合格境外机构投资者境内证券投资管理暂行办法 Provisional Measures on Administration of Domestic Securities Investments of Q

ion and settlement institution. When applying for a securities account on behalf of the QFII， a custodian should bring the QFII' mandate and its Securities Investment Licence and other valid documents， and file with CSRC the relevant situation within five working days after opening a securities account.

　　QFII should mandate its custodian to open a RMB settlement account on its behalf with securities registration and settlement institution. The custodian shall be responsible for the settlement of QFII's domestic securities investment， and shall file with CSRC and SAFE the relevant situation within five working days after opening a RMB settlement account.

　　Chapter 4 Investment Operations

　　Article 18. Subject to the approved investment quota， QFII can invest on the following RMB financial instruments：

　　1. Shares listed in China's stock exchanges （excluding B shares）；

　　2. Treasuries listed in China's stock exchanges；

　　3. Convertible bonds and enterprise bonds listed in China's stock exchanges；

　　4. Other financial instruments as approved by CSRC.

　　Article 19. QFII may mandate domestically registered securities companies to manage their domestic securities investments.

　　Each QFII can only mandate one investment institution.

　　Article 20. For domestic securities investments， QFII should observe the following requirements：

　　1. Shares held by each QFII in one listed company should not exceed 10% of total outstanding shares of the company；2. Total shares held by all QFII in one listed company should not exceed 20% of total outstanding shares of the company.

　　CSRC may adjust the above percentages based on the developments of securities market.

　　Article 21. QFII's domestic securities investment activities should comply with the requirements as set out in the Guidance for Foreign Investments in Various Industries.

　　Article 22. Securities firms should preserve the trading and transaction records of QFII for at least 15 years. Chapter 5 Fund Management

　　Article 23. Upon the approval of SAFE， a QFII should open a RMB special account with its custodian.

　　W

ithin five working days after the opening of the RMB special account， the custodian should report to CSRC and SAFE for filing.

　　Article 24. Revenue articles in the RMB special account shall include： settlement of funds （foreign exchange funds from overseas， and accumulated settlement of foreign exchange should not exceed the approved investment quota）， proceeds from the disposal of securities， cash dividends， interests from current deposits and bonds. Expense articles in the RMB special account shall include： cost of purchasing securities （including stamp tax and commission charges）， domestic custodian fee and management fee， and payment for purchasing foreign exchange （to be used to repatriate principals and proceeds）。

　　The capital of special RMB account shall not be used for money lending or guarantee.

　　Article 25. Within three months after receiving Securities Investment Licence from CSRC， QFII should remit principals from outside into China and directly transfer them into RMB special accounts after full settlement of foreign exchange. The currency of the principals from QFII should be exchangeable currency approved by SAFE and the amount of the principal should not exceed the approved quota.

　　If QFII has not fully remitted the principals within three months after receiving Foreign Exchange Registration Certificate， the actual amount remitted will be deemed as the approved quota； thereafter the difference between approved quota and the actual amount shall not be remitted inward prior to the obtaining of a newly approved investment quota.

　　Article 26. In the case that a QFII is a closed-end Chinese fund management company， it can mandate its custodian， with the submission of required documents to SAFE to apply for purchase of foreign exchange for the repatriation of principals by stages and by batches three years after its remittance of the principals. The amount of each batch of principal repatriation should not exceed 20% of the total principals， and the interval between two repatriations should not be shorter than one month.

　　Other types of QFII can mandate their custodians， with the submission of required documents， to apply to SAFE to repatriate the principals by stages and by batches one years after their remittance of the principals. The amount of each batch of principal repatriation should not exceed 20% of the total principals， and the interval between two repatriations should not be shorter than three months.

　　The overseas receivers of the above-mentioned repatriation should be the QFII themselves.

　　Article 27. QFII whose principal of approved investment quota is remitted to China for less than one year but over three months， after the submission of transfer application form transfer contract and upon approval of CSRC and SAFE， may transfer the approved investment quota to other QFII or other applicants who have fulfilled the requirements of Article 6.

　　After getting Securities Investment Licence from CSRC and investment quota from SAFE， the transferee can remit the difference as its principals if the value of the transferred assets is lower than the investment quota approved by SAFE.

　　Article 28. If QFII intends to remit principals inwards again after it partially or fully repatriates its principals， it should re-apply for investment quota.

　　Article 29. If QFII needs to purchase foreign exchange to repatriate their post-tax profits of the previous accounting year which have been audited by Chinese CPA， the QFII should mandate its custodian to apply to SAFE fifteen days prior to repatriation， together with the following documents：

　　1. Repatriation Application Form；

　　2. Financial reports of the accounting year in which the profits are generated；

　　3. Auditor's report issued by Chinese CPA；

　　4. Profits distribution resolutions or other effective legal documents；

　　5. Tax paymen

t certificates；

　　6. Other documents as required by SAFE.

　　The overseas receivers of the above-mentioned repatriation should be the QFII themselves.

　　Article 30. SAFE may adjust the timeframe required for QFII to repatriate its principal and proceeds， subject to the needs of China's foreign exchange balance. Chapter 6 Regulatory Issues

　　Article 31. CSRC and SAFE should annually review QFII's Securities Investment Licence and Foreign Exchange Registration Certificate.

　　Article 32. CSRC， PBOC and SAFE may require QFII， custodians， securities companies， stock exchanges， and securities registration and settlement institutions to provide information on QFII's domestic investment activities， and may conduct on-site inspections if necessary.

　　Article 33. Stock exchanges and securities registration and settlement institutions may enact new operation rules or revise previous operation rules on QFII's domestic securities investments， the implementation of which will be effective upon approval of the CSRC.

　　Article 34. In the event of any of the followings， QFII should file with CSRC， PBOC and SAFE in five working days：

　　1. Change of custodians；

　　2. Change of legal representatives；

　　3. Change of controlling shareholders；

　　4. Adjustment of registered capital；

　　5. Litigations and other material events；

　　6. Being imposed substantial penalties overseas；

　　7. Other circumstances as stipulated by CSRC and SAFE.

　　Article 35. . In the event of any of the followings， QFII should re-apply for its Securities Investment Licence：

　　1. Change of business name；

　　2. Acquired by or merged with other institution（s）；

　　3. Other circumstances as stipulated by CSRC and SAFE.

　　Article 36. In the event of any of the followings， QFII should surrender its Securities Investment Licence and Foreign Exchange Registration Certificate to CSRC and SAFE respectively：

　　1. Having repatriated all its principals；

　　2. Having transferred its investment quota；

　　3. Dispersion of authorised entities， entering into bankruptcy procedures， or assets being taken over by receivers；

　　4. Other circumstances as stipulated by CSRC and SAFE.

　　If QFII fail to pass the annual review on Securities Investment Licences and Foreign Exchange Registration Certificates， as mentioned in Article 31， the Licences/Certificates will automatically be invalid. And the QFII should return these Licences/Certificates as required by the aforesaid Article.

　　Article 37. In accordance with their respective authorities， CSRC， PBOC and SAFE will give warnings or penalties to QFII， custodians and securities companies， etc. who violate this Regulation. The same breach， however， should not be subject to two administrative penalties or more. Chapter 7 Supplementary Provisions

　　Article 38. This Regulation is also applicable to institutional investors from Hong Kong Special Administrative Region， Macao Special Administrative Region and Taiwan Region， who conduct securities investment businesses in Mainland China.

　　Article 39. This Regulation will come into effect from 1 December 2002

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