The Provincial Local Financial Regulatory Bureau and other departments issued the "Interim Measures for Hainan Province to Carry out the Pilot Program of Qualified Domestic Limited Partners (QDLP) Overseas Investment"

Chapter 1 General Provisions

Article 1 In order to actively promote the construction of Hainan Free Trade Port, promote the opening up of the financial industry, and standardize the pilot work of overseas investment by qualified domestic limited partners, these Interim Measures are formulated in accordance with relevant laws and regulations.

Article 2 The qualified domestic limited partners referred to in these Measures refer to domestic natural persons, institutional investors or other investors specified in these Measures who meet the conditions specified in Chapter 4 of these Measures and subscribe to the pilot funds specified in these Measures with their own funds.

The pilot fund management enterprises referred to in these Measures refer to enterprises that are jointly recognized by the relevant pilot units, registered in Hainan Province and actually operated, and whose main business is to initiate and establish pilot funds and be entrusted with the management of their overseas investment business, and comply with the provisions of Chapter 2 of these Measures.

The pilot funds referred to in these Measures refer to funds initiated by pilot fund management enterprises in Hainan Province in accordance with the law, established with the participation of qualified domestic limited partners, and invested overseas with fund assets in accordance with the provisions of these Measures, and comply with the provisions of Chapter 3 of these Measures.

Article 3  The pilot fund management enterprises shall initiate the establishment of pilot funds and use the fund assets of the pilot funds for overseas investment in accordance with the relevant laws, regulations and the provisions of these Measures to safeguard the legitimate rights and interests of investors.

Article 4  This pilot work is under the direct leadership of the provincial government, led by the provincial financial regulatory department, and relevant units jointly participate according to their duties. The pilot-related units include but are not limited to the provincial financial regulatory department, foreign exchange management department, provincial market regulatory department, securities regulatory department, etc. The provincial financial regulatory department shall be responsible for the daily affairs of the pilot work, be responsible for the acceptance of pilot application materials and other relevant documents, organize the pilot-related units to review the application materials, approve the pilot qualifications for the enterprises and grant the pilot quota; the foreign exchange management department shall be responsible for the cross-border funds management matters involved in these Measures; the provincial market regulatory department shall be responsible for the registration and filing of pilot fund management enterprises and pilot funds; the securities regulatory department shall be responsible for guiding the registration and filing of pilot fund management enterprises and pilot funds, and supervise and manage the business activities of pilot fund management enterprises and pilot funds registered and filed with the China Securities Investment Fund Industry Association; the provincial development and reform department and the provincial commerce department shall be responsible for guiding whether the investment targets and investment areas of the pilot funds are sensitive; other relevant units shall cooperate to do relevant work according to actual needs.

Article 5  The pilot work shall be carried out under the guidance of relevant national departments. The list of the first batch of pilot enterprises shall be identified by the provincial government, and the list of subsequent pilot enterprises shall be identified by the provincial financial regulatory department through meetings organized by the foreign exchange management department, the provincial market regulatory department and the securities regulatory department.

Article 6  The provincial financial regulatory department shall jointly formulate and implement various policies and measures with relevant pilot units to promote the pilot work and coordinate the resolution of relevant issues in the pilot process.

Chapter II  Pilot Fund Management Enterprises

Article 7  The pilot fund management enterprises stipulated in these Measures include domestic pilot fund management enterprises and foreign-invested pilot fund management enterprises. Foreign-invested pilot fund management enterprises refer to pilot fund management enterprises established by foreign natural persons or institutions in accordance with the provisions of these Measures.

Article 8  Pilot fund management enterprises may engage in the following businesses:

(i) Initiate the establishment of pilot funds;

(ii) Entrusted management of the investment business of pilot funds and provide related services;

(iii) Carry out investment consulting business in accordance with the law.

Article 9  Pilot fund management enterprises may adopt corporate, partnership and other organizational forms.

Article 10Pilot fund management enterprises shall meet the following conditions:

(i) The registered capital of pilot fund management enterprises shall not be less than RMB 5 million or equivalent foreign currency, and the investment method shall be limited to cash. The investment shall be fully paid in accordance with the provisions of the company's articles of association/partnership agreement or within 2 years from the date of obtaining the pilot qualification (whichever is earlier);

(ii) Have at least 1 major investment management personnel with more than 5 years and 2 major investment management personnel with more than 3 years of overseas investment management experience and relevant professional qualifications; the major investment management personnel have no violation records or economic dispute litigation cases that are still being handled in the past 5 years;

(iii) Any of the controlling shareholders, actual controllers or executive partners of the pilot fund management enterprises or any of the above-mentioned affiliated entities shall meet the following conditions: a financial enterprise approved by the local regulatory authority to engage in investment management business or asset management business, with a license issued by the local regulatory authority, or with Fund management companies with good investment performance and fund management scale of not less than RMB 100 million (or equivalent foreign currency);

(IV) Any of the controlling shareholders, actual controllers or executive partners of the pilot fund management companies or any of the above-mentioned affiliated entities shall meet the following requirements: net assets shall not be less than RMB 10 million or equivalent foreign currency, asset quality shall be good, they have been engaged in the domestic and foreign asset management industry for more than 3 years, and have a standardized internal governance structure and a sound internal control system, have not been subject to major penalties by the local regulatory authorities in the past year, and have no major matters under investigation by the judicial authorities or regulatory authorities;

(V) Domestic pilot fund management companies that continue to operate shall have registered as private equity fund managers with the Asset Management Association of China and have completed the filing of at least one private equity fund with the Asset Management Association of China;

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

Chapter III Pilot Funds

Article 11 Pilot funds may be in the form of companies, partnerships or contracts.

Article 12  The pilot fund shall meet the following conditions:

(i) The subscribed capital/initial fundraising scale shall not be less than RMB 30 million (or equivalent foreign currency), and the investment method shall be limited to monetary form;

(ii) The investors of the pilot fund shall comply with the provisions of Chapter 4 of these Measures, and the number of investors shall comply with the relevant provisions of laws and regulations.

Article 13  The overseas investment of the pilot fund shall be handled in accordance with the provisions of laws, regulations and normative documents related to overseas investment. If the overseas investment filing or approval procedures are required, they shall be handled in accordance with the relevant laws and regulations. The pilot fund can carry out the following investment business with fund assets:

(i) Equity and bonds of overseas non-listed companies;

(ii) Stocks and bonds of overseas listed companies that are not publicly issued and traded;

(iii) Overseas securities markets (including financial instruments traded in overseas securities markets, etc.);

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

(v) Overseas commodities and financial derivatives;

(vi) Other fields approved by relevant national departments.

Chapter 4  Suitability Management of Qualified Domestic Limited Partners

Article 14  Qualified domestic limited partners of pilot funds refer to domestic natural persons, institutional investors or other investors specified in these Measures who have the corresponding risk identification and risk-bearing capabilities and have invested no less than RMB 1 million or equivalent foreign currency in a single pilot fund, and meet the following standards:

(i) Legal entities with net assets of no less than RMB 10 million;

(ii) Individuals with financial assets of no less than RMB 3 million or an average annual personal income of no less than RMB 500,000 in the last three years.

The financial assets referred to in the preceding paragraph include bank deposits, stocks, bonds, fund shares, asset management plans, bank wealth management products, trust plans, insurance products, futures rights, etc.

Article 15 The following investors may be deemed as qualified domestic limited partners:

(i) social security funds, pension funds such as enterprise annuities, and social welfare funds such as charitable funds;

(ii) asset management products registered in accordance with the law;

(iii) fund managers and their employees who invest in the funds they manage;

(iv) other investors specified by the China Securities Regulatory Commission.

Where pilot fund management companies directly or indirectly invest in pilot funds by pooling investor funds in the form of partnerships, contracts, etc., they shall conduct a thorough check to see whether the ultimate investors are qualified domestic limited partners and calculate the number of investors on a consolidated basis. However, where investors who meet the requirements of Items (i), (ii) and (iv) of this Article invest in pilot funds, they shall no longer conduct a thorough check to see whether the ultimate investors are qualified domestic limited partners and calculate the number of investors on a consolidated basis. Qualified domestic limited partners shall ensure that the source of investment funds is legal and shall not illegally pool funds from others to invest in pilot funds.

Article 16  Pilot fund management companies shall earnestly perform the responsibilities of suitability management of qualified domestic limited partners, understand the identity, property and income status, investment experience, risk preferences, investment objectives and other relevant information of customers, carry out risk disclosure, customer training, investor education and other work in a targeted manner, and guide customers to participate in overseas investment on the basis of fully understanding the characteristics of overseas investment markets.

Pilot fund management companies shall establish and improve specific business systems and operating guidelines for suitability management of qualified domestic limited partners, and inform customers of the specific requirements of suitability management through various forms and channels, and do a good job of explanation and publicity.

Pilot fund management companies shall properly keep all records of customer suitability management and bear confidentiality obligations for customer information in accordance with the law; they shall designate special personnel to accept customer complaints, properly handle conflicts and disputes with customers, carefully record relevant situations, and report customer complaints and handling situations to the provincial financial regulatory department.

Article 17  Pilot fund management companies and pilot funds shall not promise to guarantee principal and returns to qualified domestic limited partners. Qualified domestic limited partners shall sign a risk disclosure letter. Pilot fund management companies and pilot funds shall raise funds from qualified investors, and the total number of qualified investors shall not exceed the statutory number; they shall not raise funds from units and individuals other than qualified investors, and shall not promote and introduce to unspecified objects.

Chapter V  Establishment Process

Article 18  The provincial financial regulatory department shall collect all application materials of the first batch of pilot fund management companies and pilot funds, organize foreign exchange management, provincial market supervision, securities supervision, development and reform and commerce departments to jointly review, conduct a comprehensive assessment of their professional level, private investment resume, overseas investment strategy and actual needs of the proposed investment projects, and propose the first batch of pilot companies and the first pilot quota recommendation. After the provincial financial regulatory department submits the first batch of pilot companies and the first pilot quota recommendation to the provincial government for approval, it shall issue a written opinion to the applicant agreeing to carry out the first batch of pilots and granting pilot quotas.

For applications from non-first batch of pilot fund management companies or non-first pilot quotas, the provincial financial regulatory department will collect all application materials, organize foreign exchange management, provincial market supervision, securities supervision, development and reform, and commerce departments to jointly review, and decide whether to grant pilot qualifications and quotas based on their professional level, private equity investment experience, overseas investment strategies, and actual needs of the proposed investment projects. The provincial financial regulatory department will issue a written opinion to the applicant agreeing to carry out the pilot and granting the pilot quota.

Article 19 To apply to become a pilot fund management enterprise, the applicant shall submit the following materials:

(i) Pilot application form (template is in Annex 1);

(ii) Power of attorney (if necessary);

(iii) Business license/registration certificate or other identity documents of the pilot fund management enterprise or its controlling shareholder, actual controller or executive partner in operation;

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

(v) Internal control system, including accounting system, internal audit system, risk control system, information disclosure system, etc.;

(vi) Domestic fund management enterprises in operation shall submit the registration record of private fund managers in China Securities Investment Fund Association and the record of filing of their managed funds in China Securities Investment Fund Association;

(vii) The applicant has not been subject to any A letter of commitment stating that the company has been severely punished by the local regulatory authority and that no major matters are currently under investigation by the judicial authority or regulatory authority;

(VIII) Personnel status list, resume, professional qualification certificate and employment certificate of the legal representative or executive partner (delegated representative) and senior management personnel;

(IX) The pilot fund management company or any of its controlling shareholders, actual controllers, executive partners or any of its affiliated entities shall provide the previous year's audit report and introduction to the domestic and overseas asset management background, as well as financial license documents, past investment performance and fund management scale certification materials;

(X) Project plan and total scale of the pilot fund to be established;

(XI) Other documents required by the provincial financial regulatory authorities and other pilot-related units in accordance with the principle of prudence.

Article 20 To apply to become a pilot fund, the applicant shall submit the following materials:

(i) Plan description/raising statement/promotional materials;

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

(iii) Entrusted management agreement or draft of the pilot fund to be applied for (if any);

(iv) If the qualified domestic limited partner is an institutional investor, the audit report of the institution in the previous year shall be submitted; if the qualified domestic limited partner is a natural person investor, proof of income in the past three years, financial asset proof materials or financial net asset commitment letter shall be provided to ensure compliance with the requirements of this Measures; investment details, exit and return of all qualified domestic limited partners;

(V) If the pilot fund entrusts an administrative manager to be responsible for the back-end administrative management of the fund, it must submit the administrative manager's business license, business qualification certificate, a letter of commitment that it has not been severely punished by the regulatory agency in the past three years and no major matters are under investigation, as well as a letter of intent signed by the fund and the administrative manager, a list of full-time personnel familiar with the administrative management business of overseas funds, resumes, internal audit and control system and risk control system;

(VI) Subscription commitment letter;

(VII) Other documents required by the provincial financial regulatory department and other pilot-related units in accordance with the principle of prudence.

Article 21  The application materials of the pilot fund management enterprise and the pilot fund must provide one original and six copies, and the original application materials must be stamped with the official seal. The certification materials of the pilot fund administrative manager (if any) must also be stamped with the official seal.

Article 22  After obtaining the written opinion of approval for the pilot, the pilot fund management enterprise and the pilot fund shall register with the provincial market supervision department with the written opinion of approval for the pilot, and go to the China Securities Investment Fund Association to complete the registration and filing procedures as soon as possible.

Article 23  Newly established pilot fund management enterprises and pilot funds shall submit the business license, company articles/partnership agreement, entrusted management agreement, custody agreement, agency agreement signed by the domestic custodian and the overseas asset custodian (if any) of the pilot fund management enterprise and the pilot fund to the provincial financial supervision department within 30 natural days after registration and establishment, and copy the foreign exchange management department and the securities supervision department. The actual payment certificate of registered capital shall be provided within 30 natural days after the capital is paid in full.

Article 24  Pilot fund management enterprises shall carry out fund-raising activities in accordance with the requirements of national laws, regulations and normative documents, handle fund-related businesses at domestic custodians within the amount approved by the relevant pilot units, and may distribute profits or liquidate in accordance with the provisions of the company articles/partnership agreement/fund contract. Investment income and capital change income shall be remitted back to the country in a timely manner in accordance with relevant cross-border fund management regulations.

Chapter VI  Foreign exchange purchase and payment and outbound investment process

Article 25  Pilot fund management enterprises shall entrust a commercial bank with a branch in Hainan Province or a financial institution with fund custody qualifications and meeting certain conditions as the domestic custodian of the pilot fund. The domestic custodian bank shall meet the following conditions:

(I) Have foreign exchange designated bank qualifications, securities investment fund custody qualifications and RMB business qualifications

 

(ii) The paid-in capital of the headquarter legal person at the end of the most recent fiscal year is not less than RMB 3 billion or equivalent foreign currency;

(iii) There are sufficient full-time personnel familiar with domestic and overseas custody business;

(iv) The conditions for safe custody of assets are met;

(v) The ability to clear safely and efficiently;

(vi) There is a sound internal audit and monitoring system and risk control system;

(vii) No major penalties have been imposed by the regulatory authorities in the past three years, and no major matters are under investigation by the judicial authorities or regulatory authorities;

(viii) No major violations of the foreign exchange and cross-border RMB business management regulations have been made in the past three years;

(ix) Other conditions required by the relevant pilot units.

Article 26 The responsibilities that the domestic custodian of the pilot fund should perform include but are not limited to:

(i) According to the fundraising situation, it is necessary to open a corresponding special account for the pilot fund and safely trust the funds in the pilot fund trust account;

(ii) Handle the relevant cross-border receipts and payments, foreign exchange settlement and sales business of the pilot fund, strictly abide by the foreign exchange management requirements such as international balance of payments declaration, bank foreign exchange settlement and sales statistics, submit foreign exchange settlement and sales statistical reports and completely preserve the paper documents related to the declaration for future reference;

(iii) The domestic custodian shall ensure that its own funds and other assets under custody are completely isolated from the assets of the pilot fund in terms of business mechanisms and processes;

(iv) Handle in accordance with relevant domestic and foreign laws and regulations and the provisions of the custody agreement Liquidation and delivery of pilot fund assets;

(V) Supervise the investment operations of pilot fund management enterprises in accordance with the law to ensure that the funds are managed in accordance with the investment objectives and restrictions agreed upon in relevant laws and regulations and investment management agreements; if investment instructions or remittances of funds are found to be illegal or irregular, they should be reported to the foreign exchange management department in a timely manner, and copied to the provincial financial regulatory department, provincial market regulatory department and securities regulatory department;

(VI) Preserve relevant information such as cross-border fund remittances, remittances, conversions, fund transactions, entrustment and transaction records of qualified domestic limited partners, and the preservation period should be no less than 20 years;

(VII) Other duties prescribed by relevant pilot units in accordance with the principle of prudent supervision.

Article 27  After obtaining pilot qualifications and foreign investment quotas, pilot fund management enterprises should go to the foreign exchange management department to handle foreign exchange registration with the written opinion of approval of the pilot. Pilot fund management companies shall submit the following materials for foreign exchange registration:

(I) Application (including but not limited to basic information of pilot fund management companies, information on pilot funds to be launched, investment plans, etc.);

(II) Written opinion issued by the provincial financial regulatory department on consent to carry out the pilot and granting the pilot quota;

(III) Business license (if any);

(IV) Registration or filing status with the Asset Management Association of China (if any);

(V) If the investment behavior requires overseas investment filing or approval procedures, submit relevant written opinions such as project approval documents or filing notices issued by overseas investment authorities.

Article 28  Pilot fund management companies may open special accounts for business custody funds with relevant business certification documents. All accounts opened by pilot fund management companies involving pilot businesses shall be included in custody, and domestic custodians shall be authorized to operate and supervise the special accounts for custody funds. Domestic custodians shall monitor the use of funds in real time as independent third parties. When a pilot fund management enterprise opens a special account for custody funds, it shall submit the following materials with the official seal of the relevant entity and submit the original for verification:

(I) Written opinion issued by the relevant units of the pilot project agreeing to carry out the pilot and granting the pilot quota;

(II) Business license of the pilot fund management enterprise and the pilot fund;

(III) Identity documents of the legal representative or the managing partner (delegated representative);

(IV) Proof of completion of foreign exchange registration;

(V) Other documents required by the domestic custodian.

Article 29 The scope of income of the special account for custody funds includes: foreign exchange (including RMB purchase funds) and RMB funds raised from domestic investors; redemption funds and liquidation, conversion and capital reduction funds for foreign investment; profits, dividends, interest and other income under current items; other income permitted by the State Administration of Foreign Exchange. The scope of expenditure of the special account for custody funds includes: transfer to overseas for investment within the prescribed scope; settlement of foreign exchange or direct transfer to the domestic limited partner account (or special account for raised settlement funds); payment of relevant taxes and fees; other expenditures permitted by the State Administration of Foreign Exchange.

Article 30  Pilot fund management companies that raise funds from qualified domestic limited partners may make overseas investments after purchasing foreign exchange or directly in RMB through a special account for escrow funds.

Article 31  When a pilot fund management company has major events such as capital increase, capital reduction, or shareholder/partner changes, it must obtain approval from the relevant pilot units. When the pilot fund management company adjusts its overseas investment quota, it should go to the foreign exchange management department to handle foreign exchange change registration procedures after obtaining written opinions from the relevant pilot units. After all pilot funds initiated and established by the pilot fund management company are liquidated, the pilot fund management company should apply to the foreign exchange management department for cancellation registration.

Article 32  Domestic custodians should review the investment scope of the pilot fund before remitting funds out. If the investment behavior does not require overseas investment filing or approval procedures, it shall be carried out in accordance with the written opinions issued by the relevant pilot units and within the pilot fund quota limit, and in accordance with the custody agreement, cross-border fund remittance shall be carried out; if the investment behavior needs to perform overseas investment filing or approval procedures, it shall also review the project approval documents or filing notices issued by the overseas investment authorities and other relevant written materials, and cross-border fund remittance shall be carried out according to the investment scale of a single project.

Article 33  Domestic custodians shall strengthen internal control management, manage and independently calculate the overseas investment funds in custody, and ensure that they are completely isolated from the custodian's own funds and other custodial funds. They shall also ensure the safety of funds in the custody account, supervise the investment operations of pilot fund management companies in accordance with the law, execute the instructions of pilot fund management companies, and handle liquidation and delivery matters in a timely manner. Domestic custodians shall prepare the "Hainan Province Qualified Domestic Limited Partner (QDLP) Overseas Investment Business Status Table" (template in Appendix 2) on a quarterly basis, and submit it to the foreign exchange management department within 10 working days after the end of each quarter, and copy it to the provincial financial regulatory department.

Article 34  The subscription and redemption prices of fund shares are calculated based on the net value of fund shares on the subscription and redemption date plus or minus relevant fees, and shall be issued after review by the pilot fund management company or administrative manager.

Article 35  The investment principal and income received by the pilot fund shall be reviewed and determined by the pilot fund management company or administrative manager. The realized investment income and principal shall be remitted to the special account of the domestic custodian.

Chapter VII Administrative Management

Article 36 Pilot fund management enterprises may manage themselves or entrust domestic enterprises that meet the conditions stipulated in this article as administrative affairs managers to be responsible for the back-end administrative management of pilot funds. The entrusted administrative affairs managers shall meet the following conditions:

(i) Have relevant qualifications for engaging in fund service business;

(ii) Be equipped with a department or team specializing in fund administrative management business, and have full-time personnel who are familiar with the administrative management business of overseas funds;

(iii) Have a sound internal audit and monitoring system and risk control system;

(iv) Have not been subject to major penalties by regulatory authorities in the past three years, and have no major matters under investigation by judicial departments or regulatory authorities.

Article 37  The responsibilities that the pilot fund management enterprise or administrative affairs manager shall perform include but are not limited to:

(i) Calculate the net asset value and investment income of the fund in accordance with the valuation policy and process of the pilot fund, and publish it to the qualified domestic limited partners on a regular basis;

(ii) Maintain the financial books and records of the pilot fund, and provide complete transaction records executed by the pilot fund;

(iii) Maintain all documents related to the investment, exit and transaction of the pilot fund that support the calculation of the net asset value of the fund;

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

(v) Verify the identity of pilot fund investors in accordance with relevant anti-money laundering policies and procedures;

(vi) Report information to the provincial financial regulatory department, foreign exchange management department, provincial market regulatory department and securities regulatory department in a timely manner.

Chapter VIII  Enterprise quota and investment management

Article 38  Balance management is implemented for the foreign investment quota. The sum of the net outward remittances of all pilot funds in principal and foreign currencies (excluding current account receipts and expenditures such as dividends, taxes, and profits) initiated by the pilot fund management enterprise shall not exceed the investment quota approved by the pilot fund management enterprise. The outward remittances of funds involved in the pilot fund management enterprise and the pilot fund's outward investment shall be handled at the custodian within the pilot quota and must follow the principles of on-demand foreign exchange purchase, quota management and risk warning.

Article 39   Pilot fund management enterprises may initiate the establishment of multiple pilot funds. Unless otherwise provided, pilot fund management enterprises may flexibly adjust the outward investment quota of a single pilot fund among the funds they have established, and the sum of the outward investment quotas of each single pilot fund shall not exceed the outward investment quota of the pilot fund management enterprise approved by the relevant pilot units.

Article 40   There are no restrictions on the quota application of a single pilot fund management enterprise and the quota of a single investment project. If there are no special reasons, if the pilot fund management enterprise fails to use the quota within 11 months after obtaining the pilot qualification and quota, the provincial financial regulatory department shall inform the pilot fund management enterprise that has not used the quota within one year. The provincial financial regulatory department has the right to cancel its pilot qualification and recover all pilot quotas. If it needs to conduct business, it needs to reapply for pilot qualification and pilot quota. If the approved quota of the fund is insufficient due to subsequent renewal or additional investment, the pilot fund management enterprise shall reapply for additional quota.

Article 41 Pilot fund management enterprises shall use the raised funds to invest overseas in accordance with relevant laws and regulations, these Measures and the provisions of relevant agreements, and shall not use this pilot quota for investment in China.

Chapter 9 Information Disclosure

Article 42 Pilot fund management enterprises, domestic custodians, administrative affairs managers and other information disclosure obligors shall perform information disclosure obligations in the entire process of fund raising and operation in accordance with relevant laws and regulations, normative documents and the provisions of these Measures, as well as relevant agreements with qualified domestic limited partners.

Article 43 Pilot fund management companies can denominate and disclose relevant information such as the net asset value of pilot funds in major currencies such as RMB and USD. If conversion between currencies is involved, the source of exchange rate data should be disclosed, and consistency and continuity should be maintained. If there is a change, it should be disclosed simultaneously and the reason for the change should be explained. The exchange rate of RMB against major foreign currencies shall be based on the RMB midpoint exchange rate announced by the People's Bank of China or its authorized agency on the last valuation day at the end of the reporting period.

Article 44  Pilot fund management enterprises shall disclose investment matters in accordance with the following principles:

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

(ii) If investing in overseas funds, the fee arrangement between the pilot fund and the overseas fund shall be disclosed;

(iii) If participating in margin trading and repurchase transactions, it shall be disclosed in the prospectus in accordance with relevant regulations, and the leverage ratio used shall be clearly disclosed;

(iv) The following risks that may arise from investing in overseas markets shall be disclosed in the prospectus: overseas market risk, government regulation risk, liquidity risk, exchange rate risk, interest rate risk, derivative risk, operational risk, accounting risk, tax risk, transaction settlement risk, legal risk, etc. The disclosure content shall include the definition, characteristics, possible consequences, etc. of the above risks;

(v) The policy, procedures and document storage of proxy voting shall be disclosed in accordance with relevant regulations.

Article 45  The information disclosure documents provided to qualified domestic limited partners shall be in Chinese. If a foreign language version is used at the same time, the contents of the two versions shall be consistent. In case of any ambiguity between the two texts, the Chinese text shall prevail.

Chapter 10 Supervision and Management

Article 46 After the pilot fund management enterprises and pilot funds have completed registration and filing, the provincial market supervision department shall push their commercial entity registration information to the provincial information sharing and exchange platform in real time, and the pilot-related units shall obtain relevant data from the provincial market supervision department through the provincial information sharing and exchange platform according to their needs.

Article 47 The pilot-related units shall be responsible for the supervision and management of the pilot fund management enterprises and pilot funds according to their respective responsibilities. Explore the implementation of in-process and post-process supervision, and use financial technology means such as blockchain to strengthen the risk management of funds. At the same time, its commercial entities shall be included in the supervision scope in a timely manner to strengthen supervision, and ensure data security and confidentiality.

Article 48 The pilot fund management enterprises shall submit to the provincial financial supervision department within 20 working days after the end of each natural year the report on the capital changes, foreign exchange settlement and sales, and overseas investment of the pilot funds in the previous year.

Pilot fund management companies that have obtained pilot qualifications shall promptly report in writing to the provincial financial regulatory department within 15 working days after the following events occur during the investment operation:

(i) Modification of important documents such as contracts, articles of association or partnership agreements;

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

(iii) Dissolution or liquidation;

(iv) Other matters required by the provincial financial regulatory department.

Article 49  Pilot fund management companies shall report relevant investment product information to the foreign exchange management department and the provincial financial regulatory department within 10 working days after the end of each quarter (see Appendix 3 for the template), including:

(i) Fund remittances and purchases and settlements;

(ii) Basic investment conditions, including: investment products, fund net value, fund investment direction, domestic sources of raised funds, etc.

Article 50  Domestic custodians and administrative affairs managers shall promptly report to the provincial financial regulatory department major events related to pilot fund asset custody and illegal and irregular matters of pilot fund management companies. If the illegal and irregular matters are not corrected within the time limit, the provincial financial regulatory department has the right to cancel its pilot qualification, recover the pilot quota, and impose penalties in accordance with relevant regulations together with the relevant management departments of the pilot.

Article 51  Pilot fund management companies shall provide quarterly and annual reports to the provincial financial regulatory department on schedule. Quarterly reports include but are not limited to subscribed scale, paid-in scale, investor situation, investment situation, withdrawal situation, fund net value, and foreign exchange purchase, settlement, account fund changes, etc.; annual reports include but are not limited to fund changes, foreign exchange settlement and sales, overseas investment situation reports, major changes, audit reports, etc. of the pilot fund in the previous year.

Article 52  If the pilot fund management company and the pilot fund violate the provisions of these Measures, the provincial financial regulatory department shall conduct an investigation together with the relevant management departments. If the situation is true, it shall be ordered to rectify within a time limit; if it fails to rectify within the time limit, the provincial financial regulatory department shall announce it to the public and investigate and deal with it in accordance with the law together with relevant departments; if it constitutes a crime, it shall be transferred to the judicial department for criminal responsibility in accordance with the law.

Chapter 11  Supplementary Provisions

Article 53  These Measures shall apply within the scope of Hainan Province and shall be interpreted by the provincial financial regulatory department. The provincial financial regulatory department, together with other pilot-related units, may make timely adjustments to relevant regulations based on the progress of Hainan's pilot work on overseas investment by qualified domestic limited partners.

Article 54  These Measures shall come into force on the date of promulgation.