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Approval Reply by the State Council to the Relevant Issues about Securities Investment Fund Management Companies
2009-11-23


[August 12, 2004 Guo Han (2008) No.66]


China Securities Regulatory Commission:

The “Proposal on Issues about Implementation of the ‘Law of Securities Investment Fund’ [Zheng Jian Fa (2004) No. 64] by your commission has been duly acknowledged. The State Council replies as follows:

I. According to Article 13 of the “Law of the People's Republic of China on Securities Investment Fund”, the State Council approved your regulations on the qualification requirements for the legal person acting as a non-major stockholder of the Securities Investment Fund Management Company:
(1) Its registered capital and the net assets value should be not less than RMB100 million and be of good quality;
(2) It has operated continuously for 3 accounting years with perfect governance structure and internal control system;
(3) It has not received any administrative penalty or criminal punishment for violations of laws and regulations in the last three years;

(4) It has never acted in such a way as to cause harm to the rights and interests of the clients, including embezzling of assets;
(5) It is not being investigated or is not in the rectification period due to violations of laws and regulations;
(6) It enjoys an excellent social credit and has no record of violating the principle of good faith at the organizations including financial supervision authorities, self-regulatory institutions and commercial banks, etc.

II According to Article 13 of the “Law of the People's Republic of China on Securities Investment Fund”, the State Council approved your regulations on qualification requirements for the domestic or overseas stockholder in a Sino-foreign securities investment fund management company:
(1) The stockholder at home whose proportion of contribution is the highest should be qualified to be a major stockholder of a securities investment fund management company; other domestic stockholders should meet the conditions for non major stockholders of a securities investment fund management company. 
(2) The overseas stockholder should meet the following requirements:
1. It shall be a financial institution established according to the laws in the country it belongs to and continues to exist legally with experiences in financial assets management, stable financial affaires and good credit. It has not been penalized by a regulatory or judicial authority in the last three years;
2. The country it belongs to has perfect securities laws and regulation system. Its securities regulation authority has sighed the memorandum of understanding on securities regulatory cooperation with China Securities Regulatory Commission (CSRC) or other organizations approved by CSRC and maintains an effective regulatory partnership;
3. Its contributed capital shall be convertible currencies equal to not less than RMB300 million;
4. Other requirements of the CSRC as approved by the State Council.
Securities investment fund management companies in the mainland invested by financial institutions in Hong Kong, Macao and Taiwan shall operate pursuant to the previous requirements.

III The “Interim Measures for the Administration of Securities Investment Funds” approved by the State Council on November 5, 1997 and promulgated by the State Council’s Securities Commission on November 14, 1997 shall thus be invalidated from this day on.