Download Notice of the Ministry of Labor and Social Security and China

Notice of the Ministry of Labor and Social Security and China
Securities Regulatory Commission on the Relevant Issues concerning
Securities Investment of Enterprise Annuity Fund
(No. 25 [2004] of the Ministry of Labor and Social Security)
The labor and social security offices or bureaus of all the provinces, autonomous regions, and
municipalities directly under the Central Government, and the regulatory bureaus under China
Securities Regulatory Commission of all the provinces, autonomous regions, municipalities
directly under the Central Government, and cities under separate state planning, the Shanghai and
Shenzhen Securities Exchanges, the China Securities Depository and Clearing Corporation
Limited, and the Securities Association of China,
With a view to implementing the Several Opinions of the State Council on Pushing forward the
Reform and Opening and Stable Development of Capital Market, ensuring the safety of enterprise
annuity fund property, maintaining the lawful rights and interests of the parties of the enterprise
annuity management, and promoting the healthy development of enterprise annuity, we hereby
make the following notice on the relevant issues concerning the securities investment of enterprise
annuity fund:
I. The fiduciaries, trustees, and investment custodians shall manage the enterprise annuity fund
property and undertake securities investment activities in accordance with the Trial Measures for
Enterprise Annuity Fund Management.
II. A trustee shall, upon the entrustment of a fiduciary, apply for opening securities account for
enterprise annuity fund as an agent. The securities account shall be opened in light of each
portfolio subject to the management of the investment custodian of enterprise annuity fund, and
the name of the account shall be the joint name of the enterprise annuity plan and the trustee.
III. A trustee shall be responsible for the clearing and settlement of the capital of enterprise
annuity fund entrusted to him/it. An investment custodian shall ensure the ordinary operation of
the securities transaction of enterprise annuity fund, and undertake settlement liabilities for acts of
overbuying and short selling occurred during its investment.
IV. A trustee shall apply for opening an account of settlement reserves in his/its own name in the
China Securities Depository and Clearing Corporation Limited (hereinafter referred to as the
China Clearing Corporation) for clearing and settling the capital of all the funds (including
enterprise annuity fund) entrusted to him/it.
V. An investment custodian shall lease or arrange special seats for securities transaction of
enterprise annuity fund for different trustees.
VI. A trustee and an investment custodian shall obtain the data for the settlement of securities
transaction of enterprise annuity fund in time from the securities exchange and the China Clearing
Corporation, and shall check with the securities exchange and the China Clearing Corporation in
time if any mistake is discovered in the data.
VII. As a contact person for information disclosure of a securities exchange, a trustee shall, in
light of the requirements of the business rules of a securities exchange, report the relevant
materials and remind the fiduciary of performing duty of information disclosure in time.
VIII. A fiduciary, trustee, and investment custodian shall, in accordance with the Directory for the
Depository and Clearing Business of Securities Investment of Enterprise Annuity Fund (See the
Annex), carry out management on securities account concerning enterprise annuity fund and the
relevant businesses of securities depository, custody and settlement, etc..
IX. The Ministry of Labor and Social Security shall conduct supervision over and inspection on
fiduciaries, trustees and investment custodians periodically and not periodically for their
implementation of the aforesaid provisions.
X. The present Notice shall be referred to by analogy for other social securities funds that may be
used for securities investment as prescribed from the date of its promulgation.
Annex: Directory for the Depository and Clearing Business of Securities Investment of Enterprise
Annuity Fund
Ministry of Labor and Social Security and China Securities Regulatory Commission
September 29, 2004
Annex: Directory for the Depository and Clearing Business of Securities Investment of Enterprise
Annuity Fund
Article 1 The present Directory is formulated in accordance with the state laws and regulations,
the Trial Measures for Enterprise Annuity, the Trial Measures for Enterprise Annuity Fund
Management, and in light of the relevant provisions of China Securities Regulatory Commission
(hereinafter referred to as the CSRC) and the relevant business rules of the China Securities
Depository and Clearing Corporation Limited (hereinafter referred to as the China Clearing
Corporation), for the purpose of providing conveniences for enterprise annuity fund to take part in
the investment activities in the securities market, ensuring the safety of fund assets, and protecting
the lawful rights and interests of employees.
Article 2 The present Directory shall be applicable to the management on securities accounts
concerning the investment of enterprise annuity fund and the relevant securities depository,
custody and clearing, and other businesses.
Article 3 The securities account of enterprise annuity fund shall be handled by the trustee of
enterprise annuity plan (hereinafter referred to as the “trustee”) directly at the Shanghai and
Shenzhen branches of the China Clearing Corporation (hereinafter referred to as the China
Clearing Corporation uniformly).
Article 4 A trustee shall provide the following materials when opening a securities account of
enterprise annuity fund:
1. The application Form for Registration of Securities Account of an Institution;
2. The original copy and photocopy of the letter of confirmation (including registration number)
on enterprise annuity plan as issued by the enterprise annuity fund regulatory institutions under the
labor security department;
3. The power of attorney to the trustee by the fiduciary of the enterprise annuity plan (hereinafter
referred to as the “fiduciary”);
4. The photocopies of the certificate of the legal representative of the trustee and the effective
identity certificate document of the legal representative;
5. The power of attorney of the legal representative or the documents of approval of the head
office on the qualification of its branches for their opening of enterprise annuity fund custody
business;
6. The photocopy of the business license of the trustee with his/its seal of authorization;
7. The original copy of the trusteeship agreement concluded between the fiduciary and the trustee;
8. The original copy and photocopy of the effective identity certificate documents of the handling
agent; and
9. Other materials that shall be provided as required by the China Clearing Corporation.
Article 5 A trustee shall, when filling in the Application Form for Registration of Securities
Account of an Institution, fill in the item of “name of the holder” with “**enterprise annuity plan
+ trustee” and the item of “number of identity certificate documents” with “registration number in
the letter of confirmation of enterprise annuity plan as issued by the enterprise annuity fund
regulatory institution under the labor security department”. The name of enterprise annuity plan
and the registration number shall be filled in according to item (2) of Article 4 of the present
Directory. A single enterprise annuity plan may open at most ten securities accounts separately in
different markets, except the case that any securities account is approved by the CSRC and the
Ministry of Labor and Social Security.
Article 6 The China Clearing Corporation may open an account after making examination on the
materials as prescribed in Article 4 of the present Directory and if there is no mistake in them, and
shall keep the original copy or photocopy of the prescribed documents.
Article 7 Where a trustee applies for inquiring about the registration materials of a securities
account, for alteration, reporting the loss of account card and its makeup and writing off of the
account and other businesses, he/it shall handle it by referring to the relevant provisions of the
Rules of the China Securities Depository and Clearing Corporation Limited for Securities Account
Management. Articles 8 and 9 of the present Directory shall be followed for the alteration of the
trustee of enterprise annuity plan.
Article 8 After a trustee for an enterprise annuity plan is altered, a new trustee shall be entrusted to
apply for handling the alteration of registration materials of securities account. An applicant shall
submit the following materials:
1. The application Form for Alteration of Registration Materials of Securities Accounts;
2. The power of attorney of a fiduciary to a trustee;
3. The photocopy of the certificate of legal representative of a trustee and the effective identity
certificate document of the legal representative;
4. The power of attorney of the legal representative of a trustee or documents of approval of the
parent bank for the qualification of its branch bank for its opening enterprise annuity fund
trusteeship business;
5. The photocopy of the business license of a trustee with his/its seal of authorization;
6. The original copy of the trusteeship agreement concluded by a fiduciary and a new trustee;
7. The securities account card;
8. The letter of confirmation for rescinding trusteeship relations as issued by the former trustee;
9. The original copy and photocopy of the effective identity certificate documents of the handling
agent; and
10. Other materials that shall be provided as required by the China Clearing Corporation.
Article 9 In case any trustee for enterprise annuity plan is altered, the China Clearing Corporation
may alter the registration materials of the securities account after auditing the materials as
prescribed in Article 8 of the present Directory and if there is no mistake in them, and shall keep
the original copy or photocopy of the prescribed documents.
Article 10 When applying for handling the relevant account business, a trustee shall pay the
corresponding fees in accordance with the charging standard for the account of relevant
institutions of the China Clearing Corporation.
Article 11 As a participant in the clearing of the China Clearing Corporation (hereinafter referred
to as the “clearing participant”), a trustee shall complete capital clearing and settlement with a net
amount of such securities transactions under his/its trusteeship as the total enterprise annuity funds.
For acts of overbuying and short selling occurred during the operation of the investment of
enterprise annuity fund, a trustee shall be responsible for prosecuting for the corresponding
settlement liabilities of the relevant responsible person, and report to the relevant regulatory
departments.
Article 12 Before handling the clearing business, a clearing participant shall sign a clearing
agreement with the China Clearing Corporation, clarifying the rights and obligations of each party.
Article 13 A clearing participant shall open a sole clearing reserve account in his/its own name at
the China Clearing Corporation, and complete the capital clearing business of all the funds under
his/its trusteeship (excluding QFII) with one net amount through the account. As one part of the
entrusted fund, the enterprise annuity fund shall be brought into the clearing reserve account of the
clearing participant for clearing with single net amount.
Article 14 A clearing participant shall preserve the designated gathering account at the China
Clearing Corporation and receive the fund remitted and allocated from the clearing reserve
account through the account. The name of the designated gathering account shall agree with the
name of the clearing participant.
Article 15 In case there is any alteration on the name of the clearing participant, the designated
gathering account, the entrusted enterprise annuity fund and other information, the clearing
participant shall provide the corresponding materials to the China Clearing Corporation in time
and handle formalities for alteration of clearing account.
Article 16 In case any clearing participant who has opened the clearing reserve account newly
increases entrusted enterprise annuity fund, he/it shall submit the power of attorney of a fiduciary
to the China Clearing Corporation. The newly increased enterprise annuity fund of a trustee and
other fund under his/its trusteeship shall participate in the clearing of single net amount of the
clearing reserve account of the clearing participant together.
Article 17 After a fiduciary alters a trustee, the newly appointed trustee shall open a clearing
reserve account in the China Clearing Corporation in accordance with the provisions of Articles 11,
12, 13 of the present Directory, or implement according to Article 16 of the present Directory.
Article 18 For the enterprise annuity fund under the trusteeship of a clearing participant, the China
Clearing Corporation shall check and ratify the corresponding minimum clearing reserve in
accordance with the relevant provisions on the management of clearing reserve. The balance at the
end of a day in the clearing reserve account of a clearing participant shall not be lower than the
minimum limitation of clearing reserve as checked and ratified by the China Clearing Corporation.
Article 19 The securities transactions on enterprise annuity fund shall be carried out through
special transaction seats. After the market is closed in each transaction day (T day), the China
Clearing Corporation shall compute the amount of securities receivable and payable in the
securities account of enterprise annuity fund, and produce the securities clearing data on the basis
of the amount of transactions and other data of the securities account of special transaction seat of
enterprise annuity fund of securities exchange in the T day; and compute the net amount of capital
receivable or payable by the clearing participant on the basis of the transaction amount and other
data of all the funds under the trusteeship of the clearing participant in the T day to determine the
relevant settlement liabilities.
Article 20 After completing the clearing in T day, the China Clearing Corporation shall deposit the
securities and capital clearing data in the current day into the clearing system as the basis and
instructions for settlement of securities and capital of the clearing participant, who shall obtain
such data from the system of the China Clearing Corporation in time.
Unless when a clearing participant is unable to obtain the relevant data due to the reason of the
system of the China Clearing Corporation, the China Clearing Corporation shall be regarded as
having notified the clearing participant of the settlement instruction under other circumstances.
Article 21 A clearing participant shall perform the settlement obligations in time in light of the
instruction of the China Clearing Corporation for settlement of securities and capital. In case a
clearing participant has any objection to the clearing data provided by the China Clearing
Corporation, he/it shall reflect it to the China Clearing Corporation in time. If it is really a clearing
error after being checked by the China Clearing Corporation, the China Clearing Corporation shall
make correction, but the clearing participant shall not refuse to perform or delay the performance
of the settlement obligations of the current day because of this.
Article 22 The China Clearing Corporation shall, according to the existing business regulations,
and on the basis of the clearing data at the T day, complete the handling of settlement of securities
and capital that are irrevocable finally with the clearing participant on the T+1 day.
Article 23 In order to prevent the clearing risk, a clearing participant shall pay clearing mutual
insurance fund as required in light of the principle of bearing risk together. The provisions of the
China Clearing Corporation shall be followed for the payment and deposit, adjustment,
management and use of the mutual insurance fund for clearing.
Article 24 The China Clearing Corporation shall collect securities clearing risk fund from the
clearing participants as an agent in accordance with the provisions of the Interim Measures for the
Management of Securities Clearing Risk Fund as promulgated by the CSRC and the Ministry of
Finance.
Article 25 In case any overdraft is occurred in the clearing reserve account of a clearing
participant, it shall be deemed as breach of contract in capital settlement. The China Clearing
Corporation may take the following measures against his/its acts of breach of contract for capital
settlement:
1. According to the amount of overdraft of the clearing participant, computing the interests of the
overdraft capital and the money for breach of contract in accordance with the relevant provisions
of the China Clearing Corporation.
2. The clearing participant may, before 15:00 o’clock of the transaction date (T+1 day), submit an
application for detaining the securities for overdraft to the China Clearing Corporation, and
designate the overdraft fund securities account entrusted by him/it and the amount of overdraft.
The China Clearing Corporation shall detain the securities by turns from the back to the front in
accordance with the order for buying the securities as designated by him/it in the overdraft fund
securities account, until the market value of the securities detained has reached 120% of the
amount of overdraft (the market value of the securities shall be computed according to the closing
quotation of the current day, the same hereinafter). If the value of all the securities in the fund
securities account is less than 120% of the amount of overdraft, all the securities in the fund
securities account shall be detained.
If the clearing participant fails to designate the overdraft fund, the China Clearing Corporation
shall have the right to determine by itself not to deliver the securities that are equal to 120%
market value of the amount of overdraft.
3. In case any overdraft of capital settlement is caused by the clearing participant, the China
Clearing Corporation shall have it registered as the bad business record of the clearing participant;
4. Reporting the overdraft of capital settlement to the CSRC in time. And
5. Asking the securities exchange to restrict or suspend the buying of securities in the overdraft
fund securities account as designated by the clearing participant.
Article 26 In case any short selling occurs in the fund securities account entrusted by a clearing
participant, it shall be deemed as occurrence of breach of contract of the clearing participant for
payment of securities. The China Clearing Corporation may not pay the capital equivalent to the
short selling price temporarily on the T+ 1 day, and shall compute and collect money for breach of
contract on the basis of the short selling price in accordance with the relevant provisions of the
China Clearing Corporation. If the short selling securities have been made up within two
transaction days, the China Clearing Corporation may rescind the temporary detainment on the
short selling price. Or else, the China Clearing Corporation shall buy securities equal to the
amount of securities short sold with the capital detained temporarily, and the profits and losses
occurred thereby shall be traced back by the clearing participant to the party liable or returned by
the clearing participant.
Article 27 The China Clearing Corporation shall have the right to make special monitoring on the
clearing participants with higher clearing risks, and may take measures to improve the amount of
payment of clearing mutual insurance fund, if necessary, and adjust the proportion and time of
payment and deposit of minimum clearing reserve, so as to prevent the relevant risks effectively.
Article 28 In case a clearing participant applies for writing off his/its clearing reserve account,
he/it may, after clearing the relevant creditor’s rights and debts on securities registration clearing
with the China Clearing Corporation, apply to the China Clearing Corporation for transferring and
paying the balance of clearing reserve and the balance of clearing mutual insurance fund.
Article 29 The power to interpret the present Directory shall remain with the China Clearing
Corporation.