Administrative Measures for the Operation of Publicly Offered Securities Investment Funds
Administrative Measures for the Operation of Publicly Offered Securities Investment Funds
Administrative Measures for the Operation of Publicly Offered Securities Investment Funds
Order of the China Securities Regulatory Commission No.104
July 7, 2014
The Administrative Measures for the Operation of Publicly Offered Securities Investment Funds, which were deliberated and adopted on March 10, 2014 at the 29th executive meeting of the Chairman of the China Securities Regulatory Commission, are hereby promulgated for implementation as of August 8, 2014.
Chairman of the China Securities Regulatory Commission Xiao Gang
Administrative Measures for the Operation of Publicly Offered Securities Investment Funds
Chapter I General Provisions
Article 1 The Administrative Measures for the Operation of Publicly Offered Securities Investment Funds (hereinafter referred to as the "Measures") are developed to standardize the operation of publicly offered securities investment funds (hereinafter referred to as the "funds"), protect investors' legitimate rights and interests and promote the healthy development of the securities investment fund market in accordance with the Law of the People's Republic of China on Securities Investment Funds (hereinafter referred to as the "Law on Securities Investment Funds") and other relevant laws and administrative regulations.
Article 2 The Measures apply to fund raising, subscription for, and redemption and trading of the fund units, fund property investment, distribution of fund proceeds, convening of the general meeting of fund unit holders and other fund operation activities.
Article 3 Fund operations shall comply with the relevant laws and administrative regulations as well as the provisions of the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), follow the principles of voluntariness, fairness and good faith, and shall not harm national interests and public interests.
When applying fund property to securities investment, the fund manager shall abide by the prudent operation rules and develop a scientific and rational investment strategy and a risk management system to effectively prevent and control risks.
Article 4 CSRC and its dispatched agencies shall supervise and administrate the fund operation activities in accordance with the laws, administrative regulations, the Measures and the prudential supervision principle.
CSRC's registration review on fund raising shall be based on the integrity of important documents and the compliance of contents thereof; and shall focus on full information disclosure and investor suitability, and target at strengthening the protection of investors' interests and guarding against systemic risks. CSRC will not make substantive judgments or guarantees in respect of the investment value and market prospects of the fund. Investors shall carefully read the fund prospectus, the fund contract and other disclosure documents, and independently determine the investment value of the fund, make investment decisions and bear investment risk.
Article 5 The Asset Management Association of China (hereinafter referred to as "AMAC") shall conduct self-discipline management over the fund operation activities in accordance with the laws, administrative regulations, CSRC provisions and self-discipline rules.
Chapter II Fund Raising
Article 6 When applying for fund raising, the fund manager or fund custodian to be appointed shall meet the following conditions:
1. the fund manager to be appointed shall be a fund management company legally established or another institution approved by CSRC; the fund custodian to be appointed shall be a commercial bank with fund custodianship or another financial institution approved by CSRC;
2. such fund manager or fund custodian have fund managerial personnel or other business personnel who meet the provisions of CSRC and are eligible for management and custody of funds to be raised;
3. such fund manager or fund custodian is subject to no administrative penalties or criminal penalties incurred by material acts violating laws and regulations and breaking promises within the past year;
4. such fund manager or fund custodian is under no investigation by any regulatory body or investigation by any judicial body, or under rectification due to acts violating laws and regulations and breaking promises;
5. the application materials for fund registration submitted to CSRC in the recent year contain no false records, misleading statements or material omissions;
6. there are no major changes that have caused or may cause adverse effects on fund operation and no litigation, arbitration or other significant events;
7. there are no major operational risks associated with unsound governance structure, management chaos, lack of effective implementation of the internal control and risk management system or deterioration of financial situation; and
8. other conditions specified by CSRC according to the principle of prudential supervision.
Article 7 When applying for fund raising, the funds to be raised shall meet the following conditions:
1. there is a clear and legitimate investment direction;
2. there is a clear fund operation mode;
3. they comply with CSRC's provisions on fund varieties;
4. drafts of the fund contract, prospectus and other legal documents shall comply with the laws, administrative regulations as well as CSRC provisions;
5. fund name shall indicate the fund category and investment characteristics and shall not contain any content that may harm national interests or public interests, deceive or mislead investors or infringe others' legitimate rights and interests;
6. the prospectus shall truly, accurately and completely disclose important information required by investors for making investment decisions, contain no false records, misleading statements or material omissions, and be prepared in the language that is concise, easy to understand, practical and in line with investors' understanding capacity;
7. there is an investor suitability management system in line with the characteristics of the funds, and there are clear methods to implement arrangement of investor suitability such as investors positioning, identification and evaluation and clear risk warning labels;
8. there are sound systems for the fund's investment management, sales, registration and valuation and other business aspects, standard conducts, fully prepared technical systems without any circumstance that affects the normal operation of the fund, damages or may damage the legitimate rights and interests of fund unit holders, and may lead to systematic risks; and
9. other conditions specified by CSRC.
Article 8 When applying for fund raising, the fund manager shall submit the application materials in accordance with the Law on Securities Investment Funds and CSRC provisions. From the starting point when such application materials are accepted, the fund manager, fund custodian and related intermediaries are required to take the corresponding legal liability for the authenticity, accuracy, and completeness of the application materials.
Intermediaries issuing legal opinions and other documents for the fund application materials shall be diligent and responsible, and shall check and verify the authenticity, accuracy and completeness of these supporting documents.
After the application materials are accepted, related contents cannot be changed at will. In case of any major change in the application materials during the application period, the fund manager shall submit the updated materials to CSRC within five working days as of the date of such change.
Article 9 CSRC shall accept and audit the application for fund raising registration in accordance with the Administrative Licensing Law of the People's Republic of China and Article 55 of the Law on Securities Investment Funds, make decision on whether to approve such registration and notify the applicant of the decision; if the decision is negative, the relevant reason shall be stated.
Article 10 When carrying out registration audit, CSRC may take the opinions solicited from AMAC, stock exchanges and securities registration and settlement institutions for reference, as the case may be.
Article 11 The fund raising period shall not exceed three months as of the date of fund unit offering.
Article 12 If the total amount of fund units raised upon the expiration of the fund raising period comply with Article 59 of the Law on Securities Investment Funds and meet the following conditions, the fund manager shall carry out the capital verification and fund record-filing procedures as required: the total number of fund units raised shall be no less than 200 million; the proceeds shall be no less than CNY200 million; the number of fund unit holders shall be no less than 200.
Initiated-end fund is not subject to the above limitations.
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