Announcement by the State Administration of Foreign Exchange of the Provisions on the Administration of Foreign Exchange in Domestic Securities Investments of Qualified Foreign Institutional Investors

Chapter IV Administration of Remittance and Exchange

Article 15 A QFII may, in accordance with the investment plan and relevant explanation while applying for investment quota, inform the custodian to directly remit the foreign exchange deposit for investment into its special RMB account within 10 working days prior to actual investment.

Where a QFII remits accumulative deposit equivalent in value of less than USD20m, it shall not conduct foreign exchange settlement and investment.

Article 16 A open-ended Chinese fund may, according to the monthly net offset balance of fund purchase and redemption, handle relevant inward and outward remittance monthly upon the end of the lock-in period.

For net fund redemption, the remitted-outward deposit shall be calculated according to the proportion of a QFII deposit and profit and loss of fund on the last trading day of the last month before the outward of remittance confirmed by the custodian, which acts as the quota of another remitted-inward deposit in future.

Where one open-ended Chinese fund has net fund purchase and each remitted-inward amount for settlement equivalent in value is no more than USD50m (including USD50m), the custodian may directly handle related formalities and submit the foreign exchange bureau where the custodian is domiciled for filing; for that equivalent in value of more than USD50m, the custodian shall, within 10 working days ahead of time, hold the photocopies of the Foreign Exchange Registration to file an application to the foreign exchange bureau where the custodian is domiciled, and may handle related formalities after the approval of the bureau.

Where one open-ended Chinese fund has net fund redemption and each remitted-outward amount for purchasing foreign exchange equivalent in value of no more than USD50m (including USD50m), the custodian may directly handle related formalities and submit to the foreign exchange bureau where the custodian is domiciled; for that equivalent in value of more than USD50m, the custodian shall, within 10 days ahead of time, hold the written application, the photocopies of the Foreign Exchange Registration and the explanation related to investment profit and loss to handle relevant formalities after the approval of the foreign exchange bureau where the custodian is domiciled.

Article 17 Apart from the open-ended Chinese fund, other QFIIs, if it is necessary to remit deposit outward for purchasing foreign exchange after the expiration of the lock-in period of deposit, should file an application to the SAFE with the following materials:

(1)    A written application;

(2)    The original copy of Foreign Exchange Registration;

(3)    Explanation related to deposit of inward of remittance and the condition of previous investment; and

(4)    Other materials required by the SAFE.

The SAFE issues the reply document and accordingly adjust to reduce the investment quota of a QFII after examination and approval. The custodian handles the formalities of purchasing foreign exchange and the outward of remittance based on the reply document of the SAFE.

Article 18 Apart from the open-ended Chinese fund, other QFIIs, if it is necessary to purchase foreign exchange to remit the realized accumulative incomes, should first acquire the special auditor’s report issued by the Chinese Certified Public Accountant and entrust the custodian to file an application to the foreign exchange bureau where the custodian is domiciled with the following materials:

(1)    A written application and relevant certification documents of profits of outward of remittance;

(2)    The original copy of the Foreign Exchange Registration;

(3)    The special auditor’s report on the return to investment issued by the Chinese Certified Public Accountant;

(4)    Tax payment certificate for incomes; and

(5)    Other materials required by the SAFE.

The custodian may handle the formalities of purchasing foreign exchange and outward of remittance for the QFII based on the reply document issued by the foreign exchange bureau where the custodian is domiciled after examination and approval.

Article 19 The custodian shall accurately and timely record the fund remittance and payment of a QFII in the Foreign Exchange Registration.

Article 20 The SAFE may, in accordance with Chinese economic and financial situation, supply and demand of foreign exchange market and the international payment, adjust the time of fund outward of remittance, amount and the period limit of a QFII.