Shenzhen Stock Exchange, Securities Trading by Qualified Foreign Institutional Investors Implementing Rules

Issued: December 1 2002
Effective: as of date of issue
Interpreting authority: Shenzhen Stock Exchange

Main contents: Qualified foreign institutional investors (QFII) should entrust a domestic securities company that is a member of the stock exchange to handle the securities transactions on its behalf (Article 4). The domestic commercial bank acting as the asset custodian of a QFII should report to the stock exchange within five days after the occurrence of a list of instances provided in Article 5, such as the obtaining of a securities investment business permit, approval of an investment quota and a foreign exchange registration certificate. The shareholding ratios are specified: a single QFII shall hold listed A shares of a listed company of no more than 10% of the total A shares of the company and the aggregate amount of A shares held by all QFIIs in any one listed company may not exceed 20% of the total A shares of the listed company (Article 6). When all the QFIIs' aggregate A shareholding reaches 16% of the total A shares of a company or when there is an increment of 2% thereafter, the total amount of A shares held by QFIIs and the shareholding ratio will be published. If the limit of A shares held by a single QFII is exceeded, the entrusted securities company and the custodian will be notified to close out within five days (Article 8). QFIIs are for the time being not allowed to participate in the repurchase of treasury bonds or trading of corporate bonds (Article 14).

Related legislation: Administration of Securities Investments in China by Qualified Foreign Institutional Investors Tentative Procedures, Nov 5 2002, CLP 2002 No.10 p46 and Shenzhen Stock Exchange, Share Listing Rules, Jun 7 2001, CLP 2001 No.6 p17