China Securities Regulatory Commission, Client Asset Management Businesses of Securities Companies Trial Procedures

Promulgated: December 18 2003
Effective: February 1 2004
Applicability: The Procedures also apply to other organizations that engage in client asset management businesses (Article 72).

Main contents: Securities companies shall apply to the China Securities Regulatory Commission (CSRC) to engage in client asset management businesses (Article 4). They shall have centralized internal operation and management and will have signed unified asset management contracts with their clients (Article 6). Part Two sets out the business scope and qualifications for such businesses. Securities companies may handle designated asset management for single clients, collective asset management for multiple clients and special asset management for clients with special purposes (Article 11). Client assets of collective asset management businesses shall be placed with a qualified bank or institution under their custodianship (Article 13). Securities companies may set up restricted and non-restricted asset management plans for the collective asset management businesses (Article 14) and may handle specific asset management businesses through comprehensive collective asset management plans (Article 15). Article 17 sets out the conditions that securities companies should meet to engage in such businesses. For instance, it must be a comprehensive-type securities company verified by the CSRC and its net capital cannot be less than Rmb200 million. To set up collective asset management plans, the securities companies should also have net assets of no less than Rmb300 million for restrictive plans and Rmb500 million for non-restrictive plans (Article 20). Article 27 sets out the basic items that an asset management contract should contain. A collective asset management contract shall be signed by the securities company, asset management custodian and the individual client (Article 28). Securities companies shall provide an accurate and complete asset management report to their clients at least every three months (Article 48).
Related legislation: PRC Securities Law (Amended), Oct 27 2005, CLP 2006 No.1 p31
Repealed legislation: Regulating the Entrusted Investment Management Business of Securities Companies Circular, Nov 28 2001, CLP 2001 No.10 p9 and Issues Relevant to Securities Companies' Engaging in Collective Entrusted Investment Management Business Circular, Apr 29 2003, CLP 2003 No.5 p51