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Sunday, December 10, 2006

Circular Concerning the Administration of Insurance Companies with Foreign Investment

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Decree [2001] No.336 of the State Council The Regulation of the People's Republic of China on the Administration of Insurance Companies with Foreign Investment has been passed at the 49th executive meeting of the State Council on December 5, 2001 and is hereby promulgated for implementation as of February 1, 2002.Premier of the State Council: Zhu Rongji December 12, 2001(11-26 10:47)

Chapter I General Provisions


HuiFa [2003] No.44
March 29, 2003
Branches and foreign exchange administration departments under the State Administration of
Foreign Exchange in provinces, autonomous regions and municipalities directly under the Central
Government, and branch administrations of Shenzhen, Dalian, Qingdao, Xiamen, Ningbo:
For the purpose of regulating the administration on foreign exchange of fund management
companies with foreign shares, this Circular is hereby issued to you concerning administration of
foreign exchange of the fund management companies with foreign shares:

I. "Fund management companies with foreign shares" mentioned in this Circular shall include the
fund management companies which corporate form are changed through acquirement by transfer of
or through subscribing stock equity of a domestic fund management company by foreign
shareholders, or the fund management companies established through joint capital contribution by
foreign shareholders and domestic shareholders.

II. No fund management company with foreign shares shall open foreign exchange account before
obtaining approval from the China Securities Regulatory Commission (hereinafter referred to as the
"CSRC") for granting commencement of its business.
(I) Where the CSRC has granted approval for commencement of business to a fund management
company established through joint capital contribution by domestic shareholders and foreign
shareholders, the company may apply to local administration of foreign exchange for opening
foreign exchange capital account at a domestic designated bank of foreign exchange by presenting
the following documents and materials:
1. A written application to open account;
2. Joint venture agreement/contract;
3. The approval document from the CSRC for granting commencement of its business.
4. The Approval Certificate of Foreign Investment Enterprise issued by the foreign economic and
trade department;
5. The Notice for Advance Examination and Approval of an Enterprise Name issued by the
administration of industry and commerce of the State; and
6. Other documents and materials required by the Administration of Foreign Exchange.
(II) A fund management company with foreign shares which corporate nature has been changed
through subscribing the stock equity of an already established domestic fund management company
by foreign shareholders may apply to local administration of foreign exchange to open foreign
exchange capital account at a domestic-designated foreign exchange bank by presenting the
necessary documents including subscription agreement/contract, approval documents of CSRC and
approval certificate of foreign economic and trade department.

III. Verification on input of capital fund from foreign shareholders into a fund management
company with foreign shares shall be conducted in accordance with this Circular of Ministry of
Finance and the State Administration of Foreign Exchange on Further Strengthening Capital
Verifications on Enterprises with Foreign Investment and on Improving the System of Foreign
Investment and Foreign Exchange Registration (CaiKuai [2002] No.1017).

IV. The scope of income for a foreign exchange capital account of the fund management company
with foreign shares shall be the capital contribution remitted by foreign shareholders. The scope of
expenditure shall be payment under current account and other foreign exchange payments approved
by the administration of foreign exchange.

V. In case a fund management company with foreign shares needs to settle the exchange at the
foreign exchange capital account, it shall make application to the local administration of foreign
exchange by presenting the following documents and materials, and handle settlement procedures at
a designated foreign exchange bank based on approval documents of the administration of foreign
exchange:
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(I) A written application for settlement;
(II) Vouchers representing usage of the settled fund or description of the same;
(III) Bank statements of the foreign exchange capital account in current period of the company;
and
(IV) Other documents required by the administration of foreign exchange.

VI. In the case a fund management with foreign shares needs to pay profits to foreign shareholders, it
shall make applications to the administration of foreign exchange at its locality by presenting the
following documents and materials, and handle purchase and payment of exchange procedures at
designated foreign exchange bank on basis of approval documents of the administration of foreign
exchange:
(I) A written application for purchase and payment of exchange;
(II) Tax payment receipt and tax declarations form;
(III) Auditing report issued by an accounting firm on profits and profits distribution at the year of
realization of profit of the company;
(IV) Resolution passed by the board of directors of the company on profit distribution;
(V) Bank statements of the foreign exchange capital account in current period of the company.
(VI) Other materials required by the administration of foreign exchange.
Within four months after the expiry of each fiscal year, the fund management with foreign
shares that fails to purchase and remit outside country the exchanges to pay profits to foreign
shareholders due in that year shall report to the administration of foreign exchange for record. The
record documents of the administration of foreign exchange shall be the necessary document for
purchase or remittance of profits to foreign shareholders thereafter.

VII. Where the corporate nature is changed through stock transfer from a domestic fund management
company to foreign shareholders, such fund management company shall report to the administration
of foreign exchange for record at its locality within five working days after obtaining formal
approval documents from the CSRC. Where the transferor is a domestic organization, it shall make
application to the administration of foreign exchange at its locality, within five working days after
receiving the foreign exchanges from the transferee, and present the documents including written
application, transfer agreement, approval document of the CSRC and approval certificate of foreign
economic and trade department.

VIII. Where transfer of stock equity of a fund management company with foreign shares is approved
by CSRC and foreign economic and trade department, it shall report to the administration of foreign
exchange at its locality record within five working days of obtaining approval documents from the
foreign economic and trade department. Where stock equity is transferred from foreign shareholders
to domestic organizations and the transferee needs to pay to the foreign investor for the transfer, it
shall apply to the administration of foreign exchange at its locality for approval of purchase and
payment of exchange by presenting the following documents and materials:
(I) A written application for purchase and payment of exchange;
(II) The stock equity transfer agreement;
(III) Approval documents from the CSRC and foreign economic and trade department granting
approval to the transfer;
(IV) Bank statements on all foreign exchange account of the transferee;
(V) If proceeds are accrued by the transfer on part of the foreign party, the transferee shall present
tax payment receipt on withholding income tax.
(VI) Other materials required by the administration of foreign exchange.

IX. Where the foreign shareholder of a fund management company with foreign shares has obtained
approval from the CSRC and foreign economic and trade department to reduce or withdraw its
investment therein, the company shall apply to the administration of foreign exchange at its locality
for approval of purchase and payment of exchange by presenting the following documents and
materials:
(I) A written application for purchase of exchange;
(II) Resolution passed by the board of directors of the company on reduction (withdrawal) of
investment by foreign party;
(III) Approval documents from the CSRC and foreign economic and trade department granting
approval to the reduction (withdrawal) of investment;
(IV) Latest capital verification report and auditing report of the company issued by an accounting
firm;
(V) Bank statement of foreign exchange capital account of the company;
(VI) If proceeds are accrued by the reduction (withdrawal) of investment on part of the foreign
party, tax payment receipt on withholding income tax shall be presented.
(VII) Other materials required by the administration of foreign exchange.

X. Fund management companies with foreign shares shall only conduct businesses specified by
CSRC. Without approval of the State Administration of Foreign Exchange, they shall not conduct
any foreign exchange business under capital items such as financing from abroad or providing
guarantees to foreign parties etc.

XI. The State Administration of Foreign Exchange and its branches shall have the power to make onsite
investigations to the foreign exchange capital account of fund management companies with
foreign shares and to their settlement and payment of exchange. Fund management companies with
foreign shares shall actively render assistance to relevant investigations and shall not provide false
information.

XII. Where a fund management company with foreign shares acts in breach of this Circular and
other regulations on administration of foreign exchange, the State Administration of Foreign
Exchange and its branches may impose sanctions on it in accordance with the Regulations of the
People's Republic of China on Administration of Foreign Exchange and other regulations on foreign
exchange control.

XIII. This Circular shall enter into force as of May 1, 2003. The State Administration of Foreign
Exchange shall be responsible for the interpretation of this Circular.

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