Table of Contents of the Interim Measures for Investment Management of the National Social Security Fund

Chapter I General Provisions

Chapter II Governing Board

Chapter III Fund Law

Chapter IV Custodianship Law

Chapter V Investment Law

Chapter VI Investment Management Contracts and Custodianship Contracts Entrusted to the Social Security Fund

Chapter VII Law on Utilization

Chapter VIII Management Law

Chapter IX Institution

Chapter X Penalties

Chapter XI Background Article 1

In order to regulate the behavior of the investment operation of the National Social Security Fund, these Measures have been formulated in accordance with the relevant national laws and regulations.

Article 2

The National Social Security Fund (hereinafter referred to as the Social Security Fund) referred to in these Measures refers to the social security fund centralized by the central government, formed by the funds transferred from the reduction of state-owned shares and equity assets, the funds allocated by the central government, the funds raised by other means approved by the State Council, and their investment returns, which the National Social Security Fund Board (hereinafter referred to as the Board) is responsible for managing. Fund.

Article 3

The basic principle of the investment and operation of the Social Security Fund is to realize the value-added of the Fund's assets on the premise of ensuring the safety and liquidity of the Fund's assets.

Article 4

The assets of the Social Security Fund are assets independent of the Council, the investment manager of the Social Security Fund, and the custodian of the Social Security Fund.

Article 5

The Ministry of Finance, in conjunction with the Ministry of Labor and Social Security, formulates policies relating to the management and operation of the Social Security Fund, and supervises the investment operation and trusteeship of the Social Security Fund.

The China Securities Regulatory Commission (hereinafter referred to as the CSRC) and the People's Bank of China supervise, in accordance with their respective mandates, the operation of the investment managers and custodians of social security funds. Article 6

The Council is responsible for the management of the social security fund and performs the following duties:

(1) To formulate the investment and business strategies of the social security fund and organize their implementation.

(ii) Selecting and entrusting investment managers and custodians of the Social Security Fund to carry out investment operation and custodianship of the assets of the Social Security Fund; and inspecting the investment operation and custodianship.

(3) To be responsible for the financial management and accounting of the Social Security Fund, to prepare regular financial and accounting statements, and to draft financial and accounting reports.

(d) Regularly publicize to the public the financial status of the Social Security Fund in terms of assets, income, cash flow, etc.

Seventh, the Social Security Fund is responsible for the financial management and accounting of the Social Security Fund.

Article 7

The Council shall strictly implement these Measures. Violations of the law by the Council shall be penalized in accordance with the relevant state laws and regulations. Article 8

The investment manager of the social security fund referred to in these Measures refers to a professional investment management organization that obtains the qualification for the investment management business of the social security fund in accordance with the provisions of Article 10 of these Measures, and is entrusted with the operation and management of the social security fund in accordance with the contract.

Article 9

Applicants for the investment management business of social security funds shall have the following conditions:

(1) Fund management companies registered in China and approved by the China Securities Regulatory Commission as having the qualification for fund management business, and other professional investment management institutions as stipulated by the State Council.

(ii) The fund management company has a paid-up capital of not less than RMB 50 million and maintains a net asset of not less than RMB 50 million at all times. The minimum size of capital required for other specialized investment management institutions is separately stipulated.

(c) Have more than 2 years of experience in securities investment management business in China, and have prudent management and high credibility. Institutions with standardized international operation experience may be exempted from the restriction of this paragraph for the duration of their operation.

(d) No major violations within 3 years.

(v) Have a sound corporate governance structure.

(vi) Have professional investment personnel suitable for engaging in the investment management business of the social security fund.

(vii) It has a complete and effective internal risk control system, an independent monitoring and auditing department, and a sufficient number of competent professionals.

Article 10

The investment manager of the social security fund shall be determined by the Council. To apply for the investment management business of the social security fund, an application shall be submitted to the Council together with an opinion issued by the China Securities Regulatory Commission as to whether or not the applicant meets the basic conditions set forth in Article 9 of these Measures. The Council shall set up an expert evaluation committee including a sufficient number of independent persons to evaluate the qualified applicants for the investment management business of the social security fund with reference to the principle of public bidding. The evaluation committee proposes a list of recommended investment managers for the social security fund after voting and submits it to the Council for determination. The evaluation methods shall be formulated by the Council. The evaluation methods and results shall be reported to the Ministry of Finance, the Ministry of Labor and Social Security and the China Securities Regulatory Commission for the record.

Article 11

The investment manager of the social security fund shall perform the following duties:

(1) Manage and utilize the assets of the social security fund for investment in accordance with the investment management policy and the contract of asset management entrusted by the social security fund.

(ii) To establish a reserve for the risk of investment management of the Social Security Fund.

(iii) Keeping accounting documents, accounting books and annual financial accounting reports of the entrusted assets of the social security fund intact for more than 15 years.

(d) Preparing financial accounting reports on assets entrusted by the Social Security Fund and issuing reports on the investment operation of assets entrusted by the Social Security Fund.

(v) Keeping the investment records of the social security fund for more than 15 years.

(F) Other duties stipulated in the social security fund entrusted assets management contract.

Article 12

In any of the following cases, the investment manager of the social security fund shall promptly report to the Council:

(1) Substantial fluctuations in the market value of the assets of the social security fund.

(ii) The investment manager of the social security fund reduces its capital, merges, separates, dissolves, is revoked in accordance with the law, decides to apply for bankruptcy, or is filed for bankruptcy.

(iii) The investment manager of the social security fund is involved in major litigation or arbitration.

(d) Major changes in the directors, supervisors, managers and other senior management of the social security fund investment manager.

(v) Other matters that are likely to materially affect the value of the assets entrusted to the Social Security Fund.

(vi) Other reporting matters stipulated in the entrusted asset management contract.

Article 13

The investment manager of the social security fund shall adapt to the requirements of the management of the social security fund and establish and improve the relevant internal management system and risk management system.

Article 14

The investment manager of a social security fund must retire in any of the following cases:

(1) The investment manager of a social security fund is dissolved, revoked in accordance with law, goes bankrupt or has its assets taken over by a receiver.

(ii) The Council has good reason to believe that the replacement of the investment manager of the Social Security Fund is in the interest of the Social Security Fund.

(iii) The Custodian has good reason to believe that the replacement of the investment manager of the Social Security Fund is in the interest of the Social Security Fund and has obtained the consent of the Council.

(d) The Ministry of Finance, the Ministry of Labor and Social Security or the China Securities Regulatory Commission has sufficient grounds to believe that the investment manager of the social security fund is unable to continue to perform the entrusted asset management duties.

(v) Other circumstances stipulated in the social security fund entrusted asset management contract.

Article 15

When the investment manager of the social security fund is replaced or retires, the Council must appoint a new investment manager as soon as possible and report it to the Ministry of Finance, the Ministry of Labor and Social Security, and the China Securities Regulatory Commission for the record; after the new investment manager has been determined and has performed its duties, the original investment manager may only retire.

Article 16

Prohibits an investment manager of a social security fund from engaging in the following activities:

(1) Engaging in investment activities in the name of the social security fund using funds that do not belong to the name of the social security fund, or engaging in investment activities in the name of another person using funds that belong to the name of the social security fund.

(ii) Unfairly treating the assets in the account of the Social Security Fund.

(iii) Misappropriating assets entrusted to the Social Security Fund.

(iv) Engaging in investments that may subject the entrusted assets of the Social Security Fund to unlimited liability.

(v) Engaging in credit transactions with the entrusted assets of the Social Security Fund.

(vi) Engaging in other activities prohibited by laws, regulations and the provisions of the social security fund entrusted asset management contract. Article 17

The custodian of the social security fund referred to in these Measures refers to a commercial bank which has obtained the qualification for the custodian business of the social security fund in accordance with the provisions of Article 19 of these Measures, and which has safe-keeping of the assets of the social security fund in accordance with the contract.

Article 18

Applicants for social security fund custodian business shall have the following conditions:

(1) A specialized fund custodian department.

(2) The paid-in capital shall be not less than 8 billion yuan.

(iii) Sufficient specialized staff familiar with the custody business.

(iv) Possessing the conditions for safe custody of all assets of the fund.

(v) Possessing safe and efficient clearing and settlement capabilities.

Article 19

The trustee of the social security fund shall be determined by the Council. To apply for social security fund custodian business, the applicant is required to submit to the Council an application as well as a certificate of approval by the People's Bank of China for engaging in social security fund custodian business. The Council shall select the trustee of the social security fund in accordance with the principle of bidding, and the selection method and results shall be reported to the Ministry of Finance, the Ministry of Labor and Social Security and the People's Bank of China for the record. The Council shall gradually create conditions for the use of bidding to determine the trustee of the social security fund.

Article 20

The trustee of the social security fund shall perform the following duties:

(1) To keep the assets of the social security fund under trusteeship with due diligence.

(2) To execute the investment instructions of the investment manager of the social security fund and to be responsible for the settlement of funds in the name of the social security fund.

(iii) Supervising the investment operation of the investment manager of the social security fund. If it is found that the investment instructions of the investment manager of the social security fund violate the law, it shall be reported to the Council.

(d) To keep the accounting books, accounting vouchers and annual financial and accounting reports of the Social Security Fund intact for more than 15 years.

(v) Other duties stipulated in the trusteeship contract of the Social Security Fund.

Article 21

The social security fund custodian shall adapt to the requirements of social security fund custodianship and establish and improve the relevant internal management system and risk management system.

Article 22

The social security fund custodian must retire under any of the following circumstances:

(1) The social security fund custodian is dissolved, revoked in accordance with law, goes bankrupt, or has its assets taken over by a receiver.

(ii) The Council has good reason to believe that the Social Security Fund Trustee should retire.

(iii) The Ministry of Finance, the Ministry of Labor and Social Security or the People's Bank of China has sufficient grounds to believe that the trustee cannot continue to perform the duties of the social security fund's trusteeship.

(iv) Other circumstances stipulated in the social security fund trusteeship contract.

Article 23

When the trustee of the Social Security Fund is replaced or retires, the Council must appoint a new trustee as soon as possible and report it to the Ministry of Finance, the Ministry of Labor and Social Security, and the People's Bank of China for the record; after the new trustee has been determined and has performed its duties, the original trustee may retire.

Article 24

The trustee of a social security fund is prohibited from engaging in the following activities:

(1) Mixing the assets of the social security fund under its trusteeship with other assets under its trusteeship.

(ii) Mixing and managing the assets of the social security fund under its custody with its own assets.

(iii) Misappropriating the assets of the social security fund under its custody.

(4) Other activities prohibited by relevant laws and regulations. Article 25

The scope of investment of the Social Security Fund is limited to bank deposits, trading of treasury bonds and other financial instruments with good liquidity.

The investment scope of the social security fund directly operated by the Council is limited to bank deposits and the purchase of treasury bonds in the primary market, while other investments shall be entrusted to the social security fund's investment manager for management and operation and to the social security fund's custodian for trusteeship.

Article 26

The investment manager of the social security fund and the custodian of the social security fund shall be independent of each other in terms of personnel, finances and assets, and their senior management personnel shall not hold any position in the other party.

Article 27

Trading in the secondary market of treasury bonds held by the Council shall be entrusted to a professional investment management organization in accordance with the provisions of Article 9 of these Measures.

Article 28

The investment of monetary assets allocated to the Social Security Fund, calculated on the basis of cost, shall comply with the following provisions:

(1) The proportion of bank deposits and investments in treasury bonds shall not be less than 50 percent. Among them, the proportion of bank deposits shall not be less than 10%. Deposits in one bank shall not be higher than 50% of the total bank deposits of the Social Security Fund.

(2) The proportion of investments in corporate bonds and financial bonds shall not be higher than 10%.

(iii) The proportion of investment in securities investment funds and stocks shall not be higher than 40%.

Article 29

The investment of the assets of a social security fund managed by a single investment manager in securities issued by an enterprise or in a single securities investment fund shall not exceed 5% of the shares of the securities issued by that enterprise or of that fund; and shall not exceed 10% of the total value of the assets of the social security fund managed by that manager on a cost basis.

The investment of the assets of the social security fund managed by the investment manager in funds under its own management shall be subject to the approval of the Council.

Article 30

The assets entrusted to a single social security fund investment manager for management shall not exceed 20 percent of the total value of the assets entrusted to the social security fund for the year.

Article 31

In the initial stage of the establishment of the social security fund, the reduction of state-owned shares obtained in addition to the funds allocated from the central budget. When the conditions are ripe, the Ministry of Finance, in conjunction with the Ministry of Labor and Social Security Business Council reported to the State Council for approval, and then invested in accordance with the proportion stipulated in Article 28 of these measures.

Article 32

Equity assets transferred to the Social Security Fund into the Social Security Fund unified accounting, in accordance with the relevant provisions of the State management. The investment ratio after the realization of equity assets shall be implemented in accordance with the provisions of Article 28 of these Measures.

Article 33

According to the changes in the financial market and the investment operation of the social security fund, the Ministry of Finance, in conjunction with the Ministry of Labor and Social Security, and in consultation with the relevant departments, shall report to the State Council at an appropriate time for adjustment of the investment ratio of the social security fund as stipulated in Article 28.

Article 34

With the approval of the People's Bank of China, the Board of Governors may, in accordance with the relevant provisions, handle agreement deposits with commercial banks. Article 35

The Council and the investment manager of the Social Security Fund must sign a contract of entrusted asset management, stipulating the rights and obligations of the two parties, the way of entrusted asset management, the scope of investment, and the distribution of proceeds, etc., and report it for the record to the Ministry of Finance, the Ministry of Labor and Social Security, and the China Securities Regulatory Commission.

When the entrusted asset management contract of the social security fund expires or is suspended, the handling of related matters shall be formulated separately.

Article 36

The Council and the custodian of the social security fund must sign a contract on the entrusted asset custody of the social security fund, specifying the rights and obligations of both parties, and report it to the Ministry of Finance, the Ministry of Labor and Social Security, the China Securities Regulatory Commission, and the People's Bank of China for the record.

When the entrusted asset custody contract of the social security fund expires or is suspended, the handling of related matters shall be formulated separately. Article 37

The net income of the social security fund shall be fully incorporated into the social security fund, and shall be allocated for use and investment in accordance with the relevant provisions of the State.

Article 38

The annual rate of the commissioned asset management handling fee withdrawn by the investment manager of the social security fund shall not be higher than 1.5% of the net value of the commissioned assets of the social security fund.

The Council may stipulate performance incentives for the investment manager of the social security fund in the entrusted asset management contract. The specific program shall be approved by the Ministry of Finance in conjunction with the Ministry of Labor and Social Security.

Article 39

The annual rate of the custodian fee drawn by the custodian of the social security fund shall not be higher than 0.25% of the net value of the custodian assets of the social security fund.

Article 40

The investment manager of the social security fund shall withdraw a reserve for the risk of investment management of the social security fund at the rate of 20% of the commissioned asset management handling fee of the social security fund collected in the current year, which shall be used exclusively to make up for the losses in the investment of the social security fund. The investment management risk reserve of the social security fund is stored in a special account in the custodian bank, and the balance can no longer be withdrawn when it reaches 10% of the net value of the assets entrusted to the social security fund for management.

The Council shall withdraw a general risk reserve of 20% of the net income of the Social Security Fund, which shall be used to make up for the losses of the Social Security Fund in the event of a major loss in the investment of the Social Security Fund which is not sufficient to be compensated by the management risk reserve proposed by the investment manager of the Social Security Fund. The balance of the general risk reserve may not be withdrawn when it reaches 20% of the net assets of the Social Security Fund. Article 41

The social security fund investment manager's social security fund entrusted asset management business must be separated from the manager's other businesses in terms of finance and accounts, and shall not be mixed in operation and accounting.

Article 42

The custodian of a social security fund must open separate securities accounts and capital accounts for the social security fund.

Article 43

The social security fund and the financial affairs of the council unit shall maintain separate accounts and accounting.

Article 44

The investment manager and the custodian of the social security fund shall carry out daily accounting carefully, prepare accounting statements in strict accordance with the relevant provisions, and carry out regular reconciliations with respect to the social security fund's accounting and statement preparation. Article 45

The Council, the investment manager of the social security fund and the custodian of the social security fund shall report on the investment and operation of the social security fund in accordance with the requirements of the present Measures, ensure that the contents of the report do not contain any false or misleading statements or material omissions, and shall be responsible for the truthfulness and completeness of the contents reported.

Article 46

The Council's information disclosure and reporting shall comply with the following requirements:

(1) Once a year, it shall publicize to the society the financial status of the social security fund in respect of its assets, income and cash flow.

(ii) Submit financial accounting reports and investment management reports of the Social Security Fund to the Ministry of Finance and the Ministry of Labor and Social Security once a quarter.

(3) Upon the expiration of the contract for management of assets entrusted by a single social security fund, submit to the Ministry of Finance and the Ministry of Labor and Social Security a report audited by a certified public accountant firm qualified to engage in the practice of securities, and provide an explanation of the investment of assets entrusted by the social security fund.

(iv) In the event of a major incident in the Social Security Fund, it shall immediately report to the Ministry of Finance and the Ministry of Labor and Social Security, and prepare an interim report, which shall be announced upon approval.

Article 47

The investment manager of the Social Security Fund shall provide the Council with reports on the investment operation of the assets entrusted by the Social Security Fund on a regular and irregular basis in accordance with the contract on the management of the assets entrusted by the Social Security Fund and the requirements of the Council.

Article 48

The custodian of the Social Security Fund shall provide the Council with a report on the assets entrusted to it by the Social Security Fund on a regular and irregular basis in accordance with the custodian contract and the requirements of the Council, and shall review the relevant contents of the report prepared by the investment manager of the Social Security Fund in accordance with Article 47, and issue a written review opinion to the Council. Article 49

If an investment manager of a social security fund violates the provisions of Article 12 of these Measures by failing to report to the Council in a timely manner or on one of the circumstances listed in the Article, it shall be ordered to make corrections, be given a warning, and be subject to a fine of not more than 50,000 yuan.

Article 50

An investment manager or custodian of a social security fund who has committed one of the acts listed in Article 16 and Article 24 of these Measures shall be retired, and if there is any unlawful income, the unlawful income shall be confiscated, and a fine not less than one and not more than five times of the unlawful income shall be imposed; and if there is no unlawful income, a fine not exceeding 500,000 yuan shall be imposed.

Article 51

The investment manager of the social security fund shall retire if it violates the provisions of Article 25 of these Measures and invests beyond the scope, and shall be fined not more than 500,000 yuan.

Article 52

If the investment managers and custodians of social security funds violate the provisions of Article 26 of these Measures, they shall be ordered to make corrections within a certain period of time and be given a warning, and if they fail to make corrections after the expiration of the period of time, they shall be retired from their posts.

Article 53

Social security fund investment managers violating the provisions of Article 29 of these Measures shall be ordered to make corrections within a specified period of time, be given a warning and fined up to 100,000 yuan, and shall retire from office if they fail to make corrections within the specified period of time.

Article 54

If an investment manager of a social security fund violates the provisions of Article 47 of these Measures, or if a custodian violates the provisions of Article 48 of these Measures and fails to provide a report in accordance with the requirements, it shall be ordered to make corrections within a certain period of time, given a warning, and fined not more than RMB 50,000 yuan, and shall retire from the office if it fails to make corrections within a certain period of time.

Article 55

If an investment manager or custodian of a social security fund engages in malpractice and irregularities, fails to fulfill its entrusted asset management or custodianship duties, or seriously fails to perform its duties, resulting in the mismanagement of the social security fund or major losses, it shall be replaced or retired from its office, in addition to being punished in accordance with the law.

Article 56

The penalties stipulated in Articles 49 to 55 of these Measures shall be decided by the Ministry of Finance in conjunction with the Ministry of Labor and Social Security, or by the China Securities Regulatory Commission or the People's Bank of China, in accordance with their respective powers and functions; no more than two penalties shall be imposed for the same act of violating these Measures.

Article 57

These Measures shall come into force on the date of promulgation. According to the Measures, the scope of investment of the National Social Security Fund is limited to bank deposits, trading of treasury bonds and other financial instruments with good liquidity, including listed and circulating securities investment funds, stocks, corporate bonds with credit ratings above investment grade, financial bonds and other marketable securities.　The Measures stipulate in principle the investment ratio of the NSSF: the ratio of bank deposits and treasury bonds shall not be less than 50%, of which the ratio of bank deposits shall not be less than 10%; the ratio of corporate bonds and financial bonds shall not be higher than 10%; and the ratio of securities investment funds and stocks shall not be higher than 40%. The measures also stipulate that: in the initial stage of the establishment of the fund, the central budget allocations other than the funds obtained from the reduction of state-owned shares shall be limited to be invested in bank deposits and treasury bonds, and when the conditions are ripe, it can be reported to the State Council for approval and then changed to be invested in accordance with the above stipulated ratios. According to the changes in the financial market and the investment operation of the fund, the proportion of the fund's investment may be adjusted in due course with the approval of the State Council.

In addition, the assets of the social security fund managed by a single investment manager, when invested in a single security or securities investment fund, shall not exceed 5% of the shares of the security or fund; and shall not exceed 10% of the total value of the assets of the social security fund under its management on a cost basis. The annual rate of handling fee drawn by the investment manager shall not be higher than 1.5% of the net value of the entrusted assets of the social security fund; the annual rate of custodian fee drawn by the custodian shall not be higher than 0.25% of the net value of the custodian assets of the social security fund.

The National Social Security Fund refers to the social security fund centralized by the central government, which is managed by the National Council of Social Security Funds and is formed by the funds transferred from the reduction of state-owned stocks and equity assets, the funds allocated by the central government, the funds raised in other ways approved by the State Council, and its investment income. The basic principle of its investment operation is to realize the value-added of the fund's assets on the premise of ensuring the safety and liquidity of the fund's assets.

The National Social Security Fund is managed by the National Council of Social Security Funds, but its investment scope is only bank deposits and primary market purchase of treasury bonds, and all other investments need to be entrusted to investment managers.