Notice of the Ministry of Finance on Printing and Distributing the Provisions on the Financial Management Issues related to the Custodian
Business of Financial Asset Management Companies
Cai Jin [2004] No. 108
The People’s Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance
Regulatory Commission, the China Huarong Asset Management Company, the China Great Wall Asset Management Company, the China Orient
Asset Management Company and the China Xinda Asset Management Company:
With a view to regulating the financial management work concerning the custodian business of financial asset management companies,
strengthening the risk control and ensuring the orderly development of trust operation, we hereby print and distribute the Provisions
on the Financial Management Issues related to the Custodian Business of Financial Asset Management Companies to you, please carry
them out accordingly.
Attachment: Provisions on the Financial Management Issues related to the Custodian business of Financial Asset Management Companies
The Ministry of Finance of the People’s Republic of China
October 30, 2004 Attachment:Provisions on the Financial Management Issues related to the Custodian Business of Financial Asset Management Companies
With a view to regulating the financial management work concerning the custodian business of financial asset management companies
(hereinafter referred to as the “asset companies”) and strengthening the risk control, the relevant issues are formulated as follows:
1.
The custodian business of asset companies shall refer to the management activities in that the asset companies legally conduct trust
to the entrusted institutions and assets on the commission of government departments and enterprises within the approved business
scope according to the commercial principles.
2.
The custodian business of asset companies, which falls within the category of commission and agency business of asset companies, shall
follow the principle of prudent operation and strictly implement the relevant provisions on the Notice of the Ministry of Finance
on Printing and Distributing the Measures for the Risk Management of Relevant Operations of Financial Asset Management Companies
([2004] No. 40 of the Ministry of Finance) and the Notice of the Ministry of Finance on Relevant Financial Issues concerning the
Development of Investment Agency by Entrustment and Commercialized Purchasing Businesses by the Financial Asset Management Companies
([2004] No. 61 of the Ministry of Finance).
3.
The asset companies shall strictly distinguish the custodian business from other business, perform well the take-over and registration
work of entrusted assets, bring the entrusted assets into the off-balance-sheet account after they are cleaned up and confirmed,
implement the management of separate account, strengthen the internal control of custodian business and effectively isolate financial
risks.
4.
According to the current financial and accounting systems of asset companies, the incomes and expenditures of the custodian business
of asset companies shall be separately calculated on the basis of the items of “other revenuesDrevenues of intermediate operations”
and “other expendituresDexpenditures of intermediate operations” and be attributed into the profits and losses of asset companies,
and extra explanations in details concerning them shall be made in the annual final accounting.
5.
The custodian business of asset companies shall follow the principle of “who entrusts, who pays”.
As to the custodian business by a government department, the government department shall put forth the scheme on trust money, and
conclude the entrustment protocol with the asset company after the finance department of the same level has approved the scheme upon
examination.
As to the custodian business by an enterprise, the entrustment protocol shall, in light of the scale, planned workload and cost of
the entrusted assets, be concluded by the enterprise and the asset company commercial principles after the trust money is determined
through consultation.
The asset company shall report the foresaid entrustment protocol to the Ministry of Finance for archival filing after it is concluded.
6.
The expenditures of custodian business of an asset company shall refer to the direct expenses occurred during the process of carrying
out the trust, which include the relevant operation expenses, direct management expenses and etc. and shall be drawn from the income
of the trust money. The expenditures of custodian business shall not be brought into the cost of the asset disposal operation.
The operation expenses shall consist of the expenses occurred in such work as the investigation, evidence-obtaining, evaluation and
management which are conducted by such intermediary agencies as law offices and evaluation institutions employed due to the necessity
for carrying out the trust, and any other operation expense from the directly related operations.
The direct management expenses shall limit to the expenses of travel, entertainment, meeting and articles for office work, which are
directly related with the implementation of the trust. The expenses for the company staff members may not be used for the expenditures
of the custodian business.
The expenses occurred in the liquidation of the trust organ of an asset company shall be brought into the liquidation expenditures
of the organ.
7.
All asset companies shall strengthen the accounting of the trust money from the custodian business, open a separate capital liquidation
account and make regular inspections on the settlement.
8.
The present Provisions shall be applicable to any custodian business carried out by asset companies on commission as of January 1,
2004.
Circular of the Ministry of Land and Resources on Promulgating and Implementing Controlling Index for Industrial Projects Construction
Land Utilization (for Trial Implementation)
Guo Tu Zi Fa [2004] No. 232
November 1, 2004
Departments of land and resources (departments of land, environment and resources, bureaus of land, resources and house administration,
bureaus of house, land and resources administration, and bureaus of programming, land and resources) of provinces, autonomous regions
and municipalities directly under the central government, bureaus of land administration of PLA as well as bureau of land and resources
of Sinkiang Production and Construction Corps:
In order to implement the Decision of the State Council on Deepening Reform and Strictly Administrating Land ([2004]No. 28), strengthen
the administration of industrial construction projects land and promote intensive utilization of construction land utilization, the
Ministry has formulated the “Controlling Index for Industrial Projects Construction Land Utilization (for Trial Implementation)”
(hereinafter referred to as Controlling Index) and promulgated it.
I.
The administrative departments of land and resources at all levels shall strictly enforce Controlling Index and the relevant index
for industrial projects construction land, strictly control land supply. No land shall be supplied or the acreage of projects land
utilization shall be reduced for industrial projects not meeting the requirements of controlling index. Where there are such special
requirements as technological processes, production security and environmental protection that the Controlling Index really need
to be broken, when applying for construction projects land utilization for preliminary examination and submitting for approval, the
relevant verification documents shall be provided . Not until the circumstance is found truly reasonable, preliminary examination
is passed or land utilization is approved, and legal documents such as approval documents and land use contract shall be filed with
administration departments of land and resources of provinces (autonomous regions , municipalities directly under the central government)
for record.
II.
When supplying land, administration departments of land and resources of cities or counties shall specify requirements of controlling
index and liabilities for breach of a contract such as investment intensity and capacity ratio pursuant to the provisions of Controlling
Index. Land users failing to perform duties shall bear the liability for breach of a contract.
III.
Administration departments of land and resources of cities or counties shall strengthen supervision of the implementation of Controlling
Index, explore good experiences and practice in using land intensively during attracting bid for inviting investments and promoting
industrialization, summarize examples, step up publicity and promotion, continually improve and regulate the enforcement procedures
and measures of Controlling Index, strengthen the evaluation and analysis of the condition of land use, step up efforts to promote
intensive utilization of industrial land utilization, formulate the local index for industrial projects construction land control
on the premise of conformity with the requirements of Controlling Index and file with the Ministry for record.
IV.
The Ministry will appropriately revise Controlling Index according to social and economic development, technological advancement,
requirements of intensive land use and the enforcement of Controlling Index.
The Controlling Index for Industrial Project Construction Land Utilization (for Trial Implementation)
I.
The controlling index for industrial projects construction land (hereinafter referred to as Controlling Index) are formulated to
carry out the basic national policy of treasuring land, rational utilization of land and cultivated land protection, to promote the
intensive utilization and optimum distribution of construction land and improve administration level of industrial projects construction
land.
II.
The Controlling Index is controlling criteria for an industrial project or individual project or its supporting projects in land
use
III.
The Controlling Index is significant norms by which administration departments of land and resources confirm industrial projects
land utilization scale in the stage of pre-examining and examining and approving construction land utilization, and crucial basis
for industrial enterprises and designing entities to establish industrial projects feasible study report and preliminary designing
documents
Where there is index formulated by the state concerning relevant engineering project construction land utilization in an industry
that the industrial project is subject to, it shall be used in conjunction with the present controlling index.
IV.
The Controlling Index is composed of investment intensity, capacity ratio, construction quotiety, and proportion of administrative
office land and social amenities land. Industrial projects construction land utilization must meet the four indexes simultaneously.
1.
Investment intensity shall meet the provision in table 1;
2.
Capacity ratio shall meet the provision in table 2;
3.
Construction quotiety shall not be lower than 30%; and
4.
The acreage of land of administration and social amenities necessary to industrial projects shall not exceed a maximum of 7% of total
acreage of industrial projects land utilization. The building of non-productive accommodations such as residences, expert building,
hotels, hostels and training centers etc. is strictly prohibited.
V.
Industrial projects construction shall adopt advanced production technology and facilities, shorten technological processes and economize
utilization of land. Industrial projects shall be established in standard multistory industrial building production if adapted, and
no land is supplied separately in principle.
VI.
Industrial projects construction shall strictly control afforestation percentage in production area. In industrial development zone
or industrial projects land, no garden-like factory is permitted.
VII.
This Controlling Index is composed of four parts, i.e. text, Application Introduction of Controlling Index (Appendix 1), City Grade
Division (Appendix 2) and Notes on the Classification of National Economic Industries (Appendix 3).
VIII.
The controlling index shall apply to newly-built industrial projects and mutatis mutandis to reconstruction and expansion industrial
projects.
Order of the Ministry of Land and Resources of the People’s Republic of China
No. 26
The “Measures for the Administration of Annual Plans on the utilization of Land” were revised and adopted at the 9th ministerial meeting
of the Ministry of Land and Resources on October 29, 2004. The revised “Measures for the Administration of Annual Plans on the utilization
of Land” are hereby promulgated, and shall come into force on December 1, 2004.
Minister of the Ministry of Land and Resources Sun Wensheng
November 1, 2004
Measures for the Administration of Annual Plans on the Utilization of Land (2004 revised edition)
Article 1
These Measures are formulated in accordance with the Land Administration Law of the People’s Republic of China, the Regulation on
the Implementation of the Land Administration Law of the People’s Republic of China and the Decision of the State Council on Deepening
the Reform and Strictly Enforcing Land Administration in order to strengthen land administration, implement the overall planning
on land utilization, control the total amount of land for construction use, guide intensive use of land, earnestly protect cultivated
land, and guarantee sustainable economic and social development.
Article 2
The compilation, submission for approval, implementation of and supervision over the annual plans on the utilization of land shall
be governed by these Measures.
The annual plan on the utilization of land as mentioned in these Measures shall mean the specific arrangements by the State in each
planned year of the amount of land for agricultural use to be converted into that for other uses, the amount of cultivated land supplemented
by land development and rehabilitation, and the amount of reserved cultivated land.
Article 3
The annual plans on the utilization of land shall be administered in compliance with the following principles:
(1)
Strictly complying with the overall planning on land utilization, controlling the total amount of land for construction use, and protecting
cultivated land;
(2)
Guiding demands for land on the basis of land supply, as well as rationally and effectively utilizing land;
(3)
Giving priority to ensuring the land for the State’s key construction projects and infrastructure projects;
(4)
Balancing the occupation and supplement of cultivated land;
(5)
Increasing land use in urban areas while reducing land use in rural areas for construction purposes; and
(6)
The ecological environment shall be protected and improved, and the sustainable utilization of land shall be guaranteed.
Article 4
The annual plan indexes of land utilization shall include:
(1)
the planned index on land conversion from agricultural use into construction use, which may be divided into the index of land for
agricultural use occupied for urban and rural construction, and the index of land for agricultural use occupied for key construction
projects of energy, traffic and water conservancy, etc., whose localities are independently selected.
(2)
the planned index of land development and rehabilitation, which may be divided into the index of supplementing cultivated land by
land development and the index of supplementing cultivated land by land rehabilitation and reclaiming. And
(3)
the planned index of the amount of reserved cultivated land.
The land administration departments in all regions may, in light of the actual needs, add the controlling index on the basis of the
above classification.
Article 5
In the annual plan on the utilization of land, the planned index on land use conversion from agricultural purposes into construction
purposes shall be determined pursuant to the plan on national economic and social development, the overall planning on land utilization,
the policies of the state on land supply, and the actual situation on land utilization.
The planned index of land development and rehabilitation shall be determined on the basis of the overall planning on land utilization,
the planning on land development and rehabilitation, and the facts on reduction of cultivated land due to construction, etc.
The planned index of the amount of reserved cultivated land shall be determined on the basis of the assessment targets on protection
of cultivated land, which are released by the State Council to all provinces, autonomous regions, and municipalities directly under
the Central Government.
Article 6
Where any land is to be used within the planned year for a key construction project which needs to be approved and ratified by the
State Council or the national development and reform institution, etc., involving land use conversion from agricultural purposes
into construction purposes, the competent authority of the said industry shall, prior to September 25 of the last year, provide its
suggestions on the plan to the Ministry of Land and Resources according to the project, and at the same time submit the copies to
the administrative department of land and resources and the development and reform department of the province, autonomous region,
or municipality directly under the Central Government where the land to be used for the project is located.
Article 7
The administrative department of land and resources of a local people’s government at the county level or above shall, jointly with
other relevant departments, and pursuant to the uniform arrangement of the state, propose its suggestions on the annual plan on the
utilization of local land, and shall, upon examination by the people’s government at the same level, report to the administrative
department of land and resources of the people’s government at the higher level.
The suggestions of all provinces, autonomous regions, and municipalities directly under the Central Government on the annual plan
on the utilization of land shall be submitted to the Ministry of Land and Resources prior to October 10 of each year, and copies
thereof shall meanwhile be submitted to the National Development and Reform Commission. The suggestions of a city directly under
state planning or of Xinjiang Production and Construction Group on the annual plan on the utilization of land shall be separately
stated in the plan proposals of the relevant province or autonomous region.
Article 8
The Ministry of Land and Resources shall, jointly with the National Development and Reform Commission, and on the basis of the suggestions
proposed from all regions and by the relevant institution under the State Council on the annual plan on the utilization of land,
compile a draft of the national annual plan on the utilization of land, which shall be included into the draft of the annual plan
on national economy and social development.
Article 9
The Ministry of Land and Resources shall, jointly with the National Development and Reform Commission, submit the draft of the annual
plan on the utilization of land to the State Council. The said annual plan shall, after verification by the State Council, be released
to all places and used as a reference for implementation. After the National People’s Congress has examined and adopted the draft
of the plan on national economic and social development, the plan approved by the National People’s Congress shall come into force.
Article 10
The national annual plan on the utilization of land shall be released to all provinces, autonomous regions, municipalities directly
under the Central Government, cities directly under state planning, and Xinjiang Production and Construction Group.
With respect to the planned index on land use conversion from agricultural purposes into construction purposes, only the planned index
of the land for agricultural use which is occupied by the projects for urban and rural (including independent industrial and mining
areas) construction and the planned index of land use conversion from agricultural purposes into construction purposes, which is
approved by the provincial authority, are required to be released. The planned index on the land for agricultural use which is occupied
for any key construction project shall not be released to specific regions if the conversion of the land for agricultural use into
that for construction use is to be approved and ratified by the State Council or by the national development and reform institution,
etc. and be examined by the State Council for approval, however, such index may be used when the land used for a construction project
is examined for approval.
Article 11
The administrative department of land and resources under a local people’s government may divide the planned index of land utilization
released by the superior authority, and release the divided index after approval of the people’s government at the same level.
The administrative department of land and resources under a people’s government at the provincial level shall, when dividing and releasing
the plans, independently list the planned index on land use conversion from agricultural purposes into construction purposes concerning
the cities in the overall planning on land utilization, which has been approved by the State Council, and shall report the said index
to the Ministry of Land and Resources for archival purposes.
Article 12
When any land for agricultural use is to be occupied by an unforeseeable key project in urgent need in respect of energy, traffic,
water conservancy, etc., whose locality is independently selected, a flexible index of a small amount of land may be reserved.
Article 13
The planned index on land use conversion from agricultural purposes into construction purposes shall be subject to mandatory administration,
which may not be broken. If no planned index on land use conversion from agricultural purposes into construction purposes is held,
the competent authority may not approve the conversion of the land for agricultural use. In the plan on land use conversion from
agricultural purposes into construction purposes, the index of the land for agricultural use, which is occupied for urban and rural
construction, may not be mixed with the index of the land for agricultural use, which is occupied by key construction projects of
energy, traffic, water conservancy, etc., whose localities are independently selected. If no planned index on land use conversion
from agricultural purposes into construction purposes is held, but the competent authority discretionarily approves the conversion
of the land for agricultural use into that for construction use, it shall be subject to liabilities for illegally approving the use
of land.
The supplement of cultivated land by land development and rehabilitation shall conform to the index determined in the land development
and rehabilitation plan.
The planned index of the amount of reserved cultivated land may be used for the inspection and assessment of the targets on protection
of cultivated land. The amount of reserved cultivated land in the assessment year may not be lower than the planned index on the
amount of reserved cultivated land.
Article 14
Once an annual plan on the utilization of land is approved to be released, it must be strictly implemented.
If, when implementing the annual plan on the utilization of land, the competent authority of a province, autonomous region, or municipality
directly under the Central Government indeed needs to raise the planned index on land use conversion from agricultural purposes into
construction purposes due to an unforeseeable key construction project, it may file an application to the Ministry of Land and Resources.
Where it is necessary to add the plan on land use conversion from agricultural purposes into construction purposes in a national annual
plan on the utilization of land due to a particular circumstance, it shall be submitted to the State Council pursuant to the prescribed
procedures for determination.
Article 15
The administrative department of land and resources of a local people’s government at the county level or above shall apply desk-account
management to the annual plan on the utilization of land, and make registration and statistics on the implementation of the said
plan.
The implementation of the annual plan on the utilization of land shall be included into the comprehensive statistics on land and resources,
and shall be reported to the superior authority at regular intervals.
Article 16
A superior administrative department of land and resources shall make assessment on the implementation by inferior ones of the annual
plan on the utilization of land.
The assessment shall be made in combination with the comprehensive statistics on land and resources, the approval and archiving of
land for construction use, the modification and survey of land utilization, dynamic monitoring of land utilization, and so on.
The assessment year of an annual plan on the utilization of land shall commence on January 1 and end on December 31 of each year.
Article 17
The results from assessment of the implementation of the annual plan on the utilization of land shall be considered as the basis for
compiling the plan for the next year.
In case of unauthorized approval of use of land beyond the plan, if there have been two years since the land was requisitioned but
no land is supplied, or if the task of balancing the occupation and supplement of cultivated land has not been fulfilled, the planned
index of the next year on land use conversion from agricultural purposes into construction purposes shall be reduced accordingly.
Article 18
The surplus of land whose use to be converted from agricultural purposes into construction purposes of each province, autonomous region,
municipality directly under the Central Government and city directly under state planning, and of Xinjiang Production and Construction
Group may be, after ratification by the Ministry of Land and Resources, carried forward for use within the planning period.
Article 19
These Measures shall come into force on December 1, 2004.
the Ministry of Commerce, the State Administration of Taxation
Notice of the Ministry of Commerce and the State Administration of Taxation on Relevant Issues concerning Undertaking Financing Lease
Business
Shang Jian Fa [2004] No.560
The competent departments of commerce of all the provinces, autonomous regions, municipalities directly under the Central Government
and cities directly under state planning, the state administration of taxation and the local administrations of taxation,
For the purpose of further bringing into play the role of leasing industry in the expansion of domestic demand and promotion of economic
development, and supporting the rapid and healthy development of leasing industry, the following notice are formulated hereby on
the relevant issues concerning the carrying out of financing lease business:
I.
According to the provisions of the Ministry of Commerce on the “Three Fixings” (fixing the function, fixing the institution and fixing
the size of staff) issued by the General Office of the State Council, the relevant functions of the former State Economic and Trade
Commission and the former Ministry of Foreign Trade and Economic Cooperation on administering leasing industry and foreign-funded
leasing companies shall come under the administration of the Ministry of Commerce. In the future, all the administrative functions
of the former State Economic and Trade Commission and the Ministry of Foreign Trade and Economic Cooperation referred to in the Notice
of the Ministry of Finance and the State Administration of Taxation on Several Policy Issues on Business Tax, shall be burdened by
the Ministry of Commerce.
II.
The relevant provisions of the Ministry of Commerce shall be continuously followed for the work of market access of and industry supervision
over foreign-funded leasing companies.
III.
The Ministry of Commerce will carry out the experimental work for undertaking financing lease business in Chinese-funded leasing enterprises.
The competent departments of commerce of all the provinces, autonomous regions, municipalities directly under the Central Government
and cities directly under state planning may recommend one or two enterprises which undertake the leasing business of various advanced
or applicable equipments used in production, communications, medical treatment, environmental protection, scientific and research
and etc., and engineering machinery and traffic conveyances (including airplane, steamships, automobiles and etc.) to take part in
the experimental work in the light of the actuality of development of leasing industry in their own regions. The recommended enterprises
shall be brought into the scope of financing lease experiment after being confirmed jointly by the Ministry of Commerce and the State
Administration of Taxation.
IV.
A pilot enterprise which undertakes financing lease business (hereinafter referred to as the financing lease pilot enterprise) shall
have the following qualifications concurrently:
1.
The minimum registered capital of any Chinese-funded leasing enterprise that was established before or on August 31st, 2001 shall
reach RMB 40 million Yuan. The minimum registered capital of any Chinese-funded leasing enterprise that was established during the
period of September 1st, 2001 to December 31st, 2003 shall reach RMB 170 million Yuan;
2.
It has a perfect internal management system and a perfect risk control system;
3.
It has corresponding professionals in aspects of finance, trade, law, accounting and etc.; and the senior managers shall have experiences
in leasing industry for not less than three years;
4.
It has good business achievements in the past two years and has no records of violation of laws and regulations;
5.
It has the industry background relating to its undertaking of financing lease product; and
6.
Other qualifications as prescribed by laws and regulations.
V.
Besides the recommendation letter, the financing lease pilot enterprise recommended by the competent department of commerce at the
provincial level shall submit the following documents:
1.
the application of the enterprise for undertaking financing lease business and the feasibility study report;
2.
the duplicate (or photocopy) of the business license;
3.
articles of association of the company, documents of internal management system and risk control system of the enterprise;
4.
financial statements in the past three years issued by a qualified accountant firm;
5.
certificate proving that it has no records of violation of laws and regulation in the past two years; and
6.
the name list and qualification certificates of senior management personnel.
VI.
The financing lease companies as listed in Articles 2 and 3 of the present Notice (that is the Chinese-funded financing lease pilot
enterprises, the foreign-funded financing lease companies) may enjoy the business tax policies on financing lease business in accordance
with the provisions of the Notice of the Ministry of Finance and the State Administration of Taxation on Several Policy Issues concerning
Business Tax (No. 16 [2003] of the Ministry of Finance).
VII.
A financing lease company shall pay all kinds of taxes in time strictly according to the relevant provisions of the state. If it violates
the tax laws and regulations of the state or evades tax money, the tax organ shall give it a punishment according to the Law of the
People’s Republic of China on the Administration of Tax Collection and the relevant provisions of tax laws and regulations, and shall
cancel the financing lease tax policy implemented to the enterprise at the same time.
When any financing lease company purchases any equipment from its affiliated production enterprises, the settlement price of the relevant
equipment shall be not lower than the price sold to any third party (or the price of the same batch of equipment) by the production
enterprise.
VIII.
Any financing lease pilot enterprise shall strictly conform with the relevant laws and regulations of the state, and may not undertake
the following businesses:
1.
absorbing deposits or depositing in disguised form;
2.
providing loans of circulating fund and other loans under the leasing item to the tenant;
3.
securities investment or equity investment of financial institutions;
4.
Inter-bank borrowing or lending business; or
5.
Other financial businesses not being approved by the China Banking Regulatory Commission.
IX.
The risk assets (including balance of guaranty) of any financing lease pilot enterprise may not exceed 10 times of the total capital.
X.
A financing lease pilot enterprise shall report the business conditions in the previous quarter to the provincial competent department
of commerce before the 15th day each quarter and send a copy to the Ministry of Commerce. The Ministry of Commerce and the State
Administration of Taxation shall make spot check on the business conditions of the pilot enterprise periodically or aperiodically.
For any enterprise that violates the relevant laws and regulations and the aforesaid provisions, the Ministry of Commerce shall cancel
its qualification as a financing lease pilot enterprise.
XI.
The competent department of commerce and the competent department of taxation of each region shall strengthen supervision over the
financing lease pilot enterprises, make research on the problems existing in the experimental work, and report to the Ministry of
Commerce and the State Administration of Taxation once any major issue is discovered. Meanwhile, they shall summarize experiment
experiences continuously and take effective measures to promote the healthy development of leasing industry.
The Ministry of Commerce
The State Administration of Taxation
October 22nd, 2004
the Ministry of Commerce, the State Administration of Taxation
2004-10-22
China Insurance Regulatory Commission, China Securities Regulatory Commission
Order of China Insurance Regulatory Commission and China Securities Regulatory Commission
No. 12
Interim Measures for the Administration of Stock Investment of Insurance Institutional Investors enacted by China Insurance Regulatory
Commission together with China Securities Regulatory Commission, are hereby promulgated and shall come into force as of the day of
promulgation.
President of China Insurance Regulatory Commission, Wu Dingfu
President of China Securities Regulatory Commission, Shang Fulin
December 24, 2004
Interim Measures for the Administration of Stock Investment of Insurance Institutional Investors
Chapter I General Provisions
Article 1
The present Measures are formulated according to the “Insurance Law of the People’s Republic of China”, the “Securities Law of the
People’s Republic of China” and other laws and administrative regulations for the purpose of strengthening the administration of
stock investment business by insurance institutional investors, regulating investment activities, preventing investment risks and
guaranteeing the interests of insurants.
Article 2
Insurance institutional investors mentioned in the present Measures shall mean insurance companies or insurance asset management companies
that meet the conditions prescribed by China Insurance Regulatory Commission (hereinafter referred to as CIRC) and engage in stock
investment. Insurance group companies and insurance holding companies engaging in stock investment shall be governed by the present
Measures.
Stock investment mentioned in the present Measures shall mean the activity that an insurance institutional investor engages in or
entrusts a qualified institution to engage in the trading of stocks, bonds of convertible companies and other stock market products.
Stock asset trusteeship mentioned in the present Measures shall mean the activity that an insurance company concludes, according to
the relevant provisions of CIRC, a trusteeship agreement with a commercial bank or other professional financial institution, who
is entrusted by the insurance company to keep in custody of the stocks and the funds for investment in stocks, to be responsible
for the settlement and transaction, valuation of assets, investment supervision and etc.
Article 3
When investing in stocks, An insurance institutional investor shall set up an independent trusteeship mechanism, follow the principles
of prudence, safety and value increase, as well as independently operate the business and bear the risks, profits and losses by itself.
Article 4
The CIRC and China Securities Regulatory Commission (hereinafter referred to as CSRC) shall, according to their respective duties,
conduct supervision and administration over the stock investment activities carried out by insurance institutional investors.
Chapter II Qualification Requirements
Article 5
An insurance asset management company shall, if it accepts the entrust to engage in stock investment, meet the following conditions:
(1)
Its internal management system and risk control system accord with the “Guide to Risk Control on Utilization of Insurance Funds”;
(2)
It has found an independent trading department;
(3)
Its relevant senior managers and major operating personnel meet the requirements prescribed in the present Measures;
(4)
It has professional investment analysis system and risk control system; and
(5)
Other conditions prescribed by the CIRC.
Article 6
An insurance company meeting the following conditions may, with approval of the CIRC, entrust a relevant insurance asset management
company which meets the conditions prescribed in Article 5 of the present Measures to engage in stock investment:
(1)
Its solvency accords with the relevant provisions of the CIRC;
(2)
Its internal management system and risk control system accord with the “Guide to Risk Control on Utilization of Insurance Funds”;
(3)
It has found a special department responsible for entrustment of insurance funds;
(4)
The relevant senior managers and major operating personnel meet the requirements prescribed in the present Measures;
(5)
It has set up a mechanism for stock asset trusteeship;
(6)
It has no investment records that severely violate laws or rules during the last three years; and
(7)
Other conditions prescribed by the CIRC.
Article 7
An insurance company meeting the following conditions may, with approval of the CIRC, directly engage in stock investment:
(1)
Its solvency accords with the relevant provisions of the CIRC;
(2)
Its internal management system and risk control system accord with the “Guide to Risk Control on Utilization of Insurance Funds”;
(3)
It has found a professional fund utilization department;
(4)
It has found an independent trading department;
(5)
It has set up a mechanism for stock asset trusteeship;
(6)
The relevant senior managers and major operating personnel meet the requirements prescribed in the present Measures;
(7)
It has professional investment analysis system and risk control system;
(8)
It has no investment records that severely violate laws or rules during the last three years; and
(9)
Other conditions prescribed by the CIRC.
Article 8
An insurance company that applies for directly engaging in or entrusting an insurance asset management company to engage in stock
investment shall submit the following documents and materials to the CIRC in triplicate:
(1)
The application letter;
(2)
The board resolution on stock investment;
(3)
Its internal management system, risk control system and the condition on the setup of its internal frameworks;
(4)
Relevant materials on stock asset trustees and the draft of the trusteeship agreement;
(5)
The list and resumes of the relevant senior managers and major operating personnel;
(6)
The financial statements of the company of the latest three years which have been audited by an accounting firm;
(7)
The existing trading seats, securities accounts and fund accounts;
(8)
Its stock investment strategies, which shall at least state the idea of stock investment, investment targets and the direction of
investment combination; and
(9)
Other documents and materials prescribed by the CIRC to be provided.
In case an insurance company applies for directly engaging in stock investment, it shall submit the statement on the investment analysis
system and risk control system in addition.
Article 9
When examining the application of an insurance company for directly engaging in or entrusting an insurance asset management company
to engage in stock investment, the CIRC shall make a decision on whether or not to approve the application within 20 days as of receipt
of the complete application documents and materials. If the CIRC decides not to approve the application, it shall notify the applicant
in written form and state the reason thereof.
When considering it necessary, the CIRC may conduct expert appraisal on the application proceedings of the insurance company and shall
notify the insurance company in written form of the time needed by the expert appraisal.
Article 10
Where an insurance company directly engages in stock investment, it shall, within 10 days after completing the relevant procedures
for stock investment, submit to the CIRC the formal trusteeship agreement, the benchmark for evaluating investment performance, as
well as the relevant materials on trading seats, securities account and fund account.
Where an insurance company entrusts an insurance asset management company to engage in stock investment, it shall, within 10 days
after completing the relevant procedures for stock investment, submit to the CIRC the entrustment agreement, the formal trusteeship
agreement, the guide on investment, the benchmark for evaluating investment performance, as well as the relevant materials on trading
seats, securities account and fund account.
In case that the contents prescribed in the preceding two paragraphs are modified, the insurance company shall report it to the CIRC
within 5 days after completing the modification procedures.
The insurance company shall submit copies of the relevant materials on trading seats, securities account and fund account to the CSRC
simultaneously.
Chapter III Investment Scope and Proportions
Article 11
The stock investment of an insurance institutional investor shall be limited to the following varieties:
(1)
Ordinary RMB stocks;
(2)
Convertible company bonds; and
(3)
Other investment varieties prescribed by the CIRC.
Ordinary RMB stocks mentioned in Item (1) of the preceding paragraph shall mean the stocks that are issued publicly in territory of
China and circulate on the market, and subscribed and traded in RMB.
Article 12
The stock investment of an insurance institutional investor may be conducted by the following means:
(1)
To be subscribed on primary market, including distribution based on market value, subscription either on or off the network, participation
in distribution in the identity of a strategic investor, and etc.;
(2)
To be traded on secondary market.
Article 13
The stocks of one listed company which are held by an insurance institutional investor shall be less than 30% of the ordinary RMB
stocks of the listed company.
The concrete proportion of the investment stocks held by an insurance institutional investor shall be separately prescribed by the
CIRC.
An insurance asset management company may not use its own funds in stock investment.
Article 14
An insurance institutional investor may not invest in ordinary RMB stocks of the following types:
(1)
Those which are under “special penalty” or “warnings on special penalty due to risks on termination of the listing” imposed by the
stock exchange, or have been terminated by the stock exchange to be on listing;
(2)
The rise of price of the stocks during the past 12 months exceeds 100%;
(3)
The stocks are suspected of being manipulated by others;
(4)
Its listed company has been has issued with opinions on refusal to comment or reservation opinions on the financial statements of
the listed company by an accounting company in the latest year;
(5)
Its listed company has disclosed that its performance has gone down by a big margin, and it is in heavy loss or will be in heavy loss
in the future;
(6)
Its listed company has disclosed that it is investigated by the supervisory department or has been severely punished by the supervisory
department within the latest year; or
(7)
Other types of stocks prescribed by the CIRC.
Article 15
The balance of the investment by an insurance institutional investor in convertible company bonds shall be calculated into the investment
balance of the enterprise bonds, and shall accord with the relevant provisions of the “Interim Measures for the Administration for
Insurance Companies to Invest in Enterprise Bonds”.
Where an insurance company converts the convertible company bonds held by it into stocks, such bonds shall be calculated into the
investment balance of the ordinary RMB stocks at cost price, and shall accord with the relevant provisions of the CIRC on the proportion
of stock investment.
Article 16
In an investment account set up by an insurance institutional investor for investment-linked insurance, the proportion of investment
stocks may be 100%.
In an investment account set up by an insurance institutional investor for omnipotent life insurance, the proportion of investment
stocks may not exceed 80%.
In an independent account set up by an insurance institutional investor for other insurance products, the proportion of investment
stocks may not exceed the relevant rate prescribed by the CIRC.
In an independent account set up by an insurance institutional investor for the insurance products mentioned above, the proportion
of investment stocks may not exceed the promissory proportion in the insurance clauses.
Chapter IV Trusteeship of Assets
Article 17
To select a stock asset trustee; an insurance company shall select a commercial bank or other professional financial institution which
meets the conditions prescribed in the “Guide to Stock Asset Trusteeship for Insurance Companies”.
Article 18
The stock asset trustee of an insurance company shall perform the following obligations:
(1)
Safely keeping custody of the insurance company’s funds and stock assets;
(2)
Handling matters of settlement and transaction in time in accordance of the orders of the insurance company or the insurance asset
management company;
(3)
Supervising the investment operation of the insurance company or the insurance asset management company;
(4)
Valuating the stock assets entrusted by the insurance company;
(5)
Periodically providing reports on stock asset trusteeship to the insurance company or the insurance asset management company;
(6)
Upon the supervisory requirements of the CIRC, submitting to the CIRC the relevant data on the stock assets and providing periodically
or a periodically intervals reports on risk evaluation and performance evaluation of the stock assets, etc.;
(7)
Keeping completely the records, account books, statements on stock asset trusteeship as well as other relevant documents. The relevant
important documents such as vouchers, trading records, contracts, etc. on custody of the stock assets shall be kept for not less
than 15 years; and
(8)
Other obligations prescribed by the CIRC.
Article 19
The stock asset trustee of an insurance company must strictly separate its own assets from the stock assets under its management upon
entrustment, and must set up relevant accounts for different insurance companies for the sake of separate management.
Article 20
The stock asset trustee of an insurance company may not have the following acts:
(1)
Mixing its own assets with the stock assets entrusted by the insurance company to manage;
(2)
Mixing other assets under its trusteeship with the stock assets entrusted by the insurance company to manage;
(3)
Mixing stock assets of different insurance companies under its trusteeship to manage;
(4)
Peculating stock assets entrusted by the insurance company;
(5)
Taking advantage of stock assets entrusted by the insurance company and other relevant information to seek benefits for itself or
for a third person;
(6)
Violating laws, administrative regulations, relevant provisions of the state or the trusteeship agreement; or
(7)
Other acts prohibited by the CIRC.
Article 21
An insurance company shall conclude a trusteeship agreement with the stock asset trustee. The trusteeship agreement must set forth
the following content:
(1)
Obligations of the stock asset trustee as prescribed in Article 18 , Article 19 and Article 20 of the present Measures;
(2)
Where the stock asset trustee violates the obligations in Item (1) of the Article and the CIRC requires the insurance company to change
the stock asset trustee, the insurance company shall have the right to terminate the trusteeship agreement in advance.
Article 22
Where a stock asset trustee is lawfully disbanded, revoked, or runs into bankruptcy, the stock assets of the insurance company entrusted
to it shall not be listed as assets for liquidation.
Chapter V Prohibited Acts of Insurance Institutional Investors
Article 23
The scope and the proportion of stock investments of insurance institutional investors may not exceed the relevant provisions of the
CIRC.
Article 24
In respect of decision-making, research, trading and settlement concerning stock investments, none of the management staff and other
relevant persons of an insurance institutional investor may engage in insider trading.
Insider trading mentioned in the preceding paragraph shall be cognized according to “Securities Law of the People’s Republic of China”
and “Interim Measures for Prohibiting Securities Frauds”.
Article 25
An insurance institutional investor engaging in stock investment may not commit any of the following acts:
(1)
Transferring profits between securities accounts for insurance funds of different natures;
(2)
Buying stocks through financing by illegal means; or
(3)
Other acts prescribed by the CIRC.
Article 26
The insurance institutional investor may not obtain inappropriate benefits or transfer risks by the following means:
(1)
Centralizing advantages of funds or share holding either alone or by conspiracy, or utilizing information advantage to trade united
or continuously, so as to manipulate securities trading prices;
(2)
Colluding with others to trade in securities pursuant to the time, price and method agreed upon in advance, or to trade in securities
held by neither of them, so as to affect the securities trading price or the securities trading amount;
(3)
Trading with itself without transferring the ownership, so as to affect the securities trading price or securities trading amount;
or
(4)
Manipulating securities trading prices in other methods.
Article 27
Where a listed company holds either directly or indirectly not less than 10% of the shares of an insurance institutional investor,
the insurance institutional investor may not invest in the stocks of the listed company or any of its associated companies.
Article 28
No insurance institutional investors, stock asset trustees, securities operation institutions or other securities intermediary institutions
may fabricate false trading records, financial information or other materials.
Article 29
An insurance company investing in stocks may not entrust any institution other than insurance asset management companies except ones
prescribed by the CIRC.
Chapter VI Risk Control
Article 30
An insurance institutional investor shall have the ideology of long-term investment and value investment, optimize the allocation
of assets and disperse the risks of investment.
Article 31
The insurance institutional investor shall, in accordance with the “Guide to Risk Control on Utilization of Insurance Funds”, found
a well developed risk control system of stock investment.
Article 32
The risk control system of stock investment of an insurance institutional investor shall at least include the following content:
(1)
The process of investment decision making;
(2)
The system of investment authorization;
(3)
The study report system;
(4)
The system of stock scope selection;
(5)
Index systems of risk assessment and performance appraisal;
(6)
The criteria on vocational ethics; and
(7)
The mechanism for dealing with major incidents.
Where an insurance company entrusts an insurance asset management company to engage in stock investment, its risk control system of
stock investment shall at least include the stock trusteeship system in addition.
Where an insurance company directly engages in stock investment, its risk control system of stock investment shall at least include
the stock trusteeship system, the stock trading management system and the information management system in addition.
The risk control system of stock investment of an insurance asset management company shall at least include the stock trading management
system and the information management system in addition.
Article 33
When investing in stocks, an insurance institutional investor must work out a written study report before making the following important
decisions:
(1)
A single-item – investment fund is to exceed the amount determined by the insurance institutional investor;
(2)
Not less than 5% of the investable stock assets are to be involved;
(3)
The investment portfolio or investment direction needs to be adjusted greatly;
(4)
The standard for selecting the scope of stocks needs to be adjusted greatly; or
(5)
The degree of stock investment risk tolerance needs to be adjusted greatly.
Article 34
When determining the scope of investable stocks, an insurance institutional investor shall consider various indexes of the listed
company such as governance structure, earning capacity, information transparency, stock liquidity and etc.
The insurance institutional investor must invest in stocks within the scope of investable stocks.
Article 35
Before investment, an insurance institutional investor shall determine the benchmark for evaluating stock investment performance by
taking the indexes of excellent-performance stocks, blue chips and shares of high liquidity into account for reference.
The benchmark for evaluating stock investment performance of the insurance industry shall be separately prescribed by the CIRC.
Article 36
When making use of the following funds, an insurance institutional investor shall separately open a securities account and a fund
account for separate accounting:
(1)
Funds for traditional insurance products;
(2)
Funds for participating insurance products;
(3)
Funds for universal insurance products;
(4)
Funds for investment-linked insurance products; or
(5)
Funds for insurance products required by the CIRC to be accounted independently.
Article 37
The insurance asset management companies and the insurance companies directly engaging in stock investment shall trade in stocks through
independent seats. The administrative measures for independent seats of stock trading shall be separately formulated.
Article 38
The stock investment trading orders of either an insurance asset management company or an insurance company directly engaging in stock
investment shall be carried out responsibly by the independent trading department and full-time trading staff.
Article 39
The insurance asset management companies and the insurance companies directly engaging in stock investment shall establish information
management systems on firewall, on-post duties, access, security and prevention, etc.
Article 40
The insurance asset management companies and the insurance companies directly engaging in stock investment shall regulate the operating
programs of stock trading systems such as computer room establishments, communication equipments, computer equipments, operating
system software, database software, etc.
Article 41
Where an insurance institutional investor selects the seat of a securities operation institution to trade in stock, this securities
operation institution shall meet the following conditions:
(1)
It is in good financial condition and steady business operation, and its net capital is not less than 1 billion Yuan;
(2)
It has well developed internal control system;
(3)
The settlement funds of client trading are fully deposited in a commercial bank with the qualification for engaging in deposition
and custody of securities trading settlement funds;
(4)
It has set up two separate accounts in China Securities Depository Clearing Co., Ltd., one for self-operation settlement of reserve
account, the other for client settlement of reserve account;
(5)
It sets up seats separately for self-operated business and non-self-operated business in the stock exchanges of Shanghai and Shenzhen;
(6)
The communication conditions and trading facilities are high efficient and secure, which can meet the requirements of stock trading,
and the information service is all-sided;
(7)
It has the capability for securities market research and is able to provide consulting service in time;
(8)
In the latest 3 years, it has no records on major violation of laws or rules. And it has not been punished by the CSRC or is not in
the process of investigation under a case filed;
(9)
It has no ill records on honesty and credibility, and has no actions of occupying or peculating the guarantee money and securities
of client in the latest year;
(10)
It has promised in written form to accept the inspection of CIRC on the stock trading of the insurance institutional investor and
truthfully provides the CIRC with various stock trading information of the insurance institutional investor;
(11)
Its local business departments has normative management, good operation and complete service functions; and
(12)
Other conditions prescribed by the CIRC.
Article 42
Where an insurance institutional investor selects the seat of a business department of a securities operation institution to trade
in stock investment, it shall conclude a relevant agreement with the head office. The agreement shall set forth the obligations of
the securities operation institution as prescribed in Item (10) of Article 41 of the present Measures. If the securities operation
institution violates the said obligations and the CIRC requires the insurance institutional investor to change the securities operation
institution, the insurance institutional investor shall have right to terminate the agreement in advance. The insurance institutional
investor shall submit a copy of the agreement to the CIRC within 5 days as of concluding the agreement prescribed in the preceding
paragraph.
Article 43
Before the opening of each day, the insurance asset management companies and the insurance companies directly engaging in stock investment
shall check the balance of securities and that of funds with the stock asset trustees so as to guarantee the said balances to be
enough for settlement.
Article 44
Where the stocks held by an insurance institutional investor are under any of the circumstances prescribed in Article 14 of the present
Measures, the insurance institutional investor shall formulate idiographic solutions.
Article 45
Where the operational situation of an insurance company is changed and no longer meets the conditions prescribed in the present Measures,
the insurance company shall not add stocks and shall lower the stock investment proportion according to the time limit, methods and
other requirements prescribed by the CIRC.
Article 46
An insurance institutional investor shall reveal the situation of stock investment risks by adopting risk value and other risk measurement
indexes.
Article 47
The transfer of funds and the payment of expense between an insurance company and an insurance asset management company; a stock asset
trustee or a securities operation institution must be in a method of transfer between accounts.
Article 48
The senior manager of an insurance institutional investor, who is in charge of stock investment, shall meet the following conditions:
(1)
He has the academic qualification of university graduate or above;
(2)
He has worked and experienced not less than 5 years in the field of securities or finance;
(3)
He knows well the operation of securities investment and has necessary financial and legal knowledge; and
(4)
Other conditions prescribed by the CIRC.
Article 49
The senior manager of an insurance institutional investor must, when making decisions on stock investment, strictly comply with the
purview of power prescribed in the company’s internal management system and risk control system. It is strictly prohibited to make
investment or make decisions outside the purview of power.
Article 50
The operating personnel in an insurance institutional investor, who engages in stock investment, shall meet the following conditions:
(1)
He has the academic qualification of university graduate or above;
(2)
He has worked and experienced not less than 3 years in the field of securities or finance;
(3)
He knows well the securities business rules and operational procedures; and
(4)
Other conditions prescribed by the CIRC.
The operating personnel mentioned in the preceding paragraph shall refer to the director and the persons who operate the stock investment
business.
Article 51
In an insurance asset management company or in an insurance company directly engaging in stock investment, the number of operating
personnel engaging in stock investment shall fit in with the scale of stock investment, and the company concerned shall have a suitable
number of researchers in the fields of macro-economics, industrial analysis, financial engineering and etc.
In case the stock assets in use amount to 100 million Yuan or more in an insurance asset management company or in an insurance company
directly engaging in stock investment, there shall not be less than 5 major operating personnel engaging in stock investment.
Article 52
A person under any of the following circumstances may not act as a senior manager in charge of stock investment business or major
operating personnel in an insurance institutional investor:
(1)
He has been sentenced to criminal punishments due to the crime of embezzlement, bribery, malicious occupation of properties, misappropriation
of properties, or destruction of socialist economic order, etc.;
(2)
He has been imposed upon administrative penalties or sentenced to criminal punishments due to such illegal actions as gambling, taking
drugs, visiting prostitutes,
