For purposes of regulating the mutual recognition of funds between Mainland China and Hong Kong, in accordance with the Law of the People's Republic of China on the People's Bank of China, the Regulation of the People's Republic of China on Foreign Exchange Administration and the relevant provisions, the People's Bank of China (“PBC”) and the State Administration of Foreign Exchange (“SAFE”) have developed the Operating Guidelines for the Administration of Cross-border Issuance and Sales of Securities Investment Funds between Mainland China and Hong Kong, where are hereby issued, and shall come into force on the date of issuance.
The People's Bank of China
The State Administration of Foreign Exchange
November 6, 2015
Annex:
Operating Guidelines for the Administration of Cross-border Issuance and Sales of Securities Investment Funds between Mainland China and Hong Kong
Chapter I General Provisions
Article 1 For the purpose of these Guidelines, “mainland securities investment funds” (hereinafter referred to as “mainland fund”) means publicly offered securities investment funds registered by the China Securities Regulatory Commission (hereinafter referred to as “CSRC”) in accordance with the Securities Investment Fund Law of the People's Republic of China and managed by a mainland fund management institution.
For the purpose of these Guidelines, “Hong Kong securities investment funds” (hereinafter referred to as “Hong Kong funds”) means mutual funds, unit trusts or other forms of collective investment plans recognized by the Securities and Futures Commission of Hong Kong (hereinafter referred to as the “SFC”) and managed by a fund management institution registered in Hong Kong.
For the purpose of these Guidelines, “cross-border issuance and sales of securities investment funds” means the issuance and sales of mainland funds in Hong Kong after recognition by the SFC (hereinafter referred to as “issuance in Hong Kong”), and the issuance and sales of Hong Kong funds in the mainland after they are registered by the CSRC (hereinafter referred to as “issuance in the mainland”).
Article 2 It is encouraged to denominate in RMB the cross-border issuance and sales of securities investment funds between Mainland China and Hong Kong as well as cross-border receipts and payments.
Article 3 The PBC and its branch offices shall conduct supervision, administration and inspection of RMB accounts and RMB cross-border receipts and payments involved in the cross-border issuance and sales of securities investment funds.
The SAFE and its branch offices and foreign exchange administrative departments shall administer the reporting of information on the cross-border issuance and sales of securities investment funds, and conduct supervision, administration and inspection of the opening, fund remittance, receipts and payments, and use, among others, of the involved foreign exchange accounts.
Chapter II Issuance of Hong Kong Funds in the Mainland
Article 4 The management institution of a Hong Kong fund registered in the CSRC shall, before the issuance of such a fund in the mainland, report the relevant information in the capital account information system of the SAFE (hereinafter referred to as the “system”) through the mainland agent of the fund (hereinafter referred to as the “agent”) based on the following materials.
(1) Report on the Issuance of Hong Kong Funds in the Mainland (see the Annex 1).
(2) Photocopies of certification materials on the registration of the Hong Kong fund management institution in Hong Kong.
(3) Photocopies of the documents on the registration of the Hong Kong fund in the CSRC.
When an agent reports the information on the first Hong Kong fund to the Hong Kong fund management institution, it also needs to search in the system whether the Hong Kong fund management institution has the subject information. If it does not have the subject information, the agent shall first apply for a special institution code for the Hong Kong fund management institution, and report the subject information of the Hong Kong fund management institution in the system.
Article 5 The management institution of a Hong Kong fund on which the subject information has been reported shall, based on the relevant business certificates generated in the system, authorize an agent to designate a sales bank to open the special fund collection account (RMB or/and foreign exchange accounts, hereinafter referred to as the “special fund collection account”) for each Hong Kong fund in the name of the Hong fund management institution. The funds in the special foreign exchange fund collection account and the special RMB fund collection account may be mutually transferred after foreign exchange settlement and purchase.
For a Hong Kong fund that raises funds by commission sale, the agent shall open a Hong Kong fund commission sale account (RMB or/and foreign exchange account) at a bank based on the relevant business certificates generated after information reporting in the system.
The Hong Kong fund management institution shall open a special RMB fund collection account in the mainland in accordance with the Measures for the Administration of RMB Bank Settlement Accounts of Overseas Institutions (No. 249 [2010], PBC), the Notice of the People's Bank of China on Issues concerning the Opening and Use of RMB Bank Settlement Accounts of Overseas Institutions (No. 183 [2012], PBC) and other relevant provisions.
See Annex 2 for the scope of receipts and payments of the aforesaid relevant accounts, and see Annex 3 for the standards for the declaration of account information.
Chapter III Issuance of Mainland Funds in Hong Kong
Article 6 The mainland management institution of a mainland fund registered in the CSRC shall, before the issuance of such a fund in Hong Kong, report the relevant information in the system through the mainland custodian of the fund (hereinafter referred to as the “custodian”) based on the following materials.
(1) Report on the Issuance of Mainland Funds in Hong Kong (see Annex 4).
(2) Photocopies of the business license of the mainland fund management institution issued by the administrative department for industry and commerce.
(3) Photocopies of certification documents on the mainland fund recognized by the SFC.
When the custodian reports the information on the first mainland fund for the mainland fund management institution, it shall also search in the system whether the mainland fund management institution already has subject information. If the mainland fund management institution does not have the subject information, it shall report the subject information to the foreign exchange authority or the bank at the place where it is registered based on the Report on the Issuance of Mainland Fund in Hong Kong, the photocopy of the business license of the mainland fund management institution issued by the administrative department for industry and commerce and other materials.
Article 7 The mainland management institution of a mainland fund on which the subject information has been reported shall, based on the relevant business certificates generated in the system, open a special fund collection account (RMB or/and foreign exchange account) for each mainland fund at the custodian or the opening bank designated by the custodian. The funds in the special RMB fund collection account and the special foreign exchange fund collection account may be mutually transferred after foreign exchange settlement and purchase.
See Annex 2 for the scope of receipts and payments of the aforesaid relevant accounts, and see Annex 3 for the standards for the declaration of account information.
Chapter IV Administration of Funds and Remittance
Article 8 The upper limit of net amount of funds raised through the issuance of Hong Kong funds in the mainland that are remitted outward and the upper limit of the net amount of funds raised through the issuance of mainland funds in Hong Kong that are remitted inward shall be an equivalent of 300 billion yuan at the early stage.
Article 9 When the net amount of funds raised through the issuance of all Hong Kong funds in the mainland that are remitted outward reaches an equivalent of 300 billion yuan, or the net amount of funds raised through the issuance of all mainland funds in Hong Kong that are remitted inward reach an equivalent of 300 billion yuan, the SAFE will make an announcement on its official website (www.safe.gov.cn), and Hong Kong (mainland) fund management institutions shall, as of the date when the announcement is made, suspend the work relating to the registration (recognition) of mainland (Hong Kong) funds and cross-border issuance and sales, until the net amount of funds remitted outward (inward) is less than an equivalent of 300 million yuan when the monthly data on outward (inward) remittance is announced on the official website of the SAFE.
The SAFE will, on a monthly basis, announce on its official website the information on the outward (inward) remittance of funds raised through the cross-border issuance and sales of funds. Hong Kong (mainland) fund management institutions may conduct the work relating to the cross-border issuance and sales of funds based on such information.
Article 10 In principle, the funds raised through the issuance of Hong Kong (mainland) funds in the mainland (Hong Kong) shall not exceed 50% of their total fund assets.
Where the assets of mainland (Hong Kong) holder of a Hong Kong (mainland) fund exceeds 50% of its total fund assets due to the net redemption of the holder, the Hong Kong (mainland) fund management institution shall cease the sale of the fund in the mainland (Hong Kong).
Article 11 A Hong Kong (mainland) fund management institution may remit outward or inward subscription and redemption funds in the form of RMB or foreign exchange through the opening bank of its special fund collection account. The relevant funds shall be remitted outward or inward through the relevant special RMB or foreign exchange accounts respectively according to currencies.
Article 12 An agent shall, according to the authorization of a fund management institution, undergo the formalities for foreign exchange settlement and purchase and transfer of funds between the relevant accounts for the Hong Kong fund.
The custodian shall, based on the requirements or order of the mainland fund management institution, undergo the formalities for foreign exchange settlement and purchase and transfer of funds between the relevant accounts for the mainland fund.
Chapter V Statistics Monitoring and Supervision and Administration
Article 13 The subjects involved in the cross-border issuance and sales of securities investment funds shall, in accordance with the provisions on the balance-of-payments statistical declarations, conduct foreign-related receipts and payments and the declaration of foreign financial assets and liabilities and trading statistics.
Article 14 The opening bank of a Hong Kong (mainland) fund management institution in the mainland, shall, in a timely, accurate and complete manner, submit the relevant RMB account information and the information on cross-border RMB fund receipts and payments to the RMB Cross-Border Payment and Receipt Management Information System (RCPMIS).
Article 15 The agent, custodian, mainland opening bank, and mainland fund management institution, among others, shall, in accordance with the relevant provisions of the SAFE, submit the data on the relevant accounts, foreign exchange settlement and sale under accounts, transfer of mainland funds, foreign debts and other relevant data.
Article 16 A Hong Kong fund management institution (through its agent) and a mainland fund management institution shall, before the end of January each year, submit to the PBC and the SAFE a report on its cross-border issuance and sales of mainland (Hong Kong) funds, which shall include but not be limited to the fund quantity, the size of each fund, outward and inward remittance of fund (statistics on a monthly basis) and foreign exchange settlement and sales.
Article 17 Where a Hong Kong (mainland) fund management institution, the agent, custodian, or mainland opening bank, among others, commits any of the following conduct, the PBC and the SAFE shall punish it in accordance with the relevant provisions:
(1) Failing to report information as required, or the content of the reported information is incomplete or false, or providing any false materials, report, information or certificate, among others.
(2) Handling the outward (inward) remittance of funds in violation of any provision.
(3) Failing to suspend fund subscription and fund registration (recognition) as required.
(4) Failing to handle the opening or close of the relevant account as required.
(5) Failing to handle foreign exchange purchase and settlement, or foreign exchange receipts and payment as required.
(6) Failing to submit the relevant data or reports or submit the materials for recordation as required.
(7) Failing to conduct balance-of-payments statistical declarations as required.
(8) Violating any other provisions of the PBC or the SAFE.
Article 18 The materials submitted by Hong Kong (mainland) fund management institutions to the PBC and its branch offices and the SAFE and its branch offices and foreign exchange administrative departments in accordance with these Guidelines shall be Chinese versions. If there are both foreign and Chinese versions, Chinese versions shall prevail.
Article 19 These Guidelines shall be subject to interpretation by the PBC and the SAFE.
Annexes:
1. Report on the Issuance of Hong Kong Funds in the Mainland
2. Statement on the Scope of Receipts and Payments under the Accounts Relating to the Cross-Border Issuance and Sales of Funds
3. Standards on the Declaration of Information on Accounts Relating to the Cross-Border Issuance and Sales of Funds
4. Report on the Issuance of Mainland Funds in Hong Kong
*The above annexes please refer to the Chinese version.
