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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II RAISE OF FUND CHAPTER III PURCHASE AND REDEMPTION OF FUND SHARES CHAPTER IV INVESTMENT AND INCOME DISTRIBUTION OF FUND CHAPTER V FUND SHARE HOLDERS' MEETING CHAPTER VI SUPERVISION AND ADMINISTRATION AND LEGAL LIABILITIES CHAPTER VII SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. The present Measures are hereby formulated in accordance with the Securities Investment Fund Law and other relevant laws and administrative regulations for the purpose of regulating the activities of operation of securities investment fund, protecting the legal rights and interests of investors and promoting the healthy development of securities investment fund market. Article 2. The present Measures shall be applicable to the activities of the raise of securities investment fund (hereinafter referred to the fund), the purchase and redemption of fund shares, investment of fund property, distribution of fund returns, convening of fund share holders' meeting, and other fund operation activities. Article 3. Any one undertaking fund operation activities shall observe laws, administrative regulations and the provisions of China Securities Regulatory Commission (hereinafter referred to the CSRC), and follow the principle of voluntariness, fairness and good faith, and may not do harm to state interests and public interests. Article 4. The CSRC and its detached offices shall make supervision over and administration on fund operation activities according to laws, administrative regulations and the provisions of the present Measures, as well as the principle of prudent supervision. Article 5. The associations of fund industry shall make self-disciplinary management on fund operation activities according to laws, administrative regulations, the provisions of the CSRC, and the self-disciplinary rules. CHAPTER II RAISE OF FUND Article 6. A fund manager or fund custodian to be appointed shall meet the following requirements when applying for the raise of fund: (1) The fund manager to be appointed shall be a fund management company established according to law; the fund custodian to be appointed shall be a commercial bank having the qualification of fund trusteeship; (2) Having fund managers and other business personnel conforming to the provisions of the CSRC and fitting in with the fund to be raised under management and trusteeship; (3) Having sound business process systems of investment and management, sale, registration and evaluation of fund, and having no circumstances influencing the ordinary operation of fund, damaging or may damage the legal rights and interests of fund share holders in the behavior criterions; (4) Having no records of administrative punishment or criminal punishment for acts in violation of laws and regulations in the previous year; (5) Not being under investigation for acts in violation of laws and regulations by supervision organs or being under rectification and correction; (6) Having no major alteration on matters that have resulted in or are likely to result in bad influence on fund operation, or litigation, arbitration or other major matters concerned; (7) Having no major management risks such as unsound corporate governance, chaos of business management, incapability of effective implementation of internal control and risk control systems, deterioration of financial status, etc.; (8) The fund contract of the fund, which is approved to raise before a fund manager is to assume the post, has taken effect, or the time limit for raising the fund has expired, and the fund raise can not meet the requirements prescribed in Article 12 of the present Measures, and it has been six months since the date when the money and interests paid by all the investors have been returned; and (9) Other conditions prescribed by the CSRC according to the principle of prudent supervision. Article 7. The following requirements shall be met for the fund to be raised when applying for the raise of fund: (1) Having clear and legal investment direction; (2) Having specific ways of fund operation; (3) Conforming to the provisions on the types of fund prescribed by the CSRC; (4) Being not a duplicate of the fund having been managed by any fund manager to be appointed; (5) The fund contract, prospectus and other draft of legal documents correspond with laws, administrative regulations and the provisions of the CSRC; (6) The fund name shows the type of the fund and its investment character, and has no contents of damaging state interests, public interests, cheating or misleading the investors or infringing upon the legal rights and interests of others; and (7) Other conditions prescribed by the CSRC in light of the principle of prudent supervision. Article 8. A fund manager shall submit application documents in accordance with the Securities Investment Fund Law and the provisions of the CSRC when applying for the raise of fund. Where during the period of application, there is any major alteration on matters involved in the application documents, the fund manager shall submit renewal documents to the CSRC within 5 working days from the date of alteration. Article 9. The CSRC shall accept the application for fund raising in accordance with the Administrative License Law and Article 39 of the Securities Investment Fund Law, and make examination and decision accordingly. Article 10. The CSRC may organize expert examination committee to make examination on the application for fund raising according to the principle of prudent supervision. Article 11. The term for fund raising may not exceed three months from the date of issuance and sale of fund shares. Article 12. In case the term for fund raising expires, and the total amount of fund shares raised meets the requirements of Article 44 of the Securities Investment Fund Law, and the following conditions have been fulfilled, a fund manager shall go through formalities for capital verification and fund archival filing: (1) The total amount of fund raise shares is no less than two hundred million shares, and the amount of fund raise is no less than RMB 200 million Yuan; and (2) The number of fund share holders is no less than two hundred persons. Article 13. The CSRC shall make a written confirmation within 3 working days from the date of receiving the capital verification report of a fund manager and fund archival filing documents. And the formalities for archival filing of fund are completed from the date of being confirmed in writing by the CSRC, and the fund contract shall take effect accordingly. A fund manager shall make a public notice from the morrow of receiving the documents of confirmation of the CSRC. Article 14. The information disclosure fees, accountant fees, lawyer's fees and other fees during the period of fund raising may not be outlaid from the fund property. In case a subscription fee is collected in a fund, such fees may be outlaid from the subscription fees. CHAPTER III PURCHASE AND REDEMPTION OF FUND SHARES Article 15. For an open-end fund, the date (hereinafter referred to the open day) and time for a fund manager to handle purchase and redemption of fund shares shall be stipulated in the fund contract and specified in the prospectus. Article 16. The fund contract of an open-end fund may stipulate that a fund manager will not handle redemptions within a certain time limit from the date when the fund contract takes effect. But the time limit stipulated may not exceed three months, and shall be specified in the prospectus. Article 17. The price of purchase and redemption of open-end fund shares shall be computed according to the net value of fund shares at the date of purchase and redemption plus or subtracting the relevant expenses. The concrete method for computation of price of purchase and redemption of an open fund share shall be specified in the fund contract and prospectus. The net value of open-end fund shares shall be computed by dividing the net value of fund capital by the amount of balance of fund shares after closing the market on each open day. The concrete computation methods shall be specified in the fund contract and prospectus. Article 18. A fund manager may not handle the purchase, redemption or conversion of fund shares on the date or at the time outside the stipulations of fund contract. Where an investor files an application for purchase, redemption, or conversion outside the date and time stipulated in the fund contract, its price of purchase or redemption of fund shares shall be the price on the open day at the time for handling purchase and redemption of fund shares next time. Article 19. Where an investor applies for purchase of fund shares, he shall pay all the purchase money, excluding the special type of fund prescribed by the CSRC. Once the investor pays the money, the application for purchase shall be effective. Article 20. A fund manager shall, within three working days from the date of receiving the application of any investor for purchase and redemption, make confirmation on the validity of the purchase and redemption. A fund manager shall pay the redemption money within 7 working days from the date when the effective redemption application of an investor is accepted, the special type of fund prescribed by the CSRC shall be excluded. Article 21. An open-end fund contract may stipulate that when the fund has reached a certain scale, the fund manager shall no longer accept any application for subscription or purchase, which shall be specified in the prospectus. A fund manager may not adjust the fund scale stipulated in fund contract during the period of fund raising. After the fund contract takes effect, the fund manager may adjust the scale of fund in light of reality and on the basis of the stipulations of the fund contract, but shall make a public notice three days ahead of time, and renew the prospectus. Article 22. An open-end fund contract may set restrictions on the proportion or amount of fund shares held by a single fund share holder, and that shall be specified in the prospectus. Article 23. In case the application for the net redemption of open-end fund on a single open day exceeds 10% of the total shares of fund, it shall be deemed as the huge amount redemption. In case a huge amount redemption occurs in an open-end fund, the redemption shares handled by a fund manager on the current date shall be no lower than 10% of the total share of the fund. The handling of other application for redemption may be postponed. Article 24. In case a huge amount redemption occurs in an open-end fund, a fund manager shall, for the application of single fund share holder for redemption, determine the redemption shares handled by the single fund share holder on the current date according to the proportion of the redemption shares he applied for to the total share of redemption applied for on the current date. A fund share holder may choose to withdraw the part of redemption shares having not been handled on the current date when applying for redemption. If the fund share holder does not choose to withdraw, the fund manager may postpone the handling of the redemption share failing to be handled to the next open day, and the redemption price shall be the price of the next open day. Article 25. In case a huge amount redemption occurs in an open-end fund and the handling is postponed, the fund manager shall notify the fund share holders within three transaction days through mail, fax, or other ways prescribed in the prospectus, stating the relevant handling methods, and make a public notice on the designated newspapers and other relevant media. Article 26. In case a huge amount redemption occurs in an open-end fund continuously, a fund manager may suspend the acceptance of redemption application according to the stipulations of the fund contract and the provisions of the prospectus. The payment of redemption money for the accepted redemption application may be postponed, but the time of postponement may not exceed 20 working days, and a public notice shall be made on the designated newspapers and periodicals and other relevant media. Article 27. An open-end fund contract may stipulate that if the redemption of fund shares applied for by a single fund share holder on a single open day exceeds a certain proportion of the total fund share, the fund manager may suspend the acceptance of the application for redemption or postpone the payment according to the provisions of Article 26 of the present Measures. Article 28. An open fund shall keep cash of no lower than 5% of the net value of fund capital or treasury bonds whose maturity is within one year, so as to prepare for payment of redemption money of fund share holders, but the special type of fund prescribed by the CSRC shall be excluded. CHAPTER IV INVESTMENT AND INCOME DISTRIBUTION OF FUND Article 29. A fund contract and fund prospectus shall specify the types of fund according to the following provisions: (1) In case over 60% of the fund capital is invested into stocks, the fund shall be deemed as stock fund; (2) In case over 80% of the fund capital is invested into bonds, the fund shall be deemed as bond fund; (3) In case the fund is invested only in the money market tools, the fund is deemed as money market fund; (4) In case the fund is invested into stocks, bonds, and money market tools, and the proportion of stock investment to bond investment does not comply with the provisions of items 1 and 2, the fund shall be deemed as mixed fund; (5) Other types of fund prescribed by the CSRC. Article 30. In case the name of a fund shows its investment direction, it shall have over 80% of the non-cash fund capital falling within the contents determined in investment direction. Article 31. The following circumstances shall be prohibited when a fund manager uses fund property to make securities investment: (1) One fund holds the stocks of a listed company, and its market value exceeds 10% of the net value of fund capital; (2) The total fund managed by the same one fund manager holds the securities issued by one company, which exceeds 10% of the securities; (3) Where any fund property is involved in the issuance and purchase of stocks, the amount declared by a single fund exceeds the total assets of the fund, the amount of stocks declared by a single fund exceeds the total stocks issued by the company that is planning to issue stocks this time; (4) Violating such stipulations of a fund contract as the investment scope, investment strategy and investment proportion, etc.; or (5) Other circumstances prohibited by the CSRC. The types of fund, which makes securities investment wholly in accordance with the proportion of the composition of the relevant index may not be restricted by the proportions prescribed in items 1 and 2 of the preceding paragraph. Article 32. A fund manager shall make the investment combination proportion of a fund correspond with the relevant stipulations of the fund contract within six months from the date when the fund contract takes effect. Article 33. In case the fund investment does not correspond with the proportion prescribed in items (1) and (2), paragraph 1 of Article 31 of the present Measures or the investment proportion stipulated in the fund contract due to the fluctuation of the securities market, merger of a listed company, alteration of fund scale, and other factors not attributable to the fund manager, the fund manager shall make adjustment within ten transaction days. Article 34. The following fees in relation to a fund may be outlaid from fund property: (1) Overhead of a fund manager; (2) Trustee fee of a fund custodian; (3) Fees for information disclosure after the fund contract took effect; (4) Accountant fees and lawyer's fees after the fund contract takes effect; (5) Fees for fund share holders' meeting; (6) Securities transaction fees of the fund; (7) Other fees that may be outlaid from the fund property according to the relevant state provisions and the stipulations of fund contract. Article 35. The returns of a closed-end fund shall be distributed at least once a year. The proportion of annual distribution of returns of a closed-end fund shall be no less than 90% of the annual returns of the fund that have been realized. The fund contract of an open-end fund shall stipulate the maximum times of annual distribution of fund returns and the minimum proportion of the distribution of fund returns. Article 36. The fund returns shall be distributed in cash. A fund share holder of an open-end fund may choose in advance to transfer the distributed cash returns he obtains into fund shares according to the stipulations of relevant purchase of fund shares in the fund contract. If the fund share holder fails to make choice beforehand, the fund manager shall pay the cash. CHAPTER V FUND SHARE HOLDERS' MEETING Article 37. A fund contract shall, in addition to stipulating the matters prescribed in items (1) to (5) of Article 71 of the Securities Investment Fund Law, also stipulate matters such as the alteration of contract that may have great influence on the rights and duties of the parties of the fund contract when a fund share holders' meeting should be convened, and other matters concerned according to the provisions of the CSRC. Article 38. Where there is necessity to convene the fund share holders' meeting believed by a fund custodian, the fund custodian shall put forward a written proposal to the fund manager, who shall then decide on whether to convene the meeting within 10 days from the date after the written proposal is received and notify the fund custodian in writing. In case a fund manager decides to convene the meeting, it shall initiate the meeting within 60 days from the date of issuing the written decision. If the fund manager decides not to convene the meeting, but the fund custodian still believes there is necessity to convene the meeting, the fund custodian shall initiate the meeting by itself. Article 39. Where there is necessity to convene the fund share holders' meeting believed by the fund share holders holding 10% of fund shares, they shall then put forward written proposals to the fund manager, who shall then decide on whether to convene the meeting within 10 days after receiving the written proposal, and notify in writing the representatives of the fund share holders who have put forward the proposals and the fund custodian. In case a fund manager decides to convene the meeting, it shall initiate the meeting within 60 days from the date of issuing the written decision. If the fund manager decides not to convene the meeting, but the fund share holders representing 10% of the fund shares still believe there is necessity to convene the meeting, they shall propose written proposals to the fund custodian. The fund custodian shall decide on whether to convene the meeting within 10 days from the date of receiving the written proposal, and notify in writing the representative of fund share holders and fund manager who put forward the proposal. If a fund custodian decides to convene the meeting, it shall initiate the meeting within 60 days from the date of issuing the written decisions. Article 40. In case neither the fund manager nor the fund custodian convenes the fund share holders' meeting, the fund share holders may convene the meeting by themselves according to the provisions of paragraph 2 of Article 72 of the Securities Investment Fund Law. In case the fund share holders convene the fund share holders' meeting by themselves, they shall put it on records to the CSRC at least 30 days ahead of schedule. Article 41. In case the fund share holders convene the fund share holders' meeting by themselves according to law, the fund manager and fund custodian shall cooperate with them, and shall not obstruct or disturb them. Article 42. The matters passed at the fund share holders' meeting through voting according to the provisions of Article 75 of the Securities Investment Fund Law shall be reported to the CSRC for approval or archival filing by the convener within 5 days from the date of adoption. The matters decided by the fund share holders' meeting shall come into force from the date when the CSRC has granted approval or issued the opinions of unanimity. Article 43. The fund manager, fund custodian and fund share holders shall execute the effective decisions of the fund share holders' meeting. CHAPTER VI SUPERVISION AND ADMINISTRATION AND LEGAL LIABILITIES Article 44. Where, after the fund contract of an open-end fund takes effect, there are less than 200 fund share holders, or the net value of fund capital is less than RMB 50 million Yuan, a fund manager shall report that to the CSRC in time. In case the preceding circumstances have continued for 20 working days, the fund manager shall explain the reasons to the CSRC and submit the settlement plans. Article 45. The CSRC and its detached offices shall make examination periodically or aperiodically on the fund managers and fund custodians for their undertaking of fund operation activities, and the fund managers and fund custodians shall cooperate with them. Article 46. In case any fund manager or fund custodian violates laws, administrative regulations and the provisions of the present Measures, the CSRC and its detached offices may order it to rectify and correct, suspend the handling of the relevant business, and take such administrative supervision measures as supervision talking, issuing warning letters, recording into the good faith archives, suspension of performance of duties, determining them as unsuitable to resume the relevant posts, etc. against the person in charge who is directly responsible and other persons directly liable. Article 47. In case any fund manager, fund custodian or the person in charge who is directly responsible or other persons directly liable undertake fund operation activities in violation of the provisions of the present Measures, the CSRC shall give administrative punishments in accordance with the relevant provisions of laws and administrative regulations. In case there are no provisions in laws and administrative regulations, it shall make administrative punishments according to the provisions of the present Measures. If any one is suspected of committing a crime, he/it shall be prosecuted for criminal liabilities by being transferred to the department of justice. Article 48. In case any fund manager handles the purchase, redemption or conversion of fund shares at the date or time outside the stipulations of the fund contract in violation of the provisions of Article 18 of the present Measures, it shall be penalized according to the provisions of Article 89 of the Securities Investment Fund Law. Article 49. In case any fund manager makes securities investment by using the fund property in violation of the provisions of Article 31 of the present Measures, it shall be penalized according to the provisions of Article 90 of the Securities Investment Fund Law. Article 50. In case any fund manager or fund custodian fails to convene the fund share holders' meeting according to the provisions of Articles 38 and 39 of the present Measures, it shall be penalized according to the provisions of Article 95 of the Securities Investment Fund Law. Article 51. In case any fund manager disguises the relevant information or provides false materials when applying for the raise of fund, the CSRC shall reject its application. If the application has been accepted, approval shall not be given, and warnings shall be given. Article 52. In case a fund manager has any of the following circumstances when undertaking fund operation activities, it shall be ordered to correct or given warnings or fined separately or concurrently; and the person in charge who is directly responsible and other persons directly liable shall be given warnings or fined separately or concurrently: (1) Failing to compute the price of purchase and redemption of fund shares according to the provisions of Article 17 of the present Measures; (2) Failing to confirm the validity of the purchase and redemption or pay the redemption money according to the provisions of Article 20 of the present Measures; (3) Failing to handle the application for redemption according to the provisions of paragraph 2, Article 23 of the present Measures; (4) Failing to keep the cash or treasury bonds according to the provisions of Article 28 of the present Measures; (5) Failing to adjust the investment proportion according to the provisions of Article 33 of the present Measures; (6) Failing to make distribution on returns according to the provisions of Articles 35 and 36 of the present Measures; or (7) Failing to report or state the relevant situations or submit settlement plans according to the provisions of Article 44 of the present Measures. Article 53. In case any fund manager or fund custodian has any of the following circumstances, it shall be ordered to correct and given warnings or fined separately or concurrently; and the person in charge who is directly responsible and other persons directly liable shall be given warnings or fined separately or concurrently: (1) Failing to cooperate with the fund share holders to convene the fund share holders' meeting according to the provisions of Article 41 of the present Measures; (2) Failing to apply for approval or put on archives the matters decided by the fund share holders' meeting according to the provisions of Article 42 of the present Measures; (3) Failing to execute the effective decision of the fund share holders' meeting according to the provisions of Article 43 of the present Measures; or (4) Failing to cooperate with the CSRC and its detached offices when they are making inspections according to the provisions of Article 45 of the present Measures. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 54. The present Measures shall come into force as of July 1, 2004. |
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