Measures for the Administration of the Sale of Securities Investment Funds (Revised)

Article 1: These Measures have been formulated pursuant to the Securities Investment Funds Law, Securities Law and other relevant laws and regulations, in order to regulate securities investment fund sales activities and promote the healthy development of the securities investment fund market.

Article 2: For the purposes of these Measures, the term “sale of securities investment funds (Funds)” includes activities by Fund sales institutions such as publicity for, and promotion of, Funds, sale of shares of Funds and carrying out of the procedures for the purchase and redemption of shares of Funds.

The term “Fund sales institutions” means Fund managers and other institutions recognised by the China Securities Regulatory Commission (the CSRC).

These Measures shall govern Fund sale-related institutions at those stages where they participate in the Fund sales business. Fund sale-related institutions include institutions that provide to Fund sales institutions services related to the Fund sales business, such as payment and settlement services, monitoring of Fund sale settlement funds and registration services.

Article 3: When engaging in Fund sales activities, Fund sales institutions shall observe laws, regulations and CSRC provisions, and may not harm the interests of the state, the public interest or the lawful rights and interests of Fund investors.

Article 4: When engaging in Fund sales activities, Fund sales institutions shall abide by the Fund contract, the Fund sale agreement and the principles of transparency, fairness and impartiality, act in an honest and trustworthy manner, diligently discharge their responsibilities and strictly observe professional ethics and codes of conduct.

Article 5: Fund sale settlement funds are the transaction settlement funds of Fund investors. Institutions that are involved in the opening, use and monitoring of dedicated Fund sale settlement accounts may not place Fund sale settlement funds under their own property. It is prohibited for any entity or individual to misappropriate Fund sale settlement funds in any manner. When a relevant institution goes bankrupt or is liquidated, Fund sale settlement funds shall not constitute part of its bankruptcy estate or liquidation property.

The term “Fund sale settlement funds” means the funds from the purchase of (or subscription for) and redemption of Funds, funds in the form of cash dividends, etc. collected by Fund sale-related institutions such as Fund sales institutions, payment and settlement institutions for Fund sales and Fund registration institutions and transferred between Fund investors' settlement accounts and Fund asset custody accounts.

Article 6: The CSRC and its agencies shall regulate Fund sales activities in accordance with laws, regulations and these Measures.

Article 7: Fund industry associations shall exercise self-regulation over Fund sales activities in accordance with laws, regulations and self-regulation rules, and exercise control over the qualifications of Fund sales personnel.

Fund sales institutions and Fund sale-related institutions shall join Fund industry associations and subject themselves to the self-regulation of such industry associations.

Part Two: Fund sales institutions

Article 8: A Fund manager may handle the sale of the Fund products that it offers. Commercial banks (here and hereinafter including foreign-funded banks with legal personality in China), securities companies, securities investment consulting firms, independent Fund sales institutions and other institutions specified by the CSRC may apply to the CSRC for Fund sales business qualifications.

Article 9: A commercial bank, securities company, securities investment consulting firm, independent Fund sales institution or other institution specified by the CSRC applying for Fund sales business qualifications shall satisfy the following conditions:

(1) it has a sound governance structure and sound internal control and risk management systems that have been effectively implemented;

(2) it has a good financial position and its operation is compliant and stable;

(3) it has a place of business, security facilities and other facilities appropriate for the Fund sales business;

(4) it has secure and efficient technical facilities for handling Fund sale, purchase and redemption that satisfy relevant CSRC requirements in respect of Fund sales business information management platforms and its technical systems for Fund sales business have undergone testing of their connection with the corresponding technical systems of the Fund manager and the China Securities Depository and Clearing Corporation Limited and the results of such tests satisfy state specified standards;

(5) it has formulated a sound fund clearance procedure and its management of such funds satisfies relevant CSRC requirements in respect of the management of Fund sale settlement funds;

(6) it has a methodology for assessing the risk-bearing capacity of Fund investors and the risk grades of Fund products;

(7) it has formulated sound Fund sales business management rules and regulations, such as business procedures, a practice code of conduct for sales personnel and contingency measures that satisfy relevant CSRC requirements in respect of the internal controls of Fund sales institutions;

(8) it has an anti-money laundering internal control system that complies with the requirements of laws and regulations; and

(9) other conditions as specified by the CSRC.

Article 10: A commercial bank applying for Fund sales business qualifications shall, in addition to satisfying the conditions set forth in Article 9 hereof, satisfy the following conditions:

(1) its capital adequacy ratio complying with relevant provisions of the State Council's banking industry regulator;

(2) having a department specifically responsible for the Fund sales business;

(3) not having been subjected to administrative penalties or criminal punishments in the most recent three years; and

(4) the number of personel with Fund business qualifications in its department responsible for the Fund sales business not being less than one-half the number of personnel in said department, and the management personnel of its department responsible for the Fund sales business having Fund business qualifications, being familiar with the Fund sales business and having at least two years of work experience in the Fund business or at least five years of work experience in other finance-related institutions; and all of the persons in charge of the Fund sales business in its major (sub-)branches having Fund business qualifications.

Article 11: When a securities company applies for Fund sales business qualifications, it shall, in addition to satisfying the conditions set forth in Article 9 hereof, satisfy the following conditions:

(1) it has a department dedicated to the Fund sales business;

(2) its financial risk monitoring indicators, such as its net capital, comply with the relevant provisions of the CSRC;

(3) it has not committed acts that are detrimental to the interests of its clients, such as misappropriating clients' assets, during the last two years;

(4) it is not being investigated by the regulatory authorities or undergoing rectification due to a violation of laws or regulations and it has not been subjected to administrative penalties or criminal punishments in the most recent three years;

(5) no material change has occurred that has affected or could affect its normal operation nor is it involved in legal proceedings, arbitration proceedings or other such material matter; and

(6) the number of personnel with Fund business qualifications in its department responsible for the Fund sales business is not less than one-half the number of personnel in said department, and the management personnel of its department responsible for the Fund sales business have Fund business qualifications, are familiar with the Fund sales business and have at least two years of work experience in the Fund business or at least five years of work experience in other finance-related institutions; and all of the persons in charge of the Fund sales business in its major (sub-)branches have Fund business qualifications.

Article 12: When a securities investment consulting firm applies for Fund sales business qualifications, it shall, in addition to satisfying the conditions set forth in Article 9 hereof, satisfy the following conditions:

(1) it has a department dedicated to the Fund sales business;

(2) its registered capital is not less than Rmb20 million and must be paid-in monetary capital;

(3) its senior management personnel responsible for the Fund sales business have Fund business qualifications, are familiar with the Fund sales business and have at least two years of work experience in the Fund business or at least five years of work experience in other finance-related institutions;

(4) it has continuously been engaged in the securities investment consulting business for at least three full financial years;

(5) during the last three years it has not acted as an agent for investors in engaging in the sale and purchase of securities;

(6) it is not being investigated by the regulatory authorities or undergoing rectification due to a violation of laws or regulations and it has not been subjected to administrative penalties or criminal punishments in the most recent three years;

(7) no material change has occurred that has affected or could affect its normal operation nor is it involved in legal proceedings, arbitration proceedings or other such material matter; and

(8) the number of personnel with Fund business qualifications in its department responsible for the Fund sales business is not less than one-half the number of personnel in said department, and the management personnel of its department responsible for the Fund sales business have Fund business qualifications, are familiar with the Fund sales business and have at least two years of work experience in the Fund business or at least five years of work experience in other finance-related institutions; and all of the persons in charge of the Fund sales business in its major (sub-)branches have Fund business qualifications.

Article 13: An independent Fund sales institution may specialise in the sale of Fund and other wealth management products. When applying for Fund sales business qualifications, it shall, in addition to satisfying the conditions set forth in Article 9 hereof, satisfy the following conditions;

(1) it is a legally established limited liability company, partnership or in another form that complies with CSRC provisions;

(2) it has an organisational name, organisational structure and scope of business that complies with provisions;

(3) it has registered capital or capital contributions of not less than Rmb20 million, which must be in the form of paid-in monetary capital;

(4) it has shareholders, in the case of a limited liability company, or partners, in the case of a partnership, that comply with the provisions hereof;

(5) no material change has occurred that has affected or could affect its normal operation nor is it involved in legal proceedings, arbitration proceedings or other such material matter;

(6) its senior management personnel have Fund business qualifications, are familiar with the Fund sales business and have at least two years of work experience in the Fund business or at least five years of work experience in other finance-related institutions; and

(7) it has not less than 10 persons with Fund business qualifications.

Article 14: If an independent Fund sales institution is established in the form of a limited liability company, its shareholders may be enterprises with legal personality or natural persons.

An enterprise legal person wishing to acquire an equity stake in an independent Fund sales institution shall satisfy the following conditions:

(1) it has been in continuous operation for at least three full financial years, has a good financial position and its operation is compliant and stable;

(2) it has not been subjected to criminal punishments in the most recent three years;

(3) it has not been subjected to administrative penalties by administrative departments such as the finance regulator, industry regulator, industry and commerce authorities and tax authorities in the most recent three years;

(4) it has a record of improper activity with the self-regulation organisation, a commercial bank, etc. during the most recent three years; and

(5) it is not being investigated by the regulatory authorities or undergoing rectification due to a violation of laws or regulations.

A natural person wishing to acquire an equity stake in an independent Fund sales institution shall satisfy the following conditions:

(1) having at least 10 years of work experience in securities, Fund or other finance business, or at least five years of work experience in managing a securities or Fund department, or having at least three years of work experience serving as a senior officer in the securities or Fund industry;

(2) not having been subjected to criminal punishments in the most recent three years;

(3) not having been subjected to administrative penalties by administrative departments such as the finance regulator, industry regulator, industry and commerce authorities and tax authorities in the most recent three years;

(4) not having a record of improper conduct with the self-regulation organisation, a commercial bank, etc;

(5) not having any large debt that is due and outstanding; and

(6) not having another major bad integrity record during the most recent three years.

Article 15: If an independent Fund sales institution is to be established as a partnership, its partners shall satisfy the following conditions:

(1) having at least 10 years of work experience in securities, Fund or other finance business, or at least five years of work experience in managing a securities or Fund department, or having at least three years of work experience serving as a senior officer in the securities or Fund industry;

(2) not having been subjected to criminal punishments in the most recent three years;

(3) not having been subjected to administrative penalties by administrative departments such as the finance regulator, industry and commerce authorities and tax authorities in the most recent three years;

(4) not having a record of improper conduct with the self-regulation organisation, a commercial bank, etc;

(5) not having any large debt that is due and outstanding; and

(6) not having another major bad integrity record during the most recent three years.

Article 16: When applying for Fund sales business qualifications, institutions shall submit the application materials in accordance with the CSRC provisions.

If a major change occurs in a matter referred to in the application materials during the application period, the applicant shall submit updated materials to the CSRC within five working days of the date the change occurred.

Article 17: The CSRC shall accept applications for Fund sales business qualifications, examine the same and render its decision in accordance with the Administrative Permission Law.

Article 18: If amendment of industry and commerce registration is required in accordance with the law, the applicant shall carry out the procedures for the amendment of registration with the administration for industry and commerce in accordance with relevant provisions after receipt of the approval document.

An independent Fund sales institution may open a dedicated Fund settlement account only after it has carried out the procedures for registering the change in its scope of business with the administration for industry and commerce.

Article 19: An independent Fund sales institution applying to establish a (sub-)branch shall satisfy the following conditions:

(1) it has sound internal controls, stable operations and relatively strong potential to operate as a going concern, and is able to effectively control the risks of (sub-)branches;

(2) it has not been subjected to administrative penalties or criminal punishments in the last year;

(3) it is not being investigated by the regulatory authorities or undergoing rectification due to a violation of laws or regulations;

(4) the proposed (sub-)branch has a name, office premises, business personnel, security facilities and other facilities related to its business that comply with provisions;

(5) the proposed (sub-)branch has clear duties and sound management systems;

(6) the proposed (sub-)branch has at least two persons with Fund business qualifications; and

(7) other conditions as specified by the CSRC.

When an independent Fund sales institution applies for Fund sales business qualifications, its existing (sub-)branches shall satisfy the foregoing conditions.

Article 20: When an independent Fund sales institution is to establish a (sub-)branch, or change its scope of business, registered capital or capital contributions, a shareholder or partner, or a member of its senior management personnel, it shall submit the plan for the change to the CSRC for the record before the change. If the number of persons of an independent Fund sales institution who have Fund business qualifications falls below 10 during its term of operation, it shall report the same to the CSRC within five working days and adjust its personnel to meet the requirements within 30 working days.

Once an independent Fund sales institution has carried out record filing in accordance with the preceding paragraph, the CSRC shall dynamically oversee it on an ongoing basis in accordance with Articles 13, 14, 15 and 16 hereof. The CSRC shall order any institution that does not satisfy the qualification conditions of a Fund sales institution to rectify the matter within a specified period of time, and if the institution fails to do so, it shall revoke its Fund sales business qualifications.

Article 21: A Fund sales institution that has secured Fund sales business qualifications shall report its basic particulars to the CSRC for the record, the basic particulars of its (sub-)branches (outlets) involved in the Fund sales business to the CSRC agencies of the places where its (sub-) branches (outlets) are located, and update the same regularly.

Article 22: When a Fund sales institution is merged or divided, its Fund sales business qualifications shall be administered in accordance with the following principles:

(1) if a Fund sales institution is established by way of a merger by establishment, the new company shall apply for Fund sales business qualifications in accordance herewith; while the new company's Fund sales business qualifications are pending, the Fund sales business qualifications of the parties to the merger shall be partially terminated; if the new company has not secured Fund sales business qualifications within six months, the Fund sales business qualifications of the parties to the merger shall be terminated;

(2) if a Fund sales institution is established by way of a merger by absorption and the surviving party does not have Fund sales business qualifications, the surviving party shall apply for Fund sales business qualifications in accordance herewith; while the surviving party's Fund sales business qualifications are pending, the Fund sales business qualifications of the absorbed party shall be partially terminated; if the surviving party has not secured Fund sales business qualifications within six months, the Fund sales business qualifications of the absorbed party shall be terminated;

(3) if a Fund sales institution is established by way of a merger by absorption and the absorbed party did not have Fund sales business qualifications, the Fund sales institution shall, once the absorbed party's (sub-)branches (outlets) satisfy the standard requirements for Fund sale, carry out record filing procedures in accordance with the requirements of Articles 20 and 21 hereof and, in accordance with relevant requirements in respect of Fund sale information management platforms, submit its system integration report to the CSRC for the record;

(4) if a Fund sales institution is established by way of a merger by absorption and both the absorbing party and absorbed party have Fund sales business qualifications, the absorbing party shall, in accordance with relevant requirements in respect of Fund sale information management platforms, submit its system integration report to the CSRC for the record; or

(5) if a Fund sales institution is divided, the new companies shall apply for Fund sales business qualifications in accordance herewith.

When Fund sales business qualifications are partially terminated, a Fund sales institution may handle matters such as account closing, redemption and transfer of custody, but may not handle matters such as account opening, subscription and purchase.

Part Three: Payment and settlement of Fund sales

Article 23: A Fund sales institution may select a commercial bank or a payment institution to handle payment and settlement matters of Fund sales. A Fund payment and settlement institution shall ensure that Fund sale settlement funds are transferred securely, efficiently and in a timely manner.

Article 24: A Fund sales institution shall select a commercial bank or a payment institution that satisfies the following conditions to handle payment and settlement matters of Fund sales:

(1) it has a secure and efficient information system for the handling of payment and settlement matters; such system shall have lawful intellectual property rights, and testing of the connection thereof with the cooperating institution and regulator shall have been completed with the test results satisfying the state specified standards;

(2) it has formulated effective risk control systems; and

(3) other conditions as specified by the CSRC.

Article 25: A commercial bank that engages in the business of payment and settlement of Fund sales shall, in addition to satisfying the conditions set forth in Article 24 hereof, have Fund sales business qualifications.

When a commercial bank provides payment and settlement services to a Fund sales institution, it shall charge relevant charges at the rates for the payment and settlement services engaged in by a commercial bank. If a commercial bank wishes to charge fees above the payment and settlement service charges, it shall execute a sales agreement with the Fund sales institution, and provide Fund sale-related services and perform the Fund sale-related responsibilities.

Article 26: A payment institution that engages in the business of payment and settlement of Fund sales shall, in addition to satisfying the conditions set forth in Article 24 hereof, have secured a Payment Business Permit issued by the People's Bank of China and its payment and settlement accounts for Fund sales shall be effectively separated from its other business accounts.

Article 27: A Fund sales institution, Fund payment and settlement institution or Fund registration institution may open a dedicated Fund settlement account with a commercial bank that has Fund sales business qualifications or a designated commercial bank that engages in the depository business for customer transaction settlement funds.

When a Fund sales institution, Fund payment and settlement institution or Fund registration institution opens a dedicated Fund settlement account, it shall provide for matters such as the nature of the account, the function of the account, specific details of the use of the account, the monitoring method and the handling of account irregularities with the monitoring institution of Fund sale settlement funds in the form of a monitoring agreement.

The term “dedicated Fund settlement account” means a dedicated account used by a Fund sales institution, Fund payment and settlement institution or Fund registration institution to collect, temporarily hold and transfer Fund sale settlement funds.

The term “monitoring institution of Fund sale settlement funds” means a commercial bank or the China Securities Depository and Clearing Corporation Limited that, in the course of the flow of Fund sale settlement funds, bears the duties of monitoring the opening and use of sales accounts by Fund sale-related institutions and the transfer procedure of Fund sale settlement funds.

Article 28: The commencement of use, change and cancellation of a dedicated Fund settlement account shall, in accordance with provisions, be reported to the CSRC and the CSRC agency of the place where the party opening the account is located for the record.

Article 29: A Fund sales institution shall treat the settlement account of a Fund investor as the investor's bank account for purchase funds.

Part Four: Fund publicity and promotional materials

Article 30: For the purposes of these Measures, the term “Fund publicity and promotional materials” means written or electronic information or information on other media that is easily available to the public through distribution or publication and the objective of which is to promote a Fund, and includes:

(1) published materials;

(2) publicity leaflets, pamphlets, letters, facsimiles, announcements related to the Fund sales published on or distributed through non-designated information disclosure media and other such publicity materials aimed at the public;

(3) posters and outdoor advertisements;

(4) television, film, radio and internet materials, public website advertisements, short messages, and other audio, video and communications materials; and

(5) other materials as specified by the CSRC.

Article 31: The Fund publicity and promotional materials of a Fund manager shall be inspected in advance by the senior management personnel of the Fund manager that are responsible for the Fund sales business and the compliance officer, who shall issue a compliance opinion thereon, and, within five working days from the date of distribution or issuance thereof to the public, the same shall be submitted for the record to the CSRC agency of the place where the Fund manager's main business activities are carried out.

The Fund publicity and promotional materials of another Fund sales institution shall be inspected in advance by the senior management personnel of the Fund sales institution who are responsible for the Fund sales business and compliance matters, who shall issue a compliance opinion thereon, and, within five working days from the date of distribution or issuance thereof to the public, the same shall be submitted for the record to the CSRC agency of the place where the Fund sales institution's main business activities are carried out.

Article 32: A Fund sales institution that has produced Fund publicity and promotional materials shall be liable for the contents thereof, and shall ensure that the materials distributed or issued to the public are identical to those placed on the record.

Article 33: Fund publicity and promotional materials must be true and accurate, be consistent with the Fund contract and Fund prospectus and may not:

(1) contain false records, misleading statements or major omissions;

(2) forecast the performance of the Fund's securities investments;

(3) promise returns or bear losses in violation of provisions;

(4) slander other Fund managers, Fund custodians or Fund sales institutions, or other Funds offered or managed by other Fund managers;

(5) publicise the Fund in an exaggerated or one-sided manner or, in violation of provisions, use language such as “safe”, “guaranteed”, “promised”, “secure”, “avoids risk”, “assured”, “high returns” and “risk free” that could cause investors to believe that there is no risk involved or that one-sidedly emphasises the concentrated marketing time limit;

(6) carry language from entities or individuals that recommends the Fund; or

(7) carry other details as prohibited by the CSRC.

Article 34: Fund publicity and promotional materials may detail the past performance of the Fund or of other Funds managed by the Fund manager, unless the Fund contract has been in effect for less than six months.

If Fund publicity and promotion materials detail past performance, they shall fulfil the following requirements:

(1) if the Fund contract has been in effect for not less than six months but less than one year, they shall detail the performance calculated from the effective date of the contract;

(2) if the Fund contract has been in effect for not less than one year but less than 10 years, they shall detail the performance for each complete financial year from the year the contract entered into effect; if the publication date of the Fund publicity and promotion materials is in the second half of the year, they shall additionally detail the performance for the first half of the year in question;

(3) if the Fund contract has been in effect for not less than 10 years, they shall detail the performance for the most recent 10 complete financial years; and

(4) if there is a change in the investment objectives, investment scope or investment strategy specified in the Fund contract during the period the performance is detailed, a special explanation shall be given thereof.

Article 35: When Fund publicity and promotional materials detail the past performance of the Fund in question or of the other Funds managed by the Fund manager, the following provisions shall be observed:

(1) the Fund's performance data shall be calculated in accordance with relevant laws and regulations or the standards generally recognised by the industry;

(2) the cited statistical data and information shall be true and accurate, the source shall be stated and data that have not been verified, have not yet arisen or have been simulated may not be cited;

When promoting closed-end fixed amount investment business, etc. that requires simulation of historical performance, a Chinese securities market or a foreign mature securities market that is a representative index shall be used and its actual return rate over a sufficiently long period of time shall be simulated, additionally, the relevant compound annual rate of return shall be noted. Furthermore, the source of the simulation data, the simulation method and the main calculation formulas shall be explained, and the corresponding risk warning given;

(3) the performance data shall truthfully, accurately and reasonably state the performance of the Fund and the management level of the Fund manager;

Fund performance figures shall be checked by the Fund custodian or excerpted from the regular Fund report.

Article 36: If Fund publicity and promotional materials detail the past performance of the Fund, it shall be stated in particular that the past performance of the Fund does not indicate its future performance and that the performance of other Funds managed by the Fund manager does not constitute a guarantee of the performance of the Fund.

Article 37: If Fund publicity and promotional materials compare the performance of different Funds, they shall use comparable data sources, statistical methods and comparative periods and the relevant data sources and statistical methods shall be fair, accurate and relative.

Article 38: If Fund publicity and promotional materials include statistical figures or tables, such figures or tables shall be clear and accurate.

Article 39: If Fund publicity and promotional materials mention appraisal results from a Fund appraisal institution, they shall comply with the relevant CSRC standards on the citing of Fund appraisal results, and the name of the Fund appraisal institution and the appraisal date shall be stated.

Article 40: If Fund publicity and promotional materials detail the backgrounds of the shareholders of the Fund manager, it shall be stated in particular that a system for separating the business of the Fund manager from that of its shareholders has been put in place and that the shareholders do not directly participate in Fund property investment operation.

Article 41: If Fund publicity and promotional materials promote a money market Fund, Fund investors shall be informed that buying into a money market Fund is not equivalent to depositing funds into a bank or a deposit-taking financial institution, and the Fund manager does not guarantee that the Fund will be profitable and does not guarantee minimum returns.

Article 42: If Fund publicity and promotional materials promote a capital guarantee Fund, the risks of the capital guarantee Fund shall be fully disclosed and it shall be stated that investment in a capital guarantee Fund is not equivalent to depositing funds into a bank or a deposit-taking financial institution and that under extreme circumstances there still exists a risk of capital loss.

If a capital guarantee Fund is open for purchase during the capital guarantee period, it shall be stated in relevant business announcements and publicity and promotional materials whether investors' purchase amounts are guaranteed during the open purchase period.

Article 43: Fund publicity and promotional materials shall include a clear and prominent risk warning statement and warning language so as to remind investors to beware of investment risks, read the Fund contract and Fund prospectus carefully and apprise themselves of the specific circumstances of the Fund.

Fund publicity and promotional materials that have sufficient space shall include in the materials a risk warning letter with mandatory contents that comply with provisions.

Publicity and promotional materials appearing on or in television, films, internet information or public website links shall include an image display lasting at least five seconds reminding investors to pay attention to risks and refer to the sales documents for the Fund. A radio broadcast shall provide such information by way of a voiceover.

Article 44: If Fund publicity and promotional materials include information stating that the Fund has been approved by the CSRC, they shall state in particular that the approval by the CSRC does not imply that the CSRC makes a material judgement, recommendation or guarantee in respect of the risks or earnings of the Fund.

Part Five: Fund sales charges

Article 45: The Fund manager shall specify in the Fund contract, prospectus or offer announcement the items for which it will charge a fee, the conditions for charging fees and the method by which they will be collected, and in the prospectus or offer announcement shall state the fee rates and calculation methods therefor.

Article 46: When processing Fund sales business, a Fund sales institution may charge investors a subscription fee, purchase fee, redemption fee, conversion fee and sales service fee in accordance with the Fund contract and prospectus. When a Fund sales institution collects Fund sales charges, it shall comply with relevant CSRC provisions on Fund sales charges.

Article 47: If a Fund sales institution provides a value-added service to Fund investors, it may charge such Fund investors a value-added service fee. The term “value-added services” means services additional to those specified in law or in the Fund contract or prospectus that a Fund sales institution provides to investors in the course of selling Fund products, while ensuring compliance with the principle of sales suitability of the Fund and related products.

Article 48: A Fund sales institution that charges a value-added service fee shall satisfy the following conditions:

(1) complying with the pricing principles of reasonableness, transparency and quality matching price;

(2) all of its business outlets offering the valued-added service displaying the details of the value-added service therein;

(3) having a uniformly printed service agreement that specifies the details and method of the value-added service, the fee rates, term and dispute resolution mechanism, etc;

(4) Fund investors having the right to opt for the value-added service at their own discretion, and Fund investors opting for the value-added service signing the service agreement in confirmation thereof;

(5) the value-added service being paid separately, and not deducted from the purchase (subscription) payment;

(6) the entity providing the value-added service and executing the service agreement being the Fund sales institution, and no sales person may charge a value-added fee privately; and

(7) other matters as specified by the relevant regulator.

A Fund sales institution that provides value-added services and charges investors a value-added service fee therefor shall submit its uniformly printed service agreement to the CSRC for the record.

Article 49: A Fund manager and Fund sales institution may provide, in the Fund sale agreement, for allocation of a certain percentage of the retained portion of the Fund sold by the Fund sales institution as a customer maintenance fee to be used to pay to the Fund sales institution customer service fees and related charges arising in the course of the sales activities. When a Fund sales institution charges a customer maintenance fee, it shall do so in compliance with relevant CSRC provisions on Fund sales charges.

Article 50: A Fund manager and Fund sales institution shall specify in the Fund sale agreement or a supplementary agreement thereto their percentage shares of sales charges such as the purchase (subscription) fees, redemption fees and sales service fees and, on the basis thereof, confirm the Fund sales revenue, truthfully account for and book the sales charges that they each actually receive and pay taxes thereon in accordance with the law.

Article 51: The Fund industry association may specify the minimum rates for Fund sales charges in the rules for self-regulation.

Part Six: Standards for sales business

Article 52: An institution that handles Fund sales matters or Fund sales-related matters and charges Fund sales institutions relevant commissions based on the Fund transactions (including account openings) shall have secured Fund sales business qualifications or been recognised by the CSRC.

An institution that has neither secured Fund sales business qualifications nor been recognised by the CSRC may not handle Fund sales or related matters. No individual may handle Fund sales or related matters in his/her own name.

Article 53: A Fund sales institution shall establish, enhance and effectively implement Fund sales business rules and regulations, and strengthen inspections and monitoring of the compliant operation of its Fund sales business so as to ensure the carrying on of its Fund sales business complies with relevant CSRC requirements in respect of the internal controls of Fund sales institutions.

Article 54: A Fund sales institution shall ensure that its Fund sale information management platform operates in a secure and efficient manner, and satisfies relevant CSRC requirements in respect of Fund sales business information management platforms.

Article 55: No individual may engage in Fund sales activities unless engaged by a Fund sales institution.

Persons who engage in the Fund sales business, such as persons who publicise and promote Funds and persons who operate and maintain Fund sale information management platform systems shall have secured Fund sales business qualifications. A Fund sales institution shall establish, enhance and effectively implement a system for the ongoing training of Fund sales personnel, and strengthen the inspection and monitoring of the code of conduct of its Fund sales personnel.

Article 56: Fund sales institutions shall establish sound systems for the administration of Fund shareholder accounts and fund accounts and procedures for, and systems for the authorisation and examination and approval of, the deposit and withdrawal of Fund shareholders' funds.

Article 57: A Fund sales institution shall, in the course of selling Funds and related products, adhere to the principle of placing investors' interests first, and stress the sale of products of different risk grades based on the different risk-bearing capacities of investors and the sale of the appropriate products to the appropriate Fund investors.

Article 58: A Fund sales institution shall establish rules and regulations for the management of Fund sale suitability that shall, at minimum, include the following:

(1) the means and method for conducting due diligence investigations of Fund managers;

(2) the means and method for setting the risk grades of Fund products and for conducting risk assessments of Fund products;

(3) the means and method for checking and assessing the risk-bearing capacity of Fund investors; and

(4) the method for matching Fund products and Fund investors.

Article 59: The method for risk assessment of Fund products used by a Fund sales institution and its explanation thereof shall be disclosed to Fund investors.

Article 60: When a Fund manager is selecting a Fund sales institution, it shall conduct due diligence investigation thereof; and when a Fund sales institution is selecting a Fund product to sell, it shall conduct a due diligence investigation of the Fund manager.

Article 61: A Fund sales institution shall strengthen investor education, guide investors in fully understanding the risk features of Fund products and safeguard the lawful rights and interests of investors.

Article 62: When handling Fund sales matters, a Fund sales institution shall establish the identities of customers based on relevant requirements of anti-money laundering regulations, check the valid identity documents of customers, record customers' basic identity particulars, ensure that the name of a Fund account holder is identical to the name appearing on his/her identity document and retain a copy or photocopy of the valid identity document.

If a Fund sales institution, when selling Fund products, has another organisation establish the identities of customers, it shall specify, by way of a contract, agreement or other written document, the anti-money laundering responsibilities of each party in respect of the establishment of the identities of customers, the keeping of customer identity information and transaction records, information exchange, reporting of large transactions and suspicious transactions, etc. and the procedures therefor.

Article 63: A Fund sales institution shall establish and enhance a file management system and duly keep the account opening information of Fund shareholders and other information relating to its sales business. A customer's identity information shall be kept for at least 15 years from the year in which the business relationship ended, and other sales business-related information shall be kept for at least 15 years from the year in which the business occurred.

Article 64: When a Fund sales institution is to handle Fund sale matters, the head office of the Fund sales institution and the Fund manager shall execute a written sales agreement that specifies the rights and obligations of the parties and, at minimum, includes the following:

(1) the percentages and method for sharing the sales charges;

(2) the method for keeping customer information, such as Fund shareholders' contact information;

(3) the ongoing service responsibilities to Fund shareholders;

(4) the performance of anti-money laundering obligations and the division of liabilities in respect thereof; and

(5) the rights and obligations in respect of the exchange of Fund sales information and the payment and collection of moneys.

Without having executed a written agreement, a Fund sales institution may not handle the sale of Funds.

Article 65: A Fund sales institution shall display the proof of its Fund sales business qualifications in a prominent location in its Fund sales outlets or post the same on its website.

Article 66: A Fund sales institution may not carry out Fund sales business or distribute or issue Fund publicity and promotional materials or sell shares of Funds to the public until the Fund offer application has been approved by the CSRC.

Article 67: The Fund sale-related institutions that a Fund sales institution elects to cooperate with shall satisfy the regulator's qualification requirements. The Fund sales institution shall establish sound selection standards and business procedures for the Fund sale-related institutions with which it cooperates, fully assess the relevant risks and clarify each party's rights and responsibilities.

Article 68: The term “Fund registration institution” means an institution that handles the registration of the transfer of title to, and the deposit and the clearance of shares of Funds. A Fund registration institution may handle the opening and management of investors' Fund accounts, the registration of shares of Funds, confirmation, clearance and settlement of Fund sales business, payment of dividends on behalf of the relevant party, establishment and keeping of the registry of Fund shareholders, etc.

Article 69: A Fund registration institution shall ensure that it handles registration of the change in title to, and the deposit and clearance of shares of Funds in a secure, accurate, timely and efficient manner. Its main duties include:

(1) opening and managing investors' accounts of shares of Funds;

(2) being responsible for the registration of shares of Funds;

(3) confirmation of Fund transactions;

(4) payment of dividends on behalf of the relevant party;

(5) establishing and keeping the registry of Fund shareholders; and

(6) other duties as specified in the registration agency agreement.

Article 70: If a Fund manager wishes to change Fund registration institutions, it shall submit the change plan to the CSRC for the record before the change.

Article 71: A Fund sales institution and Fund registration institution shall exchange data through the technical platform designated by the CSRC and carry out the centralised backup and storage of Fund registration data with the organisation designated by the CSRC. The exchange of data shall comply with relevant CSRC standards.

Article 72: Once the contract for an open-ended Fund enters into effect, the Fund sales institution shall handle the purchase and redemption of shares of Funds in accordance with laws, administrative regulations, CSRC provisions, the Fund contract and sales agreement, and may not cease to handle the sale of shares of Funds or refuse to accept investors' purchase and redemption applications without authorisation. If a Fund manager suspends or opens purchase and/or redemption, etc, it shall specify the reason and the basis therefor in an announcement.

Article 73: A Fund sales institution may not handle the purchase, redemption or conversion of shares of Funds on dates or at times other than those specified in the Fund contract.

If an investor submits a purchase, redemption or conversion application on a date or at a time other than one specified in the Fund contract, it shall be treated as a transaction handled on the following trading day and the price for the purchase or redemption of the shares of Funds shall be the price on the open date on which the following time when purchases and redemptions of shares of Funds are handled falls.

Article 74: When an investor purchases shares of Funds, it must pay the purchase moneys in full, except in the case of special Fund products specified by the CSRC. Once an investor submits a purchase application in accordance with provisions and pays the moneys in full, the purchase application enters into effect. The success or failure of a purchase application shall be determined by the confirmation of the Fund registration institution.

Article 75: A Fund sales institution shall provide valid means for Fund investors to consult Fund sale documents such as the Fund contract and prospectus.

Article 76: A Fund sales institution shall collect sales charges from investors in accordance with the Fund contract, prospectus and Fund sale service agreement and truthfully account for and book the same. It may not charge additional charges to investors unless specified in the Fund contract, prospectus or Fund sale service agreement. It may not impose different fee rates on different investors unless specified in the prospectus and announced to the public.

Article 77: A Fund sales institution shall maintain the confidentiality of investors in accordance with the law, and may not disclose information on investors' transactions or holding of Fund shares or other information for other than statutory reasons.

Article 78: If a Fund sales institution or Fund sale-related institution conducts Fund sale activities over the internet, it shall carry out record filing procedures of online content service providers with the relevant department, its information systems shall comply with relevant CSRC requirements in respect of Fund sales business information management platforms, and before activating its Fund sale website for investors, it shall report the address thereof to the CSRC for the record.

Article 79: Provisions for the administration of activities by Fund sales institutions such as the public sale of wealth management products that have Funds as their investment targets shall be specified separately by the CSRC.

Article 80: When engaging in Fund sales activities, a Fund sales institution may not:

(1) reduce the level of Fund charges in order to squeeze out competitors;

(2) use prize draws or discounts, or offer goods, insurance, shares of Funds, etc. to sell the Fund;

(3) sell the Fund at fee rates that are below cost;

(4) offer a discount on the subscription fee during the offer period (including subscription done by way of a self-service transaction model online, by telephone, etc.);

(5) undertake to use Fund assets to illegally convey benefits;

(6) when offering advance subscription or advance purchase (except for closed-end fixed amount Fund investment business), change the Fund sale date without making an announcement in accordance with provisions;

(7) misappropriate Fund sale settlement funds;

(8) be characterised by the circumstances specified in Article 33 hereof; or

(9) be characterised by other circumstances as prohibited by the CSRC.

Part Seven: Regulation and legal liability

Article 81: A Fund manager shall submit the sales agreement executed with a Fund sales institution to the CSRC agency of the place where its main business activities are carried out within seven days from the date of execution of the agreement.

Article 82: A Fund sales institution shall establish a departure audit and departure review system for relevant personnel. When an independent Fund sales institution's chairman of the board or general manager leaves service or managing partner resigns from the partnership, he/she shall be subject to an audit in accordance with CSRC provisions. When another member of the senior management personnel of an independent Fund sales institution, a member of the senior management personnel of a securities investment consulting firm who is responsible for the Fund sales business, or the person in charge of the department responsible for the Fund sales business of another Fund sales institution leaves service, he/she shall be subject to a review in accordance with CSRC provisions.

Article 83: The personnel of a Fund sales institution responsible for the control auditing of the Fund sales business shall inspect the lawfulness and compliance of the Fund sales business in a timely manner and, within one quarter after the end of a year, complete the control audit report for the year in question and place it on file for future reference.

Article 84: Fund sales institutions shall perform their information reporting obligations in accordance with CSRC requirements. The CSRC and its agencies shall conduct regular or ad hoc inspections of the Fund sales activities engaged in by Fund sales institutions and Fund sales institutions shall extend their cooperation therein.

Article 85: If a Fund sales institution violates these Measures, the CSRC or its agency may order it to rectify the matter and suspend the handling of related matters. It may take administrative regulatory measures against the supervisors directly in charge and other directly responsible persons, such as holding regulatory discussions with them, issuing them a letter of warning, suspending them from the performance of their duties and determining that they are not suited to serve in their positions.

Article 86: If a commercial bank, securities company, securities investment consulting firm, independent Fund sales institution or other institution specified by the CSRC conceals relevant information or provides fraudulent materials when applying for Fund sales business qualifications, the CSRC will not accept its application. If it has already accepted the application, it will not grant its approval and will issue the offender a warning.

Article 87: If an entity without Fund sales business qualifications launches a Fund sales business without authorisation, it shall be ordered to rectify the matter, given a warning and fined. The supervisors directly in charge and the other directly responsible persons shall be given a warning and fined.

Article 88: With the exception of Fund sales institutions and related institutions that have had their qualifications recognised by the CSRC, if a Fund sales institution, in carrying on Fund sales business, cooperates with an organisation or individual that has not secured Fund sales business qualifications, the Fund sales institution shall be ordered to rectify the matter and be given a warning and fined; the supervisors directly in charge and other directly responsible persons shall be given a warning and fined.

Article 89: A Fund sales institution shall be ordered to rectify the matter, and given a warning or fined or both and the supervisors directly in charge and other directly responsible persons shall be given a warning or fined or both if the Fund sales institution in engaging in Fund sales activities: 

(1) fails to open a Fund sales-related account in accordance with Article 27 hereof;

(2) fails to use Fund publicity and promotion materials in accordance with Article 32 hereof;

(3) violates Article 55 hereof by permitting a person whom it has not employed to sell Funds or a person without Fund sales business qualifications to publicise and promote Funds;

(4) fails to execute a written sales agreement in accordance with Article 64 hereof;

(5) violates Article 66 hereof by distributing or issuing to the public Fund publicity and promotion materials without authorisation;

(6) violates Article 72 hereof by ceasing to handle the sale of shares of Funds or refusing the purchases or redemptions of investors without authorisation.;

(7) violates Article 73 hereof in determining the purchase or redemption price of the shares of Funds;

(8) fails to collect sales charges, account for and keep the same in accordance with Article 76 hereof;

(9) fails to maintain the confidentiality of investors in accordance with Article 77 hereof;

(10) engages in an act prohibited in Article 80 hereof;

(11) fails to conduct a self inspection and prepare a control audit report in accordance with Article 83 hereof; or

(12) fails to perform its information reporting obligations or to extend its cooperation to the CSRC and/or its agency in its/their monitoring inspection in accordance with Article 84 hereof.

If a Fund sales institution violates any of the provisions in the preceding paragraph and the circumstances are serious, it shall be ordered to suspend or terminate its Fund sales business.

Article 90: A Fund sales institution's Fund sales business qualifications shall be terminated if:

(1) it violates Item (7) of Article 80 hereof by misappropriating Fund sale settlement funds; or

(2) it fails to commence its Fund sales business within one year after obtaining Fund sales business qualifications.

Article 91: In the event that a Fund sales institution is ordered to suspend its Fund sales business, it may not engage in the following activities during the suspension period:

(1) executing new sales agreements;

(2) publicising and promoting Funds;

(3) selling shares of Funds; or

(4) handling purchases of shares of Funds.

If a Fund sales institution is ordered to terminate its Fund sales business, it shall cease Fund sales activities.

If a Fund sales institution is ordered to suspend or terminate its Fund sales business, the Fund manager shall cooperate with the intermediary firm designated by the CSRC in duly handling investors' purchase and redemption of shares of Funds and change in the custody thereof, etc. and may, in accordance with the sales agreement, require the sales institution to compensate for its relevant losses in accordance with the law.

Article 92: A Fund payment and settlement institution shall be ordered to suspend or terminate its business of payment and settlement of Fund sales if:

(1) it violates Article 5 hereof by misappropriating Fund sale settlement funds; or

(2) it commits a major violation of laws or regulations.

If a Fund payment and settlement institution is ordered to suspend or terminate its business of payment and settlement of Fund sales, the Fund sales institution and monitoring institution shall cooperate with the intermediary firm designated by the CSRC in duly handling relevant investors' purchase and redemption of shares of Funds and change in the custody thereof, etc. and may, in accordance with the relevant agreement, recover relevant losses in accordance with the law.

Part Eight: Supplementary provisions

Article 93: These Measures shall be effective as of October 1 2011. The Measures for the Administration of the Sale of Securities Investment Funds (Order of the CSRC No.20) promulgated on June 25 2004 shall be repealed simultaneously.