The China Securities Regulatory Commission Circular of the China Securities Regulatory Commission on Issueing “Interim Provisions on the Administration of Qualifications of ZhengJian [1996] No.5 October 23, 1996 All the securities regulatory commissions of various provinces, autonomous regions, municipalities directly under the Central Government With a view to standardizing the operation of domestic and overseas securities institutions in terms of shares specially for purchase Chapter I General Provisions Article 1 This set of Provisions is formulated with a view to standardizing the operation of domestic and overseas securities institutions in Article 2 For dealing with shares for overseas investors, the domestic and overseas securities institutions should, in line with this set of The shares for overseas investors referred to in the preceding clause include the shares listed both domestically and overseas specially Article 3 The domestic securities institutions referred to in this set of Provisions are the securities firms and trust and investment companies The securities institutions referred to in this set of Provisions are the securities firms referred to in the preceding clause and Article 4 The overseas securities institutions referred to in this set of Provisions are the investment banks, securities firms and other financial Chapter II Conditions for Dealing in Shares for Overseas Investors Article 5 Domestic securities institutions which apply for the qualifications of being stock brokerage for overseas investors should have the (1) Securities institutions should have a total net assets of no less than RMB50 million while trust and investment companies should have (2) They have been authorized by the State Administrations of Foreign Exchange (SAFE) to engage in foreign exchange business; (3) They must have sufficient facilities such as communications, trading sites, and equipment to guarantee the normal operation of the (4) They must have at least five special personnel of overseas stock trading; (5) They must abide by relevant State laws and regulations and have not been revoked of their qualifications certificates in the recent (6) Concurrent securities institutions must have separated the operation and account of the stock trading with that of other business (7) They should have conditions as required by CSRC. Article 6 Overseas securities institutions which apply for qualification of being brokerage for overseas investors in trading of stocks through (1) They are qualified to deal in stock brokerage business according to the laws of their localities; (2) They are under effective supervision of the local securities supervision departments; (3) They must have a net total assets of equivalent to no less than RMB50 million, or are qualified to provide guarantee according to (4) They should have the experience of trading in international stock business for more than two years; (5) Their financial indicators in the recent two years accord with the requirements for risk control set by local CSRCs; (6) They are accommodated with extensive grid points for business; (7) Executive directors and other senior management personnel should have more than five years’ experience in stock trading in addition (8) They have not received any punishment by overseas securities supervision and regulatory agencies because of serious violations of (9) They abide by relevant laws and regulations of the People’s Republic of China; (10) They have at least two specialists who are familiar with China’s securities market and relevant policies and laws; and (11) Other conditions as required by CSRC. Article 7 Domestic securities institutions which apply for underwriting of stocks for overseas investors should have the following conditions: (1) Securities institutions must have a net total assets of no less than RMB80 million, and concurrent securities institutions must have (2) They have already acquired the qualifications for stock underwriting according to “The Measures on the Management of Stock Underwriting (3) They have been authorized by the State Administrations of Foreign Exchange (SAFE) to do foreign exchange business; (4) They must have sufficient facilities, such as communications, business sites and equipment to guarantee the normal operations of overseas (5) They must have at least 10 personnel who have the experience of securities underwriting, including at least one who is familiar with (6) They must have at least one year of experience in securities underwriting or joining in the underwriting of at least one stock; and (7) Other conditions as required by CSRC. Article 8 Domestic securities institutions which apply to be chief underwriters of stocks for overseas investors or coordinators of domestic (1) Securities institutions must have a net total assets of no less than RMB 120 million, and the concurrent securities institutions must (2) They have acquired the qualifications for a chief underwriter according to “The Measures on the Management of Stock Underwriting by (3) They should have at least 20 specialists with underwriting experience, including at least two who are familiar with each of the following: (4) They should have the experiences of taking part in the underwriting of stocks for overseas investors; and (5) Other conditions as required by CSRC. Article 9 Overseas securities institutions which act as the chief underwriters and assistant chief underwriters of domestic B-shares for overseas (1) They are qualified to engage in stock underwriting business according to their local laws; (2) Their net total assets are of no less than an equivalent of RMB 120 million or, according to overseas laws, they may provide guarantee (3) They have not suspended their stock underwriting at the international market in the recent two years before they file their applications; (4) They have at least three specialists who are familiar with China’s securities market and relevant policies and laws; and (5) Other conditions as required by CSRC. Article 10 When an overseas securities institution acts as the chief underwriter of stocks for overseas investors listed overseas, it may appoint Chapter III Application and Maintenance of Qualifications Article 11 In applying for a qualifications certificate, a domestic securities institution should submit the following documents to CSRC: (1) “Application Form for Qualifications for Dealing in Shares for Overseas Investors” printed by CSRC; (2) “Monetary Business License (duplicate)” issued by competent department for approving the establishment of organs, and “Foreign Exchange (3) “Business License for Enterprise Legal Person (duplicate)” issued by administrations for industry and commerce; (4) Articles of Association of the company checked and approved by competent departments for approving the establishment of organs; (5) Balance sheets, profit and loss statements and statements of changes in financial position in the recent two years as audited by a (6) “Qualifications Certificate for Securities Business” or resumes and profession certificates of the legal representative, leading responsible (7) Statements about condition of securities business in the recent two years; and (8) Other documents as required by CSRC. Article 12 In applying for a qualifications certificate, an overseas securities institution should submit the following documents to CSRC: (1) “Application Form for Qualifications for Dealing in Shares for Overseas Investors” printed by CSRC; (2) Business license issued by their local securities regulatory departments; (3) Articles of association of the company; (4) Academic credentials, qualifications certificates and other professional certificates of senior managerial personnel and main employees; (5) Capital certificates provided by certified accountants; (6) Financial statements in the recent two years as audited by certified accountants; (7) Briefings on the underwriting in the recent two years; (8) Statements about condition of securities business of the company in China; and (9) Other documents as required by CSRC. CSRC may ask overseas securities institutions hand in relevant certificates provided by their local securities regulatory departments Article 13 CSRC undertakes to examine all the application documents in line with this set of Provisions after it receives all the required documents. Article 14 A qualifications certificate is valid for two years beginning from the date of issuance by CSRC and becomes invalid automatically Article 15 Domestic and overseas securities institutions which have obtained qualifications certificates must deal in relevant business in line Article 16 Domestic and overseas securities institutions which have obtained the qualifications certificates should submit a report to the CSRC Overseas securities institutions which engage in underwriting for overseas listed shares for overseas investors should send CSRC a Article 17 Domestic and overseas securities institutions which deal in shares for overseas investors should keep the original bills, vouchers, Article 18 The CSRC may have regular or irregular examinations of the stock trading for overseas investors of the domestic and overseas securities Chapter IV Penalty Provisions Article 19 In one of the following cases, domestic and overseas securities institutions shall be imposed one or several of the punishments such (1) They obtained the qualifications certificates by cheating or other improper means; (2) They keep on deals in shares for overseas investors or do so in a disguised way before they obtain the qualifications certificates (3) They fail to report their stock trading business for overseas investors according to regulations; (4) They refuse or do not cooperate with CSRC’s examinations; and (5) They have done other actions that violate relevant State laws and this set of Provisions. Chapter V Supplementary Provisions Article 20 Domestic securities institutions which are engaged in stock underwriting for overseas investors should also abide by the relevant Article 21 The CSRC is enpost_titled to interpret this set of Provisions. Article 22 This set of Provisions shall enter into force as of December 1, 1996. |
The China Securities Regulatory Commission
1996-10-23