Article 10 Qualified investors may present the approval document of the State Administration of Foreign Exchange for investment quota and account opening to open a foreign currency account with a custodian for the qualified investor's own funds and the funds of the qualified investor's clients which use its asset management services respectively.   

For Chinese open-end funds established by qualified investors, a foreign currency account shall be opened separately for each Chinese open-end fund.

Qualified investors shall present the quota approval document of the State Administration of Foreign Exchange to open a Renminbi designated deposit account corresponding to their foreign currency account with the custodian bank or another commercial bank in China (see Appendix 2 "Guidelines on Operation of Accounts of Qualified Foreign Institutional Investors in China (Trial Implementation)" on opening and use of the relevant Renminbi account) pursuant to the relevant provisions on administration of Renminbi settlement accounts in China of overseas organisations.

The custodian shall file record with the foreign exchange bureau at the location of the custodian within five working days from opening of the qualified investor's foreign currency account and Renminbi designated deposit account, and submit the official custodian agreement to the State Administration of Foreign Exchange, and obtain a "Foreign Exchange Registration Certificate" for the qualified investor.

Article 13 A QFII shall present the filing information or approval document for investment quota issued by the State Administration of Foreign Exchange, and search the contents of the relevant control information sheet in the capital project information system, to open the corresponding foreign exchange account(s) with the custodian for its own funds, client's funds or an open-end fund.   

QFIIs which have opened their foreign exchange account(s) shall, pursuant to the relevant provisions of the People's Bank of China on administration of domestic Renminbi settlement accounts of overseas organisations, open the corresponding RMB designated deposit account(s) with the custodian or any other commercial bank (hereinafter referred to as the "RMB account; see Appendix 3 "Operating Guidelines for Administration of Domestic Accounts of Qualified Foreign Institutional Investors" for opening and use of the relevant RMB accounts).

Article 11 The scope of income of a foreign currency account of a qualified investor includes: principal sum remitted by the qualified investor from overseas, interest income, funds remitted into the account using foreign currency converted from Renminbi funds in a Renminbi special account or designated deposit account (hereinafter referred to as the "Renminbi account") and other income approved by the State Administration of Foreign Exchange; the scope of expenditure includes: funds converted into Renminbi and remitted into the qualified investor's Renminbi account, funds repatriated overseas backtrack and other expenditure approved by the State Administration of Foreign Exchange.   

Funds in a qualified investor's foreign currency accounts and Renminbi accounts shall not be used for purposes other than securities investments in China.

Article 14 The scope of income of a foreign exchange account of a QFII shall be: principal remitted from overseas by the QFII and the funds for payment of the relevant taxes and fees (taxes, custodian fee, audit fee, management fee etc), interest income, inward remittance of foreign currency funds purchased from a RMB account, and other income approved by the State Administration of Foreign Exchange. The scope of expenditure shall be: inward remittance of exchange settlement funds to the QFII's RMB account, proceeds from sale of domestic securities, cash dividend, interest etc, and other expenditure approved by the State Administration of Foreign Exchange.   

Without prior approval, funds in the account of a QFII shall not be used for purposes other than investment in domestic securities.

Article 14 Under any of the following circumstances, the qualified investor shall dispose of its assets and close its foreign currency accounts and Renminbi accounts within one month, and the corresponding investment quota shall become void simultaneously:   

(1) the CSRC has taken back its securities investment business permit;

(2) the investment amount remitted by the qualified investor into China within six months from the approval of the first application for investment quota is less than the equivalent of US$20 million;

(3) the aggregate of the principal sum remaining in China after withdrawal of investment by the qualified investor is less than the equivalent of US$20 million;

(4) the State Administration of Foreign Exchange has cancelled the original investment quota of the qualified investor pursuant to these Provisions; or

(5) any other circumstances stipulated by the State Administration of Foreign Exchange.

The custodian shall file record with the foreign exchange bureau at its location within five working days from closing of the qualified investor's foreign currency accounts and Renminbi accounts, and return the "Foreign Exchange Registration Certificate" to the State Administration of Foreign Exchange.

Article 15 Where a QFII falls under any of the following circumstances, it shall realise its assets and close its foreign exchange account within one month, and the corresponding investment quota shall become void simultaneously:   

(1) the CSRC has revoked its qualification permit;

(2) the State Administration of Foreign Exchange has cancelled the QFII's investment quota pursuant to the law; or

(3) any other circumstances stipulated by the State Administration of Foreign Exchange.

Article 15 A qualified investor may, based on the investment plan and the relevant explanations provided at the time of application for quota, notify the custodian within 10 working days before the actual investment to convert the foreign currency funds required for the investment directly into Renminbi for remittance into its Renminbi account.   

Where the investment principal sum remitted into China by the qualified investor is less than the equivalent of US$20 million cumulatively, the funds shall not be converted into Renminbi for investment.

Article 16 A qualified investor may, upon expiry of the investment principal sum lock-in period, remit the principal sum and gains out of China in phases and batches. The total amount of funds (principal sum, gains) remitted out every month by a qualified investor shall not exceed 20% of its total assets in China as at the end of the preceding year.

Article 17 For a Chinese open-end fund, the custodian bank may make the relevant inward or outward remittance of funds on a weekly basis in accordance with the net settlement amount purchased or redeemed. The cumulative net amount of funds remitted outwards per month shall not exceed 20% of the total assets of the fund in China as at the end of the preceding year.   

Where there is a net redemption, the principal sum remitted outwards shall be computed in accordance with the percentage of qualified investor's investment principal sum and gains and losses on the last market day of the month preceding the outward remittance as confirmed by the custodian, and this shall be the quota of investment permitted to be remitted into China again subsequently.

Article 17 Upon expiry of the investment principal lock-in period, the QFII may make outward remittance of the relevant investment principal and gains in phases and batches. The QFII's monthly cumulative outward remittance (principal and gains) shall not exceed 20% of its total assets in China as at end of the preceding year.   

In the case of an open-end fund, the custodian may, based on the net amount of subscription or redemption, handle inward or outward remittance of the relevant funds on a daily basis, while the monthly cumulative outward remittance shall not exceed 20% of the total assets of the fund as at end of the preceding year.

Where the QFII needs to make outward remittance of realised gains from a non-open-end fund, the custodian may present the written application or instruction of the QFII, the special audit report on investment gains issued by a Chinese certified public accountant, tax payment receipt or proof of tax filing (if any) etc, to complete the relevant outward remittance formalities for the QFII.

Article 19 A QFII shall apply, through the custodian, to the foreign exchange bureau at the location of the custodian for a code for special organisation, and complete entity information registration formalities within 10 working days from obtaining its first-time investment quota; where the QFII has obtained a code for special organisation when conducting other cross-border or foreign exchange income and expenditure business, it is not required to make a repeated application.   

The custodian shall promptly file the relevant product information of the QFII with the State Administration of Foreign Exchange (see Appendix 4 for Filing Form). The State Administration of Foreign Exchange shall register product information for the QFII through the capital project information system.

Article 21 Under any of the following circumstances, the qualified investor shall complete change formalities for foreign exchange registration certificate with the State Administration of Foreign Exchange within five working days and submit a written report:   

(1) there is a change in basic information such as name, person-in-charge, key shareholders or actual controlling party, etc of the qualified investor;

(2) the qualified investor or its key shareholders or actual controlling party is/are subject to major punishment by other regulatory authorities (including overseas), which results in significant impact on investment operations of the qualified investor or suspension or cancellation of the relevant business qualification(s);

(3) there is a change in custodian or entrusted investment organisation (brokerage) in China or change in the relevant significant information;

(4) there is a change in account name or account-opening bank information, etc;

(5) there is a change in the prospectus of a Chinese open-end fund; or

(6) any other circumstances stipulated by the State Administration of Foreign Exchange.

In the event of change of custodian of a qualified investor, the new custodian shall also provide the draft of the newly executed custodian agreement and basic information of the new custodian and a statement on the relevant information of asset custodian business, and the new notarised power of attorney, and submit the official custodian agreement within five working days from the date of opening of the foreign currency account and Renminbi account.

Article 22 Custodians shall submit the relevant reports and statements on exchange of funds of the relevant qualified investor and securities investments in China promptly and accurately pursuant to the following provisions:   

(1) complete a "Breakdown of Inward and Outward Remittance of Funds of Qualified Foreign Institutional Investor" (see Appendix 3 for sample form) within two working days from inward or outward remittance of funds or foreign exchange settlement or purchase by the qualified investor;

(2) submit a "Monthly Statement on Securities Investments in China by Qualified Foreign Institutional Investor (1), (2)" (see Appendix 4 for sample form) within five working days from the end of each month; and

(3) submit an "Annual Financial Statement on Securities Investments in China by Qualified Foreign Institutional Investors (1), (2)" of the preceding year audited by a Chinese certified public accountant (see Appendix 5 for sample form) within three months from the end of each accounting year.

Article 20 Where a QFII falls under any of the following circumstances, the custodian shall complete change registration formalities with the State Administration of Foreign Exchange within five working days:   

(1) change in important information such as name of QFII or the custodian etc;

(2) change in product information; or

(3) any other circumstances stipulated by the State Administration of Foreign Exchange.

Where a QFII replaces its custodian, the new custodian shall be responsible for completing the change registration formalities.

Where a QFII or its key shareholder or actual controlling party is subject to severe punishment by other regulatory authorities (including overseas) and this may have a significant impact on the QFII's investment operation or cause suspension or cancellation of the relevant business qualification, the custodian shall promptly report to the State Administration of Foreign Exchange.