Article 1
This Law regulates securities investment fund activities, protects investors and relevant parties' lawful rights and interests, and promotes the development of securities investment funds and the capital markets.
Article 2
This Law shall concern the formation of securities investment funds (from now on referred to as a fund/s) through the raising of capital, the management of the fund by an institution, custody by a custodian, and the securities investment activities conducted for the benefit of the fund shareholders, within the territory of the People's Republic of China. Topics not included in this Law shall be governed by the Trust Law, the Securities Law, and other applicable laws and regulations.
Article 3
The rights and responsibilities of a fund manager, a fund custodian, and the fund's shareholders shall be agreed upon in a contract under this Law. The fund manager and the custodian shall undertake their fiduciary duties under this Law and the fund contract. The shareholders of a fund formed through the raising of capital (from now on referred to as a publicly offered fund) shall benefit from the income and accept the risks to the extent of the fund shares held, and the distribution of income and acceptance of risk for a fund created by the non-public raising of capital (from now on referred to as a non-publicly offered fund) shall be decided upon in the contract.
Article 4
Fund activities shall be managed under the ethics of free will, fairmindedness, and good faith, without any intrusion upon national or public interests.
Article 5
Any debts incurred by fund assets are to be repaid solely by fund assets. The fund shareholders are liable for all debts incurred by fund assets only to the extent of their capital contributions, except as otherwise decided upon in the fund contract. Fund assets shall be separate from fund managers' or custodians' assets. The fund manager or custodian shall not incorporate any fund assets into its assets. All property and income generated by the fund manager or custodian from managing, using, or otherwise disposing of fund assets shall be combined into fund assets. Where the fund manager or custodian is liquidated or dissolved, administratively dissolved, or has been declared bankrupt under law or for any other reason, fund assets are not deemed to be liquidating property.
Article 6
The claims enjoyed by fund assets are not to be offset against any debts incurred by a fund manager or a fund custodian's assets. The claims enjoyed, and obligations sustained by the assets of different funds shall not be offset mutually.
Article 7
No enforcement may be conducted against fund assets, except for the debts incurred by fund assets.
Article 8
The fund shareholders shall assume taxes related to the holdings of a fund. The fund manager or any other withholding agent shall withhold taxes under the appropriate tax collection provisions of the state.
Article 9
Fund managers and custodians managing and utilizing fund assets and fund service institutions and undertaking fund service activities shall dedicate themselves to their duties and perform their obligations in good faith, prudence and diligence. When investing fund assets in securities, fund managers comply with the rules on prudent business operations and build methodical and rational investment strategies and risk management processes to prevent and control risks effectively. Fund employees shall be qualified to engage in the business and comply with laws, administrative regulations, professional ethics, and codes of conduct.
Article 10
By Law, fund managers, custodians, and fund service institutions shall create associations of the securities investment fund sector (referred to as fund associations) to promote self-regulation, coordinate relationships, provide services, and encourage industry development.
Article 11
The regulatory authority of the State Council of the People's Republic of China shall, under law, oversee and administer securities investment fund activities, and its local offices shall undertake their duties as authorized.
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