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[CSRC Decree No. 90] Measures for the Pilot Program of Domestic Securities Investment by RMB Qualified Foreign Institutional Investors

[2015-07-20]

 

Article 1 These Measures are formulated in accordance with the relevant laws and administrative regulations for purposes of regulating RMB qualified foreign institutional investors' securities investment in China, promoting the development of the securities market and protecting the lawful rights and interests of investors.

Article 2 For the purpose of these Measures, “RMB qualified foreign institutional investor (hereinafter referred to as the “RQFII”)” means a foreign legal person that uses overseas RMB funds to make securities investment in China with the approval of the China Securities Regulatory Commission (“CSRC”), and after obtaining the investment quota approved by the State Administration of Foreign Exchange (“SAFE”).

Article 3 The CSRC shall, in accordance with law, supervise and administer the securities investment made by RQFIIs in China, the People's Bank of China (“PBC”) shall, in accordance with law, administer the RMB bank accounts opened within China by RQFIIs, and the SAFE shall, in accordance with law, administer the investment quotas of RQFIIs, and the PBC shall, jointly with the SAFE, monitor and administer the inward and outward remittance of capital of RQFIIs in accordance with law.

Article 4 To carry out securities investment business in China, an RQFII shall authorize a domestic commercial bank qualified as a QFII custodian to be responsible for its asset custody business, and authorize a domestic securities company to purchase or sell securities on its behalf. An RQFII may authorize a domestic asset management institution to manage its domestic securities investment.

Article 5 To apply for the qualification of an RQFII, an applicant shall satisfy the following conditions: (1) It has a sound financial status and good credit standing, and its registration place, business qualification, etc., shall comply with the provisions of the CSRC;(2) It has sound corporate governance and effective internal control, and its employees meet the relevant requirements for the qualification of practice in the country or region where it is located;(3) It has sound business operations, and has not been imposed upon a heavy punishment by the local regulatory authority in the previous three years or since the date when it is formed; and(4) Other conditions as prescribed by the CSRC under the principle of prudent supervision.

Article 6 The CSRC shall examine an RQFII's qualification for engaging in securities investment business in China, and make a decision of approval or disapproval within 60 days upon receipt of the complete application documents. In the case of approval, it shall give a written reply and issue a securities investment business license; and in the case of disapproval, it shall notify the applicant in writing.

Article 7 An RQFII which has obtained the qualification for engaging in securities investment business in China shall apply to the SAFE for an investment quota on the basis of the following materials:(1) an application report, covering its profile, a statement on fund sources, a plan on securities investment in China, etc.;(2) a photocopy of the securities investment business license issued by the CSRC;(3) a notarized power of attorney issued to the domestic custodian; and(4) other materials as required by the SAFE. The SAFE shall make a decision of approval or disapproval within 60 days upon receipt of the complete application documents from the RQFII. In the case of approval, it shall give a written reply and issue a registration certificate; and in the case of disapproval, it shall notify the applicant in writing.

Article 8 The domestic custodian of an RQFII shall perform the following duties:(1) having the custody of all the assets entrusted by the RQFII;(2) supervising the operation of securities investment made by the RQFII in China;(3) handling the relevant businesses such as the inward and outward capital remittance of the RQFII;(4) reporting balance-of-payments statistics in accordance with the relevant provisions;(5) submitting relevant business reports and statements to the CSRC, the PBC and the SAFE; and(6) performing other duties as prescribed by the CSRC, the PBC and the SAFE under the principle of prudent supervision.

Article 9 When investing in RMB financial instruments within the approved investment quota, an RQFII shall abide by the relevant regulatory requirements. The CSRC and the PBC may, according to the macro management requirements and development of the pilot program, determine and adjust the overall investment proportions and types. An RQFII shall invest in the inter-bank bond market in accordance with the relevant provisions of the PBC.

Article 10 When carrying out the pilot program of securities investment business in China, an RQFII shall comply with the provisions of Chinese laws and regulations on shareholding percentage, information disclosure and so on and the requirements of other relevant regulatory rules. An RQFII shall, in accordance with the relevant provisions of the PBC, enter the information on the inward and outward remittance of RMB funds into the Cross-border RMB Receipt and Payment Information Management System of the PBC through the domestic custodian.

Article 11 An RQFII shall handle the inward and outward remittance of capital in accordance with the relevant requirements for the management of investment quotas. An RQFII may remit the principal and investment proceeds abroad through using RMB or through purchasing foreign exchange.

Article 12 The CSRC, the PBC and the SAFE may require the RQFIIs, domestic custodians, securities companies and other institutions to provide relevant information on the RQFIIs, and make necessary inquiries and inspections.

Article 13 Where an RQFII falls under any of the following circumstances, it shall report to the CSRC, the PBC and the SAFE within five workdays:(1) modification of the domestic custodian;(2) modification of the person in charge of the institution;(3) adjustment of the equity structure;(4) adjustment of the registered capital;(5) merger with any other institution;(6) involvement in any major lawsuit or any other major event;(7) imposition of any heavy punishment overseas; or(8) any other circumstance as prescribed by the CSRC, the PBC and the SAFE.

Article 14 Where an RQFII falls under any of the following circumstances, it shall apply for a new securities investment business license:(1) modification of its name;(2) merger by any other institution; or(3) any other circumstance determined by the CSRC and the SAFE. During the period of application for a new securities investment business license, the RQFII may continue its securities investment, unless the CSRC deems under the principle of prudent supervision that suspension is necessary.

Article 15 Where an RQFII falls under any of the following circumstances, it shall surrender its securities business license and foreign exchange registration certificate to the corresponding issuing authorities:(1) It fails to apply to the SAFE for an investment quota within one year after obtaining the securities investment business license;(2) It is dissolved or enters into the bankruptcy procedure or is taken over; or(3) Any other circumstance as determined by the CSRC, the PBC and the SAFE.

Article 16 Where an RQFII or its domestic custodian violates any law or regulation during the process of carrying out the pilot program of securities investment business in China, the CSRC, the PBC and the SAFE may take corresponding regulatory measures and impose administrative punishment according to law.

Article 17 These Measures shall come into force on the date of issuance, and the Measures for the Pilot Program of Securities Investment in China by RMB Qualified Foreign Institutional Investors of Fund Management Companies and Securities Companies issued on December 16, 2011 shall be repealed simultaneously.