On 31 May 2008, CSRC released the Implementing Rules for Collective Asset Management by Securities Companies (Trial) (the “Rules”), which is scheduled to take effect on 1 July 2008.
The Rules stipulate that securities companies must not conduct any business of collective asset management without obtaining the prior approval of CSRC. When securities companies engage in the business of collective asset management, they should serve specific clients (as stipulated in the Rules) and formulate plans for collective asset management (“collective plans”) for these clients.
These specific clients should be the own clients of the securities companies, or the clients of the securities agencies. The participating capital of these clients should also meet the minimum requirement set by the CSRC.
The establishment of collective asset management plans requires at least two clients with a collective capital of more than RMB 100 million. The capital of the collective plans should be kept separate from the assets of the securities company or asset management company. Should the securities company or the asset management company become bankrupt or undergo liquidation, the capital of the collective plans should not be included in the estate of bankruptcy or liquidation.
For more information, please refer to CSRC Circular No. 26 of 2008 at http://www.gov.cn/gzdt/2008-05/31/content_1001274.htm