中华人民共和国证券投资基金法 Law of the peoples Republic of china on Funds for Investment in securities

discovers that the investment instructions given by a fund manager， which are already effective according to the procedures of trading， contravene laws， administrative regulations or other relevant regulations or the provisions in the fund contract， it shall immediately notify the fund manager of the fact and report to the securities regulatory authority under the state council w

ithout delay.

　　Article 31 the provisions of Article 20 of this law shall be applicable to fund custodians.

　　Article 32 the securities regulatory authority under the state council and the banking regulatory under the state council shall， on the strength of their functions and powers， instruct the fund custodian to make rectification or disqualify it for fund custody if：

　　（1）it grossly violates any law or regulation；

　　（2）it ceases to meet the requirements prescribed by Article 26 of this law； or

　　（3）it is found in other circumstances as prescribed by relevant laws and administrative regulations.

　　Article 33 the duties of a fund custodian shall be terminated if：

　　（1）it is disqualified for fund custody according to law；

　　（2）it is discharged by the holders of fund units at a general meeting；

　　（3）it closes down according to law or is dissolved or declared bankrupt according to law； or

　　（4）it is found in other circumstances as prescribed by the fund contract.

　　Article 34 where in other duties of a fund custodian is terminated， a new fund custodian shall， within six months， be selected and appointed by the holders of fund units at a general meeting； and before a new fund custodian is selected， the securities regulatory authority under the state council shall appoint a provisional fund custodian.

　　Where the duties of a fund custodian is terminated， the fund custodian shall properly keep the fund assets and materials regarding fund custody and shall complete the procedures for the transfer of the fund assets and fund custody without delay， and the new or provisional fund custodian shall likewise take over the fund assets and fund custody.

　　Article 35 where the duties of a fund custodian is terminated， a public accounting firm shall， in accordance with relevant regulations， be appointed to audit the fund assets， and the audit results shall be announced and， at the same time， submitted to the securities regulatory authority under the state council for the record.

　　Chapter IV

　　Raising of capital

　　Article 36 to sell fund units for capital raising in accordance with this law， a fund manager shall submit the following documents to the securities regulatory authority under the state council and shall be subject to approval by the said authority：

　　（1）an application report；

　　（2）a draft fund contract；

　　（3）a draft fund custodian agreement；

　　（4）a draft prospectus；

　　（5）documents certifying the qualifications of the fund manager and the fund custodian；

　　（6）the financial and accounting repots of the fund manager and the fund custodian for the three preceding years or for the period since their establishment， which have been audited by a public accounting firm；

　　（7）the legal opinion produced by a law firm； and

　　（8）other documents prescribed by the securities regulatory authority under the state council.

　　Article 37 A fund contract shall include the following information：

　　（1）the purpose and name of the fund for which capital is to be raised；

　　（2）the and addresses of the fund manager and the fund custodian；

　　（3）the mode of operation of the fund；

　　（4）the total sum of the units of a closed-end fund and the term of the fund contract， or the minimum amount of capital to be raised for an open-end fund；

　　（5）the principles for determining the date of sale and price of the fund units and the fees；

　　（6）the rights and obligations of the holders of fund units， the fund manager and the fund custodian；

　　（7）the procedures and rules for the convening of general meetings of the holders of fund units， for discussion of business and for voting；

　　（8）the procedures， time and place of the sale trading， subscription and redemption of fund units， the ways calculation of fees， and the

time and ways for payment of redemption monies；

　　（9）the principles for distribution of fund returns and the means of implementation；

　　（10）the charging of management fees and custodian fees by the fund manager and the fund custodian as their remuneration and the means of payment and the percentage of such fees；

　　（11）the charging of other fees relating to the management and use of the fund assets and the means of payment of such fees；

　　（12）the objectives of investment with the fund asserts and restrictions on such investment；

　　（13）the says for calculation of the net value of the fund assets and for announcement of the net value；

　　（14）the ways for resolution of the situation where the capital raised fails to reach the statutory amount；

　　（15）circumstances giving rise to the revocation and termination of the fund contract and the procedures for the revocation and termination， and the ways for liquidation of fund assets；

　　（16）mechanism for resolution of disputes； and

　　（17）other matters agreed upon by the parties.

　　Article 38 the prospectus of a fund shall include the following information：

　　（1）the name of the document approving the application for capital raising and the date of approval；

　　（2）basic facts of the fund manager and the fund custodian；

　　（3）a summary of the contents of the fund contract and of the fund custodian agreement；

　　（4）the date， the price， the fees and the period for the sale of fund units；

　　（5）the mode of sale of fund units and the names of the institutions which sell the fund units and of the registration authority；

　　（6）the names and addresses of the law firm which produces the legal opinion and the public accounting firm which audits the fund assets；

　　（7）the charging of remuneration and other related fees by the fund manager and the fund custodian， and the means of payment and the percentage of such remuneration and fees；

　　（8）risk warning statements； and

　　（9）other information specified by the securities regulatory authority of the state council.

　　Article 39 the securities regulatory authority under the state council shall， within six months from the date it accepts an application for capital raising， examine the application in accordance with relevant laws and administrative regulations and the regulations prescribed by the securities regulatory under the state council as well as the principle of prudent regulation， and decide whether to approve or disapprove the application and notify the applicant of its decision accordingly； and if it disapproves the application， it shall explain the reasons why.

　　Article 40 the units of a fund may only be sold after the application for capital raising has been approved.

　　Article 41 the fund manager shall be responsible for the sale of fund units， and it may entrust another institution approved by the securities regulatory authority under the state council to sell the same on its behalf.

　　Article 42 the fund manager shall arrange for the prospectus， the fund contract and other relevant and other relevant documents to be published three days prior to the sale of the fund units.

　　The documents specified in the preceding paragraph shall be truthful， accurate and complete.

　　The promotion in connection with the capital raising shall be conducted in compliance with relevant laws and administrative regulations， and no acts specified in Article 64 of this law shall be committed.

　　Article 43 the fund manager shall， within six months from the date it receives the approval document， raise capital. If it begins to do so after the elapse of the six-month period and there is no substantive change in the matters that have been approved， it shall report the fact to the securities regulatory authority under the state council for the record. If there are substant

ive changes， it shall submit a new application to the securities regulatory authority under the state council.

　　Capital raising shall not exceed the period approved by the securities regulatory authority under the state council. The period for the raising of capital of a fund shall be counted from the date fund units begin to be sold.

　　Article 44 If， at the expiration of the period for capital raising， the total sum of the fund units sold for a closed-end fund is more than 80 percent of the approved amount of the fund or the total sum of the fund units sold for an open-end fund exceeds the minimum amount of the capital approved to be raised and， in each case the number of holders of the fund units tallies with the number specified by the securities regulatory authority under the state Council， the fund manager shall， within 10 days from the date the period for the capital raising expires， appoint a statutory capital verification institution to verify the capital raised and， within 10 days from the date it receives the report on capital verification， it shall submit the report to the securities regulatory authority under the state council， complete the procedures for registration of the fund and make an announcement thereof.

　　Article 45 the capital raised during the period of capital raising shall be deposited into a special account， and before completion

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