Recently, five departments, including the General Office of the National Development and Reform Commission ("NDRC"), have jointly distributed the Circular on Encouraging Relevant Institutions to Participate in Market-oriented Debt-for-Equity Swaps (the "Circular").
The Circular proposes that a qualified insurance group (holding) company, an insurance company or insurance asset management institution shall be allowed to set up an implementing agency to be exclusively in charge of carrying out debt-for-equity swaps in a market-oriented way, and an implementing agency in the insurance sector shall be allowed to set up the private equity investment fund to conduct the market-oriented debt-for-equity swaps. Meanwhile, the Circular expressly states that, private equity investment funds will be encouraged to conduct the business of swapping debts for equities; banks, trust companies, securities companies and fund management companies will be encouraged to roll out asset management products in accordance with laws and regulations for the purpose of participating in debt-for-equity swaps; and a commercial bank that has not established an implementing agency so far is encouraged to conduct market-oriented debt-for-equity swaps through its existing bodies. Furthermore, the Circular states that, support will be given to foreign investors to establish private equity investment funds in pursuit of market-oriented debt-for-equity swaps.