NAFMII released new Guidelines Respecting Underwriting Due Diligence for Non-financial Enterprise Debt Financing Instrument (hereinafter referred to as the new Guidelines) in December, an effort to reinforce underwriting due diligence practices in light of recent years' development in the interbank bond market.

In view of updated self-regulatory rules and market practices in the interbank bond market, new Guidelines reemphasized and made clear lead underwriters responsibilities. New Guidelines requires that major risks of issuing enterprises, business scope, use of proceeds, financial status and credit enhancement of the issuer should be included in underwriting due diligence investigation.

A dedicated section was added in the new Guidelines to stipulate the content, signature and recordkeeping of underwriting due diligence report and working papers. Working papers of underwriting due diligence are critical to determine the integrity of the lead underwriters and whether the lead underwriters had complied with its obligations throughout due diligence process.

Circumstances and corresponding self-disciplinary penalties for failure of lead underwriters to comply with its due diligence obligations were explicitly set out in the new Guidelines.