Interim Measures of Overseas Investment Pilot Program of Qualified Domestic Limited Partner (QDLP) in Hainan Province

Chapter I General Provisions

Article 1 These Interim Measures are formulated pursuant to relevant laws and regulations for the purpose of actively promoting the construction of the Hainan Free Trade Port, accelerating the opening up of the financial industry to the international market, and standardizing the development of overseas investment pilot program of qualified domestic limited partners.

Article 2 The term "Qualified Domestic Limited Partners" (QDLP) as mentioned in these Measures refers to any domestic natural persons, institutional investors or other investors as stipulated in these Measures meeting the conditions stipulated in Chapter IV of these Measures and subscribing for the pilot funds stipulated in these Measures with their own capital.

The term "Pilot Fund Management Company" as mentioned in these Measures refers to any companies that have been jointly recognized by the relevant entities of a pilot project, registered and actually operating in Hainan Province, whose main business is to initiate the establishment of a pilot fund and to manage its overseas investment as required by, meeting and being in compliance with the Chapter II provisions of these Measures.

The term "Pilot Fund" as mentioned in these Measures refers to a fund initiated by a Pilot Fund Management Company in Hainan Province pursuant to laws, established with qualified domestic limited partners, which aims to participate in investment in overseas market with fund property in accordance with the provisions of these Measures, and meeting the provisions of Chapter III of these Measures.

Article 3 The Pilot Fund Management Company shall initiate the establishment of a pilot fund and apply the fund property from the pilot fund to invest abroad pursuant to the relevant laws, regulations and the provisions of this Measures, so as to safeguard the legitimate rights and interests of investors.

Article 4 The pilot work shall be organized by provincial financial supervision department under the direct leadership of the provincial government, and the relevant departments shall participate jointly according to their functions and duties. Relevant departments of the pilot project include without limitation, provincial financial supervision department, foreign exchange administration, provincial market supervision department, securities supervision department, etc. The provincial financial supervision department shall administer the daily affairs of pilot work and manage and accept pilot applications and other relevant documents. It also organizes the relevant departments of the pilot to review the application documents; additionally, it shall review the pilot qualifications of applicants,  and grant the pilot license if the application is accepted; The foreign exchange administration department shall be responsible for the management of cross-border funds involved in these Measures; The provincial market supervision department shall be responsible for registration management of Pilot Fund Management Companies and Pilot Funds; The securities supervision department shall be responsible for guiding the registration and filing of Pilot Fund Management Companies and Pilot Funds, supervising and managing the business activities relating to the Pilot Fund Management Companies and Pilot Funds filed with the Asset Management Association of China; The provincial development and reform department and the provincial commerce department shall be responsible for providing guidance on whether the investment target and area of the Pilot Funds are sensitive categories; Other relevant departments shall cooperate in relevant work as actual needs may be.

Article 5 The pilot work will be carried out under the guidance of relevant state departments, the first batch of Pilot Fund Management Companies will be recognized by the provincial government, and the list of the subsequent Pilot Fund Management Companies will be recognized through meetings organized by provincial financial supervision department with the foreign exchange administration department, the provincial market supervision department and the securities supervision department.

Article 6 The provincial financial supervision department shall, together with the relevant departments of the pilot project, work out and implement various policies and measures, promote pilot work, and coordinate and solve relevant problems during the pilot project.

Chapter II Pilot Fund Management Companies

Article 7 The Pilot Fund Management Companies stipulated in these Measures include Domestic Pilot Fund Management Companies and outbound investment Pilot Fund Management Companies. Foreign-invested Pilot Fund Management Companies refer to any Pilot Fund Management Companies established by overseas natural persons or entities in accordance with the provisions of these Measures.

Article 8 Pilot Fund Management Companies may engage in the following businesses:

(1) To initiate the establishment of a Pilot Fund;

(2) To manage Pilot Funds investment business as required and provide relevant services;

(3) To conduct investment consulting business according to law.

Article 9 The Pilot Fund Management Company may be incorporated in corporate, partnership and other forms of organization.

Article 10 A Pilot Fund Management Company shall meet the following conditions:

(1) The registered capital of the Pilot Fund Management Company shall not be less than RMB 5 million or its equivalent in foreign currency, and the capital may be contributed in currency only, the capital contribution shall be fully paid in accordance with the Articles of Association/Partnership Agreement or within 2 years from the date of obtaining the pilot qualification, whichever is earlier;

(2) Having at least 1 major investment manager with more than 5 years of overseas investment management experience and relevant professional qualifications and 2 major investment managers with more than 3 years of overseas investment management experience and relevant professional qualifications; The main investment managers shall have no record of violations or pending economic dispute litigation cases in the last 5 years;

(3) The controlling shareholder, actual controller or managing partner of the Pilot Fund Management Company or the associated entity of any of the aforesaid subjects shall meet the following conditions: A financial enterprise that has been approved by the local regulatory authority to engage in investment management business or asset management business and has a license issued by the local regulatory authority, or a fund management enterprise that has good investment performance and manages a fund of no less than RMB 0.1 billion (or equivalent in foreign currency);

(4) Any entity of the controlling shareholder, actual controller or managing partner of the Pilot Fund Management Company or the related entity of any of the above entities shall have a net asset of no less than RMB 10 million or equivalent foreign currency, the assets are of good quality, engaged in the asset management industry at home and abroad for more than 3 years, have a standardized internal governance structure and a sound internal control system, and have not been severely punished by the local regulatory authority in the last year, no material matters are under investigation by the judicial department or the supervisory authority;

(5) The domestic Pilot Fund Management Company that continues to operate shall be registered with the Asset Management Association of China as a private fund manager, and at least one private fund has been filed with the Asset Management Association of China;

(6) Other conditions required by the principle of prudence.

Chapter III Pilot Funds

Article 11 Pilot Funds may be incorporated in the form of corporate, partnership or contractual type.

Article 12 The Pilot Funds shall satisfy the following conditions:

(1) The subscribed capital contribution amount/initial raising scale shall not be less than RMB 30 million (or equivalent in foreign currency), and the mode of capital contribution shall be limited to currency;

(2) The Pilot Funds investors shall comply with the provisions of Chapter IV hereof, and the number of investors shall comply with the relevant provisions of laws and regulations.

Article 13 Pilot Fund’s overseas investment shall be performed pursuant to relevant laws, regulations and normative documents concerning overseas investment. The Pilot Funds may carry out the following investment operations on the assets of the Fund:

(1) Equity and bonds of non-listed enterprises abroad;

(2) Stocks and bonds issued and traded in private by overseas listed enterprises;

(3) Overseas securities markets (including financial instruments traded on overseas securities markets);

(4) Overseas equity investment funds and securities investment funds;

(5) Overseas commodities and financial derivatives;

(6) Other fields approved by the relevant departments of the state.

Chapter IV Management of the Eligibility of Qualified Domestic Limited Partners

Article 14 Qualified Domestic Limited Partners of Pilot Funds refer to any domestic natural persons, institutional investors or other investors specified in these Measures, having the corresponding risk identification ability and risk bearing capacity and investing in a single Pilot Fund with no less than 1 million yuan or equivalent foreign currency, and meeting the following standards:

(1) corporate entity whose net assets are not less than RMB 10 million;

(2) individual whose financial assets are not less than 3 million yuan or whose annual income in the last three years is not less than 500,000 yuan.

The financial assets mentioned in the preceding paragraph include bank deposits, stocks, bonds, fund units, asset management plans, bank wealth management products, trust plans, insurance products, futures equities, etc.

Article 15 The following investors may be regarded as QDLPs:

(1) Pension funds such as enterprise annuities, social security funds, and social welfare funds such as charitable funds;

(2) Asset management products filed pursuant to laws;

(3) Fund managers and their employees who invest in the funds under their management;

(4) Other investors as prescribed by the China Securities Regulatory Commission.

In the case of direct or indirect investment in the Pilot Funds through pooling of investors' funds in the form of partnership or contract, the Pilot Fund Management Company shall make penetrative verification whether the final investors is a QDLP and calculate the number of investors together. However, if the investor's Pilot Funds investment is in accordance with the provisions of Item (1) (2) (4) of this Article, there is no penetrative verification to the final investors whether it is a QDLP and calculate the number of investors together. The QDLP shall ensure that the sources of investment funds are legal and shall not illegally pool other people's funds for Pilot Funds investment.

Article 16 The Pilot Fund Management Company shall earnestly perform the duty of eligibility management of QDLPs, understand relevant information such as the client's identity, property and income status, investment experience, risk preference, investment objectives, etc.; additionally, it shall take targeted measures for risk disclosure, client training, investors education, etc., and guide clients to participate in overseas investment on the basis of fully understanding the characteristics of overseas investment market.

The Pilot Fund Management Company shall establish and improve the specific business system and operational guidelines for the eligibility management of QDLPs, and inform the clients of the specific requirements of the eligibility management in various forms and channels, and take effective and proper steps to explain and communicate with the clients.

The Pilot Fund Management Company shall properly keep all the records of the eligibility management of the client, and undertake the obligation to keep the client information confidential pursuant to laws; Special personnel shall be appointed to accept client complaints, properly handle conflicts and disputes with clients, carefully record relevant information, and report client complaints and handling status to the provincial financial supervision department.

Article 17 The Pilot Fund Management Company and the Pilot Funds shall not promise break-even to the QDLPs. The Qualified Domestic Limited Partner shall sign the Risk Disclosure Letter. The Pilot Fund Management Company and Pilot Funds shall raise capital from qualified investors, and the total number of qualified investors shall not exceed the quorum; It is not allowed to raise capital from entities or individuals other than qualified investors, and it is not allowed to advertise to unspecified objects.

Chapter V Incorporation Process

Article 18 The provincial financial supervision department shall collect all the application documents of the first batch of Pilot Fund Management Companies and Pilot Funds, and shall organize the departments of foreign exchange administration, provincial market supervision, securities supervision department, development and reform department, commerce department and other departments to mutually verify and comprehensively evaluate their professional levels, private investment records, overseas investment strategies and actual needs of the proposed investment projects, etc., and work out the list of the first batch of Pilot Fund Management Companies and the proposal of the first pilot licenses.  The provincial financial supervision department will submit the list of the first Pilot Fund Management Companies and the proposal of the first pilot licenses to the provincial government for approval, and then issue a written opinion to the applicants, agreeing to the first pilot and grating the license thereof.

For applications that are not among the first batch of Pilot Fund Management Companies or the first pilot quota, provincial financial supervision department shall collect all application documents and organize the departments of foreign exchange administration, provincial market supervision, securities supervision, development and reform, and commerce, etc., to make joint review. It shall decide whether to grant the pilot qualification and license, according to the professional degree, private investment history, overseas investment strategy and the actual needs of the proposed investment project, etc. The provincial financial supervision department shall issue a consent to the applicant to carry out the pilot, and conduct a written comment on the pilot license.

Article 19 Applicants shall submit the following materials when applying for a Pilot Fund Management Company:

(1) Application Form (see annex 1 for the template);

(2) Power of attorney (if necessary);

(3) The business license/registration certificate or other identity documents of the remained Pilot Fund Management Company or its controlling shareholder, actual controller or managing partner;

(4) Articles of association/partnership agreement (or draft);

(5) Internal control system, including accounting system, internal audit system, risk control system and information disclosure system;

(6) A Pilot Fund Management Company that continues to operate shall submit the registration and filing record with the Asset Management Association of China as a private fund manager and the record of the fund managed by it in the Asset Management Association of China;

(7) A letter of commitment proving that the applicant has not been severely punished by the local supervisory authority in the last year and that there is no major event under investigation by the judicial department or supervisory authority;

(8) Personnel information sheet, resume, professional qualification certificate and practice certificate of the legal representative or executive partner (appointed representative) and senior management personnel;

(9) Pilot Fund Management Company or any subject of its controlling shareholder, actual controller, managing partner or any related entities of the subjects above shall provide the audit report for the previous year and the background introduction of domestic and overseas asset management practices, and supporting materials of financial license, previous investment performance and fund management scale;

(10) The project plan and total scale of the Pilot Fund to be established;

(11) Other documents required by the provincial financial supervision department and other pilot related departments in accordance with the principle of prudence.

Article 20 Applicants shall submit the following materials when applying for a Pilot Fund:

(1) Proposal / prospectus / promotion materials;

(2) Articles of association /partnership agreement/fund contract or draft of the pilot fund;

(3) Entrusted management agreement or draft (if any) for Pilot Funds;

(4) If the QDLP is an institutional investor, the audit report of the institution for the previous year shall be submitted; for natural person investor, the income certificates, financial assets certificates or financial net asset commitment letter for recent three years proving compliance with the requirements of the Measures; Investment details, capital contribution certificates (if any) and risk disclosure statements of all QDLPs;

(5) If Pilot Funds entrust administrators to take charge of the back-office administration of the fund, they shall submit the business licenses and business qualification certificates of administrators, a letter of commitment proving that it has not been subject to significant regulatory penalty for recent 3 years and that no major event is under investigation, and a document of intent signed between the Fund and the administrator. Full-time personnel profiles or resumes from the administrator, who are familiar with the overseas fund administration, internal audit and supervisory control systems and risk control systems;

(6) Letter of commitment;

(7) Other documents required by the provincial financial supervision department and other pilot departments in accordance with the principle of prudence.

Article 21 One original and six copies of the application documents for the Pilot Fund Management Company and Pilot Fund shall be provided, and the original application documents shall be affixed with the official seal. The supporting information of the relevant Pilot Fund administrator (if any) shall be sealed at the same time.

Article 22 After the Pilot Fund Management Company and the Pilot Fund have obtained the written opinions for the approved pilot, they shall file with the provincial market supervision department based on the approved written opinions on the pilot program, and apply for the registration with the Asset Management Association of China as soon as possible.

Article 23 The newly-established Pilot Fund Management Company and the Pilot Fund shall submit the business license, articles of association/partnership agreement, entrusting management agreement, custody agreement, and the agency agreement (if any) signed by the domestic trustee and overseas asset trustee to the provincial financial supervision department within 30 natural days after the establishment of the fund, and copy above materials to the foreign exchange administration and the Securities Supervision Department. A certificate of actual payment of the registered capital shall be provided within 30 natural days after the capital is fully paid up.

Article 24 The Pilot Fund Management Company shall carry out fund raising activities in accordance with the requirements of national laws and regulations and normative documents, and conduct fund-related businesses at the domestic trustee within the term approved by the relevant pilot authorities, profit distribution or liquidation may be carried out in accordance with the Conventions of Association/Partnership Agreement/Fund Contract, and investment income and capital change income shall be remitted back to the domestic domain in a timely manner in accordance with relevant regulations on cross-border fund management.

Chapter VI Processes of Purchase and Payment of Foreign Exchange and Outbound Investment

Article 25 The Pilot Fund Management Company shall entrust a commercial bank with branches in Hainan Province or a financial institution with fund trust qualifications and meeting certain conditions as the domestic trustee of the Pilot Funds. The domestic trustee bank shall meet the following conditions:

(1) Qualified as a designated foreign exchange bank, and having the qualification of trust of securities investment funds and of operating RMB business;

(2) The paid-up capital of the head office legal person at the end of the last fiscal year shall not be less than RMB 3 billion or its equivalent in foreign currency;

(3) Having sufficient full-time personnel who are familiar with domestic and overseas trust business;

(4) Having the conditions for safe trust of assets;

(5) Having a safe and efficient liquidation capability;

(6) Having a sound internal audit and monitoring system and a risk control system;

(7) No severe punishment by the supervisory authority in the past 3 years, and no major case being under investigation by the judicial department or the supervisory authority;

(8) No major violations of foreign exchange and cross-border RMB business regulations in the past 3 years;

(9) Other requirements as required by the relevant departments of the pilot project.

Article 26 The duties of domestic trustee of the Pilot Funds shall include but not limited to:

(1) open corresponding special accounts for the Pilot Funds according to the conditions of the raised funds, and carry out safe trusteeship business of the funds inside the Pilot Fund’s trustee account;

(2) Provide cross-border payment service, foreign exchange settlement and sale of Pilot Funds, strictly abide by foreign exchange management requirements such as international payments declaration and statistics of settlement and sale of foreign exchange, submit statistical statements on foreign exchange settlement and sale and completely keep the paper documents related to declaration for reference;

(3) Ensure that its own funds and other assets under trust are completely isolated from the Pilot Funds assets in the business mechanism and process;

(4) Perform the liquidation and settlement of Pilot Funds assets in accordance with relevant domestic and overseas laws and regulations and the agreement of trust;

(5) Supervise the investment operation of the Pilot Fund Management Company in accordance with the law, and ensure that the fund is managed in accordance with the investment objectives and restrictions stipulated in the relevant laws and regulations and the investment management agreement; If an investment instruction or remittance of funds is identified as violating laws or regulations, it shall be reported to the foreign exchange administration department in a timely manner, and a copy shall be sent to the provincial financial supervision department, provincial market supervision department and Securities Supervision Department;

(6) Keep the records of cross-border funds of QDLPs for a period of not less than 20 years;

(7) Perform other duties stipulated by the relevant departments of the pilot project in accordance with the principle of prudential supervision.

Article 27 After obtaining the qualification for the pilot project and the outbound investment license, the Pilot Fund Management Company shall apply to the foreign exchange administration department for foreign exchange registration in written form. The Pilot Fund Management Company shall submit the following materials for foreign exchange registration:

(1) Application form (including but not limited to the basic information of the Pilot Fund Management Company, the proposed Pilot Fund, the investment plan, etc.);

(2) A written opinion issued by the provincial financial supervision department, approving the pilot project and granting the pilot license;

(3) Business license (if any);

(4) The registration or filing with the Asset Management Association of China (if any);

(5) If the investment activities require the formalities for filing or approval of overseas investment, relevant written opinions such as project approval documents or notice of filing issued by the competent department of overseas investment.

Article 28 The Pilot Fund Management Company may open a special account for business trust funds on the strength of relevant documents for conducting business. All accounts opened by the Pilot Fund Management Company involving the pilot business shall be included in the trust, and the domestic trustee shall be authorized to carry out the trust operation and supervision of the special account for the trust funds. The domestic trustee, as an independent third party, monitors the use of funds in real time. To open a special account for escrow funds, the Pilot Fund Management Company shall submit the following materials stamped with the official seal of the relevant entity and the original copies for verification:

(1) a written opinion issued by units of the pilot project that agrees to carry out the pilot project and grants the pilot license;

(2) Business licenses for Pilot Fund Management Company and Pilot Fund;

(3) Identity documents of the legal representative or managing partner (appointed representative);

(4) certification of completion of foreign exchange registration;

(5) Other documents required by the domestic trustee.

Article 29 The income scope of the special account for trust funds shall include: foreign exchange (including RMB foreign exchange purchase funds) and RMB funds raised from domestic investors; Redemption of outbound investment and settlement, conversion and reduction of investment; Profits, dividends, interest and other current income; Other income permitted by the State Administration of Foreign Exchange. The scope of expenditure of the special account for trust funds shall include: transfer to overseas for investment within the prescribed scope; settlement of foreign exchange or direct transfer to the account of Domestic Limited Partner (or special account for Raising and Settlement Funds); payment for relevant taxes and fees; other expenses permitted by the State Administration of Foreign Exchange.

Article 30 The Pilot Fund Management Company may, after purchasing foreign exchange or directly in RMB, make overseas investment through a special account for trust funds.

Article 31 In case of major matters such as capital increase, capital reduction or change of shareholders/partners of the Pilot Fund Management Company, the approval of the relevant departments of the pilot project shall be obtained. In case of adjustment of the outbound investment license of the Pilot Fund Management Company, after obtaining written opinions from relevant departments of the pilot project, foreign exchange change registration shall be applied in the foreign exchange administrative department. After the winding up of all the Pilot Funds initiated by the Pilot Fund Management Company, the Pilot Fund Management Company shall apply to the foreign exchange administration for cancellation of registration.

Article 32 The domestic trustee shall examine the investment scope of the Pilot Fund before remittance of funds. If the investment is not required to go through the formalities for filing or approval of overseas investment, cross-border fund transfer shall be made within the Pilot Funds limit according to the written opinions issued by the relevant departments of the pilot project; If the investment activities need to go through the formalities for filing or approval of overseas investment, the project approval documents or notice of filing issued by the department in charge of overseas investment shall also be reviewed, cross-border fund transfer shall be carried out according to the investment scale of a single project.

Article 33 The domestic trustee shall strengthen internal control management and set up separate account to manage and account independently for overseas investment funds in trust, thus ensuring that there is complete isolation of the trustee's own funds with other trust funds, and guaranteeing the safety of the funds in the trust account; in addition it shall supervise the investment operation of Pilot Fund Management Company in accordance with the laws, execute the instructions from Pilot Fund Management Company, and perform the liquidation and delivery matters in a timely manner. The domestic trustee shall prepare the Statement of Overseas Investment Business of QDLP of Hainan Province on a quarterly basis (see Appendix 2 for the template), and submit the same to the foreign exchange administration department within 10 working days after the end of each quarter, while a copy shall be sent to the provincial financial supervision department.

Article 34 The purchase and redemption prices of fund units shall be calculated on the basis of the net value of fund units on the purchase and redemption date plus or minus the relevant fees, and shall be issued by Pilot Fund Management Company or the administrate after checking.

Article 35 The investment principal and income received by the Pilot Fund shall be examined and determined by the Pilot Fund Management Company or the administrator. The realized investment income and principal shall be remitted to the special account of the domestic trustee.

Chapter VII Administration

Article 36 The Pilot Fund Management Company may personally administrate or entrust a domestic enterprise that meets the requirements of this Article to act as an administrator to administrate the back-office affairs of the Pilot Funds. The entrusted administrator shall meet the following conditions:

(1) It has the relevant qualifications for engaging in funds service business;

(2) It shall be equipped with a department or a team that specializes in the administration of funds and full-time personnel who are sufficiently familiar with the administration of overseas funds;

(3) Having a sound internal audit monitoring system and a risk control system;

(4) In the recent 3 years, it has not been severely punished by the regulatory authorities, and not been investigated by the judicial department or the regulatory authorities for major matters.

Article 37 The duties to be performed by the Pilot Fund Management Company or the administrator shall include but are not limited to:

(1) Calculate the net asset value and investment income of the funds in accordance with the valuation policies and procedures of the Pilot Funds, and announce the same to the QDLPs regularly;

(2) Maintain the financial books and records of the Pilot Funds, and make available complete records of the transactions executed by the Pilot Funds;

(3) Maintain all documents involving the calculation of the net asset value of the supporting funds related to the investment, withdrawal and trading of Pilot Funds;

(4) Provide registration and transfer agency services related to the issuance, transfer and redemption of rights and interests and perform relevant operations;

(5) Verify the identity of Pilot Funds investors in accordance with relevant anti-money laundering policies and procedures;

(6) Submit information to the provincial financial supervision department, the foreign exchange administration, the provincial market supervision department and the securities supervision department in a timely manner.

Chapter VIII Enterprise License and Investment Management

Article 38 The amount of outbound investment shall be subject to balance management. The sum of the net remittance of outbound investment (excluding dividends, taxes, profits and other current account receipts and expenditures) of all Pilot Funds initiated by the Pilot Fund Management Company shall not exceed the amount of investment approved for such Pilot Fund Management Company. The outward remittance of funds involved in outbound investment of Pilot Fund Management Company and Pilot Funds shall be performed by the trustee within the scope of pilot license, and the principles of foreign exchange purchase on demand, license management and risk warning shall be followed.

Article 39 The Pilot Fund Management Company may initiate the establishment of multiple Pilot Funds. Unless otherwise specified, the Pilot Fund Management Company may flexibly adjust the outbound investment amount of a single pilot fund among the funds established by it, and the sum of the outbound investment amount of each individual pilot fund shall not exceed the outbound investment amount for the Pilot Fund Management Company as may be approved by the relevant authorities.

Article 40 There is no limit to the application for the license of a single Pilot Fund Management Company and the license of a single investment project. Without special reasons, if the Pilot Fund Management Company fail to use up the licensed amount within 11 months after obtaining the pilot qualification and license, the provincial financial supervision department shall inform that it reserves the right to cancel its pilot qualification and withdraw full pilot licenses. If the Pilot Fund Management Company needs to conducts business, it shall reapply for pilot qualifications and new licenses. If the approved license is insufficient due to future renewal or additional investment, the Pilot Fund Management Company shall reapply for additional license.

Article 41 the Pilot Fund Management Company shall invest raised funds in overseas market and not invest any sum under pilot licenses in China, in accordance with the relevant laws and regulations, these Measures and relevant agreements.

Chapter IX Information Disclosure

Article 42 The Pilot Fund Management Company, domestic trustee, administrator and other information disclosure obligors shall fulfill the obligation of information disclosure in the whole process of operation, in accordance with relevant laws and regulations, normative documents and the provisions of this Measures, as well as relevant agreements with QDLPs.

Article 43 The Pilot Fund Management Company may price and disclose the net asset value of the Pilot Funds and other related information, as denominated in RMB, U.S. dollars and other major currencies. Where conversion between currencies is required, the sources of exchange rate data shall be disclosed, to ensure consistency and continuity. Any change shall be disclosed simultaneously and the reasons for such change shall be stated. The exchange rate of RMB against major foreign exchange shall be based on the central parity of RMB exchange rate published by the People’s Bank of China or its authorized institution on the last valuation date at the end of the reporting period.

Article 44 The Pilot Fund Management Company shall disclose the investment matters according to the following principles:

(1) The investment strategy and the financial instruments used in the strategy shall be described in detail in the prospectus, and the relevant financial instruments shall be introduced;

(2) If an overseas fund is invested, the rate arrangement between the Pilot Fund and the overseas fund shall be disclosed;

(3) In case of participation in margin trading and securities lending or repurchase transactions, the disclosure shall be made in the prospectus in accordance with the relevant provisions, and the leverage ratio used shall be clearly disclosed;

(4) The following risks that may arise from investing in overseas markets shall be disclosed in the prospectus, including without limitation overseas market risk, government control risk, liquidity risk, exchange rate risk, interest rate risk, derivatives risk, operational risks, accounting risks, tax risks, transaction settlement risks, legal risks, etc., the contents disclosed shall include the definition, characteristics and possible consequences of the above risks;

(5) The policies, procedures and documents of proxy voting shall be disclosed in accordance with relevant regulations.

Article 45 The information disclosure documents provided to QDLPs shall be made in the Chinese language; When Chinese and foreign language copies are both used, the contents of the two versions shall be guaranteed to be consistent. In case of ambiguity between the two versions, the Chinese text shall prevail.

CHAPTER X SUPERVISION AND ADMINISTRATION

Article 46 After completing the registration and filing of the Pilot Fund Management Company and Pilot Funds, the provincial market supervision department shall forward the registration information of the commercial subject to the provincial information sharing and exchange platform in real time, relevant departments of the pilot shall acquire provincial market supervision department relevant data through the provincial information sharing and exchange platform as required.

Article 47 The pilot authorities concerned shall be responsible for the supervision and administration of the Pilot Fund Management Companies and the Pilot Funds according to their respective functions and duties. The pilot authorities concerned shall explore the implementation of ongoing and post-event supervision, using blockchain and other financial technology means to strengthen the risk management of the funds. Additionally, they shall bring its commercial subjects into the scope of supervision in a timely manner, and take further supervision and proper measures in data security and confidentiality.

Article 48 The Pilot Fund Management Company shall, within 20 working days after the end of each natural year, submit to the provincial financial supervision department a report on the change of funds, settlement and sale of foreign exchange and overseas investment of the Pilot Funds of the previous year.

The Pilot Fund Management Company that has obtained the pilot qualification shall timely report to the provincial financial supervision department in writing within 15 working days after the occurrence of the following events in the process of investment operation:

(1) Amending important documents such as contracts, articles of association or partnership agreements;

(2) Changes in senior management personnel and major investment management personnel;

(3) Dissolution or liquidation;

(4) Other matters required by the provincial financial supervision department.

Article 49 The Pilot Fund Management Company shall report the relevant investment product information to the foreign exchange administration department and the provincial financial supervision department within 10 working days after the end of each quarter (see Annex 3 for the template), including:

(1) The outward and inward remittance of funds and the purchase and settlement of foreign exchange;

(2) Basic investment information, including information on the types of investment, net value of funds, investment direction of funds and sources of capital raised in China.

Article 50 The domestic trustee and the administrator shall timely report to the provincial financial supervision department the major matters related to Pilot Funds asset trust and Pilot Fund Management Company’s illegal matters. If the violation of laws and regulations is not corrected within the time limit, the provincial financial supervision department shall have the right to cancel the pilot qualification and withdraw the pilot license together with the relevant administrative departments of the pilot, and further impose punishment according to relevant regulations.

Article 51 the Pilot Fund Management Company shall provide quarterly and annual reports to the provincial financial supervision department on schedule. The quarterly reports include, but are not limited to, subscription scale, actual payment scale, investor status, investment status, exit status, fund net value, foreign exchange purchases, foreign exchange settlement, changes in account funds, etc.; the annual reports include, but are not limited to, capital changes in the pilot fund of the previous year, foreign exchange settlement and sales, reports on overseas investment, changes in major events, audit reports, etc.

Article 52 If the Pilot Fund Management Company or Pilot Fund violates the provisions of these Measures, the provincial financial supervision department shall conduct an investigation, in conjunction with the relevant administrative departments. In case the violations really occur, rectification shall be made within a time limit; If the rectification is not made within the time limit, the provincial financial supervision department shall make an announcement to the public, and shall investigate and take punitive measures with the relevant departments in accordance with the laws; If a crime is constituted, the liable party shall be handed over to the judicial department for investigation of criminal responsibility according to laws.

Chapter XI Supplementary Provisions

Article 53 These Measures shall apply within the scope of Hainan Province, and the provincial financial supervision department shall be responsible for the interpretation. The provincial financial supervision department, together with other relevant pilot authorities, may adjust the relevant regulations in accordance with the implementation progress of overseas investment pilot work of QDLPs in Hainan.

Article 54 These Measures shall come into effect as of the date of promulgation hereof.

(All information in the documents are authentic in Chinese and their English versions are provided for reference only. In case of any discrepancy, the Chinese versions shall prevail.)