Table of Contents
Chapter I: General Provisions
Article 1 This Law is enacted for the purposes of regulating securities investment fund activities, protecting the lawful rights and interests of investors and relevant parties, and promoting the sound development of the securities investment fund and capital markets.
Article 2 This Law shall apply to securities investment fund activities such as the formation of fund management companies, the offering, sale, management, and custody of securities investment fund units through public or non-public offering within the territory of the People’s Republic of China, and the registration and filing of fund managers. Where this Law is silent, the provisions of the Trust Law of the People’s Republic of China, the Securities Law of the People’s Republic of China, and other relevant laws and administrative regulations shall apply.
Article 3 The parties to securities investment fund activities such as fund managers, fund custodians, and fund unit holders shall abide by the principles of voluntariness, fairness, and good faith, and shall not harm the public interest.
Article 4 In engaging in securities investment fund activities, fund managers and fund custodians shall fulfill their duties diligently and in good faith. Fund managers and fund custodians shall not pursue their own interests or the interests of others by harming the lawful rights and interests of fund unit holders.
Article 5 The fund property shall be independent of the proprietary property of the fund manager and the fund custodian. The fund manager and the fund custodian shall not include the fund property in their proprietary property. Where the fund manager or the fund custodian is subject to liquidation for any reason, the fund property shall not be part of the liquidation property.
Article 6 The fund property shall be kept separate from the proprietary property of the fund manager and the fund custodian and managed and accounted for separately. The fund property shall not be used to satisfy the claims of the fund manager’s or the fund custodian’s creditors. The fund property shall not be subject to compulsory enforcement unless otherwise provided by law.
Article 7 The securities investment fund industry shall be subject to the supervision and administration of the securities regulatory authority under the State Council in accordance with law. The securities regulatory authority under the State Council shall perform its duties in accordance with law.
Chapter II: Fund Managers
Article 8 A fund manager shall be a company or a partnership enterprise established in accordance with law. The establishment of a fund manager that manages publicly offered funds shall be subject to the approval of the securities regulatory authority under the State Council.
Article 9 To establish a fund manager that manages publicly offered funds, the following conditions shall be met: (1) having articles of association that comply with the provisions of this Law, the Company Law of the People’s Republic of China, and other relevant laws and administrative regulations; (2) having a registered capital of not less than RMB 100 million, which must be paid-in monetary capital; (3) having senior management personnel and business personnel whose qualifications meet the requirements, with at least 15 persons qualified to engage in fund business; (4) having business premises, safety precautions, and other facilities related to the fund management business that meet the requirements; (5) having a sound governance structure, internal audit and monitoring system, and risk control system; and (6) other conditions prescribed by laws and administrative regulations and approved by the securities regulatory authority under the State Council.
Article 10 The securities regulatory authority under the State Council shall, within six months from the date of accepting an application for the establishment of a fund manager, decide whether to approve the application in accordance with the statutory conditions and prudent regulatory principles, and notify the applicant. Where approval is not granted, the reasons shall be stated.
Article 11 The senior management personnel of a fund manager shall be familiar with securities investment laws and administrative regulations, have at least three years of experience in the fund management business or at least five years of relevant financial work experience, and meet other conditions prescribed by the securities regulatory authority under the State Council.
Article 12 A fund manager shall establish a sound internal control system and risk control system to ensure the effective implementation of internal control and risk management.
Article 13 The duties of a fund manager shall include: (1) raising funds in accordance with law and handling the filing procedures for fund units; (2) managing and operating the fund property in accordance with the fund contract; (3) allocating the fund’s investment returns or paying the redemption amounts on time and in full; (4) preparing fund financial reports and making fund information disclosures in accordance with law; (5) calculating and announcing the net asset value of the fund and determining the subscription and redemption prices; (6) preserving records, account books, statements, and other relevant materials of fund property management business activities; and (7) performing other duties as prescribed by law and agreed in the fund contract.
Chapter III: Fund Custodians
Article 14 A fund custodian shall be a commercial bank or other financial institution established with the approval of the securities regulatory authority under the State Council and the banking regulatory authority under the State Council in accordance with law. The net assets of a fund custodian shall meet the requirements prescribed by the relevant state provisions.
Article 15 The duties of a fund custodian shall include: (1) safekeeping of the fund property in accordance with law and the fund contract; (2) opening fund property accounts and securities accounts for the fund; (3) supervising the investment operations of the fund manager; (4) handling fund clearing and settlement matters; (5) reviewing the net asset value of the fund and the subscription and redemption prices; (6) preparing fund financial reports and making fund information disclosures in accordance with law; and (7) preserving records, account books, statements, and other relevant materials of fund custody business activities.
Article 16 The fund custodian and the fund manager shall not be the same institution and shall not contribute capital to or hold shares in each other.
Chapter IV: Fund Offering
Article 17 The offering of publicly offered fund units shall be subject to the registration of the securities regulatory authority under the State Council. Without registration, no public offering of fund units shall be made. For the purposes of this Law, “public offering” means offering fund units to unspecified objects or to specified objects of more than 200 persons.
Article 18 An application for registration of the offering of publicly offered fund units shall be submitted to the securities regulatory authority under the State Council together with the fund contract draft, fund custody agreement draft, prospectus draft, and other documents.
Article 19 The fund contract shall include: (1) the purpose and name of the fund; (2) the names and domiciles of the fund manager and the fund custodian; (3) the fund’s investment objectives, direction, scope, and strategy; (4) the fund’s profit distribution principles and method; (5) the fees and rates charged by the fund manager and the fund custodian; (6) the fund’s net asset value calculation method and announcement method; (7) the conditions, time, and procedures for fund termination; (8) the fund property liquidation method; and (9) other matters prescribed by the securities regulatory authority under the State Council.
Article 20 The securities regulatory authority under the State Council shall, within six months from the date of accepting an application for registration of the offering of publicly offered fund units, conduct a review. Where the registration conditions are met, registration shall be granted and a written document shall be issued. Where the registration conditions are not met, registration shall not be granted and the reasons shall be stated in writing.
Article 21 The fund offering period shall not exceed three months from the date of approval of the fund unit offering. Where the fund unit offering period expires and the total number of fund units offered does not reach the minimum number prescribed for the fund’s establishment, the fund contract shall not take effect, and the fund manager shall return the payment received for the fund units subscribed.
Chapter V: Trading, Subscription, and Redemption of Fund Units of Publicly Offered Funds
Article 22 The fund contract of a publicly offered fund shall specify the trading, subscription, and redemption arrangements for fund units. After the fund contract takes effect, fund unit holders may apply for subscription or redemption of fund units in accordance with the fund contract.
Article 23 The fund manager shall pay the redemption amounts on time and in full, except under the circumstances specified in the fund contract or as otherwise provided by the securities regulatory authority under the State Council.
Article 24 The subscription and redemption prices shall be calculated based on the net asset value of the fund units on the subscription or redemption date plus or minus relevant fees. The fund manager shall calculate and announce the net asset value of the fund units on each trading day.
Chapter VI: Information Disclosure by Publicly Offered Funds
Article 25 A fund manager, a fund custodian, and other persons obliged to disclose fund information shall disclose fund information in accordance with law and ensure the truthfulness, accuracy, and completeness of the information disclosed.
Article 26 The information that a fund manager shall disclose includes: (1) fund prospectus, fund contract, and fund custody agreement; (2) fund net asset value and fund unit net asset value; (3) fund financial reports, including annual, semi-annual, and quarterly reports; and (4) other information that may have a material impact on the rights and interests of fund unit holders.
Article 27 The fund manager and the fund custodian shall disclose fund information through the media designated by the securities regulatory authority under the State Council and on their official websites within the prescribed time limit, and ensure that investors can access or copy the publicly disclosed information materials at reasonable times.
Chapter VII: Fund Operation and Information Disclosure of Non-Publicly Offered Funds
Article 28 A non-publicly offered fund may be established in the form of a contractual fund or a corporate fund. A non-publicly offered fund shall be offered to qualified investors, and the cumulative number of investors shall not exceed 200.
Article 29 The fund contract of a non-publicly offered fund shall specify the rights and obligations of the fund manager, the fund custodian, and the fund unit holders. The fund manager of a non-publicly offered fund shall go through fund filing procedures with the fund industry association in accordance with regulations.
Article 30 A non-publicly offered fund shall not advertise or promote its offering to the general public. A non-publicly offered fund shall provide fund information to fund unit holders in accordance with the fund contract.
Chapter VIII: Modification and Termination of Fund Contracts and Liquidation of Fund Property
Article 31 Where a fund contract is modified, a resolution of the fund unit holders’ meeting shall be required, and the modification shall be filed with the securities regulatory authority under the State Council. Where the modification of a fund contract involves the replacement of the fund manager or the fund custodian, or involves a material change in the interests of the fund unit holders, the approval of the securities regulatory authority under the State Council shall be obtained.
Article 32 A fund contract shall be terminated under any of the following circumstances: (1) the fund contract term expires and the fund contract is not extended; (2) the fund unit holders’ meeting decides to terminate; (3) the fund manager or the fund custodian ceases its duties and no new fund manager or fund custodian takes over within six months; or (4) other circumstances stipulated in the fund contract.
Article 33 Upon the termination of a fund contract, a liquidation group shall be formed to carry out liquidation of the fund property. The liquidation group shall be composed of the fund manager, the fund custodian, and relevant intermediary service institutions. The liquidation report shall be filed with the securities regulatory authority under the State Council and announced.
Chapter IX: Fund Holders’ Rights and Exercise Thereof
Article 34 Fund unit holders shall enjoy the following rights: (1) sharing in the fund property proceeds; (2) distributing the remaining fund property upon the liquidation of the fund; (3) transferring or redeeming the fund units held; (4) convening a fund unit holders’ meeting; (5) exercising the right to vote on matters deliberated at the fund unit holders’ meeting; (6) accessing or copying the publicly disclosed fund information materials; and (7) other rights provided by the fund contract.
Article 35 The fund unit holders’ meeting shall consist of all fund unit holders. Matters to be decided by the fund unit holders’ meeting shall be specified in the fund contract. The fund unit holders’ meeting may be held on-site or by correspondence.
Chapter X: Supervision and Administration
Article 36 The securities regulatory authority under the State Council shall perform the following duties in accordance with law: (1) formulating rules and regulations on the supervision and administration of securities investment funds; (2) exercising examination and approval or registration powers; (3) conducting on-site inspections of fund managers, fund custodians, and other institutions; (4) investigating and handling illegal acts; and (5) other duties prescribed by laws and administrative regulations.
Article 37 When performing duties, the securities regulatory authority under the State Council may take the following measures: (1) conducting on-site inspections of the fund manager, fund custodian, and fund sales institution; (2) accessing and copying relevant materials; (3) inquiring of relevant entities and individuals; (4) sealing up or seizing relevant materials and property; and (5) other measures prescribed by laws and administrative regulations.
Chapter XI: Legal Liability
Article 38 Where a fund manager or fund custodian violates the provisions of this Law by failing to fulfill its duties diligently and in good faith, or engages in conduct that harms the interests of fund unit holders, it shall be ordered to make corrections and a fine shall be imposed; the relevant directly responsible persons shall be given a warning and may be suspended or disqualified from practice.
Article 39 Where a fund manager or fund custodian makes false statements or conceals material facts in fund information disclosure, it shall be ordered to make corrections and a fine shall be imposed; the relevant directly responsible persons shall be penalized in accordance with law.
Article 40 Where a non-publicly offered fund is publicly offered or advertised without authorization in violation of the provisions of this Law, it shall be ordered to cease the illegal act and a fine shall be imposed; where a crime is constituted, criminal liability shall be pursued in accordance with law.
Article 41 Where a fund manager, fund custodian, or fund sales institution violates the provisions of this Law and causes losses to fund property or fund unit holders, it shall assume liability for compensation in accordance with law.
Article 42 Where any provisions of this Law are violated and a crime is constituted, criminal liability shall be pursued in accordance with law.
Chapter XII: Supplementary Provisions
Article 43 The formation of securities investment fund management companies and other fund managers within the territory of China by foreign investors, and their engagement in securities investment fund management business, shall be governed by the provisions of this Law and other relevant laws and administrative regulations.
Article 44 The specific measures for the supervision and administration of securities investment funds shall be formulated by the securities regulatory authority under the State Council in accordance with this Law.
Article 45 This Law shall come into force on June 1, 2004. The 2015 Amendment shall come into force on the date of its promulgation.
Translation note: This is an unofficial English translation for reference purposes. The original Chinese text shall prevail in all legal matters.
