The Rules on the Establishment of Foreign-shared Fund Management Companies are hereby promulgated, and shall come into force on July 1, 2002.

Chairman: Zhou XiaochuanJune 1, 2002

Rules on the Establishment of Foreign-shared Fund Management Companies

　　Article 1 To meet the demand of opening the securities market, to strengthen and improve the supervision and administration of foreign-shared fund management companies and to clarify the preconditions and procedures for the establishment of foreign-shared fund management companies, the Rules is therefore formulated in accordance with relevant provisions of the Company Law and the Interim Measures for the Administration of Securities Investment Fund （hereinafter referred to as the Interim Measures）.

　　Article 2 The foreign-shared fund management companies as referred to in the Rules shall include domestic fund management companies whose shares are transferred to or purchased by foreign shareholders or those that are co-funded by foreign and domestic shareholders.

　　Article 3 The China Securities Regulatory Commission （hereinafter referred to as the CSRC） shall be responsible for the examination, approval, supervision and administration of foreign-shared fund management companies.

　　Article 4 The organizational structure of a foreign-shared fund management company shall be that of limited liability.

　　The name, registered capital, founding and functions of the departments of a foreign-shared fund management company shall be compliant with relevant provisions of the Company Law, the Interim Measures and the CSRC.

　　Article 5 Foreign-shared fund management companies shall meet the requirements as provided for in the Interim Measures and those of the CSRC.

　　Article 6 The foreign shareholders of a foreign-shared fund management company shall possess the following qualifications:

　　1） Financial institutions established in accordance with the laws of their home countries and continuing to exist legitimately without severe punishment by securities regulatory bodies or judicial organs within the past 3 years;

　　2） Their home countries shall have a sound legal and regulatory system on securities, and the securities regulatory bodies shall have signed the memorandum of understanding on securities regulation with CSRC and have maintained effective cooperation with the latter;

　　3） The actual realized capital shall be free convertible currency equivalent of no less than RMB 300,000,000 yuan;

　　4） Other prudential conditions as provided for by the CSRC.

　　Article 7 The domestic shareholders of a foreign-shared fund management company shall have the qualifications as shareholders of fund management companies as provided for by the CSRC.

　　Article 8 The shares held by foreign shareholders or the equity possessed by them （both directly and indirectly） in a foreign-shared fund management company may not exceed one third of the total in the aggregate, and the percentage may not exceed 49% within 3 years after China’s accession to the WTO.

　　Foreign shareholders shall invest with free convertible currencies.

　　Article 9 The board chairman, general manager, and deputy general manager of a foreign-shared fund management company shall possess the qualifications as senior management of securities companies as provided for by the CSRC.

　　Article 10 The domestic and foreign applicants of a foreign-shared fund management company shall submit the application materials to the CSRC in compliance with the contents and format prescribed by the CSRC. The application materials submitted by the domestic and foreign applicants to the CSRC must be in Chinese.

　　Documents and materials in foreign languages provided by the foreign shareholders and the securities bodies of their home countries shall be accompanied by their Chinese versions consistent with the original contents.

　　Article 11 The establishment of a foreign-shared fund management company by foreign shareholders and domestic shareholders shall follow two phases, namely the preparation and the commencement of business.

　　Article 12 The CSRC shall decide on whether to approve the application for establishment preparation or otherwise within 60 working days upon formal acceptance of the application. If the approval is granted, the reply document should be issued.If the approval is not granted, the applicant should be notified in writing of the reasons.

　　Article 13 As for foreign-shared fund management companies that have already obtained the approval documents for preparation from the CSRC but are yet to open to business, if there are substantial changes in the basic conditions of their foreign shareholders, or their foreign shareholders have been punished or tightly controlled and supervised by the regulatory bodies of relevant countries and regions for violation of related rules and regulations, then these foreign shareholders shall motion for a founders’ meeting within the company without delay and shall clarify the situation.

　　If the foreign shareholders no longer meet the requirements of the Rules, the founders’ meeting shall reach a treatment decision and the preparatory group of the company shall report to the CSRC and complete relevant formalities as required.

　　Article 14 The domestic and foreign applicants shall, after the preparation for establishment of the fund management company has been accomplished, submit the application materials for business operation to the CSRC.

　　The CSRC shall decide on whether to approve, postpone the approval or disapprove the business operation within 30 working days upon formal acceptance of the application. If the approval is granted, the approval documents shall be issued; if the approval is a deferred one or not granted, the applicant shall be notified in writing of the reasons.

　　Article 15 When the shares of a foreign-shared fund management company are transferred to or purchased by foreign shareholders, the fund management company shall submit the application materials to the CSRC.

　　The CSRC shall decide on whether to grant the approval within 60 working days upon formal acceptance of the application. If the approval is granted, the reply documents shall be issued; if the approval is not granted, the applicant shall be notified in writing of the reasons.

　　With regard to the review of applications involving new shareholders and the change of the largest shareholders who have the highest proportion of capital contribution and nominate the most directors, the CSRC shall follow the procedures for reviewing preparation applications of fund management companies.

　　Article 16 As for some foreign shareholders of a foreign-shared fund management company, the authorities in where the company is registered or its main business activities take place may require for records of overseas foreign investment. If these foreign shareholders, after legitimately obtaining the approval documents from the CSRC, should need to submit the relevant materials to the above-mentioned authorities for record-keeping purpose, they shall also submit copies of those materials to the CSRC.

　　Article 17 The shareholders of a foreign-shared fund management company shall, within 30 working days after obtaining the approval documents from the CSRC, apply to competent administrations for industry and commerce for alteration or establishment.

　　Article 18 The Rules is applicable to investors from Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Area holding shares of domestically-funded fund management companies.

　　Article 19 As for the establishment, alteration, termination, business activities, supervision and administration of foreign-shared fund management companies, other relevant provisions of the CSRC shall be applicable if there are no corresponding provisions in the Rules.

　　Article 20 The Rules shall enter into force as of July 1, 2002.

　　4. have a confirmed hiring unit； and

　　5. have a valid passport or other international travel documents which can be used instead of a passport （hereafter “Passport Substitute Documents”）。

　　Article 8　A foreigner employed in China shall enter the People's Republic of China on a work visa （in the case of reciprocal visa exemption agreements， matters shall be handled in accordance with such agreements）， and， after entering the People's Republic of China， may be employed inside the People's Republic of China only after obtaining a Foreigner's Employment Certificate （hereafter “Employment Certificate”） and foreigner's residence documents.

　　Foreigners who have not obtained residence documents （that is， holders of F， L， C and G visas）， foreigners who have come to study or to conduct fieldwork and the accompanying dependants of foreigners holding work visas may not be employed in China. In extraordinary circumstances， the employing unit shall apply for a Permit in accorda

nce with the examination and approval procedures specified herein， and the foreigner so hired shall proceed to the public security authority to change his or her status on the strength of such Permit. Such foreigner may be employed only after obtaining an Employment Certificate and a residence permit.

　　The employment of spouses of personnel of the embassies and consulates of foreign countries in the People's Republic of China and the representative offices in the People's Republic of China of the United Nations Organization and other international organizations shall be handled in accordance with the PRC Ministry of Foreign Affairs， Concerning the Employment in China of the Spouses of Personnel of Embassies and Consulates of Foreign Countries in the People's Republic of China and the Representative Offices in the People's Republic of China of the United Nations Organization Regulations. The relevant procedures shall be carried out in accordance with the examination and approval procedures specified in paragraph 2 of this Article.

　　Permits and Employment Certificates shall be centrally printed by the Ministry of Labour.

　　Article 9　Foreigners who conform to any of the following conditions need not obtain a work permit or Employment Certificate：

　　1. foreign specialist technical or management personnel hired and paid for directly by the Chinese government， or foreign specialist technical or management personnel who hold a high-level technical title or credentials in respect of special skills confirmed by an authoritative technical or administrative authority or professional association of their own country or an authoritative international technical or administrative authority or professional association and who are hired and paid for by a state authority or institution， and foreigners who hold a Foreign Expert Certificate issued by the Bureau of Foreign Experts；

　　2. foreign labour service personnel with special skills who hold a Work Certificate for a Foreigner Engaged in Off-Shore Petroleum Business in the People's Republic of China， who are engaged in off-shore petroleum business and do not need to go ashore； and

　　3. foreigners who hold a Temporary Permit to Engage in Commercial Performances approved by the Ministry of Culture to carry out artistic performances of a commercial nature.

　　Article 10　Foreigners who conform to any of the following conditions need not obtain a Permit， and may， after entering the People's Republic of China， directly obtain an Employment Certificate on the strength of the work visa and relevant certification：

　　1. foreigners hired to come to China to work on Chinese-foreign co-operative exchange projects pursuant to agreements or treaties between China and the government of a foreign country or an international organization； and

　　2. the chief representative and the representatives of the resident representative offices in China of foreign enterprises.

　　PART THREE　APPLICATION， EXAMINATION AND APPROVAL

　　Article 11　To hire a foreigner， the employing unit must complete an Application Form for the Employment of a Foreigner （hereafter “Application Form”）， submit an application to its authority in charge of the industry at the same level as the labour administration authority in charge （hereafter “Authority in Charge of the Industry”） and provide the following valid documents：

　　1. evidence of the education and work experience of the proposed foreign employee；

　　2. a letter of intent to hire；

　　3. a report on the reason for proposing to hire a foreigner；

　　4. evidence of the qualifications of the proposed foreign employee to engage in such work；

　　5. evidence of the state of health of the proposed foreign employee； and

　　6. other documents specified in laws and regulations.

　　The Authority in Charge of the Industry shall carry out examination and approval in

accordance with Article 6 and Article 7 hereof and the provisions of relevant laws and regulations.

　　Article 12　After approval by the Authority in Charge of the Industry， an employing unit shall take the Application Form to the labour administration authority of the province， autonomous region or municipality directly under the central government or the labour administration authority at the regional and municipal level authorized by such authority where such unit is located and carry out approval procedures. The labour administration authority of the province， autonomous region or municipality directly under the central government or the labour administration authority at the regional or municipal level authorized by such authority shall designate a specialist authority （hereafter “Permit Issuing Authority”） to be specifically responsible for the issue of Permits. The Permit Issuing Authority shall carry out approval in accordance with the opinions of the Authority in Charge of the Industry and situation in respect of the demands of the labour market， and shall issue a Permit to the employing unit after approval.

　　Article 13　When an employing unit at the central government level or an employing unit with no Authority in Charge of the Industry hires a foreigner， such unit may proceed directly to the Permit Issuing Authority of the labour administration authority to submit an application and carry out procedures in respect of a work permit.

　　The employment of foreigners by foreign investment enterprises is not subject to examination and approval by the Authority in Charge of the Industry. A foreign investment enterprise may proceed directly to the Permit Issuing Authority of the labour administration authority and obtain a Permit on the strength of its Contract， Articles of Association， Approval Certificate， Business Licence and other documents as specified in Article 11 hereof.

　　Article 14　The authorized unit must send the visa notification and Permit to the proposed foreign employee. An employing unit approved to hire foreigners may not directly issue a Permit to a proposed foreign employee.

　　Article 15　A foreigner whose employment in China has been approved shall proceed to a Chinese embassy， consulate or consular office abroad and apply for a work visa on the strength of the Permit issued by the Ministry of Labour， the letter or telegram of notification from the authorized unit and a valid passport or Passport Substitute Documents of his or her country.

　　Persons who conform to the provisions of section （1） of Article 9 hereof shall apply for a work visa on the strength of the letter or telegram of notification of the authorized unit. Persons who conform to the provisions of section （2） of Article 9 hereof shall apply for a work visa on the strength of the letter or telegram of notification issued by the China National Offshore Oil Corporation. Persons who conform to the provisions of section （3） of Article 9 hereof shall apply for a work visa on the strength of the letter or telegram of notification of the foreign affairs office of the People's Government of the relevant province， autonomous region or municipality directly under the central government and the approval document of the Ministry of Culture （issued through the relevant embassy， consulate or consular office abroad）。

　　Persons who conform to the provisions of section （1） of Article 10 hereof shall apply for a work visa on the strength of the letter or telegram of notification of the authorized unit and the document concerning the co-operative exchange project. Persons who conform to the provisions of section （2） of Article 10 hereof shall apply for a work visa on the strength of the letter or telegram of notification of the authorized unit and evidence of registration of the administration for industry and commerce authority.

　　Article 16　Within 15 days from the date that a foreign employee ha

s entered the People's Republic of China， the employing unit shall proceed to the original Permit Issuing Authority with the Permit， the labour contract entered into with the foreign employee and his or her valid passport or Passport Substitution Documents to obtain an Employment Certificate for the foreigner and complete a Registration Form for Employment of Foreigners.

　　Employment Certificates shall be valid only within the region specified by the Permit Issuing Authority.

　　Article 17　Foreigners who have obtained an Employment Certificate shall take their Employment Certificate to the public security authority and apply for residence permits within 30 days after entering the People's Republic of China. The term of effectiveness of the residence permit may be determined in accordance with the term of effectiveness of the Employment Certificate.

　　PART FOUR　LABOUR MANAGEMENT

　　Article 18　Employing units shall enter into labour contracts with foreign employees according to law. The maximum term of the labour contract may not exceed five years. The labour contract shall terminate upon expiration of its term， but may be extended after performing the examination and approval procedures as specified in Article 19 hereof.

　　Article 19　The Employment Certificate shall expire upon expiration of the term of the labour contract entered into by the foreign employee and the employing unit. If an extension is required， the said employing unit shall submit an application for extension of the employment term to the labour administration authority within 30 days prior to the expiration of the original contract and， upon approval， shall carry out procedures for extension of the Employment Certificate.

　　Article 20　Within 10 days after extension of the term of employment in China or change in the region or unit of employment of a foreigner has been approved， the foreigner shall proceed to the local public security authority to carry out procedures in respect of extension or amendment of his or her residence documents.

　　Article 21　An employing unit shall promptly report rescission of the labour contract between a foreign employee and the employing unit to the labour and public security authorities， return the Employment Certificate and residence documents， and proceed to the public security authority to carry out procedures in respect of leaving the People's Republic of China.

　　Article 22　Wages paid to the foreign employee by the employing unit may not be lower than the local minimum wage standard.

　　Article 23　Working hours， rest， holidays， labour safety and hygiene and social insurance of foreigners employed in China shall be handled in accordance with relevant state regulations.

　　Article 24　The employing unit of a foreigner employed in China must be the same as the unit specified in his or her Employment Certificate.

　　A foreigner who changes his or her employing unit within the region specified by the Permit Issuing Authority but continues to engage in the original occupation must obtain the approval of the original Permit Issuing Authority and carry out procedures for amendment of his or her Employment Certificate.

　　A foreigner who leaves the employment region specified by the Permit Issuing Authority or changes his or her employing unit and engages in a different occupation within the specified region must carry out procedures for an employment permit anew.

　　Article 25　If the resident status of a foreigner is revoked by the Chinese public security authorities due to violation of Chinese laws， the employing unit shall rescind the labour contract and the labour authority shall cancel the Employment Certificate.

　　Article 26　Labour disputes which arise between the employing unit and the foreign employee shall be handled in accordance with the PRC， Labour Law and the PRC， Handling of Labour Disputes in Enterprises Regulations.

　　Article 27　The labour administration authority shall carry out an annual inspection of Employment Certificates. Within 30 days prior to the end of each full year of employment of a foreigner， the employing unit shall proceed to the Permit Issuing Authority of the labour administration authority to carry out procedures in respect of the annual inspection of the Employment Certificate on behalf of the foreign employee. If this term is exceeded， the Employment Certificate shall automatically become ineffective.

　　If the Employment Certificate of a foreigner is lost or damaged during the period of his or her employment in China， such foreigner shall proceed immediately to the original Permit Issuing Authority to carry out procedures in respect of reporting the loss of， replacement or exchange of the Certificate.

　　PART FIVE　PENALTIES

　　Article 28　If a foreigner fails to obtain an Employment Certificate and obtains employment without authorization， or an employing unit fails to obtain a Permit and employs a foreigner without authorization in violation of these Regulations， the public security authorities shall handle the matter in accordance with Article 44 of the PRC， Control of the Entry and Exit of Foreigners Law Implementing Rules.

　　Article 29　The labour administration authority shall recover the Employment Certificate， and request the public security authorities to rescind the resident status of a foreigner who refuses inspection of his or her Employment Certificate by the labour administration authorities， or changes his or her employing unit or occupation or extends the term of his or her employment without authorization. If a foreigner has to be deported by such authority， deportation expenses shall be borne by the employing unit or by such foreigner.

　　Article 30　If a foreigner or an employing unit falsifies， alters， misuses， assigns， buys or sells an Employment Certificate or Permit， the labour administration authority shall recover the Employment Certificate or Permit， confiscate the illegal income and impose a fine of not less than Rmb 10，000 and not more than Rmb 100，000. In serious cases where a criminal offence is constituted， the matter shall be handed over to the judicial authorities， and criminal liability shall be pursued according to law.

　　Article 31　If the working personnel of the Permit Issuing Authority or the relevant authorities abuse their functions and powers， collect fees illegally or practice graft and a criminal offence is constituted， criminal liability shall be pursued according to law. If no criminal offence is constituted， administrative penalties shall be imposed.

　　PART SIX　SUPPLEMENTARY PROVISIONS

　　Article 32　The employment in mainland China of residents of the Chinese regions of Taiwan， Hongkong and Macao shall be handled in accordance with the Administration of the Employment in Mainland China of Taiwan， Hongkong and Macao Residents Regulations.

　　Article 33　These Regulations do not apply to the employment of foreigners in the Chinese regions of Taiwan， Hongkong and Macao.

　　Article 34　The employment of foreigners by individual economic organizations and individual citizens is prohibited.

　　Article 35　The labour administration authorities of the provinces， autonomous regions and municipalities directly under the central government may formulate detailed implementing rules for their region pursuant to these Regulations together with the public security authorities， and submit the same to the Ministry of Labour， the Ministry of Public Security， the Ministry of Foreign Affairs and the Ministry of Foreign Trade and Economic Co-operation for the record.

　　Article 36　These Regulations shall be interpreted by the Ministry of Labour.

　　Article 37　These Regulations shall be implemented from 1 May 1996. The Concerning Employment in China of Foreigners Who Have Not Obtained Residence Docu

ments and of Foreigners Studying in China Several Regulations promulgated on 5 October 1987 by the former Ministry of Labour and Personnel and the Ministry of Public Security shall be repealed on the same date