The Asset Management Association of China ("AMAC") has recently issued the Detailed Rules on Due Diligence for Asset-based Securitization Business for Public-Private-Partnership (PPP) Projects, the Detailed Rules on Due Diligence for Asset-based Securitization Business for Accounts Receivables of Enterprises and the Detailed Rules on Due Diligence for Asset-based Securitization Business for Creditor's Rights in Finance Lease (collectively as the "Rules") and simultaneously distributed a circular to clarify relevant work arrangements. The Rules have come into force immediately from the date of issuance.
All related institutions may work out more detailed rules of a higher standard on the basis of these Rules which are the minimum requirements for due diligence for asset-based securitization (ABS) business. Where the investment targets of a private fund product of a registered private fund manager involve certain underlying assets, the due diligence should be performed with reference to these Rules. According to the circular, due diligence for ABS business must comply with five principles and standards. For example, findings of due diligence on business participants should establish that the relevant participants will legally exist, have gained necessary business qualifications, have in place sound business rules and risk control rules, and will be able to conduct business continuously and stably.