In order to steadily boost the reform of the approval system of securities investment funds (hereinafter referred to as the "Funds"), the following notice is issued pursuant to the "Provisional Regulations on Administration of Securities Investment Funds" (hereinafter referred to as the "Provisional Regulations") and the "Experimental Regulations on Open-end Securities Investment Funds" (hereinafter referred to as the "Experimental Regulations") 1 Submission Of Application Documents Fund managers and relevant parties shall submit application documents to China Securities Regulatory Commission (CSRC) in accordance with the content and attached forms to this notice. Meanwhile, a promissory letter shall be submitted assuring that all the application documents are true, accurate, complete and valid.
2 Acceptance of Application Documents
Within 7 working days after receipt of the application documents, the CSRC shall examine the application documents and accordingly notify the fund managers in written letter whether it decides to accept the application or not.
The CSRC shall not accept the application documents if the fund manager is subject to any of the following:
2.1 Under investigation by government agencies because of suspected illegal actions;
2.2 Under scrutiny by the CSRC because of suspected violation of law, statutes or the fund contract;
2.3 Has caused or may cause negative impact on the managed fund due to changes in top management, lawsuits, arbitrations or other serious events.
2.4 The previously approved fund is not qualified for establishment, and it has not been over 12 months since the capital raised for that fund was returned to the investors.
2.5 Other problems found by CSRC in due diligence examination.
3. Examination of Application Documents
After acceptance of application documents, CSRC shall examine the legitimacy of the documents. The examination shall be focused on legal documents related to the founding of the fund, including risk disclosure and protection of the fund investors etc.
CSRC shall suspend the examination of application documents if fund managers are found to have following problems,
3.1 There is another fund being examined that has not yet been approved;
3.2 Main operating staff in the proposed functions (including sales promotion, investment management, and support services etc.) are not qualified;
3.3 Illegal actions occur during the period of examination.
3.4 Other problems found by CSRC in due diligent examination.
When CSRC decides to resume examination of a suspended application, they shall notify the fund manager in written. After the examination, for those applications that are qualified, CSRC shall organize an expert panel to appraise the application documents. The experts are chosen from those who are familiar with the operation of securities investment funds. For the reference of fund mangers, relevant parties and CSRC, the panel shall review the application documents according to relevant law and regulations and put forward opinions on such aspects as categories of Funds, types of Funds, proposed scale, target clients, feasibility of the establishment, services to investors, corporate governance etc.
CSRC shall decide whether to approve the Fund within 60-working-days of accepting the application documents (not including time for relevant parties to modify or supplement the application documents). If approved, a formal approval shall be issued. If it is not approved, a written letter shall be sent to the fund managers explaining the reasons. The fund managers shall inform relevant parties of the contents of the letter.
4 Check of Sales of Fund And Record of Sales of Fund
Within 7 working days after establishing the Fund, the fund manager and consigned agents shall by themselves check the on-going fund sales, and shall respectively send a final report to the CSRC. Moreover, advertising material shall be submitted to CSRC for their records. If more sales agents are needed by the open-ended fund, the fund manager shall report the sale agreements to the CSRC within 7 working days after the agreements have become effective.
The notice is effective from the date of issuing. "Notice of Relevant Issues Concerning the Application of Securities Investment Funds" is terminated at the same time.
Nov. 26, 2002