Measures for the Administration of Securities Investment Fund Management
Companies (Consultation Paper)
Chapter I General Provisions
Article 1 These Measures are formulated in accordance with the Securities
Investment Fund Law, the Company Law and other relevant laws and
administrative regulations for purposes of strengthening supervision over and
administration of securities investment fund management companies,
regulating acts of securities investment fund management companies, and
protecting the lawful rights and interests of fund share holders and relevant
parties concerned.
Article 2 For purposes of these Measures, “securities investment fund
management company” (hereinafter referred to as the “fund management
company”) means the enterprise as an legal person, which is established
within the territory of the People’s Republic of China with the approval of China
Securities Regulatory Commission (hereinafter referred to as the “CSRC”) and
undertakes securities investment fund management business and other
businesses approved by the CSRC.
Article 3 Fund management companies shall abide by laws, administrative
regulations, the provisions of the CSRC and the self-disciplinary rules of the
Asset Management Association of China, function in good faith, be prudent
and diligent, loyal and fulfill their responsibilities to manage and use fund
property for the benefit of fund share holders.
Article 4 The CSRC and its dispatched offices shall supervise and administer
fund management companies and their business activities in accordance with
the Securities Investment Fund Law, the Company Law and other laws,
administrative regulations and the provisions of the CSRC and under the
principle of prudent supervision.
Article 5 The Asset Management Association of China shall conduct
self-disciplinary administration of fund management companies and their
business activities in accordance with laws, administrative regulations, and the
provisions and self-disciplinary rules of the CSRC.
Chapter II Establishment of Fund Management Companies
Article 6 The following requirements shall be met for the establishment of a
fund management company:
1. The shareholders satisfy the requirements of the Securities Investment
Fund Law and the provisions of these Measures;
2. has bylaws complying with the Securities Investment Fund Law, the
Company Law and the provisions of the CSRC;
3. The registered capital is not less than a hundred million yuan, which shall be
contributed in full on the lump sum basis by shareholders, and foreign
shareholders shall make capital contribution in convertible currencies;
4. has appointed senior managers complying with laws, administrative
regulations and the provisions of the CSRC and personnel who undertake
such businesses as research, investment, appraisal and marketing, and the
appointed senior managers and business personnel are not less than 15 and
shall have obtained the fund practicing qualification;
5. has business premises and security facilities meeting relevant requirements
and other facilities relating to the business;
6. has set up organizations and work posts with reasonable division of work
and clear functions;
7. has such internal monitoring systems as supervision and audit and risk
control, which meet the provisions of the CSRC; and
8. other conditions as prescribed by the CSRC with the approval of the State
Council.
Article 7 To apply for the establishment of a fund management company, the
shareholders whose capital contribution or shareholding accounts for more
than 5% of the registered capital of the fund management company
(hereinafter referred to as the “shareholding proportion”) shall meet the
following conditions:
1. The registered capital and net assets are not less than 100 million yuan and
the quality of the assets is in good condition;
2. have operated consecutively for more than three complete fiscal years, and
have sound corporate governance and internal monitoring rules;
3. have not been given any administrative punishment or criminal punishment
due to any violation of law or regulation in the past three years;
4. have not embezzled clients’ assets or committed any other conduct
impairing clients’ interests;
5. are not under investigation by the regulatory authority due to any violation of
law or regulation, nor are in the rectification period; and
6. have good social reputation, and have no bad records in the administrative
departments of taxation, industry and commerce and so on, and such
institutions as financial supervision, self-disciplinary management and
commercial banks in the past three years.
Article 8 Major shareholders of a fund management company means the
shareholders whose shareholding proportion is the highest and not less than
25% in the fund management company.
Major shareholders shall meet the following conditions in addition to the
conditions prescribed in Article 7 of these Measures:
1. undertake securities management, securities investment consulting, trust
assets management or the management of other financial assets;
2. The registered capital is not less than 300 million yuan; and
3. have good business performance, and the quality of the assets is in good
condition.
Article 9 In a Sino-foreign joint venture fund management company, the
domestic shareholder that has the highest shareholding proportion shall meet
the conditions for major shareholders as prescribed in Article 8 of these
Measures. Other domestic shareholders whose shareholding proportion
exceeds 5% shall meet the conditions as prescribed in Article 7 of these
Measures.
The foreign shareholder of a Sino-foreign joint venture fund management
company shall meet the following conditions:
1. It is a financial institution that is established in accordance with the law of the
country or region it is located, operates lawfully and continuously, and has
financial assets management experiences, steady and sound finance, good
credit, and has not been punished by any regulatory authority or judicial organ
in the past three years;
2. The country or region it is located has complete securities laws and
regulatory rules, and the securities regulatory authority thereof has entered
into the memorandum of understanding for securities regulatory cooperation
with the CSRC or other institutions recognized by the CSRC, and has been
keeping effective regulatory cooperative relations;
3. The paid-up capital is not less than the convertible currency equal to 300
million yuan; and
4. other conditions as prescribed by the CSRC with the approval of the State
Council.
The provisions in the preceding paragraph shall apply to the investment
institutions in Hong Kong Special Administrative Region, Macao Special
Administrative Region and Taiwan region.
Article 10 The shareholding proportion of shareholders of a fund management
company shall comply with the provisions of the CSRC. The aggregate
shareholding proportion or proportion of rights and interests owned (directly
and indirectly) by the foreign party of a Sino-foreign joint venture fund
management company shall not exceed those in the commitment made in the
opening-up of the state’s securities sector.
Article 11 The number of fund management companies in which one institution
or two or more institutions controlled by the same actual controller invest shall
not exceed two, of which the number of holding fund management companies
shall not exceed one.
Article 12 The applicant applying for establishing a fund management
company shall submit application materials for establishment in accordance
with the provisions of the CSRC.
Major shareholders shall organize and coordinate the matters relating to the
establishment of a fund management company, and shall assume major
responsibility for the truthfulness and completeness of application materials.
Article 13 Where, during the application period, there is any material change in
the matters involved in the application materials, the applicant shall submit
updated materials to the CSRC within five working days of such change. If
there is any change of shareholders, a new set of application materials shall be
submitted.
Article 14 The CSRC shall, in accordance with the Administrative License Law
and paragraph 1, Article 14 of the Securities Investment Fund Law, accept the
application for establishing a fund management company, conduct
examination and make a decision.
Article 15 The CSRC may take the following ways to examine the application
for establishing a fund management company:
1. soliciting opinions from relevant institutions and departments on such
aspects as shareholders’ qualifications;
2. examining the contents of application materials by such ways as expert
review and inspection; or
3. conducting on-site inspection on the preparation for the establishment of the
fund management company within five months of the date of acceptance.
Article 16 Where the establishment of a fund management company has been
approved by the CSRC, the applicant shall undergo registration formalities at
the administrative department for industry and commerce within 30 days of the
receipt of approval documents, and obtain the Fund Management Qualification
Certificate from the CSRC based on the Business License for an Enterprise as
a Legal Person issued by the administrative department for industry and
commerce.
A Sino-foreign joint venture fund management company shall also, in
accordance with the provisions of laws and administrative regulations, apply
for the Approval Certificate for a Foreign-funded Enterprise and open a foreign
exchange capital account.
A fund management company shall make an announcement on its
establishment in the newspapers and periodicals designated by the CSRC
within ten days of the date when it has undergone registration formalities at the
administrative department for industry and commerce.
Chapter III Alteration and Dissolution of Fund Management Companies
Article 17 To modify any of the following major matters, a fund management
company shall report to the CSRC for approval:
1. modification of any shareholder holding 5% or more of its shares;
2. modification of any shareholder that holds less than 5% of its shares but has
a significant impact on corporate governance;
3. modification of more than 5% shareholding proportion of any shareholder;
4. modification of important clauses of the company’s bylaws; or
5. other major matters prescribed by the CSRC.
Article 18 After a fund management company modifies any shareholder,
registered capital or shareholding proportion of shareholders, shareholder’s
conditions, shareholding proportion of shareholders, the amount and
registered capital of fund management companies in which shareholders
invest shall comply with the provisions of the CSRC.
Article 19 A shareholder of a fund management company shall abide by the
following provisions when disposing equities:
1. The shareholder shall be honest and in good faith when transferring equities,
shall abide by the commitment made when subscribing or acquiring equities,
and shall not impair the lawful rights and interests of fund share holders;
2. The shareholder shall transfer equities in compliance with the provisions of
the Company Law, and shall not impair the lawful rights and interests of other
shareholders by taking such improper means as falsely reporting the transfer
price;
3. The shareholder and the transferee shall specify relevant matters during the
transfer period, so as to ensure that it will not impair the lawful rights and
interests of the fund management company and fund share holders. The
shareholder and the transferee shall not dispose equities by such ways as
holding equities on behalf of others, share custody, trust contract and secret
agreement;
4. Where the matters concerning the modification of shareholders are not
approved by the CSRC or the relevant legal procedures have not been
undergone, the transferor shall continue to perform shareholders’ duties and
assume corresponding liabilities, and the transferee may not exercise
shareholder’s rights in any form; or
5. other provisions as prescribed by laws, administrative regulations and
bylaws of the company.
Article 20 A shareholder must pay capital in currency in full for the registered
capital increased by a fund management company.
Article 21 Where a fund management company modifies any major matters, it
shall file a modification application in accordance with the provisions of the
CSRC within 60 days of the date when the board of directors or the
shareholders’ meeting makes a resolution. If the modification involves the
equity transfer of any shareholder, and the fund management company fails to
file an application as required, the relevant shareholder may file an application
directly.
Article 22 The CSRC shall, in accordance with the Administrative License Law
and the provisions of paragraph 2, Article 14 of the Securities Investment Fund
Law, accept the application of any fund management company for the
modification of major matters, conduct examination and make a decision.
Article 23 The CSRC may examine the application of a fund management
company for the modification of major matters by such ways as inquiring
relevant personnel, expert review and inspection.
For the modification of major shareholders of a fund management company,
modification of a shareholder whose aggregate shareholding proportion
exceeds 50%, or modification of a shareholder who has nominated the most
directors, the CSRC shall conduct examination by reference to the provisions
of these Measures relating to the establishment of a fund management
company.
Article 24 Where any major modification matters of a fund management
company involves registration at the administrative department for industry
and commerce, the fund management company shall undergo modification
registration formalities at the administrative department for industry and
commerce within 30 days of the receipt of approval documents.
To change into a Sino-foreign joint venture fund management company, a fund
management company shall also apply for obtaining the Approval Certificate
for a Foreign-funded Enterprise in accordance with relevant provisions and
open a foreign exchange capital account.
Article 25 Senior managers of a fund management company shall be elected
or changed to another post in accordance with laws, administrative regulations
and the provisions of the CSRC.
Article 26 Where the major modification matters of a fund management
company involve the modification of content of the Fund Management
Qualification Certificate, the fund management company shall apply to the
CSRC for renewing the Fund Management Qualification Certificate.
Article 27 A fund management company shall make an announcement on
major modification matters in accordance with laws, administrative regulations
and the provisions of the CSRC.
Article 28 A fund management company may not be dissolved until the CSRC
has cancelled its fund management qualification.
A fund management company shall be dissolved in accordance with the
Company Law and other laws and administrative regulations.
Chapter IV Establishment, Modification and Revocation of Subsidiaries and
Branches of a Fund Management Company
Article 29 A fund management company may, based on the requirements for
professional business operations and management, establish subsidiaries,
branches or branches of other forms as prescribed by the CSRC to specially
engage in asset management for particular clients, development of fund
varieties, fund sales, client service and other businesses relating to the
business scope of the fund management company.
The fund management company shall, in consideration of its actual
circumstances, reasonably and prudently build and improve the business
operation and management organization model, conduct sufficient evaluation
and authentication of subsidiaries and branches, and fulfill necessary internal
decision-making procedures.
Article 30 The shares of subsidiaries of a fund management company shall be
controlled by the fund management company and the subsidiaries shall
engage in related businesses in accordance with the provisions of relevant
laws and regulations. A necessary separation system shall be established to
avoid possible risk transfer and interest conflict between a fund management
company and its subsidiaries established with its investment and among all its
subsidiaries.
A fund management company shall establish effective management rules to
strengthen the daily management of businesses, personnel and financial
affairs of subsidiaries and branches, and branches may not engage in
business operations in such forms as contracting, leasing, custody and
cooperation.
A fund management company may establish offices, but the offices may not
undertake profit-making activities.
Article 31 A fund management company may, based on the requirements of its
development strategies, authorize a qualified fund service institution to handle
such businesses as asset management for particular clients, fund share sales,
registration, accounting, valuation, and the development and maintenance of
information technology systems on its behalf.
A fund management company that authorizes a fund service institution to
handle some of its businesses shall conduct sufficient evaluation and
authentication, fulfill necessary internal decision-making procedures, prudently
determine the scope of authorized businesses, content and the authorized
fund service institution, formulate risk management and emergency response
rules on authorized businesses, strengthen the evaluation and restraint of the
authorized fund service institution, guarantee the confidentiality and security of
business information, and protect the lawful rights and interests of fund share
holders and the company’s trade secrets.
The relevant obligations of the fund management company on fund share
holders shall not be exempted or terminated due to authorization of a fund
service institution to provide services.
Article 32 A fund management company shall, within ten days after signing an
authorization agreement with the fund service institution, report to the CSRC
and the dispatched office of the CSRC at the place where the company is
located the authorized business cope, content, the basic information and
business preparations made by the authorized fund service institution, major
risks and corresponding risk prevention measures. The fund management
company shall disclose the relevant information on authorized businesses in
the fund prospectus, fund contact, annual fund report, semi-annual fund report
and the annual report of the fund management company.
The fund service institution that conducts authorized businesses shall have a
sound corporate structure, standard business operations, sound financial
condition, have professional talents, business premises, security facilities and
technical facilities suitable for the authorized businesses, and have sound
internal control, risk management, emergency response rules and business
operation procedures. The fund service institution and its employees that
conduct relevant authorized businesses shall diligently perform their duties, be
honest, faithful, prudent and diligent, guarantee safe and effective operation of
the authorized businesses, keep confidential business secrets, and shall not
disclose or use any private information obtained from the authorized
businesses, or impair the lawful rights and interests of fund share holders.
Article 33 To establish a subsidiary or branch, a fund management company
shall meet the following conditions:
1. The company has sound corporate governance, complete internal
monitoring, stable business operations, and strong capacity for sustainable
business operations;
2. The company has not been given any administrative punishment or criminal
punishment due to any violation of law or regulation in the past one year;
3. The company is not under investigation by the regulatory authority due to
any violation of law or regulation, nor is in the rectification period;
4. The subsidiary or branch to be established has qualified name, offices,
business personnel, security facilities and other facilities relating to the
business;
5. The subsidiary or branch to be established has specific functions and sound
management rules; and
6. other conditions as prescribed by the CSRC.
Article 34 To establish a subsidiary or branch, a fund management company
shall submit application materials in accordance with the provisions of the
CSRC within 15 days of the date when the board of directors or the
shareholders’ meeting or shareholders’ assembly makes a resolution.
Article 35 The CSRC shall, in accordance with the Administrative License Law
and paragraph 2, Article 14 of the Securities Investment Fund Law, accept the
application of a fund management company for establishing a subsidiary or
branch, conduct examination and make a decision.
The CSRC may conduct on-site inspection on the subsidiary or branch to be
established.
Article 36 Where a fund management company modifies or revokes a
subsidiary or branch, it shall report to the CSRC and the dispatched office of
the CSRC at the place where the branch is located within 15 days of the date
of modification or revocation.
Article 37 To establish a subsidiary or branch, a fund management company
shall undergo registration formalities at the administrative department for
industry and commerce within 30 days of the receipt of approval documents.
To modify or revoke a subsidiary or branch, a fund management company
shall undergo relevant formalities at the administrative department for industry
and commerce in accordance with relevant provisions.
Article 38 A fund management company shall make an announcement on
matters relating to the establishment, modification or revocation of a subsidiary
or branch in accordance with laws, administrative regulations and the
provisions of the CSRC.
Chapter V Governance and Business Operations of Fund Management
Companies
Article 39 A fund management company shall, in accordance with the
Company Law and other laws, administrative regulations and the provisions of
the CSRC, establish a governance structure featured by sound organizations,
clear division of functions, effective control and supervision, and reasonable
incentives and restriction, maintain the standard operation of the company, and
protect the interests of fund share holders.
Corporate governance shall follow the basic principle of giving priority to the
interests of fund share holders. Where the interests of the fund management
company and its shareholders and employees run conflict with that of fund
share holders, priority shall be given to guaranteeing the interests of fund
share holders.
Article 40 Shareholders of a fund management company shall perform
statutory obligations, and shall not falsely make capital contribution, or
withdraw capital contribution or do so in a disguised form.
The shareholders of a fund management company shall not hold the
company’s equities on behalf of any other institution or individual, and shall not
entrust any other institution or individual to hold the equities. The shareholders
of a fund management company and their actual controllers shall not occupy
or transfer the company’s assets in any form.
Major shareholders of the fund management company shall uphold the
concept of long-term investment, and make written commitments to hold the
equities of the fund management company for not less than three years.
Article 41 A fund management company shall specify the scope of powers and
rules of procedures of the shareholders’ meeting.
A fund management company shall establish business and key information
separation system with shareholders. The shareholders of the fund
management company and their actual controllers shall, in accordance with
law, perform rights through shareholders’ meeting and shareholders’ assembly,
and shall not directly appoint or remove any director, supervisor or senior
manager of the company by overstepping the shareholders’ meeting, the
shareholders’ assembly or the board of directors, or intervenes in the business
management of the fund management company or the investment and
operation of fund property; and shall not require the fund management
company to render cooperation for them in such business activities as
securities underwriting and securities investment to impair the lawful rights and
interests of fund share holders and other parties concerned.
Where a single shareholder, alone or in combination with any related
shareholders, holds 50% or more of the shares of a fund management
company, the aforesaid shareholder and the institution controlled thereby shall
not engage in the securities asset management business which is identical or
similar to that of the fund management company.
Article 42 A fund management company shall, when its major shareholders are
unable to conduct ordinary business operations in the company, convene other
shareholders and relevant parties to properly handle relevant matters under
the principle of being conducive to the protection of interests of fund share
holders.
Article 43 A fund management company shall specify the scope of powers and
rules of procedures of the board of directors. The board of directors shall
formulate basic rules of the company in accordance with the provisions of laws,
administrative regulations and bylaws of the company, make decisions on
relevant major matters, and supervise and give rewards and punishments to
business managers. The board of directors and the chairman of board of
directors of the fund management company shall not intervene in the concrete
business activities of business managers by exceeding the authority.
The board of directors shall, when examining business managers, pay
attention to the long-term fund investment performance, the company’s
regulatory compliance, risk control and protection of interests of fund
shareholders, and shall not purely take short-term fund management scale
and profit increase as examination standards.
The general manager of the fund management company shall be the member
of the board of directors. Where a single shareholder, alone or in combination
with any related shareholders, holds 50% or more of the shares of a fund
management company, the number of directors related to the aforesaid
shareholder shall not exceed one third of the number of board members.
Article 44 A fund management company shall establish sound independent
director rules, the number of independent directors shall not be less than three,
and shall not be less than one third of the number of board members.
Independent directors shall be independent from the fund management
company and its shareholders, proceed from protecting the maximum interests
of fund share holders, diligently perform duties, make objective and impartial
professional judgments on major matters concerning fund property and
company operation in accordance with law, and shall not obey the will of a
single shareholder, director or any other person.
Article 45 When the board of directors of a fund management company
deliberates on the following matters, they shall be passed by more than two
thirds of independent directors:
1. major related transactions of the company and in fund investment operation;
2. auditing affairs of the company and the fund, and recruitment or modification
of accountant firms;
3. semi-annual reports and annual reports on the fund managed by the
company; and
4. other matters prescribed by laws, administrative regulations and bylaws of
the company.
Article 46 A fund management company shall establish sound rules on the
chief supervisor. The chief supervisor shall be hired by the board of directors
and be responsible to the board of directors, and supervise and audit the
legality and regulatory compliance of the company’s business operations.
Where the chief supervisor discovers any major risk or violation of law or
regulation of the company, the chief supervisor shall notify the general
manager and other relevant senior managers, and report to the board of
directors, the CSRC and the dispatched office of the CSRC at the place where
the company is located.
Article 47 A fund management company shall strengthen the role of the board
of supervisors or executive supervisors in their supervision over the financial
affairs of the company and the performance of duties by the board of directors,
so as to protect the lawful rights and interests of shareholders.
The board of supervisors shall include shareholders’ representatives and
employees’ representatives of the company, and employees’ representatives
shall be not less than one half of the number of board of supervisors. Where
the board of supervisors is not set up, there shall be at least one employees’
representative among executive supervisors.
Article 48 The general manager of a fund management company shall be
responsible for the business management of the company. Senior managers
and other staff members of a fund management company shall perform duties
faithfully and diligently, and shall not seek illegal benefits for any shareholder,
themselves or others.
Article 49 The directors, supervisors, senior managers, shareholders and all
relevant parties of a fund management company shall, when major
shareholders of the fund management company cannot normally operate or
during the equity transfer of the fund management company, perform duties in
accordance with law and diligently, make good arrangements on risk
prevention, guarantee the normal operation of the company, and protect the
interests of fund share holders.
Article 50 A fund management company shall insist on the concept of sound
business operations, match the scale of management assets with its staff
reserves, investment research and client service ability, tolerance of
information technology systems, risk management and internal control level,
and effectively protect the long-term interests of fund share holders.
Article 51 A fund management company shall, in accordance with the
provisions of the CSRC, establish an internal monitoring system, which is
scientific and reasonable, strictly controlled and operated with high efficiency,
maintain business operations in compliance with laws and regulations, and
maintain sound and effective internal monitoring.
Article 52 A fund management company shall establish a sound investment
management system consisting of such links as authorization, research,
decision-making, implementation and appraisal, and fairly treat different fund
properties and clients’ assets managed by it.
Article 53 A fund management company shall establish sound fund financial
accounting and fund asset evaluation systems, strictly abide by relevant
provisions of the state, and reflect the status of fund property in a timely,
accurate and complete manner.
Article 54 A fund management company shall abide by relevant laws and
regulations, industrial regulatory requirements, and industrial technical
standards, follow the principles of security, practicability and operability, and
establish information technology systems suitable for the company’s
development strategies and business operations.
Article 55 A fund management company shall establish sound human
resources management rules, regulate post functions, strengthen personnel
training, establish incentive and restraint mechanisms appropriate for the
company’s development, a mechanism binding the interests of fund
practitioners and fund share holders, and provide human resources support for
the company’s business management and sustainable development.
Article 56 A fund management company shall establish and improve client
service standards, strengthen sales management, regulate fund publicity and
introduction, and shall not commit illegal sales or have unfair competition.
Article 57 A fund management company shall maintain sound financial
condition to satisfy the requirements for the company’s business operations,
business development and risk prevention.
A fund management company shall establish sound financial management
rules, strictly implement financial laws and regulations of the state, and list
relevant funds or assets in its accounting books in compliance with relevant
provisions.
Article 58 A fund management company may increase registered capital
accordingly under the principle of prudent management and based on the
requirements for business development.
A fund management company shall draw risk reserves as required.
Article 59 A fund management company shall manage and use its own funds in
accordance with the provisions of the CSRC.
A fund management company shall, when managing or using its own funds,
maintain the company’s normal business operations, and shall not impair the
lawful rights and interests of fund share holders.
Article 60 A fund management company shall establish rules on emergency
response to incidents to properly handle emergencies that may seriously affect
the interests of fund share holders, may result in systematic risks, or seriously
affect social stability.
Chapter VI Supervision and Administration
Article 61 Where a fund management company or any shareholder of a fund
management company conceals relevant information or provides false
materials when applying for the approval of relevant matters, the CSRC shall
not accept the application. Where the application has been accepted, it shall
not be approved.
Article 62 The CSRC shall conduct off-site inspections and on-site inspections
on the corporate governance, internal monitoring, business operations, risk
status, and relevant business activities of fund management companies in
accordance with the provisions of laws, administrative regulations and the
provisions of the CSRC and under the principle of prudent supervision.
Article 63 Off-site inspections shall be mainly conducted by examining the
materials submitted by a fund management company.
A fund management company shall submit the following materials to the CSRC
and the dispatched office of the CSRC at the place where the company is
located:
1. annual report of a fund management company audited by the accounting
firm qualified for undertaking relevant securities business;
2. annual appraisal report on the internal monitoring of a fund management
company issued by the accounting firm qualified for undertaking the relevant
securities business;
3. quarterly report and annual report on supervision and audit; and
4. other materials as required to be submitted by the CSRC under the principle
of prudent supervision.
Article 64 A fund management company shall submit annual report and annual
appraisal report on the company within three months after the end of each year;
and submit quarterly supervision and audit report within 15 days after the end
of each quarter, and submit annual supervision and audit report within 30 days
after the end of each year.
Article 65 Where a fund management company falls under any of the following
circumstances, it shall report to the CSRC and the dispatched office of the
CSRC at the place where it is located within five days of the date of
occurrence:
1. modifies any shareholder that holds less than 5% of its shares;
2. modifies the name or residence;
3. the shareholder increases or decreases the registered capital in proportion
to its shareholding;
4. modifies the general clauses of the company’s bylaws;
5. The company or any of its directors, senior managers and fund managers is
given a criminal or administrative punishment;
6. The company or any of its directors, senior managers and fund managers is
under the investigation of the regulatory authority or judicial organ;
7. There is any material change of the company’s financial condition;
8. The company is suffering from a major complaint due to its fault;
9. The company faces a major lawsuit; or
10. any other matter that has a significant impact on the company’s business
operations.
Where any matter prescribed in item 5 to item 10 of the preceding paragraph
occurs, the fund management company shall notify all shareholders in writing.
Article 66 Where any of the shareholders of a fund management company or
its actual controller falls under any of the following circumstances, it shall notify
the company in writing, and report to the CSRC and the dispatched office of
the CSRC at the place where the company is located within five days:
1. the actual controller of the company’s shareholder changes;
2. the company’s major shareholder suffers from losses for three consecutive
years;
3. the equities of the company’s shareholder is subject to litigation preservation
by the judicial organ;
4. the company’s shareholder disposes its equities;
5. the company’s shareholder merges or splits or undergoes major asset or
debt restructuring;
6. the regulatory authority or the judicial organ files a case for the investigation
of the company’s shareholder;
7. the company’s shareholder enters the liquidation procedure or is taken over;
or
8. other matters that have a significant impact on the company’s business
operations.
Where a fund management company has any emergency prescribed in Article
60 of these Measures, it shall immediately report to the CSRC and the
dispatched office of the CSRC at the place where the company is located.
Where a fund management company establishes, modifies or revokes an
office, it shall report to the CSRC and the dispatched office of the CSRC at the
place where the company is located within 15 days of the date of
establishment, modification or revocation.
Article 67 Where the competent authority at the place where the foreign
shareholder of a Sino-foreign joint venture fund management company is
located or mainly engages in business activities has filing requirements for
overseas investment, the foreign shareholder shall, after having obtained the
CSRC’s approval documents in accordance with law, submit relevant filing
materials to the competent authority at the place where the foreign shareholder
is located or mainly engages in business activities, and shall, at the same time,
submit the duplicate to the CSRC.
Article 68 The CSRC may take the following measures to make on-site
inspection of a fund management company, and determine the objects,
content and frequency of on-site inspection according to routine supervision:
1. enter the fund management company and its subsidiaries and branches to
conduct inspection;
2. require the fund management company to provide documents, minutes of
meeting, statements, certificates and other materials relating to inspection
matters;
3. inquire of staff members of the fund management company and require
them to make statements on relevant inspection matters;
4. consult and reproduce the documents and materials of a fund management
company relating to the inspection matters, and seal up for safekeeping the
documents and materials that are likely to be transferred, concealed or
destroyed;
5. inspect the computer-based business data management system of a fund
management company; and
6. other measures prescribed by the CSRC.
Article 69 When the CSRC conducts on-site inspection on any fund
management company, the inspectors shall not be less than two, and shall
show their legal certificates. If the inspectors are less than two or fail to show
their legal certificates, the fund management company shall have the right to
refuse the inspection.
The CSRC may hire certified accountants, lawyers and other professionals to
provide professional services for inspection.
Article 70 A fund management company and relevant personnel shall
cooperate with the CSRC in inspection, and shall not refuse or delay the
provision of relevant materials with any reason, or provide untruthful,
inaccurate or incomplete materials.
Article 71 The CSRC shall issue inspection conclusions to a fund management
company under inspection after making on-site inspection on the fund
management company.
Article 72 The CSRC may, as required for supervision, establish the risk
control indicator monitoring system and comprehensive supervision evaluation
system for fund management companies. Where the relevant risk control
indicators or comprehensive supervision evaluation indicators do not comply
with relevant provisions, the CSRC may order the company to make
corrections within the prescribed time limit, and take such administrative
supervision measures as increasing the registered capital, increasing the risk
reserve withdrawal proportion or suspending some or all businesses.
Article 73 Where anyone falls under any of the following circumstances in
violation of these Measures, it shall be ordered to make correction, be given a
warning and be concurrently fined not more than 30,000 yuan. The directly
responsible person in charge and other directly liable persons shall be given a
warning, be revoked the qualification for the post or fund practicing
qualification, and may be concurrently fined not more than 30,000 yuan:
1. holds 5% or more equities of a fund management company without approval,
or becomes a shareholder of a fund management company by providing false
application materials;
2. entrusts any other person or accepts any other person’s authorization to
hold equities of the fund management company;
3. the shareholder of a fund management company and its actual controller
occupy and transfer the assets of the fund management company; or
4. the shareholder of a fund management company and its actual controller
order, instigate or accept the cooperation provided by a fund management
company during such business activities as securities underwriting and
securities investment, which impair the lawful rights and interests of fund share
holders and other parties concerned.
Article 74 Anyone that falls under any of the following circumstances in
violation of these Measures shall be ordered to make correction, and such
administrative regulatory measures may be taken against the liable
shareholders, actual controllers, directors, supervisors, senior managers and
directly liable persons as a regulatory talk, issuance of a warning letter, and
suspension of performance of duties.
1. The shareholder of a fund management company or its actual controller
appoints or removes any director, supervisor or senior manager of the
company by overstepping the shareholders’ meeting, the shareholders’
assembly or the board of directors;
2. The shareholder of a fund management company or its actual controller
intervenes in the business management of the fund management company or
the investment and operation of fund property;
3. The fund management company and its shareholders and actual controllers
fail to fulfill reporting duties in a timely manner; or
4. The board of directors of a fund management company examines business
managers in non-compliance with relevant provisions.
Article 75 Where a fund management company falls under any of the following
circumstances, it shall be ordered to make rectification within a prescribed time
limit, the company’s application for collecting a fund product or any other
business application may be suspended during the rectification period, and
such administrative regulatory measures may be taken against the liable
directors, supervisors, senior managers and directly liable persons as a
regulatory talk, issuance of a warning letter, and suspension of performance of
duties.
1. The corporate governance is incomplete, which severely affects the
company’s independence, completeness and integrity;
2. The company’s internal control rules are incomplete, the relevant rules
cannot be effectively implemented, or there is any major hidden risk or serious
risk incident;
3. The management of the subsidiaries or branches is slack, the selected fund
service institution does not meet basic qualification conditions, or there is any
major hidden risk or serious risk incident; or
4. any serious violation of law or regulation occurs.
Where the company fails to complete rectification within the prescribed time
limit, the CSRC may cease the approval of new establishment of a subsidiary
or branch; restrict the distribution of bonus, restrict the payment of
remuneration and offering of benefits to the liable directors, supervisors and
senior managers; or order the replacement of liable directors, supervisors and
senior managers or restrict the rights thereof. Where the circumstances are
especially serious, the CSRC may designate another institution to take such
regulatory measures as custody, takeover or revocation, give a warning to the
liable directors, supervisors, senior managers and directly liable persons, and
concurrently impose a fine of not more than 30,000 yuan.
Article 76 Where the net assets of a fund management company is less than
40 million yuan, and its disposable current assets such as cash, bank deposit
and national debt is less than 20 million yuan and less than the company’s
business revenue in the previous accounting year, the CSRC may suspend the
acceptance and examination of the company’s application for collecting a fund
product or any other business application, and require the company to improve
financial liquidity within a prescribed time limit. If the financial condition of the
company continues to deteriorate, the CSRC shall order it to cease business
operations for rectification.
Where a fund management company is ordered to cease business operations
for rectification, it shall, within a prescribed time limit, authorize a fund
management company recognized by the CSRC to manage the fund assets
managed by it. Where it fails to authorize management as required within the
prescribed time limit, the CSRC may designate another institution to conduct
custody of its fund management business.
Article 77 Where a fund service institution, in violation of these Measures,
discloses or uses any private information obtained from the authorized
businesses to gain benefits, which impairs the lawful rights and interests of
fund share holders, it shall be ordered to make correction, be given a warning,
and be concurrently fined not more than 30,000 yuan. The directly responsible
person in charge and other directly liable persons shall be given a warning,
and be concurrently fined not more than 30,000 yuan.
Article 78 Where a fund management company, any shareholder of a fund
management company or its actual controller, a fund service institution or its
directly responsible person in charge or any other directly liable person
violates these Measures or any other relevant provision, which shall be given
an administrative punishment in accordance with law, the violator shall be
given an administrative punishment in accordance with relevant provisions;
and if any crime is suspected, it shall be transferred to the judicial organ in
accordance with law, and be subject to criminal liability.
Where the subsidiary of a fund management company violates any law or
regulation, it shall be punished by reference to these Measures, but the
subsidiary established by the fund management company overseas shall be
punished in accordance with relevant regulatory provisions overseas.
Chapter VII Supplementary Provisions
Article 79 For purposes of these Measures, “Sino-foreign joint venture fund
management companies” include fund management companies jointly funded
and established by foreign shareholders and domestic shareholders, and fund
management companies altered from assignment or purchase of equities of
domestic fund management companies by foreign shareholders.
Article 80 The specific measures for the administration of establishment of
subsidiaries by fund management companies shall be prescribed by the CSRC
separately.
Article 81 These Measures shall come into force on
Day Month Year.