Laws of the People's Republic of China

China Development Bank, Ministry of Science and Technology

Notice of China Development Bank and Ministry of Science and Technology on Relevant Issues concerning the Work of Promoting the Financing Work for Small-and-medium-sized Scientific and Technological Enterprises

Kai Hang Fa [2005] No. 117

Banking departments and all branches of China Development Bank, all departments, commissions and bureaus of science and technology in all provinces, autonomous regions and municipalities directly under the central government, and all administrative committees of national development zones for high and new technology industries:

Notice is hereby given on relevant issues for the purposes of guiding local governments and China Development Bank branches' co-building small-and-medium-sized scientific and technological enterprises' investment and financing mechanism that is adapted to local practical situations, of preventing and controlling credit risks and of enhancing the loan-granting support.

I.

Guiding Principles

1.

We ought to give full play to the preeminence of competent departments of science and technology in organizing and coordinating and that of national development financial institutions in financing, to integrate resources of their own, to enhance the financing support for small-and-medium-sized scientific and technological enterprises, and to promote the growth of high and new technology industries;

2.

We ought to establish an effective mechanism characterized by an integration of "borrowing, utilizing and repaying" to prevent and control financial risks by way of the building of credit standing, legal person, governing structure and cash flow;

3.

Those objects eligible for financing support shall be small-and-medium-sized scientific and technological enterprises that conform to the developing orientation of society, economy and science and technology; we shall, by way of financing, promote the reorganization and optimization of local industrial structures , and support the development of industries with local characteristics;

4.

We ought to lead social capitals to enhance the financing support for small-and-medium-sized scientific and technological enterprises in the phases of embryo, adolescence and growth and to boost the self-innovation ability by way of the building of investment and financing mechanism of science and technology;

5.

We ought to adhere to the principle of attaching equal importance to both enhancing the support and stressing active stability and practical effects, and to promote phase by phase the work of promoting the financing work for small-and-medium-sized scientific and technological enterprises

II.

Responsibilities and Management

1.

The Cooperative Committee of Ministry of Science and Technology and China Development Bank shall be responsible for the general coordination, and for formulating guide lines and policies to further promote the financing work for small-and-medium-sized scientific and technological enterprises.

2.

Ministry of Science and Technology is responsible for guiding and promoting the cooperative carrying-out of loan-granting work for small-and-medium-sized scientific and technological enterprises between the local competent departments of science and technology, the administrative committees of National Development Zones for High and New Technology Industries and China Development Bank, and for strengthening the management and guidance of those institutions on which rely the loan-granting platforms by way of policy matching, science and technology credit standing building, supervision and examination, statistical analysis, personnel training, honoring and rewarding and other measures. Department of Facilities and Financial Support, Torch High-tech Industrial Development Center and Innovation Fund for Technology Based Firms are responsible for the concrete daily works.

3.

China Development Bank is responsible for the loan-granting management work, for promoting cooperation between its branches and local competent departments of science and technology and National Development Zones for High and New Technology Industries, and for conducting management of relevant works of its branches by way of policy-making, planning, organizing, guiding, supervision, examination and other measures.

4.

Local competent departments of science and technology, administrative committees of National Development Zones for High and New Technology Industries and China Development Bank branches, in a way of direct match-up cooperation, are responsible for the building of local loan-granting platforms, the arrangement and management of personnel and institutions and the matching of relevant policies and measures, for the concrete guidance and carrying-out of business, and for promoting the building of the credit standing of local small-and-medium-sized scientific and technological enterprises, legal person, governing structure and cash flow.

5.

China Development Bank branches, with the cooperation of loan-granting platforms, are responsible for concrete issues concerning the development, review, loan-granting management and repayment of principal and interest of small-and-medium-sized scientific and technological enterprises; the loan-granting platforms shall actively carry out relevant works in accordance with the requirements of China Development Bank branches.

III.

Mode of Financing

1.

Loan-granting for Small-and-medium-sized Scientific and Technological Enterprises

The local competent departments of science and technology or the administrative committees of National Development Zones for High and New Technology Industries shall attach adequate importance to the co-building of loan-granting platforms with China Development Bank. China Development Bank branches shall, in accordance with the loan-granting and management abilities of the platforms themselves, the degree of policy matching and other practical situations, cooperate with the platform institutions, and the mode of cooperation may be integrated loan-granting or direct loan-granting.

The loan-granting platform refers to the institution assuming or co-assuming, under the cultivation and guidance of China Development Bank, the responsibilities of the development, review and post-loan management of its clients as required, in accordance with the agreements in the small-and-medium-sized enterprises loan-granting contracts signed between China Development Bank branches and local governments, small-and-medium-sized commercial banks (including urban credit cooperatives), rural credit unions, and guarantee companies, etc. The loan-granting platform for small-and-medium-sized enterprises may be established on the basis of the local service centers for the establishment of hi-tech enterprises (incubator), centers for promoting productive forces, bases of industries with local characteristics, credit guarantee companies for small-and-medium-sized enterprises, hi-tech risk investment companies and other intermediate organizations of science and technology.

The mode of integrated loan-granting refers to the loan-granting mode characterized by China Development Bank's granting small-and-medium-sized enterprises loans to enterprise and institutional legal persons that have loan-raising eligibility and loan-bearing ability (borrowers of integrated borrow and integrated repayment, hereinafter referred to as "designated borrowers"), and by the designated borrowers' utilizing loans granted by China Development Bank to provide small-and-medium-sized enterprises with capital support by way of consignment loan and other legal and effective capital operation modes.

The mode of direct loan-granting refers to the loan-granting mode characterized by China Development Bank's directly signing loan-raising contracts with small-and-medium-sized enterprises that then assume the direct duty of loan-repayment to China Development Bank. The loan-granting platform is only in charge of client development, project acceptance, preliminary review and other work.

The amount, time limit, review and post-loan management of loan-granting for small-and-medium-sized scientific and technological enterprises shall be executed in accordance with the guiding propositions of China Development Bank on the review of loan-granting and credit standing and credit management, etc. for small-and-medium-sized enterprises.

2.

Loan-granting for the Establishment of Hi-tech Enterprises

Loan-granting for the establishment of hi-tech enterprise refers to that China Development Bank provides loan-granting supports to excellent domestic investment companies for the establishment of enterprises and incubators of scientific and technological enterprises, who then serve as a loan-granting platform for the establishment of hi-tech enterprises. The platform hereof is responsible for the selection of projects, and for providing small-and-medium-sized scientific and technological enterprises with capital support mainly in the form of equity investment and also of credit investment as circumstances demand. The investment companies for the establishment of enterprises herein serve as a platform for dispersing investment and assigning risks.

The amount, time limit, review and post-loan management of loan-granting for the establishment of hi-tech enterprises shall be executed in accordance with the guiding opinions of China Development Bank on the review of the establishment loan projects of hi-tech enterprises.

IV.

Policies Matched

1.

Ministry of Science and Technology shall, referring to the science and technology planning and management mechanism reform of the nation, taking the promotion of the combination between science and technology and finance as the orientation, and prioritizing hi-tech industries, arrange related capitals to finance and guide the local building of loan-granting platforms and risk compensation mechanism of the platforms hereof.

2.

Innovation Fund for Technology Based Firms of Ministry of Science and Technology shall provide interest discounting of a certain percentage to the projects to which loans are granted from the pilot loan-granting platforms established by Ministry of Science and Technology and China Development Bank, and matched interest discounting shall be provided by the local competent departments of science and technology or the administrative committees of National Development Zones for High and New Technology Industries.

3.

China Development Bank shall conduct guidance, training and work consignment for the building and operation of the loan-granting platform, and support the building and development of the platform hereof.

4.

China Development Bank shall provide financial consultations and other financial services to the loan-granting platforms and the related small-and-medium-sized scientific and technological enterprises, provide guidance and help to the small-and-medium-sized scientific and technological enterprises for their further financing, and lead commercial banks, industry funds and other social capitals to support together the development of small-and-medium-sized scientific and technological enterprises.

V.

Work Measures and Requirements

1.

Ministry of Science and Technology, the competent departments of science and technology and the administrative committees of National Development Zones for High and New Technology Industries shall have persons specially assigned for further promoting the financing work for small-and-medium-sized scientific and technological enterprises.

2.

Ministry of Science and Technology and China Development Bank shall, aiming at the characteristics and demands of small-and-medium-sized scientific and technological enterprises, co-conduct related trainings and investigations, so as to enhance the services of science and technology and finance.

3.

The local competent departments of science and technology, administrative committees of National Development Zones of High and New Technology Industries and China Development Bank branches shall, in accordance with this Notice and the local practical situations, strengthen communications between themselves and study together for implementation plans, with which Ministry of Science and Technology and China Development Bank shall be filed for record.

4.

Initiatives of interested parties shall be brought into full play, intermediate organizations including local guarantee institutions for small-and-medium-sized enterprises, etc. shall be absorbed into participations in relevant works, and credit guarantee systems for small-and-medium-sized scientific and technological enterprises shall be established.

5.

The competent departments of science and technology, administrative committees of National Development Zones for High and New Technology Industries and China Development Bank braches shall actively explore new measures to support the development of high and new technology industries and small-and-medium-sized scientific and technological enterprises, so as to promote the organic combination between science and technology innovations and financial innovations.

China Development Bank, Ministry of Science and Technology

April 13, 2005