(2002.6.5)

 

 

Chapter I    General Provisions

 

Article 1            These rules are formulatedaccording to the "Trust Law of the People's Republic of China", the "Law on the People's Bank of China of the People's Republic of China" andrelevant rules of the State Council, so as to strengthen supervision andadministration of Trust and Investment Companies (TICs), standardize theiroperations and promote healthy development of the trust and investmentindustry.

 

Article 2            Trust and Investment Companies (TICs)hereof refer to financial institutions that are mainly engaged in trustbusiness and established in accordance with " Company Law of the People'sRepublic of China" and these rules.

 

Article 3             "Trust" in these rules refers tofollowing activities:

The cliententrusts his or her property to the trustee based on his or her trust in thetrustee and the property is managed and disposed of by the trustee on his orher own name in a way that is in line with the client's will and aimed atbenefiting the beneficiary or achieving other particular goals.

 

"Client"refers to individuals, legal persons or other legal organizations that havefull capacity to perform civil action; "Beneficiary" refers to individuals,legal persons or other legal organizations that enjoy the benefits of entrustedproperty. The Client and the Beneficiary could be the same person, or otherwise. The trustee could be the beneficiary but not the only beneficiaryof the same entrustment.

 

Article 4            "Trust business" in the regulationrefers to the operation that a TIC accept the entrustment and deal with theentrustment affairs as the trustee for the purpose of operating and earningremuneration.

 

Article 5             "Entrusted property" in these rulesrefers to property accepted by a TIC through entrustment commitments. Anyproperty obtained from the management, utilization, disposal or otheroperations of the entrusted property by a TIC shall also be regarded as entrustedproperty. Any property whose transaction is prohibited by laws and regulationsshall not be used as entrusted property. Any propertywhose transaction is restricted by laws and administrative regulations can beused as entrusted property after being approved by relevant authorities.

 

Theentrusted properties are neither a TIC's own assets nor its liabilities to thebeneficiary. When a TIC ceases operation, the entrusted property shall not beincluded in assets to be liquidated.

 

Article 6            Theentrustment will not terminate with the dissolution, bankruptcy or closure of aTIC, nor with its quitting from the entrustment, unless it is stipulatedotherwise by laws or entrustment contract.

 

Article 7            Theoperations of a TIC shall be organized in accordance with laws, regulations andentrustment contract, and shall not harm the interests of the state and thegeneral public or the legitimate interest of other persons.

 

Article 8            When managing and disposing of theentrusted property,a TIC shall be faithful to their duties and fulfill theobligation of being honest, credible, prudent and efficient.

 

Article 9            ATIC shall not be allowed to take deposits, issue bonds or borrow from abroad.

 

Article 10         The People's Bank of China isto supervise TICs and their operations according to laws, administrativeregulations and these rules.

 

Chapter II    Establishment, Alterationand Termination of TICs

 

Article 11         TICsshall be established in the form of limited liability companies orshare-holding companies.

 

Article 12         A TIC shall get the approval ofthe People's Bank of China for its establishment and the "license for trust and investmentinstitution" as well. Noentities or individuals can engage in trust business without approval of thePeople's Bank of China, nor can any commercial institution use "Trust & Investment"in its name unless particularly permitted by laws and regulations.

 

Article 13         Theestablishment and operation of a TIC shall meet the following criteria:

 

1)Articles of association that conform to the "Company law of the People'sRepublic of China" and regulations of the People's Bank of China.

 

2)Eligible shareholders according to regulations of the People's Bank of China.

 

3)Registered capital no less than the minimum requirements stipulated by theserules.

 

4)Eligible senior managerial personnel and qualified trust business staffaccording to regulations of the People's Bank of China.

 

5)Complete organizational structure, comprehensive rules of trust operation andsound risk-control systems.

 

6)Business premise, security system and other business-related facilities asrequired.

 

7) Othercriteria set by the People's Bank of China.

    

                  The People's Bank of China can review the application for theestablishment of a TIC according to the need of economic development and themarket situation of trust business.

 

Article 14         Theregistered capital of a TIC shall be no less than RMB 300 million yuan.

 

A TICengaged in foreign exchange business shall have foreign currency of no lessthan USD 15 million in its registered capital.

 

The People'sBank of China can modify the minimum requirement of registered capital for theestablishment of a TIC according to the development needs of TIC sector.

 

Article 15         ATIC shall obtain approval from the People's Bank of China in following matters:

 

1) Changeof name.

 

2) Changeof registered capital.

 

3) Changeof location.

 

4) Changeof organizational structure.

 

5)Adjustment of business scope.

 

6) Changeof senior management.

 

7) Changeof major shareholders or shareholding structure. Shareholders of a listed TIC withtheir holdings of tradable shares less than 10% of total shares are notincluded.

 

8)Modification of the Articles of Association.

 

9) Mergeror split-up.

 

10) Otherchanges stipulated by the People's Bank of China.

 

Article 16         ATIC that applies for dissolution due to the merger, split-up or other reasonsstipulated in its Articles of Association can dissolute after being approved bythe People's Bank of China, and then be liquidated by a liquidation task forceset up in accordance with relevant laws.

 

Article 17         Whena TIC cannot pay its maturing debt due to illegal operations or poormanagement, and the public interests would be damaged or the financial systemwould be endangered unless it is closed, the People's Bank of China shall closeit according to the " Regulations on Closure of Financial Institutions".

 

Article 18         ATIC that can't pay its maturing debt may apply for bankruptcy to the People'sCourt with the approval of the People's Bank of China.

 

Article 19         Theapproval procedure of TICs' establishment, alteration and termination shallfollow the relevant regulations of the People's Bank of China.

 

 

Chapter III    Business Scope

 

Article 20         ATIC can apply to engage in part or all of the following businesses both inlocal and foreign currencies:

 

1)Entrusted funds management. The Client entrusts funds, which are his or herlegitimate property, to the TIC to be managed, used and disposed of on agreedterms and objectives.

 

2)Entrusted management of movables, real estate and other properties. The Cliententrusts his or her property or property rights, including moveable property,real estate, land, copyright and intellectual property rights, to the TIC to bemanaged, used or disposed of on agreed terms and objectives.

 

3)Entrusted management of investment funds permitted by relevant laws andadministrative regulations. A TIC can engage in investment fund business as asponsor of an investment fund or a fund management company.

 

4)Restructuring and acquisition of enterprises' assets; intermediary businessessuch as project financing, corporate financial management, financialconsulting, etc.

 

5)Entrusted underwriting of treasury bonds, financial institutions bonds andcorporate bonds with approval of relevant departments of the State Council.

 

6)Management, utilization and disposal of entrusted properties.

 

7)Entrusted custody.

 

8) Creditcertification and investigation; business consulting.

 

9)Providing guarantee for others backed by its own assets.

 

10) Otherbusinesses approved by the People's Bank of China.

 

Article 21         ATIC can accept entrustments with following public objectives according torelevant provisions of the" Trust Law of the People's Republic of China":

 

1) Povertyaid.

 

2)Disaster relief.

 

3)Assistance to the disabled.

 

4)Development of education, science, sports, culture and art.

 

5)Development of medical care and public sanitation.

 

6) Development of environmental protection,preservation of ecological environment.

 

7) Developmentof other social courses that are in the interest of the society.

 

Article 22         ATIC can manage or use the entrusted property by means of leasing, selling,lending, investing or interbank lending according to the terms of entrustmentcontract.

 

Article 23         ATIC can design its businesses products according to objectives of the entrustment,types of entrusted property or different ways of management of entrustedproperty.

 

Article 24         ATIC's own capital in the account of owner's equity, which is permitted to beused according to relevant rules, can be deposited in banks or used ininterbank lending, lease financing and investment. However, its outstandingbalance of equity investment and fixed assets for its own use shall not exceed80% of its net assets.

 

Article 25         Afterbeing approved by the People's Bank of China, a TIC can engage in interbankborrowing and lending.

 

Article 26         Thebusiness scope of a TIC shall be defined by its Articles of Association andapproved by the People's Bank of China.

 

Chapter IV    Rules of Business Operation

 

Article 27         Anentrustment shall be created in a written form, including entrustmentcontracts, wills or other written documents required by relevant laws andadministrative regulations.

 

Article 28         Whenan entrustment is created in the form of an entrustment contract, theentrustment contract shall contain the following contents:

 

1)Objectives of the entrustment.