Introduction
It is the written document issued by Bank of China to the judicial departments, which is at the request of plaintiff to guarantee the plaintiff fulfills the obligation of compensation for losses under the situation of losing a lawsuit.
Functions
It is suitable for the situation that the plaintiff submits to judicial departments for preservation in litigation to the defendant's property in proceedings. After the plaintiff submits to judicial departments for preservation in litigation to the defendant's property, the plaintiff shall bear losses of the defendant's property during the period of preservation in litigation if losing a lawsuit. In order to avoid the plaintiff not bearing above losses, judicial departments require the plaintiff to submit margin when applying for preservation in litigation. The litigation guarantee is the alterative form of cash margin, for increasing the plaintiff's crediting line and relieving funding pressure.
Features
1. Reduce capital occupation due to cash margin payment.
2. Improve capital turnover and gain capital benefits.
3. Improve the commercial credit of enterprises.
Charges
The litigation guarantee fees shall be charged based on the principles and rates determined in accordance with relevant rules of Bank of China; the fees for letter of guarantee in foreign currency shall be charged in the same way as for letter of guarantee in RMB.
Target Customers
Plaintiffs involved in litigation procedure.
Application Qualifications
1. The applicant shall hold a business license of legal person that has passed the annual inspection or other valid certificates which fully prove its legal operation and scope of business;
2. The applicant shall have a loan card;
3. The applicant shall have an account opening permit and open a settlement account with Bank of China;
4. The applicant shall have a credit line at Bank of China, or pay full margin, or full guarantee acceptable to Bank of China.
Process
I. Application for letter of guarantee
1. The applicant fills out an application form or a contract for issuance of a letter of guarantee;
2. The applicant pays margin or submits other counter guarantee;
3. The applicant submits primary documents related to the contract;
4. The applicant submits other documents necessary for issuance of a letter of guarantee as required by Bank of China.
II. Examination and issuance of letter of guarantee
1. Bank of China examines the customer qualification, underlying transaction and relevant documents;
2. Bank of China confirms the customer's margin or credit line and other mortgages;
3. Bank of China examines the written application and form of the letter of guarantee;
4. Bank of China issues the letter of guarantee.
Kind Reminder
1. Amendment to letter of guarantee: The clauses of the letter of guarantee can be amended on request of the guaranteed party and the beneficiary, such as extension of the validity period.
2. Payment/compensation against letter of guarantee: In case the beneficiary claims compensation within the validity period of the guarantee, the applicant should be notified in time. The payment should be made after the guaranteeing bank examines the claim documents and confirms the documents are in compliance with the claim clauses of the guarantee.
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