Provisions for the Implementation of the «Measures for Pilot Projects for Securities Investment in China by Renminbi Qualified Foreign Institutional Investors»

(Issued by the China Securities Regulatory Commission on, and effective as of, March 1 2013.)

CSRC Announcement [2013] No.14

We hereby set forth the following provisions on issues relevant to the implementation of the Measures for Pilot Projects for Securities Investment in China by Renminbi Qualified Foreign Institutional Investors in order to duly carry out the work associated with securities investment in China by renminbi qualified foreign institutional investors (RQFIIs):

1. When applying for RQFII qualifications, the place of registration, business qualifications, etc. shall satisfy the following conditions:

(1) being a Hong Kong subsidiary of a fund management company, securities company, commercial bank, insurance company, etc. in China or being a financial institution whose place of registration and principal place of business is Hong Kong; and

(2) having secured asset management business qualifications from the Hong Kong securities regulator and having commenced asset management business.

2. To apply for RQFII qualifications, the following application documents shall be submitted to the China Securities Regulatory Commission (the CSRC) by its custodian in China:

(1) a written application that shall include the reason for the application, the basic particulars of the applicant, the plan for securities investment in China, etc. with an undertaking as to the truthfulness, accuracy, completeness and compliance of the application materials;

(2) a photocopy of the institution's registration certificate;

(3) a photocopy of the business permit issued by the regulator of the residing place;

(4) proof that the principal personnel satisfy the relevant professional qualification requirements of the residing country or region;

(5) proof of not having been subjected to major penalties by the regulator of the residing place in the past three years or since establishment;

(6) an account of the source of funds and the plan for securities investment in China;

(7) the audited financial statements for the last year;

(8) the power of attorney of its custodian in China; and

(9) other documents as requested by the CSRC.

The “account of the source of funds and the plan for securities investment in China” in Item (6) shall include the following information: source of funds, the investment limit to be applied for, details of the fund(s) or product(s) to be offered, asset allocation, the investment research team, compliance monitoring and other back office operation arrangements, custodians in China and overseas, securities companies acting as agents in the trading of securities, etc.

The aforementioned application documents shall include one original and one duplicate. Where a photocopy of an application document needs to be submitted, it shall be verified against the original for consistency. If application materials are in English, a complete Chinese translation shall be provided. As for financial statements, only the auditor's opinion and the main statements need be translated.

3. An RQFII shall submit its official custody agreement to the CSRC within five working days of opening its renminbi accounts.

4. An RQFII shall entrust its custodian in China to apply to the China Securities Depository and Clearing Corporation Limited (SD&C) to open securities accounts for it. An RQFII may open multiple securities accounts and the securities accounts that it applies to open shall correspond with its approved renminbi accounts.

An RQFII shall open and use its securities accounts in accordance with the business rules of the SD&C and shall be responsible for the management of such accounts.

5. An RQFII may invest in the following renminbi financial instruments within its approved investment limit:

(1) stocks, bonds and warrants traded or transferred on a stock exchange;

(2) fixed-return products traded on the interbank bond market;

(3) securities investment funds;

(4) stock index futures; and

(5) other financial instruments as permitted by the CSRC.

An RQFII may participate in the purchase of new share offerings, offerings of convertible bonds, additional share offerings and rights issuances.

6. The securities investments in China by overseas investors shall comply with the following shareholding percentage restrictions:

(1) the shareholding percentage of a single overseas investor in a single listed company may not exceed 10% of the total number of shares of the listed company; and

(2) the total percentage of the holdings of the A shares of a single listed company by all overseas investors may not exceed 30% of the total number of shares of the listed company.

The strategic investment made in a listed company by an overseas investor pursuant to the Measures for the Administration of Strategic Investments in Listed Companies by Foreign Investors shall not be subject to the foregoing shareholding percentage limitations.

7. If an RQFII's securities investments in China reach the level where information disclosure is required, it, as a person with an information disclosure obligation, shall submit such information to the stock exchange.

8. Each RQFII may appoint not more than three securities companies in China to trade securities on each of the Shanghai and Shenzhen Stock Exchanges.

9. These Provisions shall be effective as of the date of issuance. The Provisions for the Implementation of the «Measures for Pilot Projects for Securities Investment in China by the Renminbi Qualified Foreign Institutional Investors of Fund Management Companies and Securities Companies» (CSRC Announcement [2011] No.37) issued on December 16 2011 shall be repealed simultaneously.