The introduction of these Measures constitutes a comprehensive revision of the 2015 edition of the Guidelines for Risk Management of Commercial Bank M&A Loans. The main revisions are as follows:

• Expanded Scope of Application for M&A Loans:

1. 1）Building upon the existing framework for M&A loans for control, the Measures now permit the use of M&A loans for holding non-controlling shares (equity participation-type), provided that the single acquisition of the target enterprise’s equity interest is not less than 20%.
2. 2）The Measures explicitly allow for "M&A loans for maintaining or enhancing control" and "M&A loans for increasing the shareholding ratio."

For maintaining or enhancing control: A single acquirer that has obtained control over the target enterprise may apply for an M&A loan for control if it acquires or subscribes for the equity of the target enterprise to maintain or enhance control (with a single acquisition of not less than 5% equity interest).

For increasing the shareholding ratio: A single acquirer that already holds 20% or more of the equity in the target enterprise may apply for an M&A loan for holding non-controlling shares, provided it seeks to acquire or subscribe to additional shares to increase its shareholding ratio without obtaining control (with a single acquisition of no less than 5% equity interest).

• Clarification and Optimization of Loan Conditions:

1. 1）The cap on the proportion of M&A loans for control in the total transaction value has been raised from 60% to 70%, with the maximum loan term extended from 7 years to 10 years.
2. 2）The Measures stipulate that the proportion of M&A loans for holding non-controlling shares in the total transaction value shall not exceed 60%, and the loan term shall be no longer than 7 years.
3. 3）The equity contribution ratio for M&A loans for control must be no less than 30%, and that for M&A loans for holding non-controlling shares no less than 40%.

• New Provisions on M&A Loan Substitution:

1. 1）The use of new M&A loans to refinance existing M&A loan facilities is prohibited.
2. 2）M&A loans may be used to refinance the acquisition consideration already paid by the acquirer, provided that all applicable requirements (including the minimum equity contribution ratio) are satisfied. In such cases, the initial drawdown of the M&A loan must occur within one year of the completion of payment for the acquisition consideration being refinanced.

• Eligibility Requirements for Commercial Banks
• The Measures establish differentiated eligibility criteria (such as minimum asset size requirements) for banks intending to provide M&A loans for control acquisitions versus those for holding non-controlling shares. Only banks that satisfy the respective requirements are permitted to undertake such businesses. Notably, the entry thresholds are set higher for banks engaging in M&A loans for holding non-controlling shares.