China Securities Regulatory Commission, Guiding Opinions on the Administration of Investment Management Personnel of Fund Management Companies

Issued: October 27 2006
Applicability: The term "investment management personnel" refers to the following persons who are responsible for fund investment, research and transactions and persons who actually perform the corresponding duties in a fund management company: (1) members of the investment decision-making committee of the company; (2) senior management personnel in charge of investment, research and trading businesses; (3) persons in charge of investment, research and trading departments in the company; and (4) fund managers and fund manager assistants (Article 2).
Persons engaged in research, investment and trading in the company other than the investment management personnel stipulated in Article 2 of the Guiding Opinions shall comply with the provisions concerning basic code of conduct in the Guiding Opinions (Article 37).

Main contents: In the event of a conflict of interests between fund shareholders and those of the company, shareholders, or institutions and individuals having affiliated relationships with shareholders, etc., investment management personnel shall adhere to the principle of giving priority to the interests of fund shareholders (Article 6). Companies shall specify the reporting obligations, duties and other matters to be performed by investment management personnel when they go abroad during working days (Article 27). Every member of investment management personnel shall receive compliance training for no less than 20 hours a year (Article 29). Where another person is to perform duties on behalf of a fund manager for more than 30 days, the company shall, within three working days from such decision, report to the relevant local office of the China Securities Regulatory Commission (CSRC) and disclose the relevant information (Article 30). A fund management company may not employ a fund manager who has resigned from another company for less than three months to engage in investment, research, trading and other such business (Article 33). A fund management company may not replace a fund manager who has been managing the fund for less than one year. Under exceptional circumstances where such replacement is necessary, the company shall explain the reasons to the CSRC and the relevant local office in writing (Article 34). The Guiding Opinions are one of the criteria for assessing the standard of internal controls of a fund management company. In the case of inconsistency between the acts of a company and its investment management personnel and the provisions of the Guiding Opinions, the case shall be explained in detail to the CRSC and the relevant local office. If there is no legitimate reason, the CRSC may conduct an inspection on the company to have a comprehensive understanding of the implementation of the company's internal control system (Article 38).