Investment with insurance funds

Interim Measures for the Administration of Overseas Investment with Insurance Funds

Chapter I General Provisions

Article 1 These Measures are developed in accordance with the Insurance Law of the People's Republic of China, the Regulation of the People's Republic of China on Foreign Exchange Administration, and other laws and administrative regulations for the purposes of strengthening the administration of overseas investment with insurance funds, preventing risks, protect the lawful rights and interests of the insured and the parties to overseas investment with insurance funds.

Article 2 For the purposes of these Measures, “parties to overseas investment with insurance funds” means the client, trustees, and custodian.
“Client” means an insurance company, an insurance group company, an insurance holding company, or any other insurance institution legally formed in the territory of the People's Republic of China.
“Trustees” includes the domestic trustee and the overseas trustee. A domestic trustee shall be an insurance asset management company legally formed in the territory of the People's Republic of China or any other professional investment management institution in the territory of the People's Republic of China which meets the conditions prescribed by the China Insurance Regulatory Commission (hereinafter referred to as the “CIRC”). An overseas trustee shall be a professional investment management institution legally formed outside the territory of the People's Republic of China and meeting the conditions prescribed by the CIRC.
“Custodian” means a commercial bank or any another financial institution legally formed in the territory of the People's Republic of China and meeting the conditions prescribed by the CIRC. Commercial banks serving as custodians include Chinese-funded banks, Chinese-foreign equity joint venture banks, wholly foreign-funded banks, and branches of foreign banks.

Article 3 For the purposes of these Measures, “insurance funds” means a client's own foreign exchange funds, foreign exchange funds purchased with Renminbi (RMB), and assets formed from overseas investment with the aforesaid funds.

Article 4 Except as otherwise specified by the CIRC and the State Administration of Foreign Exchange (hereinafter referred to as the “SAFE”), to engage in overseas investment with insurance funds, a client shall enter into agreements with the trustees and custodian in accordance with the provisions of these Measures, and the trustees and custodian shall be responsible for the investment operations and custodial supervision of the insurance funds respectively under the agreements.

Article 5 The insurance funds trusted for investment or under custody shall be separate from the assets owned by the trustee or custodian, and may not be included in the trustee's or custodian's own assets or any other assets under the management of the trustee or custodian.
Except under the statutory circumstances such as debts incurred from overseas investment with insurance funds, no enforcement may be conducted against the insurance funds trusted for investment or under custody.

Article 6 A client shall, under the principles of security, fluidity, profitability, and matching of assets and liabilities, prudently make investment decisions, and assume investment risks.
The trustees, custodian, and other natural persons, legal persons, or organizations providing services for overseas investment with insurance funds shall, as agreed upon, provide the relevant services, and strictly perform their duties of honesty and trustworthiness, prudence, and diligence.

Article 7 The parties to overseas investment with insurance funds shall abide by the relevant laws and administrative regulations of the People's Republic of China, these Measures, and the relevant foreign laws and provisions.

Article 8 The CIRC shall be responsible for developing the policies for the administration of overseas investment with insurance funds, and according to the law, supervise and administer activities of overseas investment with insurance funds.
The SAFE shall, according to the law, administer quotas for foreign exchange payments, remittance of foreign exchange for settlement, and other foreign exchange matters related to overseas investment with insurance funds.

Chapter II Qualifications

Article 9 To engage in overseas investment with insurance funds, a client shall meet the following conditions:

(1) It has established a sound corporate governance structure and a complete asset management system, and its internal management rules and risk control rules comply with the provisions of the Guidelines for the Risk Control in the Use of Insurance Funds (for Trial Implementation).

(2) It has a relatively strong investment management capability, risk evaluation capability, and investment performance assessment capability.

(3) It has specific policies and strategies for allocation of assets, and conducts rigorous management of the matching of assets and liabilities.

(4) The operations of its investment management team are well-regulated, and its senior executive in charge of investment has ten years or more of experience in the financial or other economic fields.

(5) It has a stable finance and good credit standing, its solvency adequacy ratio and risk monitoring indicators satisfy the relevant requirements of the CIRC, and it has no record of any gross violation of laws and regulations in the last three years.

(6) It has a permit for engaging in the foreign exchange business.

(7) Other conditions as set out by the CIRC.

Article 10 To provide trust services for overseas investment with insurance funds, a domestic trustee shall meet the following conditions:

(1) It is qualified to engage in the insurance asset management business.

(2) It has established a sound corporate governance structure and effective internal management rules.

(3) It has established a rigorous risk control mechanism, has a capability of effective risk management of overseas investment, and has secure and efficient transaction management and financial management systems.

(4) It has an experienced management team which specializes in the management of overseas investment and insurance assets, has a certain number of investment professionals, and the company's senior executive in charge of investment has ten years or more of experience in the financial or other economic fields.

(5) Both the paid-in capital and the net assets of the company are not less than 100 million yuan RMB or an equivalent in a convertible currency, and its capital scale and the scale of trusted assets under its management satisfy the requirements of the CIRC.

(6) It has a stable finance and good credit standing, its risk monitoring indicators satisfy the relevant requirements of the CIRC, and it has no record of any gross violation of laws and regulations in the last three years.

(7) Other conditions as set out by the CIRC.

Article 11 To provide trust services for overseas investment with insurance funds, an overseas trustee shall meet the following conditions:

(1) It has an independent legal person status, and is qualified to engage in the asset management business under the laws of the country or region where it is located.

(2) It has established a sound corporate governance structure, and implements effective internal management rules.

(3) It has established a rigorous risk control mechanism and secure and efficient transaction management and financial management systems, and has a capacity of comprehensive risk management.

(4) It has an experienced management team which specializes in the insurance asset management business, has a certain number of investment professionals with professional investment experience of 10 years or more on average.

(5) It has a stable finance and good credit standing, its risk monitoring indicators comply with the laws of the country or region where it is located and the relevant rules of the regulatory authorities, and it has no record of any gross violation of laws and regulations in the last three years.

(6) Its capital scale and the scale of assets under its management satisfy the requirements of the CIRC.

(7) It has purchased the relevant liability insurance consistent with the scale of assets under its management.

(8) The country or region where it is located has a sound financial regulatory system, and the financial regulatory authorities in such a country or region has signed regulatory cooperation documents with the financial regulatory authorities of China and maintain an effective regulatory cooperation relationship with the financial regulatory authorities of China.

(9) Other conditions as set out by the CIRC.

Article 12 To provide custodial services for overseas investment with insurance funds, a custodian shall meet the following conditions:

(1) It has established a sound corporate governance structure, and implements effective internal management rules.

(2) It has established a rigorous risk control mechanism, strict segregation rules for assets under custody, and secure and efficient custodial and disaster disposal systems.

(3) It has an experienced management team, has established a specialized custodial department, and has a certain number of custodial business personnel.

(4) Its capital adequacy ratio and core capital adequacy ratio reached 10% and 8% at the end of the prior year respectively, it has a stable finance and good credit standing, its risk monitoring indicators satisfy the relevant requirements, and it has no record of any gross violation of laws and regulations in the last three years.

(5) Its capital scale and the scale of assets under its custody satisfy the requirements of the CIRC.

(6) It is qualified to engage in the settlement and sale of foreign exchange.

(7) Other conditions as set out by the CIRC and the SAFE.

Article 13 A custodian may, with the consent of a client, select a commercial bank or a professional custodial institution which meets the following conditions as its custodial agent:

(1) It is permitted to engage in the custodial business under the laws of the country or region where it is located, and maintains a good cooperative relationship with the custodian.

(2) It has established a sound corporate governance structure, and implements effective internal management rules.

(3) It has established a rigorous risk control mechanism, effective segregation rules for assets under custody, and secure and efficient custodial and disaster disposal systems.

(4) It has an experienced management team and a certain number of professional custodial personnel who are familiar with the custodial business in the country or region where it is located.

(5) It has a stable finance and good credit standing, its risk monitoring indicators comply with the laws of the country or region where it is located and the relevant rules of the regulatory authorities, and it has no record of any gross violation of laws and regulations in the last three years.

(6) Its capital scale and the scale of assets under its custody satisfy the requirements of the CIRC.

(7) The country or region where it is located has a sound financial regulatory system, and the financial regulatory authorities in such a country or region has signed regulatory cooperation documents with the financial regulatory authorities of China and maintain an effective regulatory cooperation relationship with the financial regulatory authorities of China.

(8) Conditions in the custodial agreement.

(9) Other conditions as set out by the CIRC and the SAFE.

Article 14 None of the following circumstances may exist between a client and a custodian or between a client and a custodial agent:

(1) The shares held by either of them in the other exceeds the proportion prescribed by the CIRC.

(2) Any other circumstances which affect a custodian's or a custodian agent's performance of custodial obligations, as determined by the CIRC.
A client shall undertake that none of the circumstances as described in the preceding paragraph exits among the trustee, custodian, and custodial agent.

Chapter III Application Management

Article 15 To engage in overseas investment with insurance funds, a client shall file an application with the CIRC and submit the following written materials in triplicate:

(1) An application of the client for engaging in overseas investment with insurance funds and a letter of commitment which satisfies the requirements of the CIRC.

(2) A resolution of the shareholders' meeting or the board of directors of the client on consenting to the client's overseas investment with insurance funds.

(3) The client's strategic allocation plan, investment management rules, and risk management rules for overseas investment with insurance funds.

(4) A statement on the client's management capability, risk evaluation capability, and performance assessment capability for overseas investment with insurance funds.

(5) An introduction to the client's internal asset management department and the major managerial personnel thereof.

(6) The client's financial statements and solvency reports which satisfy the requirements of the CIRC and the explanations thereof.

(7) A photocopy of the client's permit for engaging in the foreign exchange business.

(8) Reconciliation statements of the client's foreign exchange bank account.

(9) A statement on the selection of the trustees and custodian and the draft of the agreements to be signed.

(10) Other materials as set out by the CIRC.
The CIRC shall, within 20 days of accepting the application, make a decision to approve or disapprove the application. In the case of approval, the CIRC shall issue a written decision; or in the case of disapproval, the CIRC shall inform in writing the applicant of the decision and provide an explanation of the reasons for the disapproval. At the same time, a copy of the written decision of approval or disapproval shall be sent to the SAFE.

Article 16 A client which has been granted approval by the CIRC to engage in overseas investment with insurance funds shall file an application with the SAFE for a foreign exchange payment quota for overseas investment within the extent of the approved investment ratio, and submit the following written materials in triplicate:

(1) An application for a foreign exchange payment quota for the investment, including the basic information on the applicant, the intended foreign exchange payment quota for the investment, and a statement on the source of capital.

(2) A written decision of the CIRC to approve the applicant's overseas investment with insurance funds.

(3) The company's financial statements for the prior year.

(4) Documents issued by the CIRC to certify that the trustees and custodian may provide trust or custodial services for overseas investment with insurance funds.

(5) A photocopy of the client's permit for engaging in the foreign exchange business.

(6) Reconciliation statements of the client's foreign exchange bank account.

(7) Other materials as set out by the SAFE.
The SAFE shall, within 20 days of accepting the application, make a decision to approve or disapprove the application. In the case of approval, the SAFE shall inform in writing the applicant of the foreign exchange payment quota of the investment; or in the case of disapproval, the SAFE shall inform in writing the applicant of the decision and provide an explanation of the reasons for the disapproval. At the same time, a copy of the written decision of approval or disapproval shall be sent to the CIRC.

Article 17 To provide trust services for overseas investment with insurance funds, a domestic trustee shall submit to the CIRC the following written materials in triplicate:

(1) An application for providing trust services.

(2) A letter of intent to provide trust services.

(3) A letter of commitment which satisfies the requirements of the CIRC.

(4) A certificate of its qualification to engage in the insurance asset management business.

(5) Its management rules and risk control rules for overseas investment with insurance funds.

(6) A statement on its management capability, risk management capability, and management system for overseas investment with insurance funds.

(7) A statement on its departments and investment management professionals.

(8) The company's financial statements and internal control audit reports which satisfy the requirements of the CIRC.

(9) Other materials as set out by the CIRC.
A domestic trustee which is an insurance asset management company may be exempt from submitting the materials in items (2) and (4) of paragraph 1 of this article. The CIRC shall, within 20 days of accepting an application, make a decision to approve or disapprove the application. If the case of approval, the CIRC shall issue a written decision; or in the case of disapproval, the CIRC shall inform in writing the applicant of the decision and provide an explanation of the reasons for the disapproval.
A domestic trustee which is any other professional investment management institution may be exempt from submitting the material in item (1) of paragraph 1 of this article. The CIRC shall prudently assess the institution in accordance with the provisions of these Measures, and within 20 days of receipt of all the materials, issue a letter of opinion.

Article 18 To provide trust services for overseas investment with insurance funds, an overseas trustee shall submit to the CIRC the following written materials in triplicate:

(1) A letter of intent to provide trust services and a letter of commitment which satisfies the requirements of the CIRC.

(2) A photocopy of documents certifying its lawful operations.

(3) Its management rules and risk control rules for overseas investment with insurance funds.

(4) A statement on its management capability, risk management capability, and management system for overseas investment with insurance funds.

(5) A statement on its departments and investment management professionals.

(6) The company's financial statements and internal control audit reports which satisfy the requirements of the CIRC.

(7) A photocopy of its liability insurance policies.

(8) The opinion issued by the regulatory authority of the place where it is located to certify that the overseas trustee has no record of any gross violation of laws and regulations in the last three 3 years; or if the regulatory authority is unable to issue a opinion, a corresponding written statement of the overseas trustee.

(9) Other materials as set out by the CIRC.
The CIRC shall prudently assess the overseas trustee in accordance with the provisions of these Measures, and within 20 days of receipt of all the materials, issue a letter of opinion.

Article 19 To provide custodial services for overseas investment with insurance funds, a custodian shall submit to the CIRC the following materials in triplicate:

(1) A letter of intent to provide custodial services for overseas investment with insurance funds and a letter of commitment which satisfies the requirements of the CIRC.

(2) Its independent custody rules and risk control rules and the specific operating processes.

(3) A statement on its global custodial capability and risk management capability and the global custody network.

(4) A statement on its internal custodial department and custodial service professionals.

(5) The company's financial statements and internal control audit reports which satisfy the requirements of the CIRC.

(6) The opinion issued by the regulatory authority of the place where it is located to certify that the custodian has no record of any gross violation of laws and regulations in the last three 3 years or a corresponding written statement issued by the shareholders' meeting or the board of directors of the custodian.

(7) Other materials as set out by the CIRC.
The CIRC shall prudently assess the custodian in accordance with the provisions of these Measures, and within 20 days of receipt of all the materials, issue a letter of opinion.

Chapter IV Account Management

Article 20 A client shall, with the approval of the regulatory authorities, enter into a custodial agreement with the custodian, and open a domestic custody account with the custodian for overseas investment (hereinafter referred to as the “domestic custody account”).
A custodian shall maintain different accounts for and apply categorized management to different trustees, different insurance products, and insurance funds of different natures.

Article 21 A custodian shall, according to the custodial agreement entered into with a client, open an overseas investment settlement account and a securities custody account for the client for the fund settlement and securities custody of overseas investment.
A custodian or a custodial agent shall open different accounts for different clients and apply categorized management to such accounts.

Article 22 Where a client is listed overseas by the offering of shares, it shall transfer the insurance funds raised from the overseas listing back to China within the prescribed period according to the relevant provisions.
Where, after the overseas listing of a client by the offering of shares, it is granted approval to engage in overseas investment with insurance funds, it shall transfer the insurance funds raised from the overseas listing back to its domestic custody account within 30 days of the CIRC's approval of overseas investment.

Article 23 The following receipts shall be within the scope of receipts in the domestic custody account of a client:

(1) The insurance funds transferred into the account.

(2) The principal amounts invested, returns on investment, dividends, bonuses, and interest remitted into the account.

(3) Other receipts that may be transferred into the account according to the law.

Article 24 The following expenditures shall be within the scope of expenditures in the domestic custody account of a client:

(1) The funds transferred into the client's overseas investment settlement account.

(2) The principal amounts invested out of the account.

(3) The funds transferred back to the client's foreign exchange account.

(4) The applicable taxes and fees paid.

(5) Other expenditures which may be transferred out of the account according to the law.

Article 25 The following receipts shall be within the scope of receipts of the overseas investment settlement account of a client:

(1) The funds transferred into the account from the client's domestic custody account.

(2) The funds obtained from the selling of overseas securities assets.

(3) The dividend and bonus income and interest income from overseas investment.

(4) Other receipts which may be transferred into the account according to the law.

Article 26 The following expenditures shall be within the scope of expenditures of the overseas investment settlement account of a client:

(1) The funds transferred into the client's domestic custody account.

(2) The funds for purchasing overseas securities assets.

(3) The applicable taxes and fees paid.

(4) Other expenditures which may be transferred out of the account according to the law.

Article 27 Where a client purchases foreign exchange for overseas investment with insurance funds, the principal amounts invested and returns on investment transferred back to China may undergo the settlement of foreign exchange or be retained in the form of foreign exchange. If settlement of foreign exchange is conducted, the client shall undergo the relevant formalities based on its certificate of purchase of foreign exchange.
The principal amounts invested and returns on investment transferred back to China by a client in the case of overseas investment with the client's own foreign exchange capital shall be retained in the form of foreign exchange, except as otherwise specified by the regulatory authorities.

Article 28 A client and the trustees shall undergo the relevant formalities for the purchase, payment, and settlement, among others, of foreign exchange according to the approval document issued by the SAFE for a foreign exchange payment quota for investment.
The custodian shall undergo the relevant fund transfer formalities according to the approval document issued by the SAFE for a foreign exchange payment quota for investment and the instructions from the client or the trustees.

Chapter V Investment Management

Article 29 A client engaging in overseas investment with insurance funds shall prudently develop a strategic asset allocation plan and overseas investment guidelines as required by the matching management of assets and liabilities, properly arrange the terms of investment and the currencies of investment, and check them on a regular basis.

Article 30 Insurance funds shall be invested globally in mature capital markets and in currencies of major countries or regions.

Article 31 Overseas investment with insurance funds shall be limited to the following forms of investment or investment instruments:

(1) Money market instruments, such as commercial papers, large-denomination negotiable certificates of deposit, repurchase and reverse repurchase agreements, and money market funds.

(2) Fixed-income instruments, such as bank deposits, structural deposits, bonds, convertible bonds, bond funds, securitization products, and trust products.

(3) Equity instruments, such as stocks, stock funds, equity, and equity products.

(4) Other forms of investment or investment instruments as set out in the Insurance Law of the People's Republic of China or prescribed by the State Council.
The measures for the specific management of the forms of investment and investment instruments shall be developed by the CIRC additionally.

Article 32 A client may, as needed for asset allocation and risk management, independently determine the proportion of overseas investment within the specific investment ratio approved by the CIRC, but shall satisfy the following requirements:

(1) The total amount of investment shall not exceed 15% of the total assets of the client at the end of the prior year.

(2) The total amount of actual investment shall not exceed the foreign exchange payment quota for investment approved by the SAFE.

(3) The proportion of investment in a single investee shall comply with the rules of the CIRC.

(4) To modify the approved specific investment ratio, investment forms, or investment instruments, a client shall file an application with the CIRC for modification and obtain an approval from the CIRC.

(5) Any major equity investment shall be subject to the approval of the CIRC.

Chapter VI Risk Management

Article 33 The parties to overseas investment with insurance funds shall legally engage in the relevant business, conduct comprehensive risk management, and strengthen information exchange to ensure the security of overseas investment with insurance funds.

Article 34 A client shall enter into written agreements with the trustees and custodian on the rights and obligations of each party and the obligations of the trustees and custodian to submit reports to the regulatory authorities as required by these Measures. The written agreements shall be precise in text and include all required elements.

Article 35 A client as a body corporate engaging in overseas investment with insurance funds shall conduct strategic asset allocation in a unified manner, and the internal asset management department of the client shall be responsible for the specific matters on the funds trusted for investment.
No branch of a client may engage in overseas investment with insurance funds.

Article 36 A client shall fully study the feasibility of overseas investment with insurance funds, and carefully evaluate market risks, country risks, exchange risks, credit risks, fluidity risks, operational risks, moral risks, and legal risks in view of market conditions, technical conditions, risk control, staffing, and cost and benefit, among others.

Article 37 A client shall, in accordance with the Guidelines for the Risk Control in the Use of Insurance Funds (for Trial Implementation), establish a centralized decision-making system, determine the duties of each post, and standardize the processes of investment operations.

Article 38 A client shall develop the criteria and procedures for the selection of trustees and custodians, select trustees and custodians in an open, fair, and just manner, and conduct effective oversight.
A client may select two or more trustees, but shall rationally determine the number of trustees as actually needed; and a client may select one custodian only, which shall take custody of all the insurance funds of the client used for overseas investment.

Article 39 A client shall, on a regular basis, evaluate the risk status of the trusted insurance funds, the management capabilities and investment performances of the trustees, the custodian's performance of duties and service capability.

Article 40 A client shall implement business credit management or proportional management in view of the risk features of overseas investment with insurance funds and the credit rating, market reputation, scale of assets under management, performances in investment management, and management experience in the sector, among others, of the counterparty to a transaction.

Article 41 A trustee providing trust services for overseas investment with insurance funds shall comply with the following provisions:

(1) It shall manage different trusted funds in a fair and just manner, establish asset segregation rules, and strictly prevent risks in affiliated transactions.

(2) It shall strictly comply with the provisions of the trust agreement, the investment guidelines of a client, and these Measures, and based on indicators such as credit rating, nature of risks, profitability, information transparency, and fluidity, prudently select the counterparty to a transaction and control the scope and proportion of investment.

(3) It shall establish a transaction monitoring system, a pre-warning system, and an information feedback system.

(4) It shall use risk measurement indicators to identify and measure the risks associated with different investment instruments and assets under its management, track or adjust risk exposures, and adopt various measures to ensure the security of investment.

(5) It shall enhance internal risk management, check operating processes on a regular basis, and establish an information exchange mechanism to ensure compliance with laws and regulations in the use of funds.

Article 42 Where an asset management company formed overseas by a domestic insurance institution with the approval of the CIRC serves as an overseas trustee, it shall be subject to the oversight and management by the domestic holding insurance institution, and report in a timely manner its management of overseas investment.

Article 43 A custodian providing custodial services for overseas investment with insurance funds shall comply with the following provisions:

(1) It shall take custody of insurance funds in a fair and just manner, and effectively segregate the trusted assets of different clients.

(2) It shall, jointly with a custodial agent, oversee the activities of overseas investment of a client and trustees, and upon discovery of any violations of laws and regulations, notify the client and trustees in a timely manner, and report to the CIRC.

(3) It shall, jointly with a custodial agent, be responsible for the settlement and delivery of insurance funds under its custody, check assets in a timely and accurate manner, and oversee the custodial agent to ensure the security of insurance funds under its custody.

Article 44 The parties to overseas investment with insurance funds shall standardize their respective decision-making and operating processes, implement segregation rules for different professional positions, establish internal control and audit mechanisms, and prevent operational and other risks to ensure the methodical operation of overseas investment with insurance funds.

Article 45 The parties to overseas investment with insurance funds shall establish a major emergency response mechanism to prevent and dissolve major emergency risks.

Article 46 The parties to overseas investment with insurance funds shall adopt advanced risk management techniques to strictly control various investment risks.
A client may authorize the trustees to conduct risk hedging management through financial derivatives such as forward, swaps, options, and futures. Financial derivatives may be used only for the avoidance of investment risks, and may not be used for speculation or amplification of transactions.
The measures for the administration of financial derivatives shall be developed by the CIRC additionally.

Chapter VII Information Disclosure and Reporting

Article 47 The parties to overseas investment with insurance funds shall, in accordance with the rules of the CIRC, disclose the following information in a true, accurate, and complete manner to the relevant parties, without any major omission, false statement, misrepresentation, or denigrating statement:

(1) Strategic allocation of overseas investment and investment decision-making.

(2) Execution of transactions, settlement of funds, and custody of assets in overseas investment.

(3) Risk status, compliance monitoring, major crises, and other important matters on overseas investment.

Article 48 A party shall have a legal obligation to keep confidential all the trade secrets of any other party known by it in the process of overseas investment with insurance funds.

Article 49 A party to overseas investment with insurance funds shall ensure that the other parties may consult or copy the relevant materials in accordance with the provisions of contracts.

Article 50 A client shall, within five days of occurrence of any of the following circumstances, report to the CIRC and the SAFE:

(1) Modification of a trustee, a custodian, or a custodial agent.

(2) Modification of the registered capital.

(3) Major modification of the structure of shareholders.

(4) Receipt of any major administrative punishment, involvement in any major litigation, or any other major incident.

(5) Other circumstances as set out by the CIRC and the SAFE.

Article 51 Where a trustee is involved in any major litigation, receives any major administrative punishment, or is involved in any other major event, it shall report to the CIRC within five days of filing the suit or being sued, receipt of the punishment decision, or occurrence of the major event.
In addition to the reporting obligation in the preceding paragraph, a trustee shall, in accordance with the rules of the CIRC, submit its financial statements, internal audit reports, trust management performance reports, risk evaluation reports, and other relevant materials.

Article 52 A custodian shall submit the relevant reports according to the following requirements:

(1) Within five days of opening a domestic custody account, an overseas investment settlement account, or a securities custody account for a client, it shall submit to the CIRC and the SAFE a report on the account opened.

(2) Where the registered capital or a shareholder of the custodian is modified, it shall report the modification to the CIRC and the SAFE within five days of the modification.

(3) Where the custodian is involved in any major litigation, receives any major administrative punishment, or is involved in any other major event, it shall report the litigation, punishment, or other major event to the CIRC and the SAFE within five days of filing the suit or being sued, receipt of the punishment decision, or occurrence of the major event.

(4) It shall report a client's purchase, settlement, and outbound or inbound remittance of the principal amount of investment and return on investment and the receipts and expenditures in a domestic custody account in accordance with the rules of the CIRC and the SAFE.

(5) It shall submit statements on overseas investment with insurance funds and its financial statements and internal audit reports in accordance with the rules of the CIRC.

(6) It shall declare to the SAFE the balance-of-payments statistics and foreign exchange settlement and sale statistics in compliance with the relevant provisions.

(7) Other reports as set out by the CIRC and the SAFE.

Chapter VIII Supervision and Administration

Article 53 In overseas investment with insurance funds, a client may not:

(1) provide security for any other organization or individual with insurance funds invested overseas;

(2) buy or sell foreign exchange for speculation;

(3) commit money laundering;

(4) seek any illegal interest in collusion with any other organization or individual by taking advantage of overseas investment with insurance funds; or

(5) conduct any other activity prohibited by the domestic or foreign applicable laws and provisions.

Article 54 The parties to overseas investment with insurance funds shall retain intermediary institutions which meet the conditions prescribed by the CIRC to conduct evaluation and audit of overseas investment with insurance funds.

Article 55 The CIRC shall have the authority to adjust the policies and rules for overseas investment with insurance funds.

Article 56 The CIRC shall, based on regulatory needs, have the authority to conduct inspection and annual review of overseas investment made by a client and its domestic trustees with insurance funds.
The SAFE may conduct inspection of a client's foreign exchange payment quota for overseas investment, remittance of foreign exchange for settlement, and other foreign exchange administration matters.
The CIRC and the SAFE may retain intermediary institutions to assist in such inspections.

Article 57 Where a client violates these Measures, the CIRC may hold regulatory interviews with its senior executives, require them to provide relevant explanations, and according to the circumstances, order the client to take corrective action during a specified period; and if the client shall be punished in accordance with the provisions of laws, administrative regulations, and rules of the CIRC, the CIRC shall impose administrative punishment on it according to the law.

Article 58 Where a trustee or a custodian violates these Measures or any provisions on foreign exchange administration, the CIRC or the relevant regulatory authority shall impose administrative punishment on it according to its powers and regulatory duties.

Article 59 Where a trustee or a custodian violates these Measures or any other provisions on the use of insurance funds, the CIRC shall record its misconduct, and according to the circumstances, require it to submit a written explanation; and if the circumstances are serious, the CIRC may order the insurance company to replace the trustee or custodian.

Chapter IX Supplemental Provisions

Article 60 Where any rules of the CIRC provide otherwise for the formation of overseas institutions in the insurance category with insurance funds, such provisions shall prevail.

Article 61 Investment in the Hong Kong Special Administrative Region and the Macao Special Administrative Region with insurance funds shall be governed by these Measures, except as otherwise specified by the CIRC.

Article 62 The use of insurance funds to purchase financial products which are denominated in RMB or a foreign currency and issued within China but invest in financial instruments or any other assets overseas shall be governed by these Measures, except as otherwise specified by the CIRC.

Article 63 The Chinese versions of all the reports and materials submitted to the CIRC and the SAFE under these Measures shall prevail.

Article 64 For the purposes of these Measures, “days” means working days, excluding legal holidays.

Article 65 These Measures shall be subject to interpretation by the CIRC, the People's Bank of China, and the State Administration of Foreign Exchange.

Article 66 These Measures shall come into force on the date of issuance, upon which the Interim Measures for the Administration of the Overseas Use of Insurance-related Foreign Exchange Funds (Order No. 9 [2004], CIRC and PBC) issued by the China Insurance Regulatory Commission and the People's Bank of China on August 9, 2004, shall be repealed.

Statement

The English translation is provided by the China Insurance Regulatory Commission and may only be used as a reference. In case a different interpretation arises, the original Chinese shall prevail.