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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II FUND UNDERWRITERS CHAPTER III MATERIALS OF FUND PUBLICITY AND INTRODUCTION CHAPTER IV FUND SALES CHARGES CHAPTER V CRITERIONS FOR SALES BUSINESS 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 sales activities of securities investment fund and promoting the healthy development of the securities investment fund market. Article 2. The "sale of securities investment fund (hereinafter referred to the fund) " mentioned in the present Measures shall include activities such as the publicity and introduction of fund, issuance and sale of fund shares, and handling of purchase and redemption of fund shares by any fund manager or any other institutions (hereinafter referred to the underwriters) entrusted by the fund manager. Article 3. Any fund manager or underwriter shall, when undertaking fund sales activities, observe laws, administrative regulations and the provisions of China Securities Regulatory Commission (hereinafter referred to the CSRC), and may not do harm to the state interests, public interests and the legal rights and interests of any investor. Article 4. Any fund manager or underwriter shall, when undertaking fund sales activities, abide by the stipulations of a fund contract and the fund underwriting agreement, and follow the principle of openness, fairness and justness, be honest and keep faith, be diligent and fulfill duties, scrupulously abide by the professional ethics and behavior criterions. Article 5. The CSRC and its detached offices shall conduct supervision over and administration on fund sales activities in accordance with laws, administrative regulations and the provisions of the present Measures. Article 6. The associations of fund industry shall conduct self-disciplinary management on fund sales activities in accordance with laws, administrative regulations, the provisions of the CSRC and the self-disciplinary rules. CHAPTER II FUND UNDERWRITERS Article 7. A fund manager shall be responsible for handling fund sales. A fund manager may entrust other institutions that have obtained the qualification of fund underwriting business to handle fund sales. Those institutions failing to obtain the qualification of fund sales business may not accept the entrustment of any fund manager to handle fund sale for it. Article 8. Commercial banks, securities companies, securities investment consultation institutions, special fund sales agencies, and other institutions prescribed by the CSRC may apply to the CSRC for qualification of fund underwriting business. Article 9. A commercial bank shall meet the following requirements when applying for qualification of fund underwriting business: (1) The capital adequacy ratio meets the requirements of the relevant provisions of the banking regulatory organ of the State Council; (2) Having a special department in charge of fund sales business; (3) Having sound financial status, and stable operation regulations, and having no records of administrative punishment or criminal punishment for acts in violation of laws and regulations in the past three years; (4) Having the sound corporate governance structure, perfect internal control and risk control system, which have been effectively implemented; (5) Having the business place, safeguard and precautious facilities and other facilities fitting in with the fund sales business; (6) Having safe and highly efficient technical facilities for handling the business of fund issuance and sale, purchase and redemptions; and the technical system of fund underwriting business has been connected and networked with the corresponding technical system of any fund manager, fund trustee, and fund registration organs for testing, and the testing result corresponds with the national standard; (7) Having established the perfect fund underwriting business management system such as the business process, personal integrity of practice of the distributors, and emergency preparedness and response measures, etc.; (8) The personnel having obtained the qualification of fund practice in the company and the department of its main branch and taking charge of the fund underwriting business shall be no less than half of the number of personnel of the department; and the management personnel of the department should have obtained the qualification of fund practice, and be familiar with fund underwriting business, and have work experiences of undertaking fund business for more than two years or of undertaking securities and financial business for more than five years; and (9) Other conditions prescribed by the CSRC. Article 10. A securities company shall, when applying for qualification of fund underwriting business, meet the following requirements in addition to satisfying the requirements prescribed in items 2 to 9 of Article 9 of the present Measures: (1) The net capital and other financial risk monitoring indexes correspond with the relevant provisions of the CSRC; (2) Having no acts of impropriating the customer's capital and other acts damaging the customer's interests in the past two years; (3) Not being investigated by the supervisory organs due to acts in violation of laws and regulations or being under rectification; and (4) Having no major alteration on matters that have influenced or are likely to influence the normal operation of the company, or other major matters of litigation or arbitration, etc.. Article 11. A securities investment consultation institution shall, when applying for qualification of fund underwriting business, in addition to satisfying the requirements prescribed in items 2 to 9 of Article 9 and items 3 and 4 of Article 10 of the present Measures, meet the following requirements: (1) The registered capital shall be no less than RMB 20 million Yuan, and shall be the paid-in currency capital; (2) The senior management personnel have obtained the qualification of fund practice, and are familiar with the fund underwriting business, and have work experiences of undertaking fund business for more than two years or of undertaking securities or financial business for more than five years; (3) Having been undertaking securities investment consultation business for more than three complete fiscal years consecutively; and (4) Not having undertaken acts of securities transaction for investors as an agent within the past three years. Article 12. A special fund sales agency shall, when applying for the qualification of fund underwriting business, in addition to satisfying the requirements prescribed in items 3 to 7 of Article 9, items 3 and 4 of Article 10, and items 1 and 2 of Article 11 of the present Measures, meet the following requirements: (1) Having the organization name, organization and business scope meeting the requirements; (2) The main contributor shall be a legal person, which is established according to law and has been conducting business operation for three complete fiscal years consecutively, with the registered capital no less than RMB 30 million Yuan, and sound financial status, as well as stable operation regulations, and has no records of administrative punishment or criminal punishment for acts in violations of laws and regulations in the past three years; (3) The personnel having obtained the qualification of fund practice shall be no less than 30 persons, and shall be no less than half of the number of the total employees; and (4) Other conditions prescribed by the CSRC. Article 13. An institution that applies for qualification of fund underwriting business shall submit application documents in accordance with the provisions of the CSRC. In case there is any major alteration on the matters involved in the application documents, the applicant shall submit renewal documents to the CSRC within five working days from the date of alteration. Article 14. The CSRC shall accept the application for qualification of fund underwriting business according to the provisions of the Administrative License Law and make examination and decision accordingly. Article 15. The CSRC may organize an expert examination committee to make examination on the application for qualification of fund underwriting business in light of the principle of prudent supervision. Article 16. An applicant shall, for which the industry and commerce alteration registration should be handled, go through formalities for alteration registration at the administrative department for industry and commerce according to the relevant provisions after the documents of approval have been received. CHAPTER III MATERIALS OF FUND PUBLICITY AND INTRODUCTION Article 17. The publicity and introduction materials mentioned in the present Measures shall refer to the written, electronic or other medium of information distributed or publicized to the general public for the purpose of introduction of a fund, and which may be obtained by the general public widely, including: (1) Materials publicly published; (2) Handbills, handbooks, letters and other publicity materials to the general public; (3) Posters and outdoor advertisements; (4) Materials of television, films, broadcasting, internet and other audio-visual materials and communications materials; and (5) Other materials prescribed by the CSRC. Article 18. The fund publicity and introduction materials of any fund manager or fund underwriter shall be subject to the inspection of the supervisor of the fund manager beforehand, with the position paper of compliance issued and submitted to the CSRC for archival filing. The CSRC shall make examination and issue written opinions on whether dissenting from it within 20 working days after the documents of archival filing have been received. Article 19. The fund publicity and introduction materials shall be real and accurate, and conform to the fund contract and fund prospectus, and shall not have any of the following circumstances: (1) False recordation, misrepresentation or major omissions; (2) Prediction of the outstanding achievements of the securities investment of the fund; (3) Making promise for the income or undertaking losses in violation of regulations; (4) Decrying any other fund manager, fund trustee or fund underwriter, or fund collected or managed by other fund manager; (5) Exaggerating or unilaterally publicizing the fund, using words such as "safe", "ensure", "promise", "avoidance of risk", "safeguard", "high income", and "no risk", etc., which may lead the investors believe there is no risk; (6) Publishing introductory letters of any entity or individual; (7) Other circumstances prohibited by the CSRC. Article 20. Past performance of other funds managed by the fund managers and/or the fund can be posted in the fund publicity and promotion materials, except those fund contracts which have become effective for less than 6 months. Where any past outstanding achievements are published in any fund publicity or introduction materials, the outstanding achievements published shall be computed from the effective date of the contract, if the fund contract has taken effect for more than six months but less than one year. If the fund contract has taken effect for more than one year but less than ten years, the outstanding achievements published shall be those in all the complete fiscal years from the year when the contract takes effect. If the date of publicity and introduction materials is in the second half of a year, the outstanding achievements in the first half of the current year shall also be published. If the fund contract has taken effect for more than ten years, the outstanding achievements in the recent ten complete fiscal years shall also be published. Article 21. The following provisions shall be followed when publishing the past outstanding achievements of a fund or other funds managed by a fund manager in the fund publicity and introduction materials: (1) The data of outstanding achievements of a fund shall be computed in accordance with the relevant laws, administrative regulations or the guidelines recognized by the industry; (2) The statistical data and materials quoted shall be real and accurate, and be indicated with the derivation; the data failing to be verified or not having occurred or simulated may be referred to; and (3) Stating outstanding achievements of any fund and the management level of any fund manager truthfully, accurately, and reasonably. The data of outstanding achievements of a fund shall be subject to the recheck of the fund trustee. Article 22. In case a fund manager publishes the past outstanding achievements of a fund or other funds managed by the fund manager in the fund publicity and introduction materials, it shall make a special statement that the past outstanding achievements of the fund do not indicate its future achievements, the outstanding achievements of other funds managed by the fund manager do not constitute the guarantee of the achievements of the new fund. Article 23. When comparing outstanding achievements of different funds in fund publicity and introduction materials, the comparable data source, statistical methods and comparison term shall be used, and the relevant data source and statistical methods shall be fair and accurate and have correlation. Article 24. In case there in the fund publicity and introduction materials any statistical diagram is attached, it shall be clear and accurate. If the appraisal conclusions of a special third party institution are referred to, the name of the special third party institution and the appraisal date shall be listed clearly. Article 25. The fund publicity and introduction materials shall include clear or eye-catching risk indication and warning letters, which shall not be ignored easily by any investor in the reading, so as to remind the investors to pay attention to the investment risk, to carefully read the fund contract and fund prospectus, and to know the special conditions of the fund. Article 26. In case the fund publicity and introduction materials contain the content that the fund has been approved by the CSRC, a special statement shall be made claiming that the approval of the CSRC does not mean that the CSRC has made material judgment, recommendation or guarantee to the risk and income of the fund. CHAPTER IV FUND SALES CHARGES Article 27. A fund manager shall specify the items, conditions and ways of collection of sales charges in the fund contract and prospectus, and specify the standard of rate of the charges in the prospectus. Article 28. A fund manager may collect subscription fees when issuing and selling fund shares or collecting fund, but the rate of such fees may not exceed 5% of the amount of subscription. A fund manager may collect purchase fees when handling purchase of open fund shares, but the rate of such fee may not exceed 5% of the amount of purchase. The subscription fees and purchase fees may be collected at the time the fund shares are issued and sold or purchased, or may be deducted from the amount of redemption fees when making redemption. Article 29. A fund manager shall collect redemption fees when handling redemption of open fund shares, unless specified differently by the CSRC. The rate of redemption fees may not exceed 5% of the amount of redemption of fund shares, and the balance of the redemption fees after deduction of handling charge shall be no less than 25% of the total amount of redemption fees, and shall be put into the fund property. Article 30. A fund manager may apply different standards of rate of subscription fees and purchase fees on the basis of the amount of subscription or purchase of an investor. Article 31. A fund manager may apply different standards of rate of subscription fees and purchase fees to the fund share holder who chooses to pay subscription fees or purchase fees at the time of redemption on the basis of the term of the fund shares he holds. Article 32. A fund manager may apply different standards of rate of redemption fees on the basis of the time limit for holding fund shares by any fund share holder. Article 33. A fund manager may calculate and draw sales service charge from the open fund property used for the continuous sale of fund and serve the fund share holder. The specific administration measures shall be prescribed by the CSRC. Article 34. The association of fund industry may prescribe the minimum standard of fund sales charge in their self-disciplinary rules. CHAPTER V CRITERIONS FOR SALES BUSINESS Article 35. A fund manager and fund underwriter shall establish, improve and effectively implement fund sales business system and the system of continuous training on distributors, as well as strengthen inspection on and supervision over the compliance operation of fund sales business and the criterions for behaviors of distributors. Article 36. A fund manager and fund underwriter shall establish and improve the system of management on fund share holder's account and capital account, and procedures for deposit and withdrawal of capital of fund share holders and authorization and examination system. Article 37. A fund manager and fund underwriter shall establish and improve system of archival management to properly keep the materials of opening account of any fund share holder and other materials relating to the sales business, the term for keeping shall be no less than 15 years. Article 38. A special fund sales agency shall manage fund underwriting business exclusively, unless specified differently by the CSRC. Article 39. When a fund manager entrusts any other institution to handle fund sales business, the entrusted institution shall have obtained the qualification of fund underwriting business. No one may undertake fund sales activities without the engagement of any fund manager or fund underwriter. The personnel undertaking the activities of publicity and introduction of fund shall also obtain the qualification of fund practice. Article 40. A fund manager shall, when entrusting any underwriter to handle the sale of fund, sign a written underwriting agreement with it, stipulating the proportion and ways of paying the remunerations, and clarifying rights and duties of both parties. No underwriter may handle the fund sale without concluding the written underwriting agreement. An underwriter shall place the certificate documents of qualification of fund underwriting business into the eye-catching place of fund sales points of network, and may not entrust any other institution to handle the fund sale as an agent. A fund manager shall have the duty to make supervision over and inspection on the activities of fund sale conducted by any underwriter, and shall stop any underwriter that sells fund in violation of regulations; or even cancel the underwriting agreement stipulated with the institution whose circumstances of violation are serious. Article 41. No fund manager or underwriter may handle fund sales business, distribute or publicize fund publicity and introduction materials or issue or sell fund shares to the general public until the application for fund collection is approved by the CSRC. Article 42. A fund manager shall be responsible for the contents of fund publicity and introduction materials to ensure the consistence of the materials distributed and publicized to the general public with the materials of archival filing. The fund publicity and introduction materials used by an underwriter shall be consistent with the archival filing materials. A fund manager shall examine and inspect the materials used by the underwriter. Article 43. A fund manager and underwriter shall open accounts relating to the fund sales in a commercial bank that has qualification of undertaking trusteeship business of securities investment fund, and the bank shall make supervision over the fund in the account. A fund manager shall deposit the fund collected during the period of fund collection into a special account, and no one may use such fund before the end of fund collection acts. Article 44. After an open fund contract takes effect, a fund manager or underwriter shall handle the purchase and redemption of fund shares in accordance with laws, administrative regulations, provisions of the CSRC, and the stipulations of fund contract and underwriting agreement, and may not stop the handling of sale of fund shares without permission or refuse the purchase and redemption of any investor. Article 45. A fund manager and underwriter shall collect sales fees from investors in accordance with the stipulations of fund contract and the prospectus, and make business accounting and keep accounts according to the facts. No fund manager or underwriter may collect additional fees from any investor without the stipulations in the fund contract, or apply different rate of fees to different investors without the specification in the prospectus and making a public notice. A fund manager shall pay remunerations to the underwriter according to the stipulations of the underwriting agreement and make business accounting and keep accounts according to the facts. Article 46. A fund manager and underwriter shall keep secret for investors according to law, and may not release any information on dealing and holding of fund shares by any investor or other information. Article 47. No fund manager or underwriter may have any of the following circumstances when undertaking fund sales activities: (1) Lowering the level of fund charges for the purpose of squeezing out the rivals of competition; (2) Selling fund by ways such as drawing lots, brokerage, or giving in-kinds, insurance, or fund shares; (3) Selling fund at the rate of sales fees lower than the cost; (4) Making discount on subscription fees during the period of collection; (5) Promising to make interests distribution by making use of fund capital; (6) Impropriating the fund of subscription, purchase and redemption of any fund share holder; (7) Circumstances prescribed in Article 19 of the present Measures; (8) Other circumstances prohibited by the CSRC. CHAPTER VI SUPERVISION AND ADMINISTRATION AND LEGAL LIABILITIES Article 48. A fund manager shall report and submit the underwriting agreement to the CSRC within 7 days from the date of signing the underwriting agreement. Article 49. The supervisor of a fund manager shall inspect the conditions of legality and compliance of fund sales activities during the period of fund collection, and shall compile a special report within 10 days from the end of fund collection acts and put it on records for future reference. Article 50. The supervisor of a fund manager shall make examination on the conditions of legality and compliance of fund sales activities periodically, and make a special statement in the quarterly report of supervision and audit, and report and submit it to the CSRC. Article 51. The CSRC and its detached offices shall make inspection on fund managers or fund underwriters periodically for their undertaking of fund sales activities. The fund managers or fund underwriters shall cooperate with them. Article 52. In case any fund manager or underwriter violates the provisions of the present Measures, the CSRC and its detached offices may order it to rectify and correct, suspend the handling of relevant business, and take administrative supervision measures such as supervision talking, issuing warning letters, recording into the good faith archives, suspension of performance of duties, determining unsuitable to resume relevant posts, etc. against the person in charge who is directly responsible and other persons directly liable. Article 53. In case any fund manager, underwriter or the person in charge who is directly responsible or other persons directly liable undertakes fund sales activities in violation of the provisions of the present Measures, the CSRC shall give an administrative punishment in accordance with the relevant provisions of laws and administrative regulations. In case there are no provisions in laws and administrative regulations, the CSRC shall give an administrative punishment 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 transferring to the department of justice. Article 54. In case any commercial bank, securities company, security investment consultation institution, special fund sales agency or any other institution prescribed by the CSRC disguises the relevant information or provides false materials when applying for qualification of fund underwriting business, the CSRC shall reject its application. If the application has been accepted, approval shall not be given, and warnings shall be given. Article 55. Any one who has not obtained the qualification of fund underwriting business but opens fund sales business without permission shall be ordered to correct and punished by warnings and a fine. And the person in charge who is directly responsible and other persons directly liable shall be given warnings and fined. Article 56. In case any special fund sales agency fails to manage fund underwriting business exclusively according to the provisions of Article 38 of the present Measures, or an underwriter fails to place the certificate documents of qualification in accordance with the provisions of paragraph 2 of Article 40 of the present Measures or entrusts any other institution to handle fund sales as an agent in violation of provisions, it shall be ordered to correct and given warnings and fined. If the circumstances are serious, it shall be ordered to suspend or terminate fund underwriting business. The person in charge who is directly responsible and other persons directly liable shall be given warnings and fined. Article 57. In case a fund manager entrusts any institution that has not obtained the qualification of fund underwriting business to handle fund sale in violation of the provisions of paragraph 1, Article 39 of the present Measures, it shall be ordered to correct and given warnings and fined. And the person in charge who is directly responsible and other persons directly liable shall be given warnings and fined. Article 58. In case a fund manager or underwriter has any of the following circumstances when undertaking fund sales 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) Permitting personnel who are not engaged to sell fund or personnel who have not obtained qualification of fund practice to publicize and introduce fund in violation of the provisions of paragraph 2 of Article 39 of the present Measures; (2) Failing to sign the written underwriting agreement according to the provisions of paragraph 1, Article 40 of the present Measures; (3) Distributing or publicizing fund publicity and introduction materials without permission in violation of the provisions of Article 41 of the present Measures; (4) Failing to use the fund publicity and introduction materials according to the provisions of Article 42 of the present Measures; (5) Failing to open accounts relating to the fund sale according to the provisions of Article 43; (6) Stopping handling the issuance and sale of fund shares without permission or refusing the purchase and redemption of any investor in violation of the provisions of Article 44 of the present Measures; (7) Failing to collect sales fees and make business accounting and keep accounts according to the provisions of paragraph 1 of Article 45 of the present Measures; (8) Failing to keep secret for investors according to the provisions of Article 46 of the present Measures; (9) Undertaking acts prohibited by Article 47 of the present Measures; or (10) Failing to cooperate with the CSRC and its detached offices when they are making supervisions and inspection according to the provisions of Article 51 of the present Measures. In case any underwriter violates the aforesaid provisions, and the circumstances thereof are serious, it shall be ordered to suspend or terminate fund underwriting business. Article 59. In case any fund manager has any of the following circumstances when undertaking fund sales activities, 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 perform duties of supervision and inspection in accordance with the provisions of paragraph 3, Article 40 of the present Measures; (2) Failing to pay remunerations and make business accounting and keep accounts in accordance with the provisions of paragraph 2, Article 45 of the present Measures; (3) Failing to submit the underwriting agreement according to the provisions of Article 48 of the present Measures; (4) Failing to make self-inspection and compile special supervision and auditing report according to Article 49 of the present Measures; or (5) Failing to inspect the conditions of legality and compliance of fund sales activities and make special statements in accordance with the provisions of Article 50 of the present Measures. Article 60. In case any underwriter is ordered to suspend fund underwriting business, it may not undertake any of the following activities during the suspension period: (1) Signing new underwriting agreement; (2) Publicizing and introducing the fund; (3) Issuing and selling fund shares; (4) Handling fund share purchase. In case any underwriter is ordered to terminate fund underwriting business, it shall stop the fund sales activities. In case any underwriter is ordered to suspend or terminate fund underwriting business, a fund manager shall properly handle the purchase and redemption of fund shares of relevant investors, and may require the underwriter to compensate for the relevant losses according to law on the basis of the stipulations of the underwriting agreements. CHAPTER VII SUPPLEMENTARY PROVISIONS Article 61. The present Measures shall come into force as of July 1, 2004. The Guiding Opinions on Improving Internal Compliance Control System and Criterions for Behaviors of Employees of Commercial Banks Acting as Agent for Securities Investment Fund Sales Business (No.150 [2001] of China Securities Regulatory Commission), and the Notice on Relevant Issues concerning Handling of Open Fund Underwriting Business (No.33 [2002] of China Securities Regulatory Commission), and the Interim Provisions on the Administration of Sale of Securities Investment Fund (No.66 [2002] of China Securities Regulatory Commission) of the CSRC shall be repealed simultaneously. |
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