Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds
Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds
Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds
Order of the China Securities Regulatory Commission No.198
May 20, 2022
The Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds (hereinafter referred to as the "Measures") were adopted upon deliberation at the second executive meeting of the China Securities Regulatory Commission in 2022 on March 24, 2022. In accordance with Article 13 of the Law of the People's Republic of China on Securities Investment Funds, the relevant conditions for the establishment of fund management companies in the Measures have been approved by the State Council. The Measures are hereby promulgated for implementation as of June 20, 2022.
Yi Huiman, Chairman of the China Securities Regulatory Commission
Appendix I: Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds
(Adopted upon deliberation at the second executive meeting of the China Securities Regulatory Commission on March 24, 2022)
Table of Contents
Chapter I General Provisions
Chapter II Market Admission of Managers of Publicly Offered Funds
Chapter III Internal Control and Business Norms for Managers of Publicly Offered Funds
Chapter IV Control and Management of Fund Management Companies
Chapter V Exit of Managers of Publicly Offered Funds
Chapter VI Supervision and Regulation
Chapter VII Legal Liability
Chapter VIII Supplementary Provisions
Chapter I General Provisions
Article 1 The Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds (hereinafter referred to as the "Measures") are formulated in accordance with the Law on Securities Investment Funds, the Securities Law, the Company Law, and other relevant laws and administrative regulations in order to standardize the management of publicly offered securities investment funds (hereinafter referred to as the "publicly offered funds"), strengthen the supervision and regulation of managers of publicly offered funds, protect the lawful rights and interests of fund shareholders and the parties concerned, and promote the healthy development of the publicly offered fund industry.
Article 2 Managers of publicly offered funds shall be fund management companies or other asset management institutions that have obtained the qualifications for publicly offered fund management business with the approval of the China Securities Regulatory Commission (hereinafter referred to as the "CSRC") (hereinafter referred to as "other managers of publicly offered funds").
For the purpose of the Measures, a fund management company refers to a profit-making legal person that is incorporated within the territory of the People's Republic of China with the approval of the CSRC and undertakes publicly offered fund management business and other business approved or determined by the CSRC.
For the purpose of the Measures, other asset management institutions include the asset management subsidiaries of securities companies, insurance asset management companies, and financial management subsidiaries of commercial banks that are incorporated within the territory of China and undertake asset management business, institutions that are registered with the Asset Management Association of China (hereinafter referred to as the "AMAC") and specialize in the management of non-publicly offered securities investment funds, and other institutions that are prescribed by the CSRC.
An institution that has not obtained the qualifications for publicly offered fund management business shall not engage in such business.
Article 3 Managers of publicly offered funds shall abide by laws, administrative regulations, the provisions of the CSRC, and self-regulatory rules, devote themselves to their duties, perform their obligations of good faith, prudence, and diligence, use fund property for the benefit of fund shareholders, and protect the lawful rights and interests of fund shareholders, and must not damage national interests, public interests, or the lawful rights and interests of others.
Article 4 The CSRC and its local offices shall supervise and regulate fund management companies and their business activities and the publicly offered fund management business activities of other managers of publicly offered funds and regulate the shareholding of fund management companies on a look-through and classification basis in accordance with laws, administrative regulations, and the provisions of the CSRC, as well as the principle of prudential regulation.
Article 5 The AMAC shall perform self-regulation of fund management companies and their business activities and the publicly offered fund management business activities of other managers of publicly offered funds in accordance with laws, administrative regulations, and the provisions of the CSRC, as well as its self-regulatory rules.
Chapter II Market Admission of Managers of Publicly Offered Funds
Article 6 The following conditions shall be met for the establishment of a fund management company:
1. the shareholders and actual controllers shall meet the provisions of the Law on Securities Investment Funds and the Measures;
2. the company shall formulate the articles of association in compliance with the Law on Securities Investment Funds, the Company Law, and the provisions of the CSRC;
3. the registered capital shall not be less than CNY100 million, and the shareholders shall pay the full capital in a currency from legal sources, and the overseas shareholders shall make capital contributions in convertible currencies;
4. the company shall have directors, supervisors, and senior officers in compliance with laws, administrative regulations, and the provisions of the CSRC and personnel who perform such job duties as research, investment, operation, sales, and compliance, and at least 30 of them shall have obtained the fund practicing qualifications in principle;
5. the company shall have a name, business premises, security facilities, and other business-related facilities that meet the requirements;
6. the company shall set up organizations and posts with reasonable division of work and clear functions;
7. the company shall develop internal management systems which meet the provisions of the CSRC; and
8. any other condition as prescribed by the CSRC with the approval of the State Council.
Article 7 Shareholders of a fund management company are divided into four categories as below according to their shareholding proportions and their influences on the company's business management:
1. any major shareholder, which refers to a shareholder that holds 25% or more of the company's equity, or, if no shareholder holds 25% or more of the company's equity, the largest shareholder that holds 5% or more of the company's equity, unless otherwise prescribed by the CSRC;
2. any non-major shareholder that holds 5% or more of the company's equity; and
3. any non-major shareholder that holds less than 5% of the company's equity.
Article 8 A non-major shareholder that holds less than 5% of a fund management company's equity shall not fall under the following circumstances:
1. the shareholder has any records of material violations of laws or regulations or of gravely dishonest conduct in the latest three years; the shareholder has been subject to a criminal penalty for an intentional crime and not more than three years have elapsed since the execution of the criminal penalty was completed; and the shareholder is under investigation due to being suspected of committing any material violation of laws or regulations, or is in the rectification period;
2. the shareholder falls under the circumstances that affect its exercise of shareholders' rights or its performance of shareholders' obligations, such as long-term failure to carry out actual business activities, suspension of business, bankruptcy liquidation, lack of a governance structure, and ineffective internal control; and there is a guarantee, litigation, arbitration, or any other major matter that may seriously affect the on-going operation of the shareholder;
3. the shareholder has an indefinite shareholding structure that cannot be looked through to the ultimate equity holder; and asset management products are involved in the shareholding structure, unless determined by the CSRC;
4. the shareholder's dishonest conduct or non-compliance has given rise to a major social doubt or serious negative social influence which has not yet been eliminated; the shareholder takes major responsibility for the operation failure of any investee, and not more than three years have elapsed since the operation failure; and the shareholder has not embezzled the assets of clients or performed any other act that impairs the interests of clients; and
5. any other circumstance as prescribed by the CSRC.
Article 9 A non-major shareholder that holds 5% or more of a fund management company's equity shall meet the following conditions, unless otherwise prescribed by the CSRC:
1. the shareholder meets Article 8 hereof;
2. where the shareholder is a legal person or unincorporated organization, it and the institutions under its control have good records of integrity and compliance; its net assets in the latest year are not less than CNY100 million or an equivalent convertible currency, and it has good asset quality and financial status; and it has a standardized corporate governance, sound internal control mechanism, and good risk control, which can support the enhancement of the comprehensive competitiveness of the fund management company; and
3. where the shareholder is a natural person, he/she acts with honesty and completeness, and is of sound moral character, and his/her personal financial assets in the latest year are not less than CNY10 million, and he/she has at least five years' experience in domestic and overseas securities asset management industries, with at least three years' experience in professional securities investment with good performance or in the management of publicly offered funds.
Article 10 A major shareholder of a fund management company shall meet the following conditions:
1. the shareholder meets Article 9 hereof;
2. where the major shareholder is a legal person or unincorporated organization, it is an institution that operates financial business or manages financial institutions in accordance with the law, with good management performance and social reputation, and its net assets in the recent year are not less than CNY200 million or an equivalent convertible currency, and it has made profits continuously in the latest three years; and its contribution to the fund management company is in conformity with its long-term strategy and is conducive to serving the development of its primary business;
3. where the major shareholder is a natural person, his/her personal financial assets in the latest three years are not less than CNY30 million, and he/she has at least ten years' experience in domestic and overseas securities asset management industries, with at least eight years' experience in professional securities investment with good performance or at least eight years' working experience as a senior officer of the publicly offered fund industry;
4. the shareholder has practical plans and arrangements to improve the governance and promote the long-term development of the fund management company; and has continuous capital replenishment capacity which matches the fund management company's business operations;
5. the shareholder has developed a definite self-restraint mechanism to ensure the fund management company's independence in business management and guard against risk transmission and illegitimate tunneling and propping; and
6. the shareholder has developed a reasonable and effective risk disposal plan for the fund management company's failure in normal business operation due to possible risks.
Where an institution that manages financial institutions is a major shareholder of a fund management company, at least one financial institution under its management shall meet Item 2 of the present article and the relevant provisions of the CSRC.
Article 11 The actual controller of a fund management company shall meet Article 8 and Items 4 to 6 of Article 10 hereof, and it/he/she shall not fall under such circumstance that its/his/her net assets are less than 50% of its/his/her paid-in capital, its/his/her contingent liabilities reach 50% of its/his/her net assets, or it/he/she is unable to repay due debts.
Article 12 Where a fund management company is incorporated by way of promotion by a natural person as a major shareholder, other shareholders shall be qualified natural persons, financial institutions, or institutions that manage financial institutions, unless otherwise prescribed by the CSRC. The proportion of the equity held directly by a single natural-person shareholder of a fund management company and the aggregate equity held by shareholders that act in concert or are associated with such single natural-person shareholder shall not exceed two-thirds.
The manager of a publicly offered fund may implement a professional stock ownership plan in accordance with the law.
Article 13 An overseas shareholder of a foreign-invested fund management company shall meet the following conditions:
1. it is a financial institution with experience in financial asset management or an institution managing financial institutions that is incorporated and legally existing under the laws of the country or region where it is located; it has a sound internal control mechanism, and its major regulatory indicators in the latest three years conform to the laws and requirements of the regulatory authority of such country or region;
2. the country or region where it is located has sound securities laws and regulatory systems, and its securities regulatory authority has signed a memorandum of understanding on securities regulatory cooperation with the CSRC or with other institutions determined by the CSRC, and has been maintaining effective regulatory cooperative relations;
3. it has a good international reputation and operating performance, and such indicators as its asset management business size, income, profit, and market share have had a rank among the leading positions in the world in the latest three years, and its long-term credit standing has remained at a high level in the latest three years;
4. the cumulative shareholding ratio or proportion of the equity (including the equity held directly and indirectly) conforms to the arrangements of the State for the opening-up of the securities industry; and
5. any other condition as prescribed by laws and administrative regulations, and the CSRC with the approval of the State Council.
The provisions of the preceding paragraph shall apply mutatis mutandis to institutions in the Hong Kong Special Administrative Region, the Macao Special Administrative Region, and Taiwan region.
Where the actual controller of a shareholder of a fund management company is an overseas institution or natural person, the present article shall apply.
Article 14 Any other asset management institution that applies for the qualifications for publicly offered fund management business shall meet the following conditions:
1. it has standard corporate governance, a sound internal control mechanism, and good risk control; it has good management capability, asset quality, and financial status, has had a sound business status in the latest three years, and has sustainable profitability; and it has moderate assets and liabilities and leverage level, as well as capital strength which matches publicly offered fund management business;
2.
......
Order of the China Securities Regulatory Commission No.198
May 20, 2022
The Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds (hereinafter referred to as the "Measures") were adopted upon deliberation at the second executive meeting of the China Securities Regulatory Commission in 2022 on March 24, 2022. In accordance with Article 13 of the Law of the People's Republic of China on Securities Investment Funds, the relevant conditions for the establishment of fund management companies in the Measures have been approved by the State Council. The Measures are hereby promulgated for implementation as of June 20, 2022.
Yi Huiman, Chairman of the China Securities Regulatory Commission
Appendix I: Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds
(Adopted upon deliberation at the second executive meeting of the China Securities Regulatory Commission on March 24, 2022)
Table of Contents
Chapter I General Provisions
Chapter II Market Admission of Managers of Publicly Offered Funds
Chapter III Internal Control and Business Norms for Managers of Publicly Offered Funds
Chapter IV Control and Management of Fund Management Companies
Chapter V Exit of Managers of Publicly Offered Funds
Chapter VI Supervision and Regulation
Chapter VII Legal Liability
Chapter VIII Supplementary Provisions
Chapter I General Provisions
Article 1 The Measures for the Supervision and Regulation of Managers of Publicly Offered Securities Investment Funds (hereinafter referred to as the "Measures") are formulated in accordance with the Law on Securities Investment Funds, the Securities Law, the Company Law, and other relevant laws and administrative regulations in order to standardize the management of publicly offered securities investment funds (hereinafter referred to as the "publicly offered funds"), strengthen the supervision and regulation of managers of publicly offered funds, protect the lawful rights and interests of fund shareholders and the parties concerned, and promote the healthy development of the publicly offered fund industry.
Article 2 Managers of publicly offered funds shall be fund management companies or other asset management institutions that have obtained the qualifications for publicly offered fund management business with the approval of the China Securities Regulatory Commission (hereinafter referred to as the "CSRC") (hereinafter referred to as "other managers of publicly offered funds").
For the purpose of the Measures, a fund management company refers to a profit-making legal person that is incorporated within the territory of the People's Republic of China with the approval of the CSRC and undertakes publicly offered fund management business and other business approved or determined by the CSRC.
For the purpose of the Measures, other asset management institutions include the asset management subsidiaries of securities companies, insurance asset management companies, and financial management subsidiaries of commercial banks that are incorporated within the territory of China and undertake asset management business, institutions that are registered with the Asset Management Association of China (hereinafter referred to as the "AMAC") and specialize in the management of non-publicly offered securities investment funds, and other institutions that are prescribed by the CSRC.
An institution that has not obtained the qualifications for publicly offered fund management business shall not engage in such business.
Article 3 Managers of publicly offered funds shall abide by laws, administrative regulations, the provisions of the CSRC, and self-regulatory rules, devote themselves to their duties, perform their obligations of good faith, prudence, and diligence, use fund property for the benefit of fund shareholders, and protect the lawful rights and interests of fund shareholders, and must not damage national interests, public interests, or the lawful rights and interests of others.
Article 4 The CSRC and its local offices shall supervise and regulate fund management companies and their business activities and the publicly offered fund management business activities of other managers of publicly offered funds and regulate the shareholding of fund management companies on a look-through and classification basis in accordance with laws, administrative regulations, and the provisions of the CSRC, as well as the principle of prudential regulation.
Article 5 The AMAC shall perform self-regulation of fund management companies and their business activities and the publicly offered fund management business activities of other managers of publicly offered funds in accordance with laws, administrative regulations, and the provisions of the CSRC, as well as its self-regulatory rules.
Chapter II Market Admission of Managers of Publicly Offered Funds
Article 6 The following conditions shall be met for the establishment of a fund management company:
1. the shareholders and actual controllers shall meet the provisions of the Law on Securities Investment Funds and the Measures;
2. the company shall formulate the articles of association in compliance with the Law on Securities Investment Funds, the Company Law, and the provisions of the CSRC;
3. the registered capital shall not be less than CNY100 million, and the shareholders shall pay the full capital in a currency from legal sources, and the overseas shareholders shall make capital contributions in convertible currencies;
4. the company shall have directors, supervisors, and senior officers in compliance with laws, administrative regulations, and the provisions of the CSRC and personnel who perform such job duties as research, investment, operation, sales, and compliance, and at least 30 of them shall have obtained the fund practicing qualifications in principle;
5. the company shall have a name, business premises, security facilities, and other business-related facilities that meet the requirements;
6. the company shall set up organizations and posts with reasonable division of work and clear functions;
7. the company shall develop internal management systems which meet the provisions of the CSRC; and
8. any other condition as prescribed by the CSRC with the approval of the State Council.
Article 7 Shareholders of a fund management company are divided into four categories as below according to their shareholding proportions and their influences on the company's business management:
1. any major shareholder, which refers to a shareholder that holds 25% or more of the company's equity, or, if no shareholder holds 25% or more of the company's equity, the largest shareholder that holds 5% or more of the company's equity, unless otherwise prescribed by the CSRC;
2. any non-major shareholder that holds 5% or more of the company's equity; and
3. any non-major shareholder that holds less than 5% of the company's equity.
Article 8 A non-major shareholder that holds less than 5% of a fund management company's equity shall not fall under the following circumstances:
1. the shareholder has any records of material violations of laws or regulations or of gravely dishonest conduct in the latest three years; the shareholder has been subject to a criminal penalty for an intentional crime and not more than three years have elapsed since the execution of the criminal penalty was completed; and the shareholder is under investigation due to being suspected of committing any material violation of laws or regulations, or is in the rectification period;
2. the shareholder falls under the circumstances that affect its exercise of shareholders' rights or its performance of shareholders' obligations, such as long-term failure to carry out actual business activities, suspension of business, bankruptcy liquidation, lack of a governance structure, and ineffective internal control; and there is a guarantee, litigation, arbitration, or any other major matter that may seriously affect the on-going operation of the shareholder;
3. the shareholder has an indefinite shareholding structure that cannot be looked through to the ultimate equity holder; and asset management products are involved in the shareholding structure, unless determined by the CSRC;
4. the shareholder's dishonest conduct or non-compliance has given rise to a major social doubt or serious negative social influence which has not yet been eliminated; the shareholder takes major responsibility for the operation failure of any investee, and not more than three years have elapsed since the operation failure; and the shareholder has not embezzled the assets of clients or performed any other act that impairs the interests of clients; and
5. any other circumstance as prescribed by the CSRC.
Article 9 A non-major shareholder that holds 5% or more of a fund management company's equity shall meet the following conditions, unless otherwise prescribed by the CSRC:
1. the shareholder meets Article 8 hereof;
2. where the shareholder is a legal person or unincorporated organization, it and the institutions under its control have good records of integrity and compliance; its net assets in the latest year are not less than CNY100 million or an equivalent convertible currency, and it has good asset quality and financial status; and it has a standardized corporate governance, sound internal control mechanism, and good risk control, which can support the enhancement of the comprehensive competitiveness of the fund management company; and
3. where the shareholder is a natural person, he/she acts with honesty and completeness, and is of sound moral character, and his/her personal financial assets in the latest year are not less than CNY10 million, and he/she has at least five years' experience in domestic and overseas securities asset management industries, with at least three years' experience in professional securities investment with good performance or in the management of publicly offered funds.
Article 10 A major shareholder of a fund management company shall meet the following conditions:
1. the shareholder meets Article 9 hereof;
2. where the major shareholder is a legal person or unincorporated organization, it is an institution that operates financial business or manages financial institutions in accordance with the law, with good management performance and social reputation, and its net assets in the recent year are not less than CNY200 million or an equivalent convertible currency, and it has made profits continuously in the latest three years; and its contribution to the fund management company is in conformity with its long-term strategy and is conducive to serving the development of its primary business;
3. where the major shareholder is a natural person, his/her personal financial assets in the latest three years are not less than CNY30 million, and he/she has at least ten years' experience in domestic and overseas securities asset management industries, with at least eight years' experience in professional securities investment with good performance or at least eight years' working experience as a senior officer of the publicly offered fund industry;
4. the shareholder has practical plans and arrangements to improve the governance and promote the long-term development of the fund management company; and has continuous capital replenishment capacity which matches the fund management company's business operations;
5. the shareholder has developed a definite self-restraint mechanism to ensure the fund management company's independence in business management and guard against risk transmission and illegitimate tunneling and propping; and
6. the shareholder has developed a reasonable and effective risk disposal plan for the fund management company's failure in normal business operation due to possible risks.
Where an institution that manages financial institutions is a major shareholder of a fund management company, at least one financial institution under its management shall meet Item 2 of the present article and the relevant provisions of the CSRC.
Article 11 The actual controller of a fund management company shall meet Article 8 and Items 4 to 6 of Article 10 hereof, and it/he/she shall not fall under such circumstance that its/his/her net assets are less than 50% of its/his/her paid-in capital, its/his/her contingent liabilities reach 50% of its/his/her net assets, or it/he/she is unable to repay due debts.
Article 12 Where a fund management company is incorporated by way of promotion by a natural person as a major shareholder, other shareholders shall be qualified natural persons, financial institutions, or institutions that manage financial institutions, unless otherwise prescribed by the CSRC. The proportion of the equity held directly by a single natural-person shareholder of a fund management company and the aggregate equity held by shareholders that act in concert or are associated with such single natural-person shareholder shall not exceed two-thirds.
The manager of a publicly offered fund may implement a professional stock ownership plan in accordance with the law.
Article 13 An overseas shareholder of a foreign-invested fund management company shall meet the following conditions:
1. it is a financial institution with experience in financial asset management or an institution managing financial institutions that is incorporated and legally existing under the laws of the country or region where it is located; it has a sound internal control mechanism, and its major regulatory indicators in the latest three years conform to the laws and requirements of the regulatory authority of such country or region;
2. the country or region where it is located has sound securities laws and regulatory systems, and its securities regulatory authority has signed a memorandum of understanding on securities regulatory cooperation with the CSRC or with other institutions determined by the CSRC, and has been maintaining effective regulatory cooperative relations;
3. it has a good international reputation and operating performance, and such indicators as its asset management business size, income, profit, and market share have had a rank among the leading positions in the world in the latest three years, and its long-term credit standing has remained at a high level in the latest three years;
4. the cumulative shareholding ratio or proportion of the equity (including the equity held directly and indirectly) conforms to the arrangements of the State for the opening-up of the securities industry; and
5. any other condition as prescribed by laws and administrative regulations, and the CSRC with the approval of the State Council.
The provisions of the preceding paragraph shall apply mutatis mutandis to institutions in the Hong Kong Special Administrative Region, the Macao Special Administrative Region, and Taiwan region.
Where the actual controller of a shareholder of a fund management company is an overseas institution or natural person, the present article shall apply.
Article 14 Any other asset management institution that applies for the qualifications for publicly offered fund management business shall meet the following conditions:
1. it has standard corporate governance, a sound internal control mechanism, and good risk control; it has good management capability, asset quality, and financial status, has had a sound business status in the latest three years, and has sustainable profitability; and it has moderate assets and liabilities and leverage level, as well as capital strength which matches publicly offered fund management business;
2.
......