INTERIM ADMINISTRATIVE MEASURES FOR COMMERCIAL BANKS TO PROVIDE OVERSEAS FINANCING MANAGEMENT SERVICES

Yin Fa [2006] No. 121

Shanghai Head Office of the People’s Bank of China, each branch and business management department of the People’s Bank of China and
its central sub-branch of all provincial (or autonomous regional) capital cities, each central sub-branch of Dalian, Qingdao, Ningbo,
Xiamen and Shenzhen, each banking regulatory bureau of all provinces, autonomous regions, municipalities directly under the Central
Government and cities specifically designated in the state plan, each branch and foreign exchange department of the State Administration
of Foreign Exchange of all provinces, autonomous regions and municipalities directly under the Central Government, each branch of
the State Administration of Foreign Exchange of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, each wholly state-owned commercial
bank and joint-stock commercial bank:

For the purpose of propelling the convertibility of Renminbi capital accounts in an orderly and controllable way, satisfying the reasonable
demands of domestic institutions and individuals for financing investment and asset management abroad, and promoting the balance
of international payments, the People’s Bank of China, China Banking Regulatory Commission and the State Administration of Foreign
Exchange have formulated the Interim Administrative Measures for Commercial Banks to Provide Overseas Financing Management Services,
which are hereby promulgated. Please abide hereby.

Each branch and business management department of the People’s Bank of China shall immediately, after receiving this Circular, transmit
it to the city commercial banks and foreign capital banks within their respective jurisdictions.

The People’s Bank of China

China Banking Regulatory Commission

The State Administration of Foreign Exchange

April 18, 2006

Interim Administrative Measures for Commercial Banks to Provide Overseas Financing Management Services
Chapter I General Provisions

Article 1

For the purpose of regulating commercial banks to provide overseas financing management services, these Measures are formulated in
accordance with the related laws and administrative regulations.

Article 2

The term “providing overseas financing management services” as mentioned in these Measures shall refer to the business activities
carried out in light of the related requirements of these Measures by commercial banks that are qualified for overseas financing
management services and are entrusted by domestic institutions and individual residents (except domestic non-residents, hereinafter
referred to as “investors”) to make stipulated financing product investments with the investors’ funds.

Article 3

China Banking Regulatory Commission (hereinafter referred to as “CBRC”) shall take charge of the admittance administration and business
administration of commercial banks to provide overseas financing management services.

Article 4

The State Administration of Foreign Exchange (hereinafter referred to as “SAFE”) shall take charge of the foreign exchange quota
administration on overseas financing management services of commercial banks.

Article 5

A commercial bank shall, when making overseas financing management investments for customers, follow the laws and regulations of
the state, the provisions of the state on foreign exchange administration and industry administration, as well as the laws and regulations
at the locality of the investments.

Article 6

Where a commercial bank is entrusted by a domestic individual resident to provide overseas financing management services, it shall
follow the related provisions on the administration of commercial banks’ provision of personal financing management services; where
a commercial bank is entrusted by a domestic institution to provide overseas financing management services, it shall conduct it by
referring to the related requirements on building up internal control rules and risk management systems as well as other prudence
requirements pertaining to the administration of commercial banks’ provision of personal financing management services.

Article 7

A commercial bank shall, when providing overseas financing management services, take practical and effective measures to intensify
the management of related risks.

Chapter II Business Admittance Management

Article 8

A commercial bank shall, when intending to provide overseas financing management services, apply with CBRC for approval.

Article 9

A commercial bank providing overseas financing management services shall be a designated foreign exchange bank, and shall satisfy
the following requirements:

(1)

it has established and improved an effective market risk management system;

(2)

it has sound internal control rules;

(3)

it is of the ability for and experience in overseas investment management;

(4)

it has not been penalized by CBRC within one year before applying for the financing management service activities; and

(5)

other conditions on prudence as required by CBRC.

Article 10

A commercial bank shall, when applying with CBRC for the qualification for providing overseas financing management services, provide
the following materials (in triplicate):

(1)

an application letter;

(2)

the related internal control and risk management systems;

(3)

the draft of the custody agreement; and

(4)

other documents as required by CBRC.

Article 11

CBRC shall abide by the related procedures and provisions on administrative license when examining and approving commercial banks’
qualifications for overseas financing management services.

Article 12

Where a commercial bank sells personal financing management products within the territory of China after obtaining the qualification
for overseas financing management services, the activities shall be subject to the related provisions in the Interim Measures for
the Administration of Commercial Banks’ Personal Financing Management Services.

Where a commercial bank sells financing management products or provides comprehensive financing management services to domestic institutions
after obtaining the qualification for overseas financing management services, the admittance administration shall be subject to the
report system, while the matters concerning report procedures and requirements as well as management of related risks shall be handled
by referring to the related provisions on the administration of personal financing management services.

Chapter III Quotas of Foreign Exchanges Purchased for Investments and Conversion Administration

Article 13

Where a commercial bank is entrusted by an investor to provide overseas financing management services with foreign exchanges purchased
with Renminbi, it shall apply with SAFE for the quota of foreign exchanges purchased for overseas financing management services.

Where a commercial bank is entrusted by an investor to invest in overseas financing management with the investor’s own foreign exchanges,
the amount of funds under entrustment shall not be counted into the quota of foreign exchanges purchased for investments as approved
by SAFE.

Article 14

A commercial bank shall, when applying for the quota of foreign exchanges purchased for overseas financing management, provide the
following documents to SAFE:

(1)

the application letter (including but not limited to the basic information on the applicant, the requested quota of foreign exchanges
purchased for investments, the investment plan and etc.) ;

(2)

the approval document on the business qualification by CBRC;

(3)

the draft of the custody agreement;

(4)

the specimen of the agreement of entrustment (in standard form) to be concluded with the certain investor, which shall include the
rights and obligations of both parties, the assumption of proceeds and risks, and other related contents; and

(5)

other documents as required by SAFE.

SAFE shall make a reply on approval or disapproval, inform the applicant in writing and make a copy to CBRC within 20 working days
as of the receipt of the entire application documents.

Article 15

A commercial bank may, within the approved quota of purchased foreign exchanges, issue to investors the overseas financing management
products whose prices are marked in Renminbi, and shall uniformly go through the formalities for purchase of foreign exchanges for
raising Renminbi funds.

Article 16

A commercial bank shall pay the investment principals and proceeds to the investors after the overseas financing management funds
are remitted to China. Where the investor purchases foreign exchanges with Renminbi for investment, the commercial bank shall pay
in Renminbi to the investors after settlement of foreign exchanges; while if an investor makes investments with foreign exchanges,
the commercial bank shall transfer the foreign exchanges into the investor’s original account, or may, if the original account has
been closed up, transfer the foreign exchanges into the account appointed by the investor.

Article 17

The quota of net foreign exchanges purchased by a commercial bank for providing overseas financing management services shall not
exceed the quota of purchased foreign exchanges, which is approved by SAFE.

Article 18

A commercial bank shall take effective measures to offset and manage the foreign exchange rate risks of overseas financing management
services by making use of forward foreign exchange settlement and other businesses.

Chapter IV Administration on Inward and Outward Funds

Article 19

A commercial bank shall, when making overseas financing management investments, entrust another domestic commercial bank approved
by CBRC as qualified for custody business as the custodian to keep all the assets used for overseas investment.

Article 20

In addition to the duties as prescribed by CBRC, the custodian shall fulfill the following functions and duties:

(1)

opening the domestic custody account, the settlement account on use of overseas foreign exchange funds and the securities custody
account in light of the financing management plan on behalf of the commercial bank;

(2)

supervising the commercial bank’s investment operation, and timely reporting it to SAFE when finding any of the commercial bank’s
investment instructions violates any law or rule;

(3)

preserving the related information like the records on the remittance and conversion of the commercial bank’s funds, collection and
payment of foreign exchanges, flow of funds and etc., with the time of preservation to be not less than 15 years;

(4)

making statistical reports on balance of international payments in accordance with the provisions;

(5)

assisting SAFE in inspecting the use of the commercial bank’s funds abroad; and

(6)

other functions and duties as prescribed by SAFE in light of the principle of prudential supervision.

Article 21

A custodian shall submit the related reports according to the following requirements:

(1)

it shall, within 5 working days as of opening the domestic custody account, the settlement account on use of overseas foreign exchange
funds and the securities custody account on behalf of the commercial bank, report it to CBRC and SAFE;

(2)

it shall, within 5 working days as of the day when the commercial bank remits the principals or proceeds out or back, report the remittance
of funds to SAFE;

(3)

it shall, within 5 working days as of the end of each month, report the incomes and expenditures of the commercial bank’s domestic
custody account to SAFE;

(4)

it shall, within 1 month as of the end of each accounting year, submit to SAFE the commercial bank’s statement on using foreign exchange
funds abroad in the last year;

(5)

it shall timely report it to CBRC and SAFE when finding any of the commercial bank’s investment instructions violates any law or rule;
and

(6)

other for-report matters as prescribed by CBRC and SAFE.

Article 22

A commercial bank shall, after receiving SAFE’s approval document on the quota of purchased foreign exchanges, conclude a custody
agreement with the domestic custodian upon the strength of the approval document, and open a domestic custody account. The commercial
bank shall, within 5 working days as of opening the domestic custody account, submit the formal custody agreement to SAFE.

Article 23

The scope of incomes of a commercial bank’s domestic custody account shall be the foreign exchange funds transferred by the commercial
bank into the aforesaid account, the investment principals and proceeds remitted from abroad and other income as prescribed by SAFE.

The scope of expenditures of a commercial bank’s domestic custody account shall be the funds transferred into the settlement account
on use of overseas foreign exchange funds, the funds remitted back to the commercial bank, the currency conversion fees, the custody
fees, the asset management fees, various commissions and other expenditures as prescribed by SAFE.

Article 24

A domestic custodian shall, in light of the principle of prudence and according to the risk management requirements and commercial
practices, select an overseas financing institution as its overseas custody agent.

The domestic custodian shall open the settlement account on use of the commercial bank’s foreign exchange funds and the securities
custody account at the overseas custody agent, and use the aforesaid accounts for the funds settlement business and securities custody
business with overseas securities registration and settlement institutions.

Article 25

A domestic custodian and its overseas custody agent must separately set custody accounts for different commercial banks.

Chapter V Information Disclosure and the Supervision and Management Thereon

Article 26

A commercial bank shall, when intending to buy overseas financing products, accord with the related risk management provisions of
CBRC.

CBRC shall, under the related laws and regulations, supervise and manage the risks in commercial banks’ overseas financing management
services.

Article 27

A commercial bank providing overseas financing management services shall, when selling its products, notify the investors in details
and in an all-round way of the investment plan, product features and related risks, so that the investors may make their choices
independently.

Article 28

A commercial bank providing overseas financing management services shall, at regular intervals, disclose the information on investment
conditions, investment behaviors and risk conditions and etc. to investors.

Article 29

A commercial bank providing overseas financing management services shall, in accordance with the provisions, fulfill the obligations
of making statistical reports on settlement and sale of foreign exchanges.

Article 30

SAFE may, when required by the balance of payments, adjust the quotas of commercial banks that provide overseas financing management
services for purchasing foreign exchanges for investment.

Article 31

CBRC and SAFE may require a commercial bank, a domestic custodian or an overseas custody agent to provide related information on
the commercial bank’s overseas investment activities, and may, when necessary, make on-the-spot inspections on the commercial bank
in light of their supervisory duties.

Article 32

Where a commercial bank falls under any of the following circumstances, it shall, within 5 working days after the circumstance occurs,
report it to CBRC and SAFE for archiving:

(1)

the custodian or the custody agent is changed;

(2)

the registered capital or the structure of shareholders of the company is changed greatly;

(3)

it is involved in any lawsuit or is severely penalized; or

(4)

other circumstances as prescribed by CBRC and SAFE.

Article 33

Where a commercial bank’s domestic custodian is under any of the following circumstances, it shall, within 5 working days after the
circumstance occurs, report it to SAFE:

(1)

its registered capital or stock right structure is changed greatly;

(2)

it is involved in any major lawsuit or is severely penalized; or

(3)

other matters as prescribed by SAFE.

Article 34

Where a commercial bank or its domestic custodian violates these Measures, it shall be imposed upon administrative penalties by SAFE.
If the circumstance is serious, CBRC and SAFE shall have the power to demand the commercial bank to change the domestic custodian,
or to revoke the commercial bank’s quota of foreign exchanges purchased for overseas financing management services. In case the overseas
custody agent refuses to provide related information, CBRC and SAFE shall have the power to demand to change the overseas custody
agent.

Chapter VI Supplementary Provisions

Article 35

Where a commercial bank invests in the financing products in Hong Kong Special Administrative Region or Macao Special Administrative
Region, it shall take the related clauses in these Measures as reference.

Article 36

The power to interpret these Measures shall remain with the People’s Bank of China and CBRC.

Article 37

These Measures shall enter into force as of the date of promulgation.