中国证券监督管理委员会令第17号

（Promulgated¹ by the China Securities Regulatory Commission on 18 December 2003 and effective as of 1 February 2004.）

颁布日期：20031218 　实施日期：20040201 　颁布单位：中国证券监督管理委员会

　　PART ONE　GENERAL PROVISIONS

　　Article 1　These Procedures have been formulated³ in accordance with the Securities Law and other relevant laws and administrative⁴ regulations in order to standardize⁵ the client asset management activities of securities companies， protect the lawful⁶ rights and interests of investors⁷ and maintain the order of securities market.

　　Article 2　When engaging in client asset management business， a securities company shall comply with laws， administrative and the provisions of the China Securities Regulatory Commission （CSRC）， and shall not act fraudulently against clients. These Procedures shall apply to securities companies that engage in client asset management business in the People's Republic of China.

　　Article 3　When engaging in client asset management business， a securities company shall follow the principles of fairness and impartiality⁸， safeguard the lawful rights and interests of clients， act in good faith and with due diligence， and avoid conflict of interests.

　　Article 4　To engage in client asset management business， a securities company shall apply to the CSRC for the qualifications for client asset management business in accordance with the provisions hereof. Securities companies that have not obtained the qualifications for client asset management business may not engage in client asset management business.

　　Article 5　When engaging in client asset management business， a securities company shall conclude asset management contracts with clients in accordance with the provisions hereof， and shall operate the clients' assets and provide investment management services in relation to securities and other financial products in the format⁹ and according to the conditions， requirements and restrictions¹⁰ stipulated¹² in the asset management contracts.

　　Article 6　When engaging in client asset management business， a securities company shall implement¹³ centralized operation and management of internal departments and conclude asset management contracts with outside parties uniformly， and shall establish a department dedicated¹⁴ to client asset management business.

　　Article 7　When engaging in client asset management business， a securities company shall establish a sound risk control system and rigorously separate its client asset management business from its other businesses.

　　Article 8　Stock exchanges and securities registration¹⁵ and clearing institutions shall formulate² their own special operational rules for issues relevant to the client asset management activities of securities companies and implement standardized¹⁶ and orderly self-regulation.

　　Article 9　As the self-regulating organization for the securities industry， the Securities Association of China shall coordinate¹⁷ and guide the client asset management activities of securities companies and promote the healthy development of the industry.

　　Article 10　The CSRC and its offices shall supervise and regulate the client asset management activities of securities companies in accordance with the provisions of laws， administrative regulations and these Provisions.

　　PART TWO　SCOPE OF BUSINESS AND BUSINESS QUALIFICATIONS

　　Article 11

　　Subject to the approval of the CSRC， a securities company may engage in the following client asset management businesses：

　　1. undertake client-specific asset management businesses for single clients；

　　2. undertake collective asset management businesses for multiple clients； and

　　3. undertake specific-objective special asset management businesses for clients.

　　Article 12　Where a securities company undertakes client-specific asset management business for a single client， it shall conclude a client-specific asset management contract with the client and provide asset management services to the client by means of the client‘s account.

　　Article 13　Where a securities company undertakes collective asset management business for multiple clients， it shall establish a collective asset management scheme， conclude a collective asset management contract with the clients， hand over the clients‘ assets for custody¹⁸ of a commercial bank with the business qualifications for legal person custody of transaction clearing funds of clients or other institutions recognized by the CSRC， and provide asset management services to the clients by means of a dedicated account.

　　Article 14　When undertaking¹⁹ collective asset management business， a securities company may establish restrictive collective asset management schemes and non-restrictive collective asset management schemes.

　　The assets of restrictive collective asset management schemes shall be primarily invested in treasury²⁰ bonds， major State construction bonds， bond-type securities investment funds， enterprise bonds listed on stock exchanges and other fixed²¹-income financial products of high credit and high liquidity²². Assets invested in equity²³ securities such as stocks of high performance， high growth and high liquidity and in share-type securities investment funds shall not exceed 20% of the net asset value of the scheme and shall abide²⁴ by the principle of diversification²⁵ of investment risks.

　　The investment scope of non-restrictive collective asset management schemes shall be stipulated in collective asset management contracts and shall not be subject to the restrictions stipulated in the preceding paragraph.

　　Article 15　Where a securities company undertakes specific-objective special asset management business for a client， it shall conclude a special asset management contract and set an investment objective specifically tailored to the special requirements of the client and the specific circumstances of the assets， and provide asset management services to the client by means of a dedicated account.

　　A securities company may undertake special asset management business by establishing a comprehensive collective asset management scheme.

　　Article 16　A securities company that has obtained the qualifications for client asset management business may undertake client-specific asset management business. To undertake collective asset management business and special asset management business， it shall submit separate applications to the CSRC for each of these businesses in accordance with the provisions hereof.

　　Article 17　To engage in client asset management business， a securities company shall meet the following conditions：

　　1. it is determined²⁶ by the CSRC as a comprehensive securities company；

　　2. it has a net capital of not less than Rmb 200 million， and satisfies the provisions of the CSRC regarding various risk control indexes of comprehensive securities companies；

　　3. its client asset management personnel have securities business qualifications and have no record of misconduct， and at least five of them have three or more years of experience in securities business on own account， asset management or securities investment fund management；

　　4. it has a good legal person governance structure and a sound internal control and risk management system， which are effectively implemented²⁷；

　　5. it has not been subjected to administrative penalty or criminal punishment in the most recent year； and

　　6. other conditions specified²⁸ by the CSRC.

　　Article 18　To apply for the qualifications for client asset management business， a securities company shall submit the following materials to the CSRC：

　　1. an application；

　　2. photocopies²⁹ of the Securities Business Permit and Enterprise Legal Person Business Licence；

　　3. a calculation schedule of the net capital and the financial statements of the most recent period audited³¹ by an accounting³² firm with the securities-related business qualifications；

　　4. the registration forms of the senior management personnel to be in charge of client asset management business；

　　5. the list of names and résumés of the client asset management personnel and personnel responsible for risk control， and photocopies of their securities business qualification certificates and identity documents；

　　6. a certificate issued by the applicant³³ certifying³⁴ that its client asset management personnel have no record of misconduct；

　　7. the documentation of its internal control and risk management system and an internal control assessment³⁵ report issued by an accounting firm with the securities-related business qualifications；

　　8. a business plan and operational procedures for client asset management business； and

　　9. other materials required by the CSRC.

　　Article 19　The CSRC shall examine the application materials of a securities company and render a decision on whether or not to approve the application in accordance with the provisions of laws， administrative regulations and these Procedures， and shall notify the applicant in writing.

　　Article 20　To undertake collective asset management business and establish a collective asset management scheme， a securities company shall meet the following requirements in addition to meeting the conditions stipulated in Article 17 hereof and obtaining the qualifications for client asset management business：

　　1. it has a sound legal person governance structure and a sound internal control and risk management system， which are effectively implemented；

　　2. to establish a restrictive collective asset management scheme， the net capital shall not be less than Rmb 300 million； to establish a non-restrictive collective asset management scheme， the net capital shall not be less than Rmb 500 million；

　　3. it has not misappropriated client transaction clearing funds and other assets of clients in the most recent year； and

　　4. other conditions stipulated by the CSRC.

　　Article 21　To establish a restrictive collective asset management scheme， a securities company shall report to the CSRC for record filing in advance. To establish a non-restrictive collective asset management scheme， it shall apply to the CSRC for approval.

　　Article 22　To apply for establishment of a collective asset management scheme， a securities company shall submit the following materials to the CSRC：

　　1. a record filing report or an application；

　　2. the prospectus³⁶ of the collective asset management scheme；

　　3. the draft text of the collective asset management contract；

　　4. the asset custody agreement；

　　5. the promotion³⁷ proposal and promotion agency agreement；

　　6. a special statement on the measures for prevention of conflict of interests and for risk control in the operation of the collective asset management scheme；

　　7. the registration forms of the senior management personnel and personnel to be in charge of the investment management of the collective asset management scheme；

　　8. a calculation schedule of the net capital and the financial statements of the most recent period audited by an accounting firm with the securities-related business qualifications； and

　　9. other materials required by the CSRC.

　　Article 23　The CSRC shall examine the applications of securities companies for undertaking collective asset management business and establishment of collective asset management schemes in accordance with the provisions of laws， administrative regulations and these Procedures.

　　The CSRC may， pursuant to the principle of prudent³⁸ regulation， organize assessment by experts of the applications for undertaking collective asset management business and establishment of collective asset management schemes.

　　Article 24　The CSRC shall conduct verification of the compliance³⁹ of the record filing materials for establishing a restrictive collective asset management scheme， and shall issue to the securities company a written opinion on whether it has any objection. The securities company may promote the collective asset management scheme that it has submitted for record filing only if the CSRC has no objection to the scheme.

　　Article 25　The CSRC shall conduct a comprehensive examination and verification of the application materials for establishing a non-restrictive collective asset management scheme and render a decision on whether or not to approve the application， and shall notify the applicant in writing.

　　Article 26　The application materials submitted by a securities company to the CSRC for qualifications for client asset management business and the record filing and application materials submitted for establishing collective asset management schemes shall， at the same time， be copied to the local office of the CSRC at the place of registration.

　　PART THREE　BASIC OPERATION STANDARDS

　　Article 27　When conducting client asset management business， a securities company shall， in accordance with the provisions of laws， administrative regulations and these Provisions， conclude written asset management contracts with clients to expressly stipulate¹¹ the rights and obligations of both parties and the related matters.

　　An asset management contract shall include the following basic particulars：

　　1. the type and quantity of the client's assets；

　　2. the investment scope， investment restrictions and investment ratio；

　　3. the investment objective and the term of management；

　　4. the method and the authority limit for the management of the client's assets；

　　5. disclosure of various types of risks；

　　6. the manner in which information of client asset management is to be provided and accessed；

　　7. the rights and obligations of the parties；

　　8. the method of calculating management fees and the method of payment；

　　9. the manner in which other charges in connection with the management of the client's assets are to be withdrawn⁴⁰ and paid；

　　10. the terms and procedures for dissolution and termination of contract， and the matters on the settlement and return of the client's assets；

　　11. the liability for breach⁴¹ of contract and the methods of resolving disputes； and

　　12. other particulars specified by the CSRC.

　　Article 28　In addition to meeting the requirements stipulated in the preceding article， a collective asset management contract shall also stipulate on matters such as the conditions and the date for the commencement of operation of the collective asset management scheme， the duties of the asset custodian⁴² institution， the form and charges of the custody， the estimation of net asset value of the client's assets， and the confirmation⁴³ and distribution of investment gains.

　　A collective asset management contract shall be signed by the securities company， the asset custodian institution and the individual client.

　　Article 29　Where a securities company undertakes client-specific asset management business， the net asset value of the assets accepted from any single client shall not be less than Rmb 1 million.

　　Article 30　A securities company may only accept assets in monetary⁴⁴ form when undertaking collective asset management business.

　　Where the securities company establishes a restrictive collective asset management scheme， the amount of funds received from a single client shall not be less than Rmb 50，000. Where the securities company establishes a non-restrictive collective asset management scheme， the amount of funds received from a single client shall not be less than Rmb 100，000.

　　Article 31　A securities company shall divide a collective asset management scheme into equal shares. A client shall enjoy the interests and bear the risks in proportion to the shares it owns in the collective asset management scheme， unless stipulated otherwise in accordance with the second paragraph of Article 33 hereof.

　　Article 32　A securities company that establishes a collective asset management scheme may specify⁴⁵ the term of the scheme or may choose not to do so.

　　A collective asset management contract shall expressly stipulate the time， manner， price and procedures in relation to the participation⁴⁶ in and withdrawal⁴⁷ from the collective asset management scheme of clients.

　　A client that participates in a collective asset management scheme may not transfer the shares it owns unless stipulated otherwise by laws or administrative regulations.

　　Article 33　A securities company may use its own funds to participate in a collective asset management scheme established by itself， but it shall not withdraw its invested funds during the term of the collective asset management scheme.

　　A securities company that uses its own funds to participate in a collective asset management scheme established by itself shall stipulate in the collective asset management contract the amount of funds it invests and the liability to be borne.

　　The funds invested by the securities company shall be deducted⁴⁸ correspondingly in calculating the company‘s net capital according to the liability borne by it.

　　Article 34　A securities company may promote a collective asset management scheme on its own or appoint another securities company or commercial bank to promote the scheme on its behalf.

　　A client shall have already been a client of the securities company or other promotion institutions prior to its participation in the collective asset management scheme.

　　Article 35　Where a securities company establishes a collective asset management scheme， it shall complete the establishment work and commence investment operation within 60 days of the date on which the CSRC issues a no-objection opinion or renders an approval decision.

　　Prior to the completion of the establishment of a collective asset management scheme， the participating funds of clients may only be deposited in the asset custodian institution， and shall not be used.

　　Article 36　Where a securities company carries out investment operation for a collective asset management scheme by engaging in securities transactions on a stock exchange， it shall centralize all deals from a fixed seat and shall file a record with the stock exchange and the securities registration and clearing institution.

　　The securities in the assets of a collective asset management scheme shall not be used for repurchase.

　　Article 37　The investment by a securities company of the clients' assets under its management in the securities issued by a company shall not exceed 10% of the total quantity of the securities issued in terms of face value.

　　The investment of a collective asset management scheme in the securities issued by a company shall not exceed 10% of the net asset value of that scheme.

　　Article 38　If a securities company invests a client's assets under its management in the securities issued by the company itself， an asset custodian institution， or by a company with which it or the asset custodian institution has a relationship of affiliated⁴⁹ parties， it shall obtain the consent of the client beforehand and notify the asset custodian institution and the client subsequently， and shall at the same time report to the stock exchange.

　　Where a securities company undertakes collective asset management business， the funds invested by a single collective asset management scheme in the securities mentioned in the preceding paragraph shall not exceed 3% of the net asset value of that collective asset management scheme.

　　Article 39　Where a securities company undertakes client-specific asset management business， the client shall， on its own， exercise the rights pertaining⁵⁰ to the securities it holds and perform the corresponding obligations.

　　Where a securities company invests a client's assets under client-specific asset management business in the shares of a listed company， and the client is required to perform the obligations of announcement， reporting and takeover by offer as stipulated by laws， administrative regulations and the provisions of the CSRC， it shall promptly⁵¹ notify the relevant client and procure⁵² the client's performance of the corresponding obligation. If the client refuses to perform the obligation， the securities company shall report the matter to the stock exchange.

　　Article 40　A securities company shall exercise the rights and perform the corresponding obligations in respect of the securities owned by a collective asset management scheme on behalf of its clients.

　　Article 41　When a securities company engages in client asset management business， it shall not：

　　1. misappropriate the assets of clients；

　　2. undertake to a client that the principal of its assets will not suffer losses or that a minimum yield will be obtained；

　　3. mislead or induce a client by fraudulent means or other inappropriate methods；

　　4. mix the operation of its client asset management business with that of other businesses；

　　5. carry out trading between its own account and an asset management account or between different asset management accounts for the purposes of transferring the gains or losses of asset management accounts， thereby⁵³ causing harm to the interests of its clients；

　　6. carry out transaction on its own account in priority to its asset management business， thereby causing harm to the interests of its clients；

　　7. use the assets of its clients to carry out unnecessary securities transactions for the purposes of obtaining commissions or other interests；

　　8. engage in insider trading or manipulate the market；

　　9. carry out other acts prohibited by laws， administrative regulations and the provisions of the CSRC.

　　Article 42　When a securities company undertakes collective asset management business， it shall comply with the following provisions in addition to those stipulated in the preceding article：

　　1. the assets of the collective asset management scheme may not be used for capital lending at call， loans， mortgage for financing or security to outside parties； and

　　2. the assets of the collective asset management scheme may not be used in investment that may incur⁵⁴ unlimited⁵⁵ liability.

　　PART FOUR　RISK CONTROL AND CUSTODY OF CLIENTS' ASSETS

　　Article 43　When a securities company undertakes client asset management business， it shall expressly stipulate in the asset management contract that the investment risks shall be borne by the client itself.

　　Article 44　A securities company shall truthfully disclose to the clients its qualifications for asset management business， management capacity and business performance， etc.， and shall fully⁵⁶ disclose the market risks， the legal risks that the client may incur if the securities company loses its qualifications for client asset management business， and other investment risks.

　　When a securities company briefs a client on investment yield projection⁵⁷， it must act in good faith and provide a full and reasonable basis， and shall make a special statement in writing， which states that such projection is for reference of the client only， and does not constitute an undertaking of the securities company that the principal of the clients' assets will not suffer losses or that a minimum investment yield will be obtained.

　　Article 45　Before concluding an asset management contract with a client， a securities company shall seek the basic information of the client， such as its assets and income， risk tolerance⁵⁸ capacity and investment preference， and the client shall truthfully provide the relevant information.

　　Where a securities company establishes a collective asset management scheme， it shall clearly define the criteria⁵⁹ for clients and the scope of promotion of the collective asset management scheme. The clients participating in the collective asset management scheme shall have the corresponding financial investment experience and risk tolerance capacity.

　　Article 46　A client shall give an undertaking on the legality of the sources and uses of its assets. If the client has not given such undertaking or the securities company knows that the sources or uses of the assets are illegal， no asset management contract shall be concluded.

　　No one shall illegally pool the funds of other parties to participate in a collective asset management scheme.

　　Article 47　Securities companies and other promotion institutions shall adopt effective measures so that the clients understand the characteristics and risks of the collective asset management scheme and the rights and obligations of the clients in detail， but they shall not promote the collective asset management scheme through radio broadcast， television， newspapers and periodicals， and other mass media.

　　Article 48　A securities company shall， at least once every three months， provide an accurate and complete asset management report to its clients， which gives a detailed⁶⁰ statement on the allocation of the clients' assets and change in valuation， etc. during the reporting period.

　　A securities company shall ensure that information on the allocation of the clients' assets and other information can be accessed by its clients in such time and manner as stipulated in the asset management contract. When a major matter stipulated in the asset management contract that may affect the interests of the clients arises， the securities company shall notify the clients in a timely manner.

　　Article 49　When a securities company undertakes client-specific asset management business， it shall ensure that the client's assets are independent from its own assets and the assets of other clients， and shall set up separate accounts for the assets of different clients， and carry out independent accounting and management on separate accounts.

　　Article 50　When a securities company undertakes collective asset management business， it shall ensure that the assets of the collective asset management scheme are independent from its own assets， the assets of other clients and the assets of other collective asset management schemes， and shall set up separate accounts， and carry out independent accounting and management on separate accounts.

　　Article 51　When a securities company undertakes client-specific asset management business， it shall manage the monetary funds in the clients' assets in accordance with the provisions of the CSRC. If a client so requests， the securities company shall hand over the client's assets for custody of an asset custodian institution.

　　Article 52　When a securities company undertakes collective asset management business， it shall hand over the assets of the collective asset management scheme for custody of an asset custodian institution.

　　The securities company and the asset custodian institution shall open separate securities account and funds account for the collective asset management scheme. The name of the securities account shall indicate the names of the securities company and the collective asset management scheme， and other particulars.

　　Article 53　An asset custodian institution shall have a department dedicated to the custodian business for the assets of collective asset management schemes， and shall rigorously separate the assets of the collective asset management schemes in its custody from its own assets and the other assets under its management.

　　Article 54　An asset custodian institution shall perform the following duties when undertaking custodian business for a collective asset management scheme：

　　1. maintain safe custody of the assets of the collective asset management scheme；

　　2. execute the investment or clearing instructions of the securities company and be responsible for handling the fund transactions in connection with the asset operation of the collective asset management scheme；

　　3. supervise the securities company's operation of the collective asset management scheme and， if it discovers that an investment or clearing instruction of the securities company violates laws， administrative regulations， provisions of the CSRC or the stipulations of the collective asset management contract， it shall demand rectification⁶¹； if the securities company fails to carry out rectification， it shall refuse to execute the instruction and shall report the matter to the CSRC；

　　4. issue an asset custody report； and

　　5. other matters stipulated in the collective asset management contract.

　　Article 55　An asset custodian institution has the right to inquire the operation of the collective asset management scheme at any time and shall periodically verify the conditions of the assets of the collective asset management scheme in order to prevent misappropriation or loss.

　　Article 56　If an asset management contract shall be terminated upon the expiration⁶² of the term of investment management stipulated in the client-specific asset management contract or the occurrence of other causes stipulated in the contract， the securities company must， after deduction⁶³ of the charges stipulated in the contract， return all the assets in the account of the client back to the client for its own management.

　　If the operation of a collective asset management scheme shall be terminated upon the expiration of the term of investment management stipulated in the collective management contract or the occurrence of other causes stipulated in the contract， the securities company and the asset custodian institution must， after deduction of the charges stipulated in the contract， distribute， in the form of monetary funds， all the assets of the collective asset management scheme to the clients in proportion to the shares they own or as stipulated in the collective asset management contract， and shall cancel the securities account and the funds account.

　　PART FIVE　REGULATORY MEASURES AND LEGAL LIABILITY

　　Article 57　If a securities company is under investigation⁶⁴ by the CSRC for suspected violation⁶⁵ of laws and regulations， the CSRC shall not accept its application for qualifications for client asset management business and record filing or application for establishing collective asset management schemes for the time being. If such filing or application is already accepted， examination and verification thereof shall be suspended.

　　Article 58　A securities company shall formulate an internal inspection⁶⁶ system for the operation of client asset management business and shall periodically conduct self-inspection.

　　A securities company shall prepare a client asset management business report on a quarterly basis， and submit the same to the CSRC and the office of the CSRC at the place of registration for record filing.

　　Article 59　When a securities company promotes a collective asset management scheme， it shall make the official promotional documents such as the collective asset management contract and the prospectus of the collective asset management scheme available at the business sites in which the securities company and other promotion institutions promote the collective asset management scheme， and shall submit such documents to the office of the CSRC at the place of registration and the place where the promotion site is located.

　　The securities company shall， within five working days of the completion of the establishment work of the collective asset management scheme， report the details of the establishment of the collective asset management scheme to the CSRC and the office of the CSRC at the place of registration for record filing.

　　Article 60　When a securities company carries out annual audit³⁰， it shall at the same time carry out audit of the operation of the client asset management business， and shall request an accounting firm to issue a separate audit opinion for each collective asset management scheme.

　　The securities company shall submit the audit results to the CSRC and the office of the CSRC at the place of registration for record filing， and shall provide the separate audit opinions of each collective asset management scheme to the clients and the asset custodian institution.

　　Article 61　A securities company and an asset custodian institution shall keep the account books of the client asset management business in accordance with the provisions of the relevant laws and administrative regulations， and shall duly keep the related contracts， agreements， transaction records and other documents and information.

　　The period for keeping shall not be less than 15 years from the date of termination of the asset management contract.

　　Article 62　The CSRC and its offices shall carry out periodic or ad hoc inspection on the client asset management business of securities companies and asset custodian institutions. Securities companies and asset custodian institutions shall cooperate with such inspection.

　　If the senior management personnel， the directly responsible personnel in charge and other directly responsible personnel of a securities company or an asset custodian institution violate the provisions hereof， the CSRC and its offices shall， according to the circumstances， impose administrative regulatory measures on such personnel， including oral reminder⁶⁷， suspension of performance of duties， demerit record in the credit file and recognition as unsuitable for the relevant position.

　　Article 63　If a securities company， an asset custodian institution and their directly responsible personnel in charge and other directly responsible personnel engage in client asset management business in violation of the provisions hereof， the CSRC and its offices shall impose administrative penalty in accordance with these Procedures. Where there are other provisions in laws and administrative regulations， administrative penalty shall be imposed in accordance with the relevant provisions. Where the case is serious and a criminal offence is suspected， the case shall be transferred to the judicial⁶⁸ authorities for pursuance of criminal liability.

　　If a securities company， an asset custodian institution and their directly responsible personnel in charge and other directly responsible personnel harm the lawful interests of clients when engaging in client asset management business， such company， institution and personnel shall bear civil liability in accordance with the law.

　　Article 64　If a securities company， in violation of the provisions hereof， conducts client asset management business without authorization⁶⁹， it shall be ordered to rectify⁷⁰ the matter and be subjected to warning and fine.

　　Warnings and fines shall be imposed on the directly responsible personnel in charge and other directly responsible personnel， and their qualifications for senior management personnel or securities business qualifications shall be revoked⁷¹ in accordance with the law.

　　Article 65　If a securities company is in any of the following circumstances when engaging in client asset management business， it shall rectify the matter on its own initiative. If it fails to rectify the matter， it shall be ordered to carry out rectification. If it refuses to rectify the matter， its client asset management business shall be suspended， and a warning and/or a fine shall be imposed. If the case is serious， its qualifications for client asset management business shall be revoked in accordance with the law：

　　1. failure to handle the custody of the clients' assets in accordance with the provisions hereof；

　　2. failure to make the relevant materials available at its business sites or submit such materials to the CSRC and the office of the CSRC at the place of registration in accordance with the provisions hereof；

　　3. appointing other institutions or individuals to promote a collective asset management scheme on its behalf in violation of Article 34 hereof；

　　4. using the participation funds of clients before it completes the establishment of a collective asset management scheme in violation of Article 35 hereof；

　　5. failure to carry out transaction from a fixed seat or using the securities in a collective asset management scheme for repurchase in violation of Article 36 hereof；

　　6. carrying out investment beyond the investment scope and proportion in violation of Articles 14 and 37 hereof；

　　7. engaging in a transaction with an affiliated party without following the stipulated procedures or beyond the proportion in violation of Article 38 hereof；

　　8. failure to perform its notification and reporting obligations according to Article 39 hereof；

　　9. carrying out an act prohibited by Article 41 or 42 hereof；

　　10. concluding an asset management contract with clients in violation of Article 46 hereof；

　　11. promoting a collective asset management scheme in violation of Article 47 hereof；

　　12. failure to keep the relevant materials according to Article 61 hereof；

　　13. failure to cooperate with the supervision⁷² and inspection of the CSRC and its offices according to Article 62 hereof； or

　　14. carrying out other acts in violation of the provisions hereof.

　　Warnings and/or fines shall be imposed on the directly responsible personnel in charge and other directly responsible personnel. If the case is serious， their qualifications for senior management personnel or their securities business qualifications shall be revoked in accordance with the law.

　　Article 66　If an asset custodian institution that engages in client asset management business is in any of the following circumstances， it shall be ordered to rectify the matter， and a warning and/or a fine shall be imposed：

　　1. failure to manage the assets of a collective asset management scheme or perform its custodian duties according to Article 53 or 54 hereof；

　　2. failure to keep the relevant materials according to Article 61 hereof； or

　　3. failure to cooperate with the supervision and inspection of the CSRC and its offices according to Article 62 hereof.

　　Warnings and/or fines shall be imposed on the directly responsible personnel in charge and other directly responsible personnel. If the case is serious， their securities business qualifications shall be revoked in accordance with the law.

　　Article 67　If any other promotion institution promotes a collective asset management scheme in violation of Article 47 hereof， it shall be ordered to rectify the matter， and a warning and a fine shall be imposed.

　　Warnings and/or fines shall be imposed on the directly responsible personnel in charge and other directly responsible personnel. If the case is serious， their securities business qualifications shall be revoked in accordance with the law.

　　Article 68　If the client asset management business of a securities company is suspended by the CSRC for violation of laws and regulation in its operation or for non-compliance of its relevant financial indexes with the provisions of the CSRC， no new asset management contract may be concluded during the period of the suspension. If the qualifications for client asset management business of the securities company is revoked by the CSRC in accordance with the law， the securities company shall cease asset management activities and handle the matters in relation to termination of contracts in accordance with Article 56 hereof.

　　PART SIX　SUPPLEMENTARY⁷³ PROVISIONS

　　Article 69　For the purposes of these Procedures， the term “custody” means the taking of clients' assets into custody and the handling of such matters as interest registration， title transfer， funds transfer and supervision of operation in relation to such assets by an asset custodian institution upon entrustment⁷⁴ of a securities company and its clients.

　　For the purposes of these Procedures， “relationship of affiliated parties” bears the meaning of the same term in the Ministry⁷⁵ of Finance， Enterprise Accounting Guidelines – Disclosure of Relationships and Transactions Between Affiliated Parties.

　　Article 70　The qualifications for entrusted⁷⁶ investment management business of a securities company verified and approved by the CSRC prior to the implementation⁷⁷ of these Procedures shall continue to be valid⁷⁸， and shall automatically become qualifications for client asset management business as of the date of implementation of these Procedures.

　　Article 71　If the entrusted investment management business conducted by a securities company prior to the implementation of these Procedures does not comply with the relevant provisions hereof， such business shall be regulated according to these Procedures.

　　Article 72　Other institutions approved by the CSRC to engage in client asset management business shall handle matters in accordance with these Procedures.

　　Article 73　These Procedures shall be implemented as of 1 February 2004. The Regulating the Entrusted Investment Management Business of Securities Companies Circular （Zhengjian Jigou Zi [2001] No. 265） and the Issues Relevant to Securities Companies Engaging in Collective Entrusted Investment Management Business Circular （Zhengjian Jigou Zi [2003] No. 107） of the CSRC shall be simultaneously⁷⁹ repealed⁸⁰.

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