According to the Measures for the Administration of Name Lists of Clients Evading Debt Payments to Banks passed at the 5th general meeting of the China Banking Association (CBA), nine acts will be deemed malicious evasion of bank debt by the debtor. Hong Kong companies, which are known for adopting these practices, should take note.

Liu Zhangjun, vice chairman of CBA, revealed that the main objectives of the measures are to curb evasion of debt payments to banks, improve the operating environment for banks, and promote the development of a social credit system. CBA will solicit "name lists of clients evading bank debt" from its members and publicise them through the association's website and the media in accordance with the relevant rules.

According to Liu, the measures stipulate that a debtor engaging in any of the following acts will be deemed evading bank debt maliciously:

• Making a debt loss to the creditor bank by carrying out restructuring, reorganisation, spin-off, merger, leasing and bankruptcy, etc without the consent of the creditor bank;
  
  
• Making a debt loss to the creditor bank by withdrawing funds via irregular transactions, profit transfer and asset transfer;
  
  
• Deliberately circumventing the supervision of the creditor bank by making funds transfer from one account to another and by opening a number of accounts, thereby making it impossible for the bank to recover the principal and interest of the debt concerned;
  
  
• Deliberately concealing the actual situation, providing untruthful information, collateral with dubious ownership, or maliciously refusing to complete the collateral procedure;
  
  
• Making a collateral loss to the creditor bank by disposing of the collateral of the debt without the consent of the creditor bank;
  
  
• Concealing important matters or changes in financial situation that will affect the repayment of debt to the bank according to schedule, thereby putting the bank debt in a high-risk position;
  
  
• Refusing to fulfil the requirement as stipulated in legally binding documents handed down by people's courts or arbitration organisations, and continuing to fall behind in bank debt repayment;
  
  
• Failing to make debt repayment and refusing to sign to acknowledge receipt of debt payment advice by the bank;
  
  
• Other acts of maliciously evading bank debt.

Furthermore, the related debtor will be deemed maliciously evading bank debt if he or she commits any of the following: providing guarantee to the bank on behalf of the debtor but failing to fulfil the obligations of guarantor as stipulated in the contract or the law, and refusing to be held liable for the guarantee; incurring a loss of debt or its guarantee to the creditor bank through reorganisation, restructuring, spin-off, merger, leasing and bankruptcy, etc; debtor shareholder abusing his or her status as shareholder and the company's status as an independent legal person to transfer company assets maliciously thereby increasing the debt burden of the company; and other acts of maliciously evading bank debt.

It is understood that the "name lists of clients evading bank debt" will be managed by CBA's legal affairs committee.