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China Tightens Fund Management Rules For Investment Trusts

by Mary Swire, Tax-News.com, Hong Kong

28 December 2004


The China Banking Regulation Commission has issued new fund management rules for investment trusts in a bid to strengthen investor protection and provide more certainty for clients in an often risky market.

The new rules, which took effect early in December, set out a regulatory framework for custodians of pooled funds, detailing disclosure requirements and limits on investments.

In addition, the rules limit the size of an investment for a single transaction to 50% of the total investment plan for the pooled funds within an accounting year.

The CBRC also wants investment trusts to establish a reporting system to monitor investments, and establish systems for funds being held by custodian banks.

The Commission acknowledged that before the new rules were introduced, clients who had entrusted money to fund managers had not been adequately protected or informed of potential risks.

"It is a significant move made by the regulator to intensify the supervision of investment trusts," the CBRC stated.

A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, and hedge funds is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp

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