China Securities Regulatory Commission, Administration of the Sales Activities of Securities Investment Funds Tentative Provisions

Issued: September 18 2002
Effective: as of date of issue

Main contents: Prior to the approval by the China Securities Regulatory Commission (CSRC) for an application for setting up a securities investment fund, no promotion or sale of the fund is allowed (Article 3). After its approval, the fund management company may publicize the sale of the fund in various media directly or through an agent and the publicizing materials should subsequently be submitted to the CSRC for the record (Article 4). Article 5 sets out the requirements on the contents of publicizing in terms of truthfulness and accuracy. Fund sales publicizing should contain express risk reminder and warning wording, state that the past performance (if contained) does not indicate its future performance, state that the CSRC's approval for its content (if contained) does not indicate a judgment, recommendation and guarantee in respect of its risks and profits (Article 6). Interviews of the fund management companies and agents should also comply with the requirements of Article 5. Article 9 prohibits the fund management companies, fund agents and the personnel thereof from engaging in a list of behaviour, such as misleading the investors, charging extra fees, etc. Fund management companies and fund agents must expressly indicate if they offer a discount to investors or a commission to an intermediary and such discount and commission must be recorded (Article 11). Article 12 prohibits the fund management companies and fund agents from committing a list of improper competition behaviour such as dispersal of false facts to defame the competitors.
Related legislation: Administration of Securities Investment Funds Tentative Procedures, Nov 14 1997, CLP 1997 No.2 p27 and China Securities Regulatory Commission, Pilot Projects for Open-ended Securities Investment Funds Procedures, Oct 8 2000, CLP 2000 No.10 p35