Download Pilot Measures for the Asset Management Services of Fund

Pilot Measures for the Asset Management Services of Fund Management Companies for
Specific Clients
Chapter I General Provisions
Article 1 For purposes of regulating the asset management services of fund management
companies for specific clients (hereinafter referred to as “specific asset management services”)
and protecting the lawful rights and interests of the parties concerned, these Measures are
formulated according to the Law of the People’s Republic of China on Securities Investment Fund
(hereinafter referred to as the “Law on Securities Investment Fund”), the Securities Law of the
People’s Republic of China, the Company Law of the People’s Republic of China, and the relevant
laws and regulations.
Article 2 These Measures shall apply to activities in which a fund management company
raises funds from specific clients or accepts the asset entrustment of specific clients to be their
asset manager, places the entrusted assets under the trusteeship of a custodian institution, and
invests the entrusted assets for seeking interest for asset trustors.
Article 3 To provide specific asset management services, a fund management company shall
follow the principle of free will, fairness, good faith, and normalization, maintain the normal order
of securities market, protect the lawful rights and interests of all parties, and prohibit interest
transfer in any form.
Asset managers and asset custodians shall scrupulously perform their duties, fulfill the obligation
of good faith, wariness and diligence, and treat all investors on an equal footing.
Asset trustors shall guarantee the lawful sources of entrusted assets, and may not damage the
national interests, public interests or lawful rights and interests of others.
Article 4 When an asset manager company provides specific asset management services, the
entrusted assets shall be separated from the assets owned by the asset manager and the asset
custodian, and be separated from the assets under management of the asset manager and the
properties under trusteeship of the asset custodian. No asset manager or asset custodian may
incorporate the entrusted assets into its own assets.
The properties and proceeds obtained by the asset manager and the asset custodian from the
management and use of entrusted assets or under other circumstances shall be incorporated into
the entrusted assets.
When the asset manager or the asset custodian is liquidated due to dissolution, revocation or
bankruptcy according to law, the entrusted assets are not liquidation property.
Article 5 The China Securities Regulatory Commission (hereinafter referred to as the
“CSRC”) shall supervise and administrate specific asset management services according to laws,
administrative regulations and provisions of these Measures.
Article 6 Stock exchanges and futures exchanges shall supervise securities transactions and
futures transactions involving specific asset management services according to laws,
administrative regulations, and provisions of these Measures.
Article 7 The Asset Management Association of China shall conduct self-disciplinary
administration of specific asset management services according to laws, administrative regulations,
provisions of the CSRC, and self-disciplinary rules.
Chapter II Business Rules
Article 8 An asset manager may adopt the following methods to provide specific asset
management services by means of preparing asset management plans:
1. Provides specific asset management services for a single client; and
2. Provides specific asset management services for several specific clients.
Article 9 The assets under an asset management plan shall be used in the following
investment:
1. Cashes, bank deposits, shares, bonds, securities investment funds, vouchers of the People’s
Bank of China, debt financing instruments of non-financial enterprises, asset support securities,
commodity futures, and other financial derivatives;
2. Equities, creditor’s rights, and other property rights that are transferred not through securities
exchanges; or
3. Other assets that are recognized by the CSRC.
The specific asset management plan in which the assets as prescribed in Item 2 and 3 of the
preceding paragraph are invested is called the special-purpose asset management plan.
A fund management company shall establish special subsidiaries and provide special-purpose
asset management services by establishing special-purpose asset management plans.
Article 10 Upon approval of the CSRC, a fund management company that meets the
following requirements may provide specific asset management services:
1. It has normalized business conducts, has not been subject to any administrative penalty or
ordered to make rectifications by the regulatory authority due to any illegal act or regulatory
violation in the last year, and is not being investigated by the regulatory authority due to any
illegal act or regulatory violation;
2. It has hired proper professionals to provide specific asset management services;
3. It has formulated effective business rules and measures for preventing interest transfer, illegal
commitment to give proceeds or bear losses, and unfair competition;
4. It has established rules for management of fair trading and specified the principle and content of
fair trading as well as specific measures for achieving fair trading;
5. It has established an effective investment monitoring system and reporting system, and can
timely detect any abnormal transactions; and
6. Other requirements determined by the CSRC according to the principle of prudent supervision.
To provide specific asset management services, a fund management company shall set up a special
business department or establish special subsidiaries. When providing specific asset management
services, the subsidiaries of the fund management company shall conform to the conditions as
prescribed in the preceding paragraph.
Article 11 When providing specific asset management services for a single client, the asset
initially entrusted by the client shall value at no less than 30 million yuan, unless it is otherwise
stipulated by the CSRC.
Article 12 When providing specific asset management services for several specific clients, an
asset manager shall sell asset management plans to specific qualified clients.
The term “specific qualified clients” as mentioned in the preceding paragraph refers to natural
persons, legal persons and legally-formed organizations that initially entrust assets valuing no less
than 1 million yuan and are able to identify, judge and assume the related investment risks, or
other specific clients that are approved by the CSRC.
Article 13 When providing specific asset management services for several clients, an asset
manager shall ensure that clients involved in a single asset management plan do not exceed 200;
however, the number of investors is not subject to restriction where the amount of a single sum of
entrusted assets is above 3 million yuan; and that the total asset initially entrusted by clients are no
less than 30 million yuan but no more than 5 billion yuan; unless it is otherwise provided by the
CSRC.
An asset management plan shall use equal shares. Unless it is otherwise stipulated in the asset
management contract, each share is entitled to the same lawful rights and interests.
Article 14 When providing specific asset management services, an asset manager shall place
the entrusted assets under the trusteeship of a custodian institution.
Article 15 When providing specific asset management services, the asset trustor, the asset
manager and the asset custodian shall enter into a written asset management contract so as to
clarify and stipulate their respective rights and obligations as well as the relevant matters.
The content and format of an asset management contract shall be separately provided for by the
CSRC.
Article 16 To sell an asset management plan to several specific clients, an asset manager shall
make a prospectus which shall be authentic, accurate, and complete, and may not contain any false
recording, misleading statement or major omission.
A prospectus shall cover:
1. A brief introduction to the asset management plan;
2. Major content of the asset management contract;
3. A brief introduction to the asset manager and the asset custodian;
4. An investment risk disclosure;
5. The initial sales term; and
6. Other matters as set forth by the CSRC.
Article 17 Where providing specific asset management services to several clients, an asset
manager shall, before entering into an asset management contract with an asset trustor, ensure that
there is enough time for the asset trustor to review the contract, know well about the financial
strength, financial investment experience and investment objectives of the asset trustor, prepare
client information forms and retain the relevant certificates for future reference, and assign special
persons to elaborate the asset management plan to the asset trustor.
Article 18 An asset manager and an asset custodian shall, in the asset management contract,
make sufficient disclosure of risks that may result from management and use of entrusted assets
for investment, and make the asset trustor by fully aware of the relevant rights and obligations and
be willing to bear investment risks.
Article 19 An asset manager may sell an asset management plan on its own or entrust an
agency qualified for selling funds to do so.
Article 20 Where providing specific asset management services for several clients, an asset
manager shall sell an asset management plan within the term as prescribed in the prospectus.
Where a client satisfies conditions as set forth in Article 13 of these Measures, the asset manager
shall, within ten days after the expiration of the initial sales term, hire a capital verification agency
which meets statutory requirements to verify capitals and, within ten days of receipt of a capital
verification report, submit the report and client information form to the CSRC and undergo the
filing formalities.
Article 21 To provide specific asset management services for several clients, an asset
manager and a sales agency shall open a special-purpose sales and settlement account for the asset
management plan at a commercial bank qualified for the sales of funds, a designated commercial
bank engaging in the depository of a client's trading settlement funds, or the China Securities
Depository and Clearing Corporation Limited.
The asset manager shall deposit the client’s capital entrusted during the initial sales term of the
asset management plan into the special-purpose account. No institution or individual may use such
capital before the end of the initial sales of such asset management plan.
Article 22 Where, at the expiration of the initial sales term of an asset management plan, a
client fails to meet the conditions as set forth in Article 13 of these Measures, an asset manager
shall assume the following liabilities:
1. Pays debts and expenses incurred in the course of initial sales with its inherent assets; and
2. Returns funds paid by the client plus interest thereof as calculated at the current deposit interest
rate of the bank within 30 days after the expiration of the initial sales term.
Article 23 An asset management contract shall specify the investment objectives, investment
scope, investment ratio, and investment strategies, and effective measures that are adopted to
manage investment risks.
The investment portfolio of entrusted assets shall confirm to laws, regulations, and provisions of
the CSRC; when a company participates in stock offering and subscription, the volume applied for
by a single portfolio shall not exceed the total assets of that portfolio, and the number of shares
applied for by a single portfolio shall not exceed the total number of shares to be offered as
scheduled by the company offering the shares for the current time.
Article 24 Where the investment of entrusted assets fails to reach the investment ratio as
prescribed in the asset management contract due to fluctuations in the securities market, merger of
listed companies, change in the scale of the asset management plan, or any other factor beyond the
control of the asset manager, the asset manager shall make timely adjustments according to the
asset management contract.
Article 25 During the period of continual existence of an asset management contract, the
asset manager may, according to the contract, undergo formalities for specific clients to participate
in and withdraw from the asset management plan, and the reasonable expenses incurred therefrom
may be paid by the asset trustor.
An asset management plan offers at most one chance for clients to participate in and withdraw
from the asset management plan each quarter, unless it is otherwise an asset management plan for
a single client, an asset management plan in the category of cash administration for multiple
clients, or any other asset management plan approved by the CSRC.
The asset trustor may, through the trading platform of the exchange, transfer its shares of the asset
management plan to specific qualified clients.
Article 26 An asset manager shall be responsible for the registration of shares of its asset
management plan; and the asset manager may authorize any other institution to handle the
registration matters.
Article 27 When providing specific asset management services, the asset manager, the asset
custodian, and the asset trustor shall, according to laws, regulations, and provisions of the CSRC,
perform the obligation of reporting and disclosure of information regarding specific asset
management services.
Article 28 An asset manager shall, according to the characteristics of the asset management
plan, stipulate the management rate and trusteeship rate in the asset management contract.
When setting the management rate and trusteeship rate, the asset manager may not, for the
purpose of expelling competitors, keep down the level of management rate and trusteeship rate of
the asset management plan and disturb the market order.
The asset manager may agree with the asset trustor that proper performance rewards are drawn in
light of conditions on the management of entrusted assets. The fixed management fees and
performance rewards may be collected simultaneously.
Article 29 Before entering into an asset management contract, an asset trustor shall fully
notify the asset manager of the basic information about its investment objectives, investment
preferences, investment restrictions, and risk tolerance, and offer special explanations and written
commitments about the lawful sources of its funds and securities assets.
When making an asset entrustment, the asset trustor shall voluntarily learn the features of risks
and proceeds of targeted investment products, and meet the requirements for business
decision-making procedures.
Article 30 An asset trustor shall abide by laws, regulations, and provisions of these Measures,
prudently and carefully sign the asset management contract, and faithfully perform various
obligations prescribed in the asset management contract, and may not commit any of the following
acts during the period of property entrustment:
1. Hides truth or provides false materials;
2. Entrusts assets from an unclear source for money laundering;
3. Provides or demands commercial bribes for or from the asset manager;
4. Requires the asset manager to illegally guarantee proceeds;
5. Requires the asset manger to reduce or return the management fee;
6. Requires the asset manger to make use of other assets under its management to seek
unjustifiable interests for it;
7. Requires the asset manager to cooperate with it in securities underwriting, securities investment,
or other business activities;
8. Violates the asset management contract by intervening in the investment of the asset manager;
9. Engages in other activities that may damage the lawful rights and interests of other assets under
management of the asset manger or under trusteeship of the asset custodian; or
10. Commits any other act that is prohibited by laws, regulations, and provisions of the CSRC.
Article 31 An asset manager shall learn the risk preference, risk cognitive abilities and risk
tolerance of its clients, evaluate the financial situations of its clients, explain the relevant laws,
regulations, as well as the operating markets and modes of the relevant investment tools to its
clients, and make sufficient disclosure of the relevant risks.
Article 32 In order to handle the relevant business registration and settlement matters, an
asset manager and an asset custodian shall, according to the relevant provisions of the CSRC,
open special securities accounts, futures accounts, capital accounts, and other relevant accounts
for investment management.
The asset manger shall fairly treat different assets under its management, establish an effective
routine monitoring system of abnormal transactions, monitor obverse and reverse transactions
occurred between different portfolios (including time, price, quantity and causes), and report such
transactions to the CSRC on a regular basis.
It is strictly prohibited a same portfolio from conducting reserve transactions or other transactions
that may cause unfair trade or interest transfer one the same trading day.
Article 33 An asset manager shall voluntarily avoid possible conflict of interests, give
explanations about any affiliated transaction in which the conflict of interests does exist or may
exist in the asset management contract or the said transaction, and report to the CSRC.
Article 34 Neither the investment manager of a fund management company that provides
specific asset management services nor the fund manager of securities investment funds may hold
concurrent posts.
An investment manager responsible for providing specific asset management services shall be
registered at the CSRC.
Article 35 When providing specific asset management services, an asset manager may not:
1. Seek illicit interest for any specific asset trustor by making use of other assets under its
management or make interest transfer;
2. Seek illicit interests for any third party by making use of the assets of specific clients under its
management or make interest transfer;
3. Return the management fees to the asset trustor in any form;
4. Illegally guarantee proceeds or bear losses for clients;
5. Mix its own assets and others' assets with the entrusted assets for securities investment;
6. Exceed the limit of management powers in violation of the stipulations in the asset management
contract when making securities investment;
7. Publicly recommend any specific asset management service scheme or asset management plan
through newspaper, television, radio, internet (except its own website and the website of sales
agencies) or any other public medium;
8. Seek or accept improper interests other than the remunerations for specific asset management
services;
9. Engage in insider trading, manipulation of securities trading prices or any other unjustifiable
securities trading; or
10. Commit any other act that is prohibited by any law, regulation of the CSRC.
Article 36 When an asset custodian finds that an investment instruction sent out by the asset
manager violates laws, regulations, other relevant provisions or the asset management contract, it
shall refuse to execute that instruction, immediately notify the asset manager and the asset trustor,
and report to the CSRC in a timely manner.
When an asset custodian finds that an investment instruction of the asset manager that has taken
effect under the trading procedures violates laws, regulations, other relevant provisions or the asset
management contract, it shall immediately notify the asset manager and the asset trustor, and
report to the CSRC in a timely manner.
Chapter III Supervision and Administration
Article 37 When providing specific asset management services for a single client, an asset
manager shall, within five workdays after an asset management contract is signed, report it to the
CSRC for filing. For any amendment or supplementation to the contract, the asset manager shall
report it to the CSRC for filing within five workdays of the occurrence of such amendment or
supplementation.
Article 38 When providing specific asset management services for several clients, an asset
manager shall, within five workdays after an asset management plan starts to be sold, submit the
asset management contract, the prospectus, the sales plan and other materials as set forth by the
CSRC to the CSRC for filing.
Article 39 An asset manger shall make an investment report on entrusted assets and submit it
to the asset trustor according to the asset management contract, and give explanations on the
investments of entrusted assets within the reporting period. The asset custodian shall review the
said report and issue written opinions.
Article 40 An asset manager and an asset custodian shall ensure that the asset trustor can
inquire about the investment operation and trusteeship of the entrusted assets in light of the time
and method as stipulated in the asset management contract. In the case of the occurrence of any
material matter as stipulated in the asset management contract that may affect the client’s interests,
the asset manager shall notify the situation to the asset trustor in a timely manner.
Article 41 A fund management company shall analyze the performances of securities
investment funds and portfolios of entrusted assets under its management. Within a term of
entrusted investment, if there is obvious difference between the performance of securities
investment funds and portfolios of entrusted assets with similar investment targets and strategies,
the fund management company shall issue a written analysis report, which shall be signed
separately by the investment manager, the supervisor in chief and the general manager and then be
submitted to the CSRC for filing.
Article 42 A fund management company shall, within 15 workdays after the end of each
quarter, prepare a quarterly report on specific asset management services, and submit it to the
CSRC for filing. The quarterly report on specific asset management services shall give special
explanations about the implementation of the fair trading system, the comparison of performances
between specific asset management services and securities investment funds, and abnormal
trading, and be signed separately by the investment manager, the supervisor in chief and the
general manager.
Asset managers and asset custodians shall, within three months after the end of each year, prepare
the annual management report and the annual trusteeship report on specific asset management
services, and submit them to the CSRC for filing.
Article 43 Asset managers and asset custodians shall, according to laws, administrative
regulations and the relevant provisions of the CSRC, keep all the accounting materials about
specific asset management services, and properly keep the relevant contracts, agreements, trading
records and other documents and files.
Article 44 Stock exchanges and futures exchanges shall rigidly monitor the abnormal
transactions between securities investment funds and portfolios of entrusted assets under the
management of the same fund management company, and timely report the relevant situation to
the CSRC.
Chapter IV Legal Liability
Article 45 Where an asset manager, asset custodian or asset trustor violates any laws,
administrative regulations or these Measures, the CSRC or its dispatched offices shall order it to
make correction, suspend the relevant business or take other administrative regulatory measures,
and take such administrative regulatory measures against the directly responsible person in charge
and other directly responsible persons as holding regulatory interviews, issuing warnings,
suspending them from office or determining them as unsuitable for holding the relevant posts.
Article 46 Where an asset manager, asset custodian, asset trustor, a directly responsible
person in charge or any other person held directly responsible provides specific asset management
services in violation of these Measures, the CSRC shall give administrative penalties according to
these Measures. If it is otherwise provided in laws or administrative regulations, such provisions
shall apply. If a crime is involved, the CSRC shall transfer the case to the judicial authority to
investigate the criminal liability of the liable party.
Article 47 Where an asset manager or asset custodian draws the management fee or
trusteeship fee in violation of Article 28 of these Measures, it shall be ordered to make correction,
be warned and/or fined; where the circumstances are serious, it shall be ordered to suspend the
relevant business; the directly liable persons in charge and other directly liable persons shall be
warned and/or fined; and where the circumstances are serious, the liable party can be banned from
entry into the securities market according to the relevant provisions.
Article 48 Where an asset manger or asset custodian violates Item (1), Article 35 of these
Measures and seeks unjustifiable interests or transfers interest for any specific asset trustor by
making use of securities investment funds under its management or trusteeship, it shall be
punished according to Article 89 of the Law on Securities Investment Funds; where an asset
manger or asset custodian violates Item (1), Article 35 of these Measures and seeks for
unjustifiable interests or transfers interests for any specific asset trustor by making use of assets
other than the securities investment funds under its management or custody, it shall be ordered to
make correction, be warned and/or fined; where the circumstances are serious, it shall be ordered
to suspend the relevant business; the directly liable persons in charge and other directly liable
persons shall be warned and/or fined; and the circumstances are serious, the liable party may be
banned from entry into the securities market according to relevant provisions.
Article 49 Where an asset manger or asset custodian is under any of the following
circumstances, it shall be ordered to make correction, be warned and/or fined; where the
circumstances are serious, it shall be ordered to suspend the relevant business; the directly liable
persons in charge and other directly liable persons shall be warned and/or fined; and where the
circumstances are serious, the liable party may be banned from entry into the securities market
according to relevant provisions:
1. Provides specific asset management services without approval of the CSRC and in violation of
Article 10 of these Measures;
2. Sells asset management plans to specific unqualified clients in violation of Article 12 of these
Measures;
3. Fails to place the entrusted assets under the trusteeship of the asset custodian according to
Article 14 of these Measures;
4. Fails to prepare the prospectus according to Article 16 of these Measures;
5. Makes investment by exceeding the scope of investment and investment restrictions and in
violation of Articles 9 and 13 of these Measures;
6. Fails to equally treat all assets under its management according to Article 32 of these Measures;
7. Permits the investment manager and the securities investment fund manager to hold concurrent
posts in violation of Article 34 of these Measures;
8. Violates Items 2 to 10 of Article 35 of these Measures; or
9. Fails to undergo the filing formalities according to Articles 20, 37, and 38 of these Measures.
Article 50 Where an asset trustor violates Article 29 or 30 of these Measures, it shall be
ordered to make correction, be warned and/or fined; and the directly liable persons in charge and
other directly liable persons shall be warned and/or fined.
Article 51 Where a specialized institution issuing audit reports or legal opinions for specific
asset management services fails to be diligent and fulfill duty, and produces or issues documents
containing any false record, misleading statement or major omission, it shall be ordered to make
correction, be warned and/or fined; the directly liable persons in charge and other directly liable
persons shall be warned and/or fined; where the circumstances are serious, the liable party may be
banned from entry into the securities market according to the relevant provisions.
Chapter 5 Supplementary Provisions
Article 52 These Measures shall come into force on November 1, 2012. The Pilot Measures
for the Asset Management Services of Fund Management Companies for Specific Clients (Order
No. 74 of the China Securities Regulatory Commission) shall be abolished concurrently.