In order to broaden capital replenishment channel for commercial banks and enhance the innovation of capital instruments through bond market, the CSRC and the CBRC, after comprehensive communication, study and consultation, have jointly drafted the Guidelines on the Practice of Replenishing Capital through Corporate Bonds (the Guidelines), and will formulate and implement relevant work schedule. The Guidelines serves as an institutional norm for commercial banks to broaden their capital replenishment channels and is conducive to the development of bond market and its interconnection and interworking. Commercial banks should adopt capital replenish systems based on endogenous capital accumulation and seek new capital instruments that can improve their capital quality. After the release of the Guidelines, qualified commercial banks may apply to issue corporate bonds to replenish capital.

The Guidelines consists of 15 items, mainly including:

1. Issuing body. Issuing bodies include commercial banks listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, domestic commercial banks that issue overseas listed foreign share and commercial banks that apply for domestic IPO (listed or pre-IPO commercial banks). The Guidelines also permits space for more issuing bodies in the future. If the CBRC widens the range of issuing body, more qualified commercial banks may issue corporate bonds to replenish capital in accordance with the Guidelines.

2. Capital instruments. The Guidelines first puts into force corporate bonds packaged with write-down clauses (write-down bonds) by commercial banks. In addition, it provides that the issuance of other types of corporate bonds will be prescribed separately by the CSRC and the CBRC in accordance with relevant laws and regulations, thus leaving room for commercial banks to adopt other types of innovative capital instruments in the future. The issuance of write-down bonds by commercial banks should meet the demand of corresponding capital attributes and improve the ability of loss absorption. 

3. Issuance management. The Guidelines provides that listed or pre-IPO commercial banks should first formulate a feasible issuance plan, and then submit it to the CBRC to identify their capital attributes. After the identification, they should submit it to the CSRC for approval before issuing bonds publicly, or putting it on record in accordance with rules of stock exchange and then issuing privately.

4. Exchange mechanism of IPO and management of investor eligibility. In order to enhance the risk management of write-down bonds, the Guidelines prescribes that stock exchanges should adopt a differentiated approach to managing exchange mechanisms of write-down bonds issued publicly, set up corresponding management system of investor eligibility and improve mechanism and measures for risk control.

5. Mechanism and measures for risk control. Given the special attributes of corporate bonds as a capital instrument, especially the investment risks brought about by write-down clauses, the Guidelines prescribes that issuing bodies should fully disclose the special attributes and risks of write-down bonds, put special notes in prominent position of listing memorandum and explicitly put forward information such as whether compensation clauses are agreed on and its influence on the rights of investors.

6. Supervision of private offering. Since private offering is limited to qualified investors who are equipped with risk identification ability and larger risk appetites, the Guidelines explicitly puts that private offering is not subject to administrative approval, but to record management of stock exchanges instead. Relevant stock exchanges should separately formulate regulations regarding recording procedures for private offering, requirements for information disclosure, exchange mechanism and management of investor eligibility in accordance with relevant laws, regulations and the Guidelines and submit them to the CBRC for approval.