China Banking Regulatory Commission and State Administration of Foreign Exchange, Tentative Measures for the Administration of the Entrusted Overseas Financial Management Business of Trust Companies

中国银行业监督管理委员会、国家外汇管理局信托公司受托境外理财业务管理暂行办法

June 02, 2007 | BY

clpstaff &clp articles &

Trust companies admitted to the QDII group.

Clp Reference: 3610/07.03.12 Promulgated: 2007-03-12 Effective: 2007-03-12

Issued: March 12 2007
Effective: As of date of issuance
Interpreting Authorities: China Banking Regulatory Commission and State Administration of Foreign Exchange

Applicability: For the purposes of these Measures, the term "entrusted overseas financial management business" means the business activity wherein a domestic organization or an individual resident (the Settlor) entrusts funds that it/he/she lawfully owns to a trust company to establish a trust, and the trust company engages in the investment in specified financial products and in asset management overseas in its own name in accordance with the provisions of a trust document. The investment returns and risks are enjoyed and borne by the relevant parties in accordance with laws, regulations and the trust document (Article 2).

Main Contents: A trust company wishing to engage in entrusted overseas financial management business shall satisfy the following conditions:

(1) having registered capital of not less than Rmb1 billion or the equivalent in a freely convertible currency; having approved qualifications to engage in foreign exchange business and having a good track record in engaging in foreign exchange business; and having a regulatory rating of good or better for two years in succession;

(2) having been profitable for the most recent two years in succession and having year-end net assets of not less than its registered capital after allocations to the various loss reserves; and not having been subjected to administrative penalties by the regulatory department during the most recent two years;

(3) having a sound and well implemented corporate governance structure, internal control systems and risk management mechanism;

(4) having professional personnel who are capable of satisfying the requirements of entrusted overseas financial management business and have overseas investment management skills and experience (with not less than two professional managers who have engaged in the trading of foreign currency denominated negotiable securities for at least two years); having an independent department responsible for engaging in entrusted overseas financial management business that centrally accepts and operates the entrusted overseas financial management business and manages the same in separate accounts;

(5) having risk analysis techniques and a risk control system that satisfy the requirements of entrusted overseas financial management business; having a place of business, computer system, security facilities and other related facilities that satisfy the requirements of entrusted overseas financial management business; and having erected an effective firewall mechanism between its trust business and the business conducted for its own account; and

(6) other prudential conditions as specified by the CBRC.

Related Legislation: PRC Trust Law, Apr 28 2001, CLP 2001 No.5 p.22; and PRC Banking Regulation Law, Dec 27 2004 No.1 p.45

Full Analysis & Translation: See page 26

clp reference:3610/07.03.12prc reference:银监法 [2007] 27 号promulgated:2007-03-12effective:2007-03-12

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