The circular says the debt-to-equity agreements signed between related enterprises and financial asset management companies shall comply with the laws and regulations stipulated by the central government and the State Council.

The agreements and plans should be standardized and reasonable, practical and realistic to guarantee that the enterprises will turn loss into gain. They should take the survival and development of the debt-to-equity enterprises as a goal and meanwhile give attention to the interests of all shareholders.

Those enterprises which have not yet signed debt-to-equity agreements with asset management companies should sign the agreements and formulate plans as soon as possible and report them to the responsible institutions according to stipulated procedures.

After the agreements and plans have been approved by the State Council, all parties should revise and perfect the texts and plans in strict accordance with the requirements in the reply of the superior institution and report to SETC for record.

The qualified enterprises should register the new companies with the administration of industry and commerce. Those enterprises which need asset assessment should simplify procedures and speed up the pace of work.

The circular requires the debt-to-equity enterprises to strengthen their accounting management and auditing, standardize enterprise accounting and financial management, set up and perfect the internal accounting regulations, conduct accounting correctly, and to implement effective financial management. They should strictly implement the Accounting Report Regulations to ensure the verity and accuracy of the accounting report forms.

Furthermore, the debt-to-equity enterprises should earnestly implement the responsibility of getting rid of difficulties and speed up the establishment of modern enterprise system.

SETC will carry out strict regulation on debt-to-equity enterprises, and related regulatory methods will be issued separately.

(People’s Daily 11/07/2000)