminal convictions: Individuals who have been convicted of crimes or punished by administrative penalties are also prohibited from owning a controlling interest.
  • Companies in liquidation or bankruptcy: Companies that have been dissolved or declared bankrupt are ineligible to own a controlling interest.

Step 4: Identify Entities and Individuals Restricted from Owning a Controlling Interest

Entities and individuals may be restricted from owning a controlling interest if:

  • Registration procedures not completed: If they have not completed the registration procedures with the banking regulatory authorities under the State Council.
  • Actual controllers or major shareholders prohibited: If their actual controllers or major shareholders are prohibited from holding a controlling interest.