Trial Measures for the Administration of Overseas Securities Investment by Qualified Domestic Institutional Investors

Article 3: When a QDII engages in overseas securities investment business, a domestic commercial bank shall be responsible for asset custody and an overseas securities service firm may be engaged to purchase and sell securities on behalf of the QDII.

Article 4: The CSRC and the State Administration of Foreign Exchange (SAFE) shall oversee, within their respective purviews, overseas securities investment by QDIIs in accordance with the law.

PART TWO: QUALIFICATION CONDITIONS OF QDIIS AND THE EXAMINATION AND APPROVAL PROCEDURES THEREOF

Article 5: To apply for QDII qualifications, the following conditions shall be satisfied:

(1) the applicant's finances are stable, its creditworthiness is good, and the scale of the assets under its management, number of years it has been in operation, etc., comply with the provisions of the CSRC;

(2) it has personnel whom satisfy provisions and have overseas investment management related experience;

(3) it has a sound governance structure and internal control systems and its operations are compliant;

(4) during the most recent three years it has not been subjected to a major penalty by the regulatory authorities, and there are no material events in respect of which the judicial or regulatory authorities have opened a case and are presently investigating; and

(5) other conditions as specified by the CSRC based on the principle of prudent regulation.

Article 6: The conditions specified in Item (1) of Article 5 are as follows:

(1) for a fund management company: net assets of not less than Rmb200 million; it has been engaging in securities investment fund (Fund) management business for at least two years; and, as at the end of the most recent quarter, it had assets under its management of not less than Rmb20 billion or the equivalent in foreign exchange assets;

(2) for a securities company: all of its risk control indicators comply with the prescribed standards; its net capital is not less than Rmb800 million; its net capital is equivalent to not less than 70% of its net assets; it has been engaging in the pooled asset management plan (Pooled Plan) business for at least one year; and, as at the end of the most recent quarter, it had assets under its management of not less than Rmb2 billion or the equivalent in foreign exchange assets.

Article 7: The conditions specified in Item (2) of Article 5 are as follows: having not less than one person at mid-level management or above with at least five years of overseas securities market investment management experience and related professional qualifications, and not less than three persons with at least three years of overseas securities market investment management related experience.

Article 8: When applying for QDII qualifications, the following documents (one original and one copy) shall be submitted to the CSRC:

(1) an application;

(2) documentation evidencing compliance with Article 5 hereof; and

(3) other documents as required by the CSRC.

Article 9: After receipt of the complete set of qualification application documents, the CSRC shall conduct an examination thereof, and render a decision on whether or not to grant its approval. If it decides to grant its approval, it shall issue an overseas securities investment business permit; or if it decides to withhold its approval, it shall notify the applicant thereof in writing.

Article 10: After obtaining its QDII qualifications, the applicant shall submit its product offering application documents.

Article 11: After receipt of the product offering application documents, the CSRC shall conduct an examination thereof, render a decision on whether or not to grant its approval and notify the applicant thereof in writing.

Article 12: A QDII shall apply to SAFE for qualifications to engage in foreign exchange business in accordance with relevant provisions.

PART THREE: OVERSEAS INVESTMENT CONSULTANTS

Article 13: For the purposes of these Measures, the term "overseas investment consultant" (OIC) means an overseas financial institution that satisfies the conditions specified herein and provides services such as advice on securities purchases and sales, and investment portfolio management to a QDII in accordance with a contract, and for which it obtains income.

Article 14: A QDII may appoint an OIC that satisfies the following conditions to carry out overseas securities investment:

(1) it is established abroad and has been approved to engage in investment management business by the regulatory authority of the country or region where it is located;

(2) the securities regulatory authority of the country or region where it is located has executed a bilateral regulatory cooperation memorandum of understanding with the CSRC and maintains an effective regulatory cooperation relationship with it;

(3) it has engaged in the investment management business for at least five years, and in the most recent financial year it had securities assets under its management of not less than US$10 billion or the equivalent in another currency; and

(4) it has a sound governance structure and internal control systems, its operations are compliant, during the most recent five years it has not been subjected to a major penalty by the regulatory authority of the country or region where it is located, and there are no material events in respect of which the judicial or regulatory authorities have opened a case and are presently investigating.

If a branch or sub-branch of a domestic securities company set up abroad is to serve as an OIC, it may be exempted from the restrictions specified in Item (3) of the preceding paragraph.

Article 15: A QDII shall bear a fiduciary duty and, when selecting and appointing an OIC, it shall perform its obligation of conducting a due diligence investigation.

Article 16: An OIC shall strictly abide by relevant laws and regulations of China and the Fund contract or the pooled asset management contract, at all times give priority to the interests of the Fund or Pooled Plan holders, provide investment advice based on rational grounds, seek the best transactions for the Fund or Pooled Plan and proceed accordingly, treat all customers in a fair and objective manner, at all times implement investment decisions based on the objectives, strategy, policies, guidelines and restrictions of the Fund or Pooled Plan, fully disclose all material matters that involve a conflict of interest and respect the confidentiality of customer information.

Article 17: If a QDII authorizes an OIC to be responsible for investment decision-making, it shall specify in the agreement that the OIC shall bear the attendant liability in the event that the property suffers a loss as a result of an error, negligence, failure to perform its duties, etc., on the part of the OIC.

PART FOUR: ASSET CUSTODY

Article 18: When a QDII engages in overseas securities investment business, a bank with securities investment fund custody qualifications (Custodian) shall be responsible for the custody of the assets.

Article 19: The Custodian may appoint an overseas asset custodian that satisfies the following conditions to be responsible for overseas asset custody:

(1) it is established in a country or region other than mainland China and is subject to the regulation of the local government and financial or securities regulatory authority;

(2) in the most recent financial year, it had paid-in capital of not less than US$1 billion or the equivalent in another currency, or it had assets in its custody of not less than US$100 billion or the equivalent in another currency;

(3) it has a sufficient number of full-time personnel who are familiar with the overseas custody business;

(4) it has the resources for the secure custody of assets;

(5) it has secure and effective clearance and delivery capabilities; and

(6) during the most recent three years it has not been subjected to a major penalty by the regulatory authorities, and there are no material events in respect of which the judicial or regulatory authorities have opened a case and are presently investigating.

Article 20: The Custodian shall perform the following trustee duties in accordance with relevant laws and regulations:

(1) protecting the interests of the holders, monitoring the day-to-day investments of the Fund or Pooled Plan and the outward and inward remittance of funds in accordance with provisions, and if it should find that investment instructions or outward or inward remittances of funds violate laws or regulations, reporting the same to the CSRC and SAFE in a timely manner;

(2) securely protecting Fund or Pooled Plan property, and punctually communicating information on corporate acts to the QDII so as to ensure that the Fund or Pooled Plan receives all revenue receivables in a timely manner;

(3) ensuring that the Fund or Pooled Plan is managed in accordance with the investment objectives and restrictions specified in relevant laws, regulations and the Fund contract or pooled asset management contract;

(4) carrying out the instructions of the QDII or OIC and carrying out clearance and delivery in a timely manner in accordance with relevant laws, regulations and the Fund contract or pooled asset management contract;

(5) ensuring that the net value of the shares of the Fund or Pooled Plan are calculated in the manner specified in relevant laws, regulations and the Fund contract or pooled asset management contract;

(6) ensuring that the day-to-day transactions of the Fund or Pooled Plan, such as purchase, subscription and redemption are carried out in accordance with relevant laws, regulations and the Fund contract or pooled asset management contract;

(7) ensuring that the plans for the distribution of the returns from the Fund or Pooled Plan are determined and implemented in accordance with relevant laws, regulations and the Fund contract or pooled asset management contract;

(8) registering the assets as trustee or in the name of its designated agent in accordance with relevant laws, regulations and the Fund contract or pooled asset management contract;

(9) within seven working days after the end of each month, reporting on the overseas investments of the QDII to the CSRC and SAFE and, in accordance with relevant provisions, carrying out the reporting of international receipts and expenditures; and

(10) other duties as specified by the CSRC and SAFE in accordance with the principle of prudent regulation.

Article 21: The Custodian may authorize the overseas custodian to perform its trustee duties in respect of the overseas property of the Fund or Pooled Plan on its behalf. If the property of the Fund or Pooled Plan suffers a loss due to the fault, negligence, etc. of the overseas custodian in the course of performing its duties, the Custodian shall bear the attendant liability.

Article 22: The Custodian shall perform the following custodial duties in accordance with relevant laws and regulations:

(1) securely safekeeping the Fund or Pooled Plan assets, and opening a fund account and securities account;

(2) carrying out the relevant settlement, sale, receipt and payment of foreign exchange and the settlement of renminbi funds for the QDII;

(3) preserving relevant information such as records on the QDII's outward and inward remittances of funds, currency exchanges, receipts and payments of foreign exchange, fund transactions, instructions and completed transactions for not less than 20 years; and

(4) other duties as specified by the CSRC and SAFE in accordance with the principle of prudent regulation.

Article 23: The Custodian and overseas custodian shall keep their own assets and the property under the management of the QDII strictly separate.

PART FIVE: RAISING OF FUNDS, INVESTMENT OPERATIONS AND INFORMATION DISCLOSURE

Article 24: A fund management company with QDII qualifications may offer Funds by way of the public sale of Fund shares and invest the Fund property in overseas securities markets in accordance with relevant laws and regulations. When a fund management company applies to offer a Fund, it shall submit the application materials in accordance with relevant laws and regulations.

Article 25: A securities company with QDII qualifications may raise funds through the establishment of Pooled Plans, etc., and invest such funds in overseas securities markets. When a Pooled Plan is to be established, the application materials shall be submitted, the funds shall be collected and the investments shall be carried out in accordance with relevant provisions.

Article 26: When an application is made to offer a Fund, an investment performance comparative baseline shall be selected in accordance with relevant provisions.

Article 27: Funds and Pooled Plans shall invest in financial products and instruments specified by the CSRC.

Article 28: Funds and Pooled Plans shall comply with provisions on investment percentage restrictions.

Article 29: If a QDII or OIC selects and appoints an overseas securities service firm to purchase and sell securities on its behalf, it shall strictly perform its fiduciary duty and manage investment transaction procedures, information disclosures and record preservation in accordance with relevant provisions.

Article 30: The securities transaction and research service arrangements between a QDII or OIC and an overseas securities service firm shall be handled in accordance with the following principles:

(1) the trading commissions shall be part of the property of the Fund or Pooled Plan holders;

(2) the QDII or OIC has the responsibility to represent the holders in ensuring the quality of transactions, including but not limited to:

(i) seeking the best transactions and proceeding accordingly;

(ii) endeavouring to minimize transaction costs; and

(iii) using the holders' trading commissions to procure returns for the holders.

Article 31: The overseas securities investments of QDIIs shall comply with the relevant laws and regulations of the local regulatory authorities and exchanges.

Article 32: Parties with an information disclosure obligation, such as QDIIs and Custodians shall disclose information in strict accordance with the requirements of relevant laws and regulations.

PART SIX: LIMIT AND FUND MANAGEMENT

Article 33: A QDII shall set a reasonable upper size limit in the prospectus based on market conditions, features of the product, etc., report the same to SAFE for the record and carry out the relevant procedures with SAFE in accordance with relevant provisions. The management of the size limit during the life of a Fund or Pooled Plan shall be carried out in accordance with relevant provisions.

Article 34: A QDII shall open a custody account with the Custodian for the custody of all of the assets of the Fund or Pooled Plan.

Article 35: The Custodian shall open a settlement account and securities custody account for the Fund or Pooled Plan, to be used for fund settlement and securities custody with the securities depository and clearing institution and other institutions.

Article 36: The scope of receipts and expenditures of a custody account, settlement account or securities custody account shall comply with relevant provisions, and funds in such accounts may not be used to extend loans to, or provide security for, third parties.

Article 37: A QDII shall periodically report to SAFE on the use of its limit and its outward and inward remittances of funds.

PART SEVEN: OVERSIGHT

Article 38: The CSRC and SAFE may require a QDII or Custodian to provide information on the overseas investment activities of the QDII. When necessary, they may conduct an onsite inspection.

Article 39: If a QDII is characterized by any of the circumstances set forth below, it shall report the same to the CSRC for the record and make a public announcement within five working days after the same arises:

(1) it replaces the Custodian or overseas custodian;

(2) it replaces its OIC;

(3) it is involved in a lawsuit or other material event abroad; or

(4) another circumstance as specified by the CSRC arises.

If it replaces the Custodian or overseas custodian, the QDII shall additionally report the same to SAFE for the record.

Article 40: If a QDII is characterized by any of the following circumstances, it shall re-apply for overseas securities investment business qualifications within 60 working days after the same arises, and carry out anew with SAFE the procedures for obtaining the qualifications to engage in foreign exchange business and for the record filing of its investment limit:

(1) it changes its name;

(2) it is merged with another organization; or

(3) another circumstance as specified by the CSRC and SAFE arises.

Article 41: If, in using Fund or Pooled Plan property to invest in securities, a QDII commits a major violation of laws or regulations, the CSRC may take measures against it such as restricting its trading in accordance with the law and SAFE may take measures against it such as restricting the funds it remits outward or inward in accordance with the law.

Article 42: If a Custodian commits a serious violation of laws or regulations, the CSRC may render a decision to restrict its custody business in accordance with the law.

Article 43: If a QDII, Custodian, etc., violates these Measures, the CSRC and/or SAFE shall impose the attendant administrative penalties.

PART EIGHT: SUPPLEMENTARY PROVISIONS

Article 44: The investment by QDIIs in financial products or instruments in the Hong Kong Special Administrative Region or Macao Special Administrative Region shall, mutatis mutandis, be handled in accordance with these Measures.

Article 45: The raising of funds or acceptance of property from specific parties by a fund management company with QDII qualifications to invest in overseas securities markets on behalf of such parties shall, mutatis mutandis, be handled in accordance with these Measures.

Article 46: The use of the funds from directed asset management and dedicated asset management services offered by a securities company with QDII qualifications to invest in overseas securities markets shall, mutatis mutandis, be handled in accordance with these Measures.

Article 47: These Measures shall be effective as of July 5 2007.