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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II ADMINISTRATION OF APPLICATION CHAPTER III MANAGEMENT OF VARIETIES CHAPTER IV ADMINISTRATION OF AGREEMENT CHAPTER V MANAGEMENT OF INVESTMENT CHAPTER VI SUPERVISION AND ADMINISTRATION CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. In order to strengthen the administration of overseas investment of the insurance foreign exchange capital, regulate investment operations, prevent market risks as well as operational risks and guarantee the legitimate rights and interests of the parties concerned, the present Detailed Rules are formulated according to such laws and regulations as the Insurance Law of the People's Republic of China and the Interim Measures for the Administration of Overseas Use of the Insurance Foreign Exchange Capital (hereinafter referred to as the Measures). Article 2. The overseas investment of the insurance foreign exchange capital shall be decided by the board of directors of an insurance company (hereinafter referred to as the entrusting party) and may, through entrustment, be put under the management of an insurance asset management company within the Chinese territory or an overseas investment management organization (hereinafter referred to as the entrusted party). Any other management form shall be separately formulated by the China Insurance Regulatory Commission (hereinafter referred to as the CIRC). Article 3. An entrusting party shall, according to the provisions of the Measures, entrust a commercial bank (hereinafter referred to as the custodian party) to take charge of overseas use of the insurance foreign exchange capital as well as the foreign exchange asset as formed by investment (hereinafter uniformly referred to as the insurance foreign exchange capital) under custodianship in an independent manner. Article 4. An entrusting party shall choose its entrusted party and custodian party in an open, fair and impartial manner and shall, based on the principles of security, liquidity and profitability, formulate a plan for strategic allocation of assets in a prudent way. Article 5. An entrusting party or custodian party shall, based on the principles of being honest and creditworthy, prudent and diligent, loyal and dutiful, manage the insurance foreign exchange capital in an fair manner so as to guarantee the security of the insurance foreign exchange capital. Article 6. The CIRC shall take charge of formulating the policies for the administration of overseas investment of the insurance foreign exchange capital. The CIRC and the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) shall, according to their respective functions and duties, carry out supervision and administration on the overseas investment of insurance foreign exchange capital according to law. CHAPTER II ADMINISTRATION OF APPLICATION Article 7. An entrusting party shall, when submitting an application for foreign exchange payment so as to make overseas investment with its insurance foreign exchange capital, concurrently submit the following documents and materials to the CIRC: (1) The documents and materials as prescribed in Article 7 of the Measures; (2) The original document regarding the decision of the board of directors of the company on the overseas investment with its insurance foreign exchange capital; (3) The management system and risk control system of overseas investment, including, at least, management rules on the entrusted affairs, factors as taken into account in the formulation of the guidance for overseas investment with its insurance foreign exchange capital (hereinafter referred to as the investment guidance) as well as the procedures thereof, standards for and procedures of selecting the relevant entrusted party and the custodian party within the Chinese territory, standards for selecting trading partners, information communication mechanism, performance assessment mechanism, risk control mechanism, measures for supervision and examination, and the mechanism for handling major emergencies; (4) A plan of strategic allocation of overseas investment, stating at least the principles of investment, assets and liabilities, investment target, investment varieties, investment proportion, investment market, currency allocation, performance benchmark, and arrangement of trading seats, etc.; (5) An independent custodian plan of the third party, stating at least the name of the custodian party within the Chinese territory, the overseas custodian agent, and the secondary custodian and the relevant countries where they are located as well as the associated relationship between the aforesaid parties and the entrusting party as well as the entrusted party; (6) A research report that the relevant entrusted party and the custodian party have carried out their business operations in a law-abiding and prudent manner; (7) A document of commitment, promising the authenticity of the materials as submitted and the performance of functions and duties as prescribed in the Measures and the present Detailed Rules; and (8) Any other documents and materials as prescribed by the CIRC. The CIRC shall, according to the relevant provisions of the Measures and the Detailed Rules, carry out examination over the requirements for management of overseas investment as made by an entrusting party. Article 8. An entrusted party within the Chinese territory that manages any overseas investment of insurance foreign exchange capital shall submit the following documents and materials to the CIRC: (1) An application with the signature of the legal representative or any person authorized thereby; (2) The overseas investment management system and the risk control system, including at least an investment authorization system, an administration system to check out whether or not the relevant laws and regulations are observed, a research and reporting system, a variety selection system, a transaction management system, an information management system, and the procedures for investment decision-making, standards for selecting trading partners, indicators of risk appraisal and performance assessment, a risk control mechanism, professional code of ethics, inspection and examination measures and a mechanism for handing major emergencies, etc; (3) A scheme of managing overseas investment, operational strategies and the arrangement of trading seats, etc.; (4) The number of professionals who engage in overseas investment and the resumes thereof; (5) A brief of the technical supporting systems concerning the investment of the insurance foreign exchange capital such as the information system, trading system, and investment management system, etc.; (6) A brief of the associated relationship with the entrusting party, the custodian party within the Chinese territory and the overseas custodian agent; (7) A promise document of guarantying the authenticity of the materials as submitted and the performance of the functions and duties as prescribed by the Measures and the present Detailed Rules; and (8) Any other documents and materials as prescribed by the CIRC. The CIRC shall, according to the relevant provisions of the Interim Provisions on the Administration of Insurance Assets Management Companies, the Measures and the present Detailed Rules, carry out a prudent appraisal on the conditions for an entrusted party within the Chinese territory to engage in the management of overseas investment of the insurance foreign exchange capital in such aspects as corporate governance, asset scale, management experience, investment performance, research capability, internal control, and market status. Article 9. An overseas entrusted party who manages overseas investment of insurance foreign exchange capital shall not only satisfy the requirements as prescribed in Article 14 of the Measures but also meet the following requirements: (1) Having the qualification of an independent legal-person; (2) Having experience on the management of insurance assets for 5 years or more; and (3) Having purchased the liability insurance that complies with the asset management scale. Article 10. An overseas entrusted party who is under any of the following circumstances may not be limited by either the restriction of paid-in capital or the restriction of net asset of lower than 60 million US dollars or the equivalent of convertible currency: (1) Being an entrusted party of mutual system or partnership and the scale of assets under entrusted management being 200 billion US dollars or the equivalent of convertible currency or more; or (2) The relevant shareholders satisfying the provisions of item (3) of Article 14 of the Measures on paid-in capital and net assets and being able to offer full-liability guaranty. Article 11. An overseas entrusted party who manages overseas investment of insurance foreign exchange capital shall submit the following documents and materials to the CIRC: (1) An application of the legal-person representative or a person authorized thereby; (2) A written account of meeting the requirements as prescribed in Article 14 of the Measures, Articles 9 and 10 of the present Detailed Rules, or in case the paid-in capital and net assets of the entrusted party fails to reach 600 million US dollars or the equivalent of convertible currency, the full-liability guaranty letter of share-controlled holders shall be provided; (3) The overseas investment management system and risk control system, including at least a investment authorization system, a management system to check out whether or not the relevant law and regulations are observed, a research and reporting system, a variety selection system, a transaction management system, an information management system, and the procedures for investment decision-making, standards for selecting trading partners, indicators of risk appraisal and performance assessment, a risk control mechanism, professional code of ethics, inspection and examination measures and a mechanism for handling major emergencies, etc.; (4) An overseas investment management plan, operational strategies and the arrangement of trading seats, etc.; (5) The number of overseas investment professionals and the resumes thereof; (6) A brief of the technical supporting system of the investment of insurance foreign exchange capital such as the information system, trading system and investment management system; (7) The business license (duplicate) as issued by the supervisory organization of the country or region where it is located, or the effective photocopy of the business license; (8) The opinions on supervision as produced by the supervisory organization of the country or region where it is located or the announcement as signed by the directors or partners of the company upon notarization; (9) A financial statement of the company in the latest 1 year as audited by an accounting firm; (10) An auditing report on the internal control system of the company in the latest 1 year as produced by an accounting firm; (11) A photocopy of the valid insurance policy of liability insurance; (12) A statement on the associated relationship between the entrusted party and the entrusting party, the custodian party within the Chinese territory and the overseas custodian agent; (13) A promise document of guaranteeing the authenticity of the materials as submitted and the performance of the functions and duties as prescribed by the Measures and the present Detailed Rules; and (14) Any other documents and materials as prescribed by the CIRC. The opinions on supervision and announcement as mentioned in item (8) of the preceding paragraph shall include such contents as paid-in capital, net assets, management asset scale, business management experience, and the certification of no major irregularity or rule-breaking act in the latest 3 years. The CIRC shall, according to the relevant provisions of the Measures and the present Detailed Rules, carry out a prudent appraisal on the requirements for an overseas entrusted party to manage the insurance foreign exchange capital under entrusted management in such aspects as corporate governance, asset scale, management experience, research capability, investment performance, internal control, and market status, and produce the opinions on examination. Article 12. A custodian within the Chinese territory who, under custodianship, manage the overseas investment of insurance foreign exchange capital of an entrusting party shall submit the following documents and materials to the CIRC: (1) An application of the legal-person representative or a person authorized thereby; (2) A written statement of meeting the requirements as prescribed in Article 18 of the Measures; (3) The qualification certification of engaging in the custodian business of overseas investment of insurance foreign exchange capital; (4) The procedures for independent custodian operations and management system, including at least the opening of accounts, asset preservation, capital supplement and withdrawal, delivery of securities and capital settlement, internal control and risk prevention, verification of information in collaboration with the entrusting party and the entrusted party, selection of the overseas agent and the secondary custodian thereof, the professional code of ethics, the inspection and examination mechanism and the mechanism for handling major emergencies; (5) A financial statement of the company in the latest 1 year as audited by an accounting firm and the announcement as signed by the directors of the company upon notarization; (6) An auditing report on the internal control in the latest 1 year as produced by an accounting firm, which shall include its custodian business; (7) A list of global custodian network, indicating the names of the overseas custodian agents, and secondary custodian agents as well as the countries where they are located and a statement of meeting the requirements as prescribed in Article 26 of the Measures; (8) A statement of the associated relationship between the custodian party and the entrusting party as well as the entrusted party; (9) A promise document of guaranteeing the authenticity of the materials as submitted and the performance of the functions and duties as prescribed by the Measures and the present Detailed Rules; and (10) Any other documents and materials as prescribed by the CIRC. The "statement" as mentioned in item (5) of the preceding paragraph shall include the paid-in capital, net assets, scale of custodian assets, custodian business experience, and the certification of no major irregularity or rule-breaking action in the latest 3 years. The CIRC shall, according to the Measures and the present Detailed Rules, carry out a prudent appraisal on the conditions of the commercial banks within the Chinese territory to engage in the custodian business of overseas investment of insurance foreign exchange capital in such aspects as capital strength, corporate governance, custody scale, business experience, internal control, market status, and service level, and produce its opinions on examination. CHAPTER III MANAGEMENT OF VARIETIES Article 13. The currency allocation of an entrusting party in overseas investment of insurance foreign exchange capital shall be limited to US dollar (USD), Euro (EUR), Japanese Yuan (JPY), Pound Sterling (GBP), Canadian Dollar (CAD), Swiss Franc (CHF), Australian Dollar (AUD), Singapore Dollar (SGD), Hong Kong Dollar and any other currency as approved by the CIRC. The strategy of currency allocation in overseas investment of insurance foreign exchange capital shall be subject to the approval of the Investment Decision-making Commission of the entrusting party or the authorized department thereof. The currency allocation shall comply with the provisions of the Measures and the present Detailed Rules as well as the agreement on the management of overseas investment of insurance foreign exchange capital (hereinafter referred to as the agreement on investment management) and the stipulations of the guidance for investment. Article 14. The term "bank deposit" as mentioned in item (1) of Article 9 of the Measures refers to the amount required by the entrusting party to be deposited in an overseas bank and whose principals and interests are paid on a periodic base according to the promise of the bank, including the structured deposit as issued by a bank that has promised break-even principals and interests. The term "foreign government bonds" as mentioned in item (2) of Article 9 of the Measures refers to the bonds issued by a sovereign state in the name of its central government, which promises that the relevant principals and interests are paid on a periodic base, including the mortgage-backed securities (MBS) as guaranteed by the government for duly payment of the principal and interests. The term "bonds of an international financial organization" as mentioned in item (2) of the Measures refers to the bonds as issued by a policy-related financial organization that is composed of multi-lateral governments, etc. The term "products of the monetary market" as mentioned in item (4) of Article 9 of the Measures includes the funds of the monetary market. Article 15. The investment of an entrusting party in overseas stocks by using insurance foreign exchange capital shall be limited to the stocks of the Chinese enterprises that have been listed in the Stock Exchange of New York, London, Frankfurt, Tokyo, Singapore or Hong Kong. Article 16. The means of purchase in the primary market and transaction in the secondary market may be adopted for the investment of an entrusting party in overseas stocks by using insurance foreign exchange capital. The purchase in the primary market includes the ration, targeted ration and the participation in the ration in the name of a strategic investor. Article 17. For the financial products in the overseas investment of an entrusting party by using insurance foreign exchange capital, the credit rating made by an international rating institution shall meet the provisions of Article 9 of the Measures. In particular: (1) The structured deposits of an issuing bank in the latest 3 years shall be ranked at or above Grade A; (2) A Chinese enterprise that has issued bonds abroad shall be ranked at or above Grade BBB; (3) The mortgage-backed securities (MBS) shall be ranked at or around Grade AAA; and (4) The funds of the monetary market shall be ranked at Grade A-1or the equivalent of A-1. Article 18. The proportion of overseas investment as made by an entrusting party by using insurance foreign exchange capital shall meet the provisions of Article 10 of the Measures, in particular: (1) The balance of the structured deposit shall, when calculated according to the cost price, not exceed 5% of the quota of the foreign exchange payment for investment as approved by the SAFE; (2) The balance of the mortgage-backed securities (MBS) shall, when calculated according to the cost price, not exceed 20% of the quota of the foreign exchange payment for investment as approved by the SAFE; (3) The total amount of the stocks as issued abroad by a Chinese enterprise shall, when calculated according to the cost price, not exceed 10% of the quota of the foreign exchange payment for investment as approved by the SAFE; For the stock issued by an enterprise with simplified investment, it shall not exceed 5% of the total amount of the stocks; (4) The bank deposit of a single associated party shall not exceed 10% of the quota of the foreign exchange payment for investment as approved by the SAFE; the bond as issued by a single associated party shall not exceed 3% of the quota of the foreign exchange payment for investment as approved by the SAFE and shall not exceed 10% of the total amount of bonds in the very issuance; the stock as issued by a single associated party shall not exceed 2% of the total amount of the stocks. The term "associated party" as mentioned in item (4) of the preceding paragraph refers to: (1) An entrusting party that directly or indirectly holds more than 10 % of the shares of the enterprise; (2) An enterprise that holds directly or indirectly more than 10 % of the shares of the entrusting party; (3) A same enterprise that directly or indirectly holds more than 10 % of the shares of the entrusting party or the enterprise respectively; (4) Any other enterprise as recognized by the CIRC that has an interest relationship with the entrusting party. CHAPTER IV ADMINISTRATION OF AGREEMENT Article 19. Where an entrusting party and an entrusted party conclude an agreement on the management of investment, they shall be required to provide the examination opinions as produced by the CIRC. An agreement on investment management shall not only meet all the provisions of the Measures and the present Detailed Rules and the general practice of entrustment but also meet the following provisions: (1) Clarifying the duties and functions and obligations of the entrusting party and the entrusted party; (2) Clarifying the restrictions on the varieties, proportion and market of investment and determining the measures for handling any overstepping of investment quota due to such factors as market fluctuation and credit rating adjustment; (3) Clarifying the supervisory functions and duties of the entrusting party and the CIRC on the entrusted party. An entrusted party shall, according to the stipulations and requirements of the agreement on investment management, provide to the entrusting party and the CIRC all of or related information regarding the management of the insurance foreign exchange capital in a timely manner; (4) Clarifying that the entrusting party shall observe the principle of avoiding interest conflicts; (5) Clarifying that the entrusting party shall employ an accounting firm to carry out an auditing on the implementation of internal control on an annual base and the auditing report shall include the insurance foreign exchange capital under its management and clarifying that the entrusting party has the right to employ an accounting firm to carry out an auditing on the insurance foreign exchange capital under the management of the entrusted party who shall provide coordination; (6) Clarifying that the entrusted party shall coordinate the custodian party within the Chinese territory to carry out an examination to see whether or not they comply with the relevant provisions, verify the insurance foreign exchange capital in a timely manner, provide other relevant information and guarantee the authenticity and accuracy of the information; (7) Clarifying that the entrusted party shall manage the overseas investment of the insurance foreign exchange capital according to the principles of prudence and accountability. In case any loss has been incurred from any kind of negligence, operational fault, balance insufficiency of securities or capital, or due to any flaw in any article of the agreement as concluded with a third party, systematic malfunction or personnel fraudulence, the entrusting party shall compensate the loss as directly incurred therefrom and be subject to civil liabilities. The entrusted party shall bear the responsibility of proof of prudence and accountability; (8) Clarifying that an entrusted party who violates the relevant laws and regulations, the provisions of the Measures and the present Detailed Rules or the agreement on investment management or the guidance for investment and thus incurs any loss of insurance foreign exchange capital shall be responsible for the relevant compensation and be subject to civil liabilities. Resignation of the entrusted party from entrustment shall not exempt it from compensation or civil liabilities; (9) Clarifying that where an entrusted party violates the relevant laws and regulations, the provisions of the Measures or the present Detailed Rules, uses the insurance foreign exchange capital under entrusted management to seek any improper interest for himself or any other person, the relevant interest shall be incorporated into the insurance foreign exchange capital and if any loss of the insurance foreign exchange is incurred, the entrusted party shall make compensation and be subject to civil liabilities. Resignation of the entrusted party from entrustment shall not exempt it from the compensation and civil liabilities; (10) Clarifying the measures for drawing and paying the expenses for investment management; (11) Clarifying that it is stipulated in the arbitration article of the agreement on investment management that any dispute shall be submitted to an arbitration organization of China or the Hong Kong SAR of China; (12) Clarifying other relevant matters regarding the rescission and termination of the agreement on investment management; (13) Clarifying that the language of the agreement on investment management shall be the Chinese language and where any foreign language is required according to the agreement, market practice or any other requirement, a Chinese translation shall be attached; and (14) Clarifying any other matter that requires determination. Before an entrusting party and an entrusted party conclude an agreement on investment management, they shall employ a professional lawyer with a qualification of more than 5 years practice to examine the agreement on investment management and produce legal opinions. Article 20. Where an entrusted party and a custodian party conclude a custodian agreement on overseas investment of insurance foreign exchange capital (hereinafter referred to the custodian agreement), they shall be required to provide the examination opinions as produced by the CIRC. The custodian agreement shall not only meet all the provisions of the Measures and the present Detailed Rules and the general convention on custodianship, but also meet the following provisions: (1) Clarifying the functions and duties of the entrusting party and the custodian party within the Chinese territory; (2) Clarifying that the entrusting party shall coordinate with the custodian party within the Chinese territory to carry out an examination to see if the relevant laws and regulations are observed. A custodian party within the Chinese territory shall assist the CIRC to carry out an examination to see if the relevant laws and regulations are observed, verify the insurance foreign exchange capital, provide other relevant information and guarantee the authenticity and accuracy of the information; (3) Clarifying the supervisory functions and duties of the entrusting party and the CIRC on the custodian party within the Chinese territory. The custodian party shall, according to the stipulations and requirements of the custodian agreement, provide all the information or the relevant information of the insurance foreign exchange capital under custodianship to the entrusting party and the CIRC in a timely manner; (4) Clarifying that where the custodian party within the Chinese territory needs to employ an overseas custodian agent or a secondary custodian, he shall clarify to the entrusting party the standards for selecting an overseas custodian agent or a secondary custodian, the management procedures and supervisory measures, and shall obtain the recognition thereof. An custodian party within the Chinese territory shall report the result regarding the selection of an overseas custodian agent or a secondary custodian to the CIRC; (5) Clarifying that the custodian party within the Chinese territory shall employ an accounting firm to carry out an auditing on the implementation of its internal control on an annual base and the auditing report shall include the insurance foreign exchange capital under custodianship and clarifying that the entrusting party has the right to employ an accounting firm to carry out an auditing on the insurance foreign exchange capital under the custodianship of the custodian party and the custodian party within the Chinese territory shall provide assistance; (6) Clarifying that the custodian party within the Chinese territory shall, according to the principles of prudence and accountability, supervise the business operations of the insurance foreign exchange capital under the custodianship of an overseas custodian agent or a secondary custodian and that where any loss is incurred from any negligence, operational fault, position insufficiency or flaw in any article of the agreement as concluded with a third party, systematic malfunction or personnel fraudulence, the custodian party within the Chinese territory shall compensate the loss as directly incurred there from and shall be subject to civil liabilities. A custodian party within the Chinese territory shall be bear the burden of proof of prudence and accountability; (7) Clarifying that a custodian party within the Chinese territory who violates the relevant laws and regulations, the provisions of the Measures or the present Detailed Rules or the agreement on investment management or the guidance for investment and thus incurs any loss of the insurance foreign exchange capital shall be responsible for compensation and be subject to civil liabilities. Resignation of a custodian within the Chinese territory from custodianship shall not exempt it from compensation or civil liabilities; (8) Clarifying that where a custodian party within the Chinese territory violates relevant laws and regulations, or the provisions of the Measures and the present Detailed Rules, or the agreement on investment management or the guidance for investment by using the insurance foreign exchange capital under the custodianship thereof to seek any improper interest for himself or any other person, the relevant interest shall be incorporated into the insurance foreign exchange capital, and if any loss of the insurance foreign exchange is incurred, the custodian party shall make compensation and take civil liabilities. Resignation of a custodian within the Chinese territory from custodianship shall not exempt it from compensation or civil liabilities; (9) Clarifying the measures for drawing and paying the expenses for custodianship; (10) Clarifying that the conclusion, interpretation of the custodian agreement and the resolution of disputes shall be governed by the relevant laws and regulations of the People's Republic of China and it is stipulated in the arbitration article of the custodian agreement that any dispute shall be submitted to an arbitration organization of China or the Hong Kong SAR of China; (11) Clarifying other relevant matters regarding the rescission and termination of the custodian agreement; (12) Clarifying that the language of the custodian agreement shall be the Chinese language, and where any foreign language is required according to the agreement, market practice or any other requirement, a Chinese translation shall be attached; and (13) Clarifying any other matter that requires determination. Before an entrusting party and a custodian within the Chinese territory conclude a custodian agreement, they shall employ a professional lawyer with the qualification of more than 5 years practice to examine the custodian agreement and produce legal opinions. CHAPTER V MANAGEMENT OF INVESTMENT Article 21. An entrusting party shall, according to the Guidance for Risk Control in the Utilization of Insurance Funds, establish an investment management system as well as a risk control system for overseas investment of the insurance foreign exchange capital and formulate a scientific, precise and efficient procedure for managing overseas investment. Article 22. An entrusting party shall take the nature of the insurance foreign exchange capital into full account and, according to the requirements of matching asset with liability, intensify and improve the strategic allocation of assets. Article 23. An entrusting party shall, according to the standards and the prescribed procedures, adopt the method of bid invitation to select an entrusted party and a custodian party within the Chinese territory. As a general principle, an entrusting party can only select one custodian party within the Chinese territory. Article 24. An entrusting party shall authorize a custodian party within the Chinese territory to establish custodian accounts according to the foreign exchange capitals of different entrusted parties, different insurance products as well as different natures respectively, and maintain the independence of all kinds of capital. A custodian party within the Chinese territory shall provide assistance. Article 25. An entrusting party that makes IPO abroad shall, within 6 months, withdraw the insurance foreign exchange capital as raised from the IPO back to China. In case there is otherwise any different provision of any law or regulation of the state, such provision shall prevail. An entrusting party that has obtained the qualification for overseas investment shall, within 30 days as of obtaining the approval, directly transfer the insurance foreign exchange capital as raised from IPO into the custodian account at home or abroad. Article 26. The investment guidance as formulated by an entrusting party shall at least include the investment concept, investment principles, variety, proportion, market, and term of investment, the performance benchmark, and the standard for selecting the trading partner as well as the checklist thereof, liquidity and risk control requirements. The investment guidance shall be concurrently served on the entrusted party and the custodian party within the Chinese territory. Article 27. An entrusting party who deposit in a commercial bank beyond its custodian party within the Chinese territory or its overseas custodian agent shall require the bank to provide the original of the ownership document or the original of the document certifying all the ownership to the custodian party within the Chinese territory, and provide the information of the said deposit to the custodian party within the Chinese territory on a periodic base. Where a deposit is terminated or expires ahead of schedule, it shall be transferred back to the designated account of the custodian party within the Chinese territory. Article 28. An entrusting party shall examine the investment guidance on a periodic base and, according to the policy environment, market trend, and investment situation, make adjustments in a timely manner and inform the relevant entrusted party and the custodian party within the Chinese territory. The frequency of examination on investment guidance shall be no less than once each year. Article 29. An entrusting party shall, according to the relevant articles of the agreement on investment management, appraise the investment management capability and actual investment performance of an entrusted party on a periodic base and adjust the scale of entrusted management accordingly. Where any irregularity or rule-breaking act of an entrusted party is found, the entrusting party may terminate the agreement on investment management. The frequency of appraisal of the entrusted party shall be no less than once each year. Article 30. An entrusting party shall, according to the relevant articles of the custodian agreement, carry out an appraisal on the custodian ability and the actual service performance of the custodian party within the Chinese territory, the overseas custodian agent or the secondary custodian on a periodic base. Where any party fails to comply with the requirement as set by the custodian agreement or if any irregularity or rule-breaking act is found, the entrusting party may require the replacement of the overseas custodian agent or the secondary custodian or terminate the custodian agreement. The frequency of appraisal on the custodian party within the Chinese territory shall be no less than once each year. Article 31. Both the entrusting party and the entrusted party shall carry out a follow-up appraisal on the risks concerning foreign exchange rate, interest rate, credit, market, liquidity and operations of overseas investment of the insurance foreign exchange capital so as to control the risks of overseas investment. Article 32. Before an entrusted party engages in any investment operation, the relevant entrusting party, entrusted party and custodian party within the Chinese territory shall reach a consensus on the preparation of documents, transactional operations and the issuance, recognition and implementation of the orders of transactions and settlement. The entrusting party and the entrusted party shall inform the custodian party within the Chinese territory of the personnel that issue the relevant orders, authorization documents as well as the authorization scope. Article 33. An entrusted party shall carry into effect the provisions of laws and regulations, the Measures and the present Detailed Rules as well as the stipulations of the agreement on investment management and the investment guidance by establishing a special system of order-giving and examination so as to ensure that no transactional order will violate the relevant restrictive provisions. Article 34. An entrusted party shall not engage in any speculative sale or purchase of foreign exchange by using the insurance foreign exchange capital or make any financing by using the insurance foreign exchange capital as a pledge or make investment by any other form of liability. Article 35. Before an entrusted party makes any of the following major decisions, he shall produce a written research report: (1) Where 10 % of the insurance foreign exchange capital as entrusted for management is involved; (2) Where any major adjustment of investment portfolio is required; (3) Where any major adjustment of performance benchmark is required; (4) Where any major adjustment of the endurance of investment risks is required; or (5) Where any major adjustment of the standards for selecting trading partners is required. Article 36. An entrusted party shall, based on the provisions of the Measures and the present Detailed Rules and the agreement on investment management and the stipulations of the investment guidance, take such indicators as credit situation, risk nature, profit-making ability, information transparency and liquidity into comprehensive consideration so as to determine the scope of possible varieties for investment. Article 37. An entrusted party shall adopt the indicator of risk value and any other risk measurement to reveal the risks of different investment varieties and the overall risk of the insurance foreign exchange capital under entrusted management. Article 38. An entrusted party, who incurs any investment management failing to comply with the relevant provisions of the Measures, the present Detailed Rules or the stipulations of the agreement on investment management or the stipulations of the investment guidance, shall inform the entrusted party and the custodian party within the Chinese territory in a timely manner, and shall make adjustment within a reasonable period. Article 39. An entrusted party shall manage different capital under entrustment in a fair and impartial manner, and shall provide to its entrusting party reports on investment performance and risk appraisal, etc. regarding the entrusted management of the insurance foreign exchange capital on a periodic base. Article 40. A custodian party within the Chinese territory shall carry out an examination on the investment of an entrusted party to see whether or not the relevant provisions are observed and where any violation of the provisions of the Measures, the present Detailed Rules or the agreement on investment management or the stipulations of the investment guidance is found, he shall inform the entrusting party and the entrusted party in a timely manner. The entrusting party and the entrusted party shall jointly determine the resolution measures and make the relevant disposals. Article 41. A custodian party within the Chinese territory, an overseas custodian agent as well as a secondary custodian shall, according to the relevant provisions of the custodian agreement, jointly take charge of the settlement, delivery and preservation of the insurance foreign exchange capital under custodianship, and verify the assets in a timely and accurate manner. The original document concerning the ownership of custodian assets or the original document certifying all the ownership thereof shall be kept by a custodian within the Chinese territory. In case there is any separate provision of the local laws and regulations where the investment is made, it shall prevail. Article 42. Where an entrusted party fails to carry out investment management according to the provisions of the Measures, the Detailed Rules and the agreement on investment management and the stipulations of the investment guidance, the custodian party within the Chinese territory shall inform the entrusting party and the entrusted party in a timely manner, supervise the entrusted party to make adjustment within the reasonable period and shall report the adjustment result to the CIRC. CHAPTER VI SUPERVISION AND ADMINISTRATION Article 43. Where an entrusting party entrusts several entrusted parties to manage the overseas investment of insurance foreign exchange capital, the investment balance shall be calculated in a combined manner and shall not exceed the investment proportion as prescribed by the CIRC. Article 44. An entrusting party shall not only report the relevant matters to the CIRC according to the provisions of Articles 33 and 34 of the Measures but also the following: (1) Within 10 days before the end of each quarter, reporting the overseas special account of foreign exchange balance and all the revenues and expenditures of the account; (2) Within 10 days before the end of each quarter, reporting the structured deposits, which shall at least include such important contents as major articles of the agreement, the floating range of interest rate, deposit term, a summary of internal risks and the potential loss that may affect products; (3) Within 10 days before the end of each quarter, reporting its deposit in the associated party and purchase of the bonds and stocks of the associated party, which shall at least include the associated relationship of all parties to a transaction, business nature, transaction amount, the relevant proportion and pricing policy; (4) Before the end of June each year, reporting the appraisal reports of the entrusted party and the custodian party about the management of insurance foreign exchange capital in the previous year; (5) In the case of any addition or reduction of the scale of the insurance foreign exchange capital under entrusted management of a single entrusted party, including the decision-making basis and management performance of the entrusted party, reporting it within 15 days as of the day of decision; (6) In the case of formulation or alteration of the investment guidance, reporting it within 15 days; (7) In the case of concluding an agreement on investment management, custodian agreement or legal opinions, reporting it within 5 days; (8) In the case of any major emergency in the investment market, or any major emergency that may affect the security of insurance foreign exchange capital or the investment performance, reporting it within 2 days; and (9) In the case of any emergency of an entrusted party or a custodian party within the Chinese territory, reporting it within 2 days. A report as made by an entrusting party about the matters as prescribed in item (8) of the preceding paragraph shall include asset preservation and measures for risk prevention. Article 45. A commercial bank that has any of the following relationship with an entrusted party shall not act as the custodian party within the Chinese territory or the overseas custodian agent of the said entrusted party: (1) Where the entrusted party directly or indirectly holds more than 10% of the shares of the commercial bank; (2) Where the commercial bank directly or indirectly holds more than 10% of the shares of the entrusted party; (3) Where a same enterprise directly or indirectly holds more than 10% of the shares of the entrusted party or the commercial bank; or (4) Where the CIRC recognizes any other matter may affect the independence of the custodian party within the Chinese territory or the overseas custodian party. Article 46. Any commercial bank and any overseas entrusted party shall not, under any of the following circumstances, concurrently act as the custodian party within the Chinese territory, overseas custodian agent or the entrusted party of a same entrusting party: (1) Where the commercial bank directly or indirectly holds more than 10% of the shares of the overseas entrusted party; (2) Where the overseas entrusted party directly or indirectly holds more than 10% of the shares of the commercial bank; (3) Where a same enterprise directly or indirectly holds more than 10% of the shares of the commercial bank or the overseas entrusted party; or (4) Where the CIRC recognizes any other matter may affect the independence of the entrusted party or the custodian party within the Chinese territory. Article 47. An entrusted party shall report the following matters to the CIRC: (1) Before the end of June each year, reporting the auditing report on the internal control and financial statements as produced by an accounting firm in the previous year, including the investment performance and the entrusted management of the insurance foreign exchange capital; (2) Within 15 days as of the end of each quarter, reporting the investment performance of the insurance foreign exchange capital under entrusted management; (3) In the case of any emergency in the investment market, or any emergency that may affect the security of the insurance foreign exchange capital as well as the investment performance, reporting it within 2 days; (4) In the case of any major change of the registered capital, shareholder structure or partnership, reporting it within 5 days; (5) In case any major litigation or serious punishment is involved, reporting it within 5 days; and (6) In the case of any other matter as prescribed by the CIRC. A report as made by an entrusted party on the matters as prescribed in item (3) of the preceding paragraph shall include asset preservation and the measures for risk prevention. Article 48. A custodian party within the Chinese territory shall not only report the relevant matters to the CIRC according to the provisions of Article 20 of the Measures, but also the following: (1) Before the end of June each year, reporting the auditing report on the internal control and financial statements as produced by an accounting firm in the previous year, including the custodianship of the insurance foreign exchange capital; (2) In the case of any major change of the registered capital, shareholder structure or partnership, reporting it within 5 days; (3) In case any major litigation and serious punishment is involved, reporting it within 5 days; (4) In the case of determination or alteration of the overseas custodian agent and the secondary custodian thereof, reporting it within 5 days; and (5) In the case of any other matter as prescribed by the CIRC. Article 49. The CIRC may, according to Articles 9 and 10 of the Measures and the relevant provisions, take the following measures: (1) According to the overseas investment of the insurance foreign exchange capital as well as the situation of the international financial market, adjusting all kinds of investment proportion; (2) According to the management capability of the entrusted party, adjusting the investment varieties, investment currencies and the investment market step by step. Article 50. The CIRC shall carry out an examination to check out whether the overseas investment of an entrusting party and an entrusted party within the Chinese territory complies with the relevant regulations as well as examine the risk control, or may employ such intermediary organizations as an accounting firm to carry out an examination on the overseas investment of an entrusting party and an entrusted party within the Chinese territory. Article 51. The CIRC shall, according to the relevant provisions of the Measures and the present Detailed Rules, carry out an annual examination on the business operations of overseas investment of the insurance foreign exchange capital as made by an entrusted party or a custodian party within the Chinese territory. An entrusted party or a custodian party within the Chinese territory shall, according to provisions of Articles 8, 9 and 10 and Articles 11 and 12 of the present Detailed Rules, respectively provide the documents and materials. The CIRC may, where finding that any entrusted party or custodian party within the Chinese territory fails to meet the requirements of the Measures and the present Detailed Rules, require the entrusted party or the custodian party within the Chinese territory to give relevant explanations. Article 52. Where an entrusting party or an entrusted party violates the Measures and the present Detailed Rules or the relevant provisions, the CIRC shall talk with or inquire the relevant senior management personnel and the major business operators. In the case of serious circumstances, an administrative punishment shall be given. Article 53. Where a custodian party within the Chinese territory or an overseas entrusted party violates the Measures, the present Detailed Rules or the relevant provisions, the China Regulatory Commission shall record the unfavorable business operations. In the case of serious circumstances, the CIRC may terminate its business operations of overseas investment of insurance foreign exchange capital. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 54. The term "insurance foreign exchange capital under the custodianship of a custodian party" as mentioned in the present Detailed Rules includes the insurance foreign exchange capital under the management of an insurance institution at home or abroad. Article 55. The term "accounting firm" as mentioned in the present Detailed Rules refers to an accounting firm that has relevant auditing experience on the relevant industries, enjoys a reputation on a global base and has been widely recognized. The term "international rating institution" as mentioned in the present Detailed Rules shall be limited to the Moody's Investors Service, Standard & Poor's, Fitch Ratings and any other rating institution as recognized by the CIRC. Article 56. The present Rules shall come into force as of the day of promulgation. |
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