Tentative Measures for the Administration of Overseas Investment of Insurance Capital

For the purposes of these Measures, the term "entrusting party" means an insurance institution, such as an insurance company, insurance group company and insurance holding company lawfully established in the People's Republic of China.

For the purposes of these Measures, the term "entrusted party" includes domestic entrusted parties and overseas entrusted parties. The term "domestic entrusted party" means an insurance asset management company lawfully established in the People's Republic of China or other professional investment management institution that satisfies the conditions specified by the China Insurance Regulatory Commission (the CIRC). The term "overseas entrusted party" means a professional investment management institution lawfully established outside the People's Republic of China that satisfies the conditions specified by the CIRC.

For the purposes of these Measures, the term "custodian" means a commercial bank or other financial institution lawfully established in the People's Republic of China that satisfies the conditions specified by the CIRC. Commercial banks that may serve as a custodian include Chinese-invested banks, Sino-foreign equity joint venture banks, wholly foreign-owned banks and foreign bank branches.

Article 3: For the purposes of these Measures, the term "insurance capital" means the entrusting party's own foreign exchange funds, foreign exchange funds exchange purchased with renminbi and the assets derived from the overseas investment of the aforementioned funds.

Article 4: Unless otherwise specified by the CIRC and the State Administration of Foreign Exchange (SAFE), an entrusting party wishing to engage in the overseas investment of its insurance capital shall appoint entrusted parties and a custodian in accordance herewith, who shall respectively be responsible for the overseas investment and application of the insurance capital and the custody and monitoring of the insurance capital in accordance with their agreements.

Article 5: Insurance capital entrusted for investment or held in custody shall be kept separate from the entrusted party's or custodian's own property and may not be included with the entrusted party's or custodian's own property or the other property that it manages.

Enforcement may not be taken against insurance capital entrusted for investment or held in custody, except in statutory circumstances such as debts arising as a result of the overseas investment of the insurance capital.

Article 6: The entrusting party shall prudently make investment decisions based on the principles of security, liquidity, potential for returns and matching of assets and liabilities, and shall bear the investment risks.

The entrusted parties, custodian and other natural persons, legal persons or organizations that provide services in connection with the overseas investment of insurance capital shall, in accordance with their agreements, faithfully carry out their duties and strictly perform their obligations of good faith, prudence and due diligence.

Article 7: Parties involved in the overseas investment of insurance capital shall abide by relevant domestic laws, administrative regulations, these Measures and relevant foreign laws and provisions.

Article 8: The CIRC shall be responsible for formulating policies on the administration of the overseas investment of insurance capital and for overseeing the overseas investment of insurance capital in accordance with the law.

SAFE shall, in accordance with the law, be responsible for the administration of foreign exchange matters connected with the overseas investment of insurance capital such as foreign exchange payment limits and foreign exchange conversion.

PART TWO: QUALIFICATION CONDITIONS

Article 9: To engage in the overseas investment of its insurance capital, an entrusting party shall satisfy the following conditions:

(1) having a sound corporate governance structure and sound asset management system, and having internal management systems and risk control systems that comply with the Risk Control Guidelines for Use of Insurance Capital (Trial Implementation);

(2) having relatively strong investment management capabilities, risk assessment capabilities and investment performance assessment capabilities;

(3) having a clear asset allocation policy and strategy and implementing strict management of asset-liability matching;

(4) its investment management team operating compliantly, and the senior management personnel in charge of investment having at least 10 years of financial or other economic work experience;

(5) having stable finances, good creditworthiness, its solvency adequacy ratio and risk monitoring indicators complying with relevant CIRC provisions, and not having a record of a major violation of laws or regulations during the most recent three years;

(6) having a permit to engage in foreign exchange business; and

(7) other conditions as specified by the CIRC.

Article 10: To engage in the entrusted management of insurance capital earmarked for overseas investment, a domestic entrusted party shall satisfy the following conditions:

(1) having the relevant qualifications to engage in the management of insurance assets;

(2) having a sound corporate governance structure and effective internal management systems;

(3) having a sound risk control mechanism, good risk management capabilities for overseas investment, and a secure and effective transaction management system and financial management system;

(4) having an experienced management team that is skilled in overseas investment and insurance asset management, having a certain number of professional investment personnel, and the senior management personnel in charge of investment having at least 10 years of financial or other economic work experience;

(5) having paid-in capital and net assets both of not less than Rmb100 million or the equivalent in a freely convertible currency, and the scale of its capital and that of the assets entrusted to it for management complying with CIRC provisions;

(6) having stable finances, good creditworthiness, risk monitoring indicators complying with relevant CIRC provisions, and not having a record of a major violation of laws or regulations during the most recent three years; and

(7) other conditions as specified by the CIRC.

Article 11: To engage in the entrusted management of insurance capital earmarked for overseas investment, an overseas entrusted party shall satisfy the following conditions:

(1) having independent legal personality and, in accordance with the law of the country or region where it is located, having the relevant qualifications to engage in asset management;

(2) having a sound corporate governance structure and having implemented effective internal management systems;

(3) having a sound risk control mechanism, a secure and effective transaction management system and financial management system, and comprehensive risk management capabilities;

(4) having an experienced management team that is skilled in insurance asset management, and having a certain number of professional investment personnel with an average of at least 10 years of professional investment experience;

(5) having stable finances, good creditworthiness, risk monitoring indicators complying with the law of the country or region where it is located and the relevant provisions of that country's or region's regulatory authority, and not having a record of a major violation of laws or regulations during the most recent three years;

(6) the scale of its capital and of the assets under its management complying with CIRC provisions;

(7) having purchased relevant liability insurance appropriate to the scale of the assets under its management;

(8) the financial regulatory system of the country or region where it is located being sound, and the financial regulatory authority having executed a regulatory cooperation document and maintaining an effective regulatory cooperation relationship with the financial regulatory authority of China; and

(9) other conditions as specified by the CIRC.

Article 12: To engage in the custody of insurance capital earmarked for overseas investment, a custodian shall satisfy the following conditions:

(1) having a sound corporate governance structure and having implemented effective internal management systems;

(2) having a sound risk control mechanism, a strict custodial asset segregation system, and a secure and effective custody system and disaster handling system;

(3) having an experienced management team, a dedicated custody department that is familiar with the global custody business and a certain number of custody business personnel;

(4) having a capital adequacy ratio of at least 10% and a core capital adequacy ratio of at least 8% as at the end of the previous year, having stable finances, good creditworthiness, risk monitoring indicators complying with relevant provisions, and not having a record of a major violation of laws or regulations during the most recent three years;

(5) the scale of its capital and of the assets in its custody complying with CIRC provisions;

(6) having the qualifications for settlement and sale of foreign exchange; and

(7) other conditions as specified by the CIRC and SAFE.

Article 13: With the consent of the entrusting party, the custodian may select a commercial bank or professional custodial organization that satisfies the following conditions as its custodial agent:

(1) being permitted to engage in custody business pursuant to the law of the country or region where it is located and having a good cooperative relationship with the custodian;

(2) having a sound corporate governance structure and having implemented effective internal management systems;

(3) having a sound risk control mechanism, an effective custodial asset segregation system, and a secure and effective custody system and disaster handling system;

(4) having an experienced management team, and having a certain number of professional custody business personnel familiar with the custody business of the country or region where they are located;

(5) having stable finances, good creditworthiness, risk monitoring indicators complying with the law of the country or region where it is located and the provisions of that country's or region's regulatory authority, and not having a record of a major violation of laws or regulations during the most recent three years;

(6) the scale of its capital and of the assets in its custody complying with CIRC provisions;

(7) the financial regulatory system of the country or region where it is located being sound, and the financial regulatory authority having executed a regulatory cooperation document and maintaining an effective regulatory cooperation relationship with the financial regulatory authority of China;

(8) the conditions specified in the custodian agreement; and

(9) other conditions as specified by the CIRC and SAFE.

Article 14: The following circumstances may not exist between the entrusting party and the custodian or between the entrusting party and the custodial agent:

(1) the shares of the other party that it holds exceeding the percentage specified by the CIRC; or

(2) another circumstance as determined by the CIRC as being sufficient to affect the custodian or custodial agent in the lawful performance of its custodial obligations.

The entrusting party shall ensure that the circumstances specified in the preceding paragraph do not exist between or among the entrusted parties, custodian and custodial agent.

PART THREE: APPLICATION ADMINISTRATION

Article 15: An entrusting party wishing to engage in the overseas investment of its insurance capital shall submit an application and the following written materials to the CIRC in triplicate:

(1) an application to engage in the overseas investment of its insurance capital and an undertaking that complies with CIRC provisions;

(2) the resolution of its shareholders' general meeting, shareholders' meeting or board of directors approving the overseas investment of its insurance capital;

(3) the strategic allocation plan for the overseas investment of its insurance capital, and its investment management system and risk management systems;

(4) a description of its investment management capabilities, risk assessment capabilities and investment performance assessment capabilities for the overseas investment of its insurance capital;

(5) a description of its internal asset management department and main management personnel;

(6) financial statements, a solvency report and an explanation thereof complying with CIRC provisions;

(7) a photocopy of its permit to engage in foreign exchange business;

(8) a bank statement of its foreign exchange account;

(9) an explanation of the entrusted parties and custodian selected by it and drafts of the agreements it intends to execute with them; and

(10) other materials as specified by the CIRC.

The CIRC shall render its decision on whether or not to grant its approval within 20 days from the date of acceptance of the application. If it decides to grant its approval, it shall issue a written decision. If it decides to withhold its approval, it shall notify the applicant thereof in writing and explain the reasons therefor. It shall additionally send a copy of its written decision to grant or withhold approval to SAFE.

Article 16: An entrusting party that has been approved by the CIRC to engage in the overseas investment of its insurance capital shall apply to the SAFE for a foreign exchange payment limit for overseas investment within its approved investment percentage and submit to it the following materials in triplicate:

(1) an application for a foreign exchange payment limit for investment, which shall include the applicant's basic particulars, the foreign exchange payment limit for investment that it is applying for and an explanation of the source of the funds;

(2) the written decision of the CIRC granting approval to engage in the overseas investment of its insurance capital;

(3) its financial statements for the preceding year;

(4) the documents issued by the CIRC evidencing that the entrusted party and the custodian may engage in the entrusted management and the custody of insurance capital earmarked for overseas investment;

(5) a photocopy of its permit to engage in foreign exchange business;

(6) a bank statement of its foreign exchange account; and

(7) other materials as specified by the SAFE.

SAFE shall render its decision on whether or not to grant its approval within 20 days from the date of acceptance of the application. If it decides to grant its approval, it shall notify the applicant in writing of the approved foreign exchange payment limit for investment. If it decides to withhold its approval, it shall notify the applicant in writing and explain the reasons therefor. It shall additionally send a copy of its written decision to grant or withhold approval to the CIRC.

Article 17: A domestic entrusted party wishing to engage in the entrusted management of insurance capital earmarked for overseas investment shall submit the following written materials to the CIRC in triplicate:

(1) an application to engage in the entrusted management business;

(2) the letter of intent to engage in the entrusted management business;

(3) an undertaking complying with CIRC provisions;

(4) relevant proof of its qualifications to engage in insurance asset management;

(5) its management system and risk control system for the overseas investment of insurance capital;

(6) a description of its investment management capabilities, risk management capabilities and management system for the overseas investment of insurance capital;

(7) information on the establishment of its departments and its professional investment management personnel;

(8) financial statements and an internal control audit report complying with CIRC provisions; and

(9) other materials as specified by the CIRC.

If the domestic entrusted party is an insurance asset management company, it may be exempted from submitting the materials specified in Items (2) and (4) of the first paragraph of this Article. The CIRC shall render its decision on whether or not to grant its approval within 20 days from the date of acceptance of the application. If it decides to grant its approval, it shall issue a written decision; and if it decides to withhold its approval, it shall notify the applicant thereof in writing and explain the reasons therefor.

If the domestic entrusted party is another professional investment management institution, it may be exempted from submitting the document specified in Item (1) of the first paragraph of this Article. The CIRC shall conduct a prudent evaluation thereof in accordance with these Measures and issue an opinion within 20 days from the date of receipt of all the materials.

Article 18: An overseas entrusted party wishing to engage in the entrusted management of insurance capital earmarked for overseas investment shall submit the following written materials to the CIRC in triplicate:

(1) the letter of intent to engage in the entrusted management business and an undertaking complying with CIRC provisions;

(2) a photocopy of its document evidencing its lawful commencement of business;

(3) its management system and risk control system for the overseas investment of insurance capital;

(4) a description of its investment management capabilities, risk management capabilities and management system for the overseas investment of insurance capital;

(5) information on the establishment of its departments and its professional investment management personnel;

(6) financial statements and an internal control audit report complying with CIRC provisions;

(7) a photocopy of its liability insurance policy;

(8) the opinion issued by the regulatory authority of the place where it is located evidencing that it has not committed any major violation of laws or regulations during the most recent three years; if the regulatory authority of the place where it is located is unable to issue such an opinion, a corresponding written declaration given by the overseas entrusted party; and

(9) other materials as specified by the CIRC.

The CIRC shall conduct a prudent evaluation of the overseas entrusted party in accordance with these Measures and issue an opinion within 20 days from the date of receipt of all the materials.

Article 19: A custodian wishing to engage in the custody of insurance capital earmarked for overseas investment shall submit the following materials to the CIRC in triplicate:

(1) the letter of intent to engage in the custody of insurance capital earmarked for overseas investment and an undertaking complying with CIRC provisions;

(2) its independent custody system, risk management system and specific operating procedures;

(3) a description of its global custodial capabilities, risk management capabilities and global custodial network;

(4) information on its internal custody department and its custody business personnel;

(5) company financial statements and an internal control audit report complying with CIRC provisions;

(6) the opinion issued by the regulatory authority of the place where it is located evidencing that it has not committed any major violation of laws or regulations during the most recent three years or a corresponding written declaration issued by the shareholders' meeting or board of directors of the custodian; and

(7) other materials as specified by the CIRC.

The CIRC shall conduct a prudent evaluation of the custodian in accordance with these Measures and issue an opinion within 20 days from the date of receipt of all the materials.

PART FOUR: ACCOUNT ADMINISTRATION

Article 20: Once the entrusting party has obtained the approval of the regulatory authority, it shall execute a custodian agreement with the custodian and open a domestic custody account for overseas investment with the custodian (Domestic Custody Account).

The custodian shall keep separate accounts for and separately manage different entrusted parties, different insurance products and insurance capital of different natures.

Article 21: Pursuant to the custodian agreement executed with the entrusting party, the custodian shall open an overseas investment settlement account and securities custody account for the entrusting party, which will be used for the settlement of funds invested overseas and custody of securities.

A custodian or custodial agent shall open separate accounts for different entrusting parties and manage them separately.

Article 22: If an entrusting party makes an offering and lists overseas, it shall, in accordance with relevant provisions, repatriate within the prescribed period of time the insurance capital raised through the overseas listing.

If an entrusting party receives approval to engage in the overseas investment of its insurance capital after making an offering and listing overseas, it shall repatriate into its Domestic Custody Account the insurance capital raised through the overseas listing within 30 days from the date of the CIRC's approval for overseas investment.

Article 23: The following receipts fall within the scope of the receipts in an entrusting party's Domestic Custody Account:

(1) insurance capital transferred into the account;

(2) investment principal and returns, dividends, bonus income, and interest income, remitted into the account; and

(3) other receipts that may legally be transferred into the account.

Article 24: The following expenditures fall within the scope of the expenditures from an entrusting party's Domestic Custody Account:

(1) funds transferred to the entrusting party's overseas investment settlement account;

(2) investment principal remitted outward;

(3) funds remitted back into the entrusting party's foreign exchange account;

(4) payments of relevant taxes and levies; and

(5) other expenditures that may legally be transferred out of the account.

Article 25: The following receipts fall within the scope of the receipts in an entrusting party's overseas investment settlement account:

(1) funds transferred in from the entrusting party's Domestic Custody Account;

(2) proceeds from the sale of overseas securities assets;

(3) bonuses and dividends from the overseas investments and interest income; and

(4) other receipts that may legally be transferred into the account.

Article 26: The following expenditures fall within the scope of the expenditures from an entrusting party's overseas investment settlement account:

(1) funds transferred to the entrusting party's Domestic Custody Account;

(2) funds used to purchase overseas securities assets;

(3) payments of relevant taxes and levies; and

(4) other expenditures that may legally be transferred out of the account.

Article 27: If an entrusting party purchases foreign exchange to engage in the overseas investment of insurance capital, the repatriated principal and returns thereon may be converted or, alternatively, may be retained in foreign exchange. If they are to be converted, relevant procedures shall be carried out on the strength of the proof of purchase of the foreign exchange.

If an entrusting party uses its own foreign exchange to engage in the overseas investment of insurance capital, the repatriated principal and returns thereon shall be retained in foreign exchange, unless otherwise specified by the regulatory authority.

Article 28: The entrusting party and entrusted party shall carry out relevant foreign exchange purchase, payment and settlement procedures in accordance with SAFE's approval document for the foreign exchange payment limit for investment.

The custodian shall carry out relevant fund transfer procedures in accordance with SAFE's approval document for the foreign exchange payment limit for investment and the instructions of the entrusting party or entrusted party.

PART FIVE: INVESTMENT ADMINISTRATION

Article 29: When engaging in the overseas investment of its insurance capital, an entrusting party shall prudently formulate an asset strategic allocation plan and overseas investment guidelines in accordance with asset-liability matching management requirements, duly arrange the investment terms and investment currencies and periodically review and verify the same.

Article 30: Insurance capital shall be invested in mature capital markets around the world in the currencies of major countries or regions.

Article 31: The overseas investment of insurance capital shall be restricted to the following investment forms or investment products:

(1) commercial bills, large negotiable certificates of deposit, repurchase agreements and reverse repurchase agreements, money market funds and other such money market products;

(2) bank deposits, structured deposits, bonds, convertible bonds, bond funds, securitized products, trust products and other such fixed return products;

(3) stocks, stock funds, equity, equity products and other such equity-type products; and

(4) other investment forms or investment products specified in the PRC Insurance Law or by the State Council.

The specific measures for the administration of investment forms and investment products shall be formulated separately by the CIRC.

Article 32: An entrusting party may, based on its asset allocation and risk management requirements, determine at its own discretion its overseas investment percentage within the specific investment percentage approved by the CIRC, and such percentage shall comply with the following requirements:

(1) its total investment amount may not exceed 15% of its total assets as at the end of the previous year;

(2) its actual total investment amount may not exceed the foreign exchange payment limit for investment approved by SAFE;

(3) the percentage invested in a single entity shall comply with CIRC provisions;

(4) if it wishes to change its approved specific investment percentage, investment form or investment product, it shall submit an application for such change to the CIRC and require the CIRC's approval; and

(5) if it is to carry out a material equity investment, it shall report the same to the CIRC for approval.

PART SIX: RISK Management

Article 33: Parties involved in the overseas investment of insurance capital shall engage in the relevant business in accordance with the law, implement comprehensive risk management and strengthen information communication so as to ensure the security of insurance capital invested overseas.

Article 34: The entrusting party shall execute written agreements with the entrusted parties and custodian that expressly stipulate the rights and obligations of the parties and, in accordance herewith, specify the entrusted parties' and custodian's reporting obligations to the regulatory authority. The language of the written agreement shall be compliant and all essential elements shall be included.

Article 35: The strategic allocation of assets in connection with the overseas investment of insurance capital shall be carried out centrally by the entity of the entrusting party with legal personality and its internal asset management department shall be responsible for specific entrusted management matters.

The branches and sub-branches of an entrusting party may not engage in the overseas investment of insurance capital.

Article 36: The entrusting party shall fully demonstrate the viability of the overseas investment of its insurance capital and carefully assess market risks, country risks, exchange rate risks, credit risks, liquidity risks, operational risks, moral risks and legal risks from the perspectives of market situation, technical conditions, risk control, human resources, and cost and return, etc.

Article 37: The entrusting party shall establish a centralized decision-making system, determine the duties attaching to positions and standardize the investment operation procedure in accordance with the Risk Control Guidelines for Use of Insurance Capital (Trial Implementation).

Article 38: The entrusting party shall formulate the standards and procedures for selecting and appointing entrusted parties and the custodian, transparently, fairly and impartially select entrusted parties and the custodian and effectively monitor them.

The entrusting party may select several entrusted parties, but shall rationally determine their number based on its actual requirements; the entrusting party may select only one custodian and such custodian shall have custody of all of the entrusting party's insurance capital earmarked for overseas investment.

Article 39: The entrusting party shall periodically evaluate the risk situation of its entrusted insurance capital, the entrusted parties' management capabilities and investment performance, and the custodian's performance of its duties and level of service.

Article 40: The entrusting party shall implement business credit management or ratio management based on the risk features of the overseas investment of its insurance capital and the transaction counterparties' credit ratings, market reputations, managed asset scales, investment management performance, industry management experience and other such indicators.

Article 41: When engaging in the entrusted management of insurance capital earmarked for overseas investment, an entrusted party shall comply with the following provisions:

(1) fairly and impartially managing different entrusted funds, establishing an asset segregation system and strictly guarding against affiliated transaction risks;

(2) strictly abiding by the entrusted management agreement, the entrusting party's investment guidelines and these Measures, carefully selecting transaction counterparties and controlling the investment scope and percentages based on indicators such as creditworthiness, type of risk, return potential, information transparency and liquidity;

(3) establishing a transaction monitoring system, advance warning system and information feedback system;

(4) adopting risk measurement indicators to identify and weigh the risks of different investment products and managed assets, tracking or revising risk exposure and taking various measures to ensure the safety of investments; and

(5) strengthening internal risk management, periodically inspecting its operational procedures and establishing an information communication mechanism so as to ensure the lawfulness and compliance of the application of funds.

Article 42: If the asset management company established overseas by a domestic insurance institution with the approval of the CIRC serves as the overseas entrusted party, it shall accept the oversight of its controlling domestic insurance institution and report on its overseas investment management in a timely manner.

Article 43: When engaging in the custody of insurance capital earmarked for overseas investment, a custodian shall comply with the following provisions:

(1) keeping custody of insurance capital in a fair and impartial manner, and effectively segregating the assets of different entrusting parties in its custody;

(2) monitoring the overseas investment by the entrusting party and entrusted parties jointly with the custodial agent and if it discovers a violation of laws or regulations, promptly informing the entrusting party and entrusted parties, and reporting the same to the CIRC; and

(3) being jointly responsible with the custodial agent for the clearance and delivery of the insurance capital in their custody, accurately verifying assets in a timely manner and monitoring the custodial agent so as to ensure the safe custody of the insurance capital.

Article 44: A party involved in the overseas investment of insurance capital shall standardize its decision-making and operational procedures, implement a professional position separation system, establish an internal control and audit monitoring mechanism, guard against operational and other risks, and ensure that the overseas investment of insurance capital is carried out in an orderly fashion.

Article 45: A party involved in the overseas investment of insurance capital shall establish a response mechanism for material contingencies to guard against and mitigate material unexpected risks.

Article 46: A party involved in the overseas investment of insurance capital shall adopt advanced risk management techniques to strictly control various investment risks.

An entrusting party may authorize the entrusted parties to use financial derivatives such as forwards, swaps, options and futures to hedge risks. Financial derivatives shall be used solely to avoid investment risks, and may not be used for speculation or the magnification of transactions.

The measures for the administration of the use of financial derivatives shall be formulated separately by the CIRC.

PART SEVEN: INFORMATION DISCLOSURE AND REPORTING

Article 47: Parties involved in the overseas investment of insurance capital shall disclose information on the following to relevant parties in a truthful, accurate and complete manner in accordance with CIRC provisions, and such information may not contain material omissions or false, misleading or defamatory statements:

(1) the strategic allocation of overseas investments and investment decisions;

(2) the carrying out of overseas investment transactions, fund clearance and asset custody; and

(3) risk status, compliance monitoring, major crises and other such relevant material matters in connection with overseas investment.

Article 48: A party shall, in accordance with the law, bear an obligation of confidentiality in respect of the trade secrets of the other parties that it learns in the course of the overseas investment of insurance capital.

Article 49: A party involved in the overseas investment of insurance capital shall ensure that the other concerned parties can review or take copies of relevant information as specified in the contract.

Article 50: The entrusting party shall report to the CIRC and SAFE within five days from the date of occurrence of any of the following:

(1) the replacement of an entrusted party, its custodian or custodial agent;

(2) a change in its registered capital;

(3) a material change in its shareholding structure;

(4) receipt of a major administrative penalty or involvement in a major lawsuit or another material event; or

(5) another circumstance as specified by the CIRC and SAFE.

Article 51: If an entrusted party is involved in a major lawsuit, receives a major administrative penalty or is involved in another material event, it shall report to the CIRC within five days from the date of the same occurring.

In addition to the foregoing, the entrusted party shall, in accordance with CIRC provisions, submit its financial statements, an internal audit report, report on the performance of the entrusted investment management, risk assessment report and other such relevant materials.

Article 52: A custodian shall submit relevant reports in accordance with the following requirements:

(1) within five days from the date of the opening of the Domestic Custody Account, overseas investment settlement account and securities custody account for the entrusting party, report on the opening of the accounts to the CIRC and SAFE;

(2) if a change in its registered capital or shareholders occurs, it shall report the same to the CIRC and SAFE within five days from the date of the change;

(3) if it is involved in a major lawsuit, receives a major administrative penalty or is involved in another material event, it shall report to the CIRC and SAFE within five days from the date of the same occurring.

(4) in accordance with the provisions of the CIRC and SAFE, report on the purchase and settlement of foreign exchange, outward remittances of principal, and repatriation of principal and returns by the entrusting party as well as details of the receipts into and expenditures from the Domestic Custody Account;

(5) in accordance with CIRC provisions, statements on the overseas investment of insurance capital and its own financial statements and internal audit reports;

(6) statistics, complying with provisions, on international receipts and expenditures and on settlements and sales of foreign exchange to SAFE; and

(7) other reports as required by the CIRC and SAFE to be submitted.

PART EIGHT: OVERSIGHT

Article 53: In engaging in the overseas investment of its insurance capital, an entrusting party may not commit any of the following acts:

(1) using insurance capital earmarked for overseas investment to provide security for another organization or an individual;

(2) engaging in speculative foreign exchange buying and selling;

(3) money laundering;

(4) colluding with another organization or an individual to use the overseas investment of its insurance capital to obtain illegal gains; or

(5) other acts prohibited by relevant domestic and foreign laws or provisions.

Article 54: A party involved in the overseas investment of insurance capital shall engage intermediary organizations that satisfy the conditions specified by the CIRC to evaluate and audit the overseas investment of insurance capital.

Article 55: The CIRC has the right to revise the policies and systems for the administration of the overseas investment of insurance capital.

Article 56: Based on regulatory requirements, the CIRC has the right to conduct inspections and annual reviews of the overseas investment of insurance capital by entrusting parties and domestic entrusted parties.

SAFE may conduct inspections of foreign exchange control matters of an entrusting party such as its foreign exchange payment limit for overseas investment and foreign exchange conversions.

The CIRC and SAFE may engage intermediary organizations to assist them in their inspections.

Article 57: If an entrusting party violates these Measures, the CIRC may give its senior management personnel a regulatory discussion, require them to give an explanation of relevant matters and, depending on the circumstances, require the entrusting party to rectify the matter within a specified period of time. If, in accordance with laws, administrative regulations or CIRC provisions, penalties should be imposed, the CIRC shall impose administrative penalties in accordance with the law.

Article 58: If an entrusted party or custodian violates these Measures or state foreign exchange control provisions, the CIRC or the relevant regulatory authority shall impose administrative penalties within its purview.

Article 59: If an entrusted party or custodian violates these Measures or other provisions on the application of insurance capital, the CIRC shall record its improper activity and, depending on the circumstances, require it to submit a written explanation therefor. If the circumstances are serious, the CIRC may order the insurance company to replace it.

PART NINE: SUPPLEMENTARY PROVISIONS

Article 60: If the CIRC has provided otherwise with respect to the establishment of overseas insurance institutions with insurance capital, such provisions shall apply.

Article 61: These Measures shall apply to the investment of insurance capital in the Hong Kong Special Administrative Region and Macao Special Administrative Region, unless otherwise specified by the CIRC.

Article 62: These Measures shall apply to the investment of insurance capital in domestically issued renminbi or foreign currency denominated financial products that have overseas financial instruments or other assets as their investment targets, unless otherwise specified by the CIRC.

Article 63: The reports and materials that, pursuant to these Measures, are to be submitted to the CIRC and SAFE, shall be in Chinese.