China’s new financing rules will improve documents

Author: | Published: 17 Dec 2008

Sophisticated loan documents are coming to China. In a move designed to encourage market consolidation, China is allowing direct acquisition financing for the first time – and welcoming the complex documents needed to govern these transactions.

Last week, China Banking Regulatory Commission (CBRC), issued ‘Guidelines for the Risk Management of Merger and Acquisition Loans granted by Commercial Banks’. This framework sets out to encourage acquisition financing, but will also lead to better loan documentation.

“If we increase the level of sophistication in this sort of transaction, it will have a knock-on effect and we...