The State Council's Approval of “The Overall Development

QIANHAI FINANCIAL POLICIES

The State Council’s Approval of “The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone”

(Guo Han [2010] No. 86 August 26, 2010)

Guangdong Provincial People’s Government, National Development and Reform Commission:

We have received the document “Call for Instruction Regarding the Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone” (Fa Gai Di Qu [2010] No. 1814) and have the following remarks:

1. We have approved the “Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone” on principal, hereinafter referred to as the “plan”. Please carry out this plan with dedication.

2. The implementation of the plan must be done under the spirit of socialism with Chinese characteristic and the scientific development outlook. Within the “One Country, Two Systems” framework, the plan should further strengthen the partnership between the province of Guangdong and Hong Kong, using the development of modern service industry to facilitate the upgrade of industrial structure. The plan should help create a new phrase of the opening up process, providing a fine example of shift in economic development model and the implementation of the scientific development outlook for the nation. Qianhai should take full advantage of the strengths and functions of Hong Kong as an international economic center; using the plan as a platform to promote partnership and integrated development with Hong Kong. The goal is to turn Qianhai into a pilot area for modern service industry under the partnership between Guangdong and Hong Kong.

Qianhai will play a leading role in promoting the partnership between Hong Kong and mainland China in the area of modern service industry. Qianhai must strengthen its planning, focus on its strengths and develop the overall economy while facilitating the development of modern service industry as well as strengthening the efficiency in resource allocation and utilization. The goal is to turn Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation into a key national base for modern service industry and an influential manufacturing service industry center, playing a leading role in the upgrade of our nation’s modern service industry. Being part of the Special Economic Zone that always acts as a pioneer, Qianhai should seize the opportunity to develop its modern service industry while exploring the system and mechanism that can facilitate the development of modern service industry, providing new experience for the development of modern service industry across the nation.

3. The Guangdong Provincial People’s Government must play a leading role in the implementation of the plan, by creating a sound working system and having a clear set of responsibilities. Following the development positioning and core industries introduced by this plan, the Guangdong Provincial People’s Government must work hard to provide favorable conditions for Qianhai and implement the plan in a timely fashion, taking full advantage of Qianhai’s leading role in industrial upgrade in the Pearl River Delta. The Shenzhen Municipal People’s Government must follow the spirit of this approval, implementing the plan in a timely fashion. They must aim high and come up with a unified plan; then they should coordinate and implement the plan step by step. They should also improve the democracy and the legal system while taking full advantage of the Special Economic Zone’s legislative right assigned by the National People’s Congress to provide a legally sound environment for the development of Qianhai’s modern service industry. One must seek approval according to relevant rules if the legislation exceeds the scope of the central government’s authorization.

4. Departments from the State Council must play their part in providing support and guidance to the development of Qianhai. One must come up with a coordination mechanism that is led by the National Development and Reform Commission and is

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joined by related departments from the State Council, Hong Kong SAR Government, Guangdong Provincial People’s Government and Shenzhen Municipal People’s government. This mechanism should help solve the problems faced when implementing the plan and provide active support in terms of policy implementation and project arrangement, creating a favorable policy environment that can help facilitate the development of Qianhai modern service industry. One must follow and analyze closely the implementation of the plan, with focus on supervision and evaluation. During the process of implementation, one must focus on studying the new situations, solving new problems, forming new conclusions and reporting to the State Council in a timely manner when faced with significant issues.

Taking advantage of the comparative advantages of Shenzhen and Hong Kong, the decision to develop modern service industry in Qianhai is a significant move in a new phase of the reform and opening up process. All related parties must recognize the significance of development of Qianhai; one should see the implementation as an opportunity to innovate, to cooperate closely and to work diligently to promote the development of modern service industry while continuing to explore the new development model under the scientific outlook.

State Council of People’s Republic of China August 26, 2010

Notice Issued by the National Development and Reform Commission Regarding Printing and Issuing of “The Overall Development Plan of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone”

(Fa Gai Di Qu [2010] No. 2415 October 10, 2010)

People’s Governments of the Provinces, Autonomous Regions, Municipalities Directly under the Central Government, and Cities Separately Listed on the State Plan, Ministries and Commissions of the State Council, and Departments Directly under the State Council:

“The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone” (hereinafter referred to as the “plan”) has been approved by the State Council. According to the spirit of The State Council’s Approval of The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone (Guo Han [2010] No. 86), we proceed to distribute the plan to you and have the following announcement to make:

1. Located at the west part of Shenzhen and on the east shore of the Pearl River while being very close to both Hong Kong and Macau, Qianhai enjoys unique geographical advantages with enormous potential for development. Guangdong Provincial Government and Shenzhen Municipal Government, together with departments of the State Council, must study closely the State Council’s approval of the plan; one should seize the opportunity that comes with the 30th anniversary of establishment of the Shenzhen Special Economic Zone, combining the implementation of planning with opening up further, promoting innovation within the current system and mechanism as well as exploring the new development model under the scientific outlook. One must strengthen the partnership between

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Guangdong and Hong Kong so they can promote the development of modern service industry, gradually turning Qianhai into an innovative area for modern service industry system and mechanism, a concentrated area for development of modern service industry, a driving force for closer partnership between Hong Kong and mainland as well as industrial upgrade within the Pearl River Delta area. The ultimate objective is to realize the strategic goal of turning Qianhai into a pilot area for modern service industry under the partnership of Guangdong and Hong Kong.

2. We would like to urge the Guangdong Provincial Government to play a leading role in implementing the plan and to complete all the objectives mentioned in the plan. One must establish a working system and lay out all the responsibilities clearly. One must follow the development positioning and major industries mentioned in the plan to build the Qianhai Shenzhen- Hong Kong Modern Service Industry Cooperation zone. One must ensure that Qianhai’s governing institution is entitled to favorable policies that are equivalent to what a city separately listed on the State Plan would be entitled to by creating favorable conditions, decentralizing administrative privilege, simplifying the review process and providing favorable policies. Together they should help build a system and mechanism that promotes the concentrated development of Qianhai modern service industry.

3. As the main body of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, the city of Shenzhen must implement the plan in a timely manner and complete the objectives laid out in the plan. First, one must come up with an innovative management model for the development of Qianhai; one must aim high, coordinate the planning and implement step by step. One must come up with a centralized system and mechanism that could manage taxation, land, planning and human resources efficiently and flexibly, showing the advantages of combining executive management and market operation. This approach should enable Qianhai to develop quickly in a sound fashion. Second, one must speed up the planning and construction of major projects such as the Qianhai Bonded Port Area, the Shenzhen Hong Kong Western Express Railway, the Suiguanshen (Guangzhou, Dongguan, Shenzhen) Intercity Railway and Qianhai Port Complex. Third, one must take full advantage of the legislative right assigned by the National

People’s Congress to provide a legally sound environment for the development of Qianhai’s modern service industry. One must seek approval according to relevant rules if the legislation exceeds the scope of the central government’s authorization. According to the national law and circumstances, one must establish legal institutions and introduce civil commercial mediation institutions, strengthening the cooperation between Shenzhen and Hong Kong in legal affairs.

4. We would like to urge relevant departments of the State Council to perform their duties by providing support and guidance to the development of Qianhai. Following the spirit of the State Council’s approval, our commission will chair the coordination mechanism that is joined by relevant departments from the State Council, Hong Kong SAR Government, Guangdong Provincial People’s Government and Shenzhen Municipal People’s Government. This mechanism should help solve the problems faced when implementing the plan and provide active support in terms of policy implementation and project arrangement, creating a favorable policy environment that can help facilitate the development of Qianhai modern service industry. One must follow and analyze closely the implementation of the plan, with focus on supervision and evaluation. During the process of implementation, one must focus on studying the new situations, solving new problems, forming new conclusions and reporting to the State Council in a timely manner when faced with significant issues.

Attached: “The Overall Development Plan of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone”

National Development and Reform Commission of People’s Republic of China October 10, 2010

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Forward: Notice by Guangdong Provincial People’s Government regarding the State Council’s approval of “The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone”

(Guang Fa [2010] No.234 September 15, 2010)

Shenzhen Municipal People’s Government, Relevant Departments of the Guangdong Provincial People’s Government and Relevant Subordinate Institutions:

We are going to forward the “The State Council’s Approval of The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone” (State Council Document [2010] No. 86) to you, please carry out this plan with dedication.

“The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone” (hereinafter referred to as the “plan”) is an important document that is approved by the State Council to implement at a historic moment, the 30th anniversary of establishment of the Shenzhen Special Economic Zone. This is yet another significant move forward for the opening up process of the Shenzhen Economic Zone. The design and implementation of the plan will have a significant impact on the partnership model between Guangdong and Hong Kong, on the strengthening of such partnership, on facilitating the upgrade of industrial structure as well as speeding up the shift in economic development model. Shenzhen Municipal Government must bear the responsibility to implement the plan; one must lead by example with innovative thinking and realistic goals and fulfill his or her responsibility. One must implement the plan based on the positioning and development focuses laid out in the plan and

coordinate the overall implementation of the plan. Relevant departments of the provincial government must perform their duties by providing guidance and support to Shenzhen Municipal Government’s implementation of the plan and help them solve problems during that process. The Provincial Hong Kong and Macau Affairs Office must follow the progress of implementation of the plan and report to the Guangdong Provincial Government on the progress and important issues in a timely manner.

Guangdong Provincial People’s Government September 15, 2010

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The Overall Development Plan of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone

(October 2010)

Foreword

Ever since its inception some 30 years ago, the Shenzhen Special Economic Zone has always followed the policy decisions of the Central Committee and the State Council. Fully utilizing the geographical advantage of being close to Hong Kong, Shenzhen has always been the forerunner in the reform and opening up process, playing the leading role in the innovation of the national system and the manufacturing industry. At the moment we are going through an important phrase of the implementation of the scientific development outlook and the shift in economic development model. To promote the opening up and cooperation of the modern service industry is not only a strategic decision for our nation’s reform and opening up process, but also a new mission for the Shenzhen Special Economic Zone in a new era. “The Reform and Development Planning Outline for the Pearl River Delta Area (2008-2020)” (hereinafter referred to as the “Planning Outline”) and the “Overall Plan for Reform in Supporting Facilities” (hereinafter referred to as the “Overall Plan”) require Shenzhen to be a forerunner, using Qianhai as a driver to promote a closer partnership in modern service industry between Guangdong province and Hong Kong. For this reason, we have drafted the Overall Development Plan of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone”.

Located at the west part of Shenzhen and on the east side of the Pearl River, Qianhai is situated close to both Hong Kong and Macau. Qianhai boasts a planning area of 15 km² and a planning period until 2020. The Overall Development Plan of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone forms the basis for

all the action plans designed for the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone and all the related project planning.

1. Overall rationale Taking full advantage of the Special Economic Zone as a forerunner as well as the comparative advantages of Guangdong province and Hong Kong, the plan should strengthen the partnership between Guangdong province and Hong Kong and promote the development of modern service industry in Qianhai. Using the development of modern service industry to facilitate industrial structural upgrade, the plan should create a new condition for the nation’s opening up process and help the nation’s search of a more open economic system. It should also play a pivotal role in the nation’s shift in economic development model and the implementation of the scientific development outlook.

1.1 Significance of Qianhai Qianhai will play a pivotal role in the nation’s opening up process and help nurture new strengths in the face of global competitions. To promote development in modern service industry is required to help increase the openness of the nation’s economy. Using Hong Kong’s advantage in service industry and strengthening the partnership between Guangdong province with Hong Kong and Macau, the plan aims to develop an advanced modern service industry, to achieve breakthroughs in important areas, to increase global competitive advantage and the ability to allocate global resources in Qianhai. In doing so, Qianhai should be able to provide excellent service support to the nation’s manufacturing industry in the global market. Development in modern service industry will play a crucial role in facilitating industrial transformation and upgrade as well as in the search for a new economic development model. Development of the modern service industry is an effective way to speed up the shift in economic development model. Using the rapid development in modern service industry as an attraction, Qianhai will lure and nurture a group of manufacturing service industry that are internationally renowned with regional servicing ability. This should help create

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an exceptional assembly point for the modern service industry. Not only would this help facilitate transformation and upgrade of the world-class manufacturing base in the Pearl River Delta area and create a modern industrial system that is driven by modern service industry and advanced manufacturing industry, this would also be helpful to the nation’s search for a new economic development model. The plan should be conducive to raise the cohesion of regional partnership, creating a new driver for the partnership of Guangdong province, Hong Kong and Macau. The province of Guangdong, Hong Kong and Macau are our nation’s important international gateways. It is important that we push for a closer partnership among the province of Guangdong, Hong Kong and Macau, and raise the cohesion of regional partnership. Located at the core area of Guangdong, Hong Kong and Macau, Qianhai promote the development of modern service industry and nurture a regional modern service center while building a new driver for the partnership of Guangdong province, Hong Kong and Macau. This should be conducive to speeding up the economic integration of the Guangdong province, Hong Kong and Macau while raising the overall competitiveness within this region and creating a fine example of regional economic partnership and integrated development. The plan should be conducive to explore new means to cooperate with Hong Kong within the “One Country, Two Systems” framework. The modern service industry plays an integral part of Hong Kong’s economy and its market expansion is essential to Hong Kong’s economic development. To promote development of modern service industry in Qianhai, to promote implementation of the “Closer Economic Partnership Arrangement” (hereinafter referred to as CEPA), to speed up the integration of Hong Kong modern service industry with the mainland market, to expand room for development of Hong Kong’s service industry are all conducive to take advantage of the strengths of the two markets and two systems. This should boost the vitality of Hong Kong’s economy and its ability to fight off risk, consolidating Hong Kong’s position as an international financial center as well as its long-standing prosperity and stability. Hong Kong will prosper along with mainland China. The plan should be conducive to using Shenzhen Special Economic Zone as

a continuous forerunner while accumulating new experience with the scientific development outlook. Shenzhen Special Economic Zone will continue to be a forerunner in the reform and opening up process. Using the development of modern service industry as an opportunity and the internationalized advantage of Hong Kong, the plan will follow international successful cases and provide favorable policy environment as well as favorable system environment. Through innovation in policy and system, Shenzhen will undergo transformation in its development model and will accumulate new experiences under the scientific development outlook.

1.2 Foundation for cooperation Geographical Location. Qianhai boasts unique geographical and infrastructure advantages. Located at the intersection of the principal axis of development of the Pearl River Delta Region and the coastal functional expansion area, Qianhai is situated closed to the two airports in Shenzhen and Hong Kong respectively, as well as the Shenzhen-Zhongshan Cross-river Channel, Shenzhen West Port Area and Shenzhen North Station. The Guangzhou Shenzhen Coastal Expressway will go through Qianhai. All of the above-mentioned infrastructure will provide Qianhai with excellent means of transportation and logistical advantage; that should prove to be strategically important in the region of Guangdong, Hong Kong and Macau. Policy Environment. The “Planning Outline” and the “Overall Plan” specifically ask Shenzhen to strengthen its partnership with Hong Kong, to speed up the construction planning and systematic innovation in Qianhai. The “Guangdong-Hong Kong Partnership Framework Agreement” confirms Qianhai as a key area of partnership between Guangdong province and Hong Kong. Shenzhen and Hong Kong have already signed agreements in the areas of building infrastructure, industrial development and environmental protection, forming a policy framework for the partnership of Shenzhen and Hong Kong in Qianhai. Industry Environment. As an international financial, trade and logistic center, Hong Kong is one of the most developed areas for service industry in the world. The service industry accounts for 92.3% of Hong Kong’s GDP while it ranks

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within the top 10 cities for total service export. Shenzhen’s service industry has undergone rapid development in recent years while the added value of the service industry accounts of 53.2% of the city’s GDP. That means Shenzhen is ready to cooperate with Hong Kong at a higher level. The strengths of the service industries in Shenzhen and Hong Kong as well as the enormous demand coming from the world class manufacturing base in the Pearl River Delta region should form a powerful cornerstone for the joint development of modern service industry between Shenzhen and Hong Kong. Legal Environment. The National People’s Congress assigned the legislative right to the Shenzhen Special Economic Zone. Based on that assignment of right, Shenzhen has already established legislations in modern service industries such as finance and professional services. Qianhai should take full advantage of the special economic zone’s legislative right and create a legal environment that is conducive to the development of modern service industry. Innovative Environment. Shenzhen has explored and established system and mechanism that are conducive to have reform and innovation. This creates an environment that encourages innovation and nurtures a group of talented individuals that are brave enough and eager to innovate. Shenzhen is one of the most active areas for industrial innovation and that provides a solid foundation for the development and innovation of modern service industry in Qianhai.

1.3 Strategic position The guiding principle and strategic position of joint development of Qianhai modern service industry: Under the spirit of socialism with Chinese characteristic and using the theories by Mr. Deng Xiaoping and the “Three Represenatives” as guidance, one must implement the scientific development outlook and place emphasis on openness, cooperation, mutual benefit, systematic innovation, science and efficiency, high-end oriented, concentrated development, coordination and planning. Within the “One Country, Two Systems” framework, one must strengthen partnership with Hong Kong and create a more lively system and mechanism. With the manufacturing service industry as the focus, one should promote the concentrated development of modern service industry and facilitate the industrial structural upgrade, raising

the cohesion of the partnership among the province of Guangdong, Hong Kong and Macau while building a pilot area for modern service industry under the partnership between Guangdong and Hong Kong. Innovation area for modern service industry system/mechanism. Qianhai should actively explore the system/mechanism that could facilitate the development of modern service industry. It should create an environment that is in line with international standard that is conducive to industrial development. This should provide a new example for the development of modern service industry around the nation and new experience for building an open economy system. Centralized area for the development of modern service industry. Qianhai should focus its resources and high-end elements to develop its aggregate economy. To facilitate the concentrated development of modern service industry, to strengthen the ability for resource allocation and utilization, to build an important national base for the modern service industry and a powerful manufacturing service center. Qianhai should be the forerunner in driving the industrial upgrade of the nation’s modern service industry. Pioneering area for close partnership between Hong Kong and mainland China. Qianhai must actively implement the arrangements from CEPA while exploring the new model of partnership between Hong Kong’s service industry and their mainland counterpart. Both parties should continue their partnership and expand the international market while playing a leading role in pushing the partnership of service industries in Hong Kong and mainland China. Leading area for industrial upgrade in the Pearl River Delta region. Shenzhen and Hong Kong should build a base for modern service industry: to continue to improve service, to improve function of service, to lead the industrial structural upgrade in the Pearl River Delta region, to speed up the construction of modern industrial system.

1.4 Development goals In 2020, Qianhai should complete the construction of a world class modern service industry cooperation zone with excellent infrastructural facilities. It should also boast a system/mechanism and legal environment that are conducive

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to the development of modern service industry. Together they should form a sound, highly international and influential modern service industry system, bringing together a group of world-renowned modern service corporations. Qianhai should become one of the most important manufacturing service centers in Asia Pacific and should play a leading role in the global modern service industry as well as being an important global base for service trade.

1.5 Major industries Based on its infrastructural conditions and needs for industrial development, Qianhai should take full advantage of Qianhai Port that connects both Shenzhen and Hong Kong, the unique features of Qianhai Bay as well as the composition of “3 Areas and 1 Zone”. Business Central Area. The Business Center Area is located between the south of Shuangjie River and north of Haibing Boulevard. Following the experiences of construction of other advanced city centers and international management, Qianhai should focus its development on modern service industries such as finance, information, trade and accounting and attract corporations to set up their headquarters there, building a core business area in Shenzhen and Hong Kong. Bonded Port Area. The Bonded Port Area is located at the south of Chanwan Road. The Qianhai Bay Bonded Port Area should focus its development on service industries such as modern logistic, shipping service, supply chain management and innovative finance. Integrated Development Area. The Integrated Development Area is located between the south of Haibing Boulevard and north of Chanwan Road. It is aimed to supplement the development of the Business Central Area and the Bonded Port Area and acts as an integrated industrial development area. Costal Recreation Zone. The Costal Recreation zone is a coastal area that is located at the west of Tinghai Road. It is aimed to build a high quality coastal public area in Qianhai.

2. To speed up the development of the financial industry Under the guidance of the national financial regulatory institutions and based on the

nation’s overall scheme for the opening-up process of the financial industry, in accordance with the principle of opening-up and cooperation, within the CEPA framework and within the scope of Guangdong province, Qianhai must explore ways to strengthen the partnership of Shenzhen-Hong Kong in the financial industry and ways to lower the entry threshold for Hong Kong’s financial institutions and financial service, supporting new financial reform projects to take place in Qianhai. One must create a favorable financial environment to attract a wide range of financial institutions to set up offices in Qianhai. Qianhai must strengthen its financial services and turn itself into one of the nation’s finest window that is open to the outside world.

2.1 To promote financial innovation and partnership with focus on cross- border Renminbi business. One should continue to expand the pilot area for cross-border RMB business and take advantage of geographical advantages of Shenzhen as a pilot area for cross-border RMB business while facilitating the development of Hong Kong as an offshore RMB market. Qianhai should explore ways to open up capital projects and the internationalization of RMB. Within the CEPA framework, relevant departments should design a pilot program for the Hong Kong-Shenzhen cross-border bank loan business. Under manageable risk condition, one should introduce more pilot programs. Based on the management principles of foreign direct investment, one should introduce pilot program that allows foreign shareholders of foreign corporations to invest directly in RMB from abroad. One should encourage financial institutions that are qualified as “Hong Kong Service Supplier” under the CEPA framework to set up headquarter or branch office in Qianhai. One should also support the establishment of institutions such as finance leasing companies, auto finance companies, consumer finance companies and small loan companies to help strengthen the market operation. Qianhai should support the strategic transformation of financial institutions and banking partnership that encourages closer cooperation in the field of finance between Shenzhen and Hong Kong. One should encourage financial institutions from the banking sector to support the development of modern service industry through innovation in financial products, business flow and internal management mechanism in Qianhai. One should provide greater credit support for high-tech industries; one should support

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the founding of the guarantee and re-guarantee institutions and financial institutions that work mainly for small and medium enterprises (hereinafter referred to as SMEs). This should help create a multi-domain and multi-level financing service system for the SMEs and help explore a new mechanism to regulate financing service for the SMEs.

2.2 To enhance steady partnership of Shenzhen and Hong Kong in the capital market According to the overall planning for the opening-up of the nation’s financial industry, Qianhai should gradually open up Shenzhen’s capital market and gradually expand and strengthen the partnership between the two stock markets in Shenzhen and Hong Kong. The two stock markets can complement each other, achieving mutual benefit and win-win situation. One should support eligible Mainland corporations that are listed in Hong Kong to get listed in Shenzhen’s stock exchange; one should also encourage Hong Kong and Shenzhen’s Stock Exchanges to launch exchange-traded index funds (ETFs) that track the each other’s index. One should encourage qualified Hong Kong financial institutions to set up joint venture securities company, joint-venture securities investment advisory firm and joint venture fund management company in Qianhai. One should support the qualified joint-venture securities companies to expand their business in Shenzhen. One should actively explore if the securities companies founded in Shenzhen and fund management firms with brand office in Hong Kong to conduct domestic securities investment business. One should improve the training, exchange and partnership of high-end professionals from the financial industry in Shenzhen and Hong Kong. communication and innovation cooperation. One should support companies from the Shenzhen High-Tech Zone to enter the expanded pilot program for agency share transfer system and support Shenzhen’s SMEs to speed up their process of getting listed in the capital market.

2.3 To vigorously promote the building of pilot area for innovative development of insurance industry. One should support having reform and innovative insurance projects in Qianhai. According to the State Insurance Regulatory policies and regulations, one should study and come up with policies that allow Hong Kong’s insurance agencies to enter Qianhai, to relax the restrictions for

Hong Kong resident and institutions to enter Qianhai as an insurance intermediary. One should seek to set up captive insurance company, pilot area for mutual insurance companies and to develop a reinsurance market vigorously. One should continue to promote the pilot program for technological insurance, providing risk insurance service to technology corporations. One should support setting up of commercial car insurance pricing mechanism and pilot program for insurance marketing systematic reform. One should encourage qualified insurance institutions from Shenzhen and Hong Kong to seek resource integration and business partnership in terms of product development, sales distribution and insurance claims.

3. The development of modern logistics industry Based on the objective of building a global logistics center by Shenzhen and Hong Kong, Qianhai should promote closer partnership in modern logistics industry between Shenzhen and Hong Kong and form a concentrated area of high-end logistics industry. The goal is to build a major supply chain management center and a shipping related service base, strengthening the servicing ability offered to the manufacturing industry in the Pearl River Delta region.

3.1 To create a regional manufacturing organization center and international supply chain management center. The Qianhai bonded port area can follow international practices and actively seek innovation in the policy and system that govern the custom special supervised areas. One could better the market entry mechanism and supporting policy mechanism, focusing on the development of financing advisory, financing guarantees, settlement, customs clearance, information management and supply chain management companies of related value-added services. One should encourage the entry of integrated service corporations that provide e-commerce companies with logistic and related valued-added services. One should encourage Shenzhen Port to become a terminal for export and import of commercial vehicles and to focus on the development of automobile Ro-Ro logistic service. One should encourage local business to undertake outsourcing service such as procurement and sales, to set up a management platform for international procurement, international distribution and

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global distribution center.

3.2 The active development of supporting service for port shipping. Working closely with the international shipping center in Hong Kong, one should push for a closer partnership of airports and ports in Hong Kong and Shenzhen, expanding the functions of port services. To build a Hong Kong and Shenzhen international shipping service platform in Qianhai is to provide convenience in international shipping service to Hong Kong’s shipping operators. One should support the development of aviation trade market, aviation material rental, aviation material transactions, and a variety of innovative services such as civil aircraft financing and leasing. One should actively encourage the shipping business management center, document management center, settlement center, shipping intermediary institutions to set up office and to do business in Qianhai. One should promote the development of shipping and aviation finance, the formation of shipping industry fund, shipping financial leasing companies and shipping insurance institutions to promote the development of civil aircraft and aviation material financial leasing business. One should allow corporations that are registered in Qianhai with demand for offshore international trade, decent operating performance and corporate credit to set up dedicated offshore or special accounts in domestic banks in advance. One should support the financial institutions that serve the aviation and shipping industries in Qianhai to borrowing money and issuing bonds in the banking sector.

4. The development of information services Qianhai should coordinate the planning and construction of information infrastructure, the development of software, IT services, information content services, to enhance the information transmission services. To speed up the convergence of the network economy and the real economy, one must use the penetrating IT technology to lead the development and upgrade of manufacturing industry.

4.1 High level of development of information transmission services. One must vigorously develop the new generation of information transmission services such

as the next generation of telecommunications networks, radio networks and the internet. Qianhai should try to integrate the three aforementioned networks and build an internationally advanced digital city. One must actively promote partnership between the basic network operators and the media as well as the value-added services companies. One should strengthen the partnership between telecom operators in mainland China and their counterparts in Hong Kong to explore new business opportunities. Qianhai should focus on the development of the value-added services for both internet and mobile communication to attract excellent domestic and foreign value-added service providers, content providers and system integrators to venture into Qianhai.

4.2 To develop software and IT services industry. One should encourage the development of systems integration, IT consulting and operational services. Qianhai should focus on the development of trusted computing, intelligent network technology, cloud computing technology and their applications. To speed up the concentrated development of the software industry and to push for the construction of the Shenzhen-Hong Kong sub-park of Shenzhen Software Park will help create an influential software and information service industry zone. Qianhai should support the research and development of industry application software and help the software industry to establish overall advantages in terms of system integration and software solutions in industries such as logistics and finance. Qianhai should speed up the development of new businesses such as mobile e-commerce, mobile multimedia, mobile search and mobile payment.

4.3 To build the Southern logistics information exchange hub and international e-commerce center. Qianhai should support the research and development and industrialization of key software technology for internet of things; it should speed up the development of the “Internet of Things”. One should establish standard systems for the classification and coding, collection, exchange and security of the Shenzhen-Hong Kong logistics information. That should improve sharing of information and resources for departments in the fields of logistics, ports, banks, industry and commerce as well as taxation. One should build a public logistics information platform, the Southern Logistics Information Exchange Hub. One

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should also encourage the logistics corporations to strengthen the research and development of new technologies such as intelligent transportation and logistics management software, raising the level of innovation and logistics management. One should speed up the establishment of a rational layout of digital certificate security certification system, promoting the application of electronic signatures and authentication in the logistics information exchange and e-commerce. Qianhai should focus on the development of e-commerce, building a safe, convenient and multi- currency business transaction application platform. This should strengthen the integration with the internationally well-known e-commerce platforms and create the Qianhai International E-commerce Center.

4.4 To focus on development of content service industry. One should focus on the development of data analysis and consulting services, actively bringing high-end international data service corporations into Qianhai while fostering local businesses. Qianhai should become more and more international by building a regional data analysis and consulting service center. One should focus on the development of new integrated media that combine new technologies such as broadband communications, mobile multimedia broadcasting and digital television. One should strengthen the depth of development and utilization of the internet and digital content to attract domestic and foreign well-known internet companies to set up their headquarters or regional headquarters in Qianhai. One should focus on market segments such as online gaming, online music, online video, online media, and online advertising. Qianhai should implement advanced projects such as mobile internet content products, development of online game engine and platform. One should actively develop derivative products and services such as web content, animation, games, facilitating the development of related industries.

5. The development of technology services and other professional services One should assemble technology services and other professional service resources to build a regional technology innovation service center and a manufacturing professional services base, providing strong support to the industrial upgrade and self-innovation in the Pearl River Delta.

5.1 Give priority to the development of technological innovative service. Based on the innovation needs within the Pearl River Delta region, one should actively promote the partnership of Shenzhen and Hong Kong in technological service. One should support scientific organizations from Hong Kong to set up subsidiary bodies in Qianhai, to participate in national and local technology projects, and to explore a new model for technology funds from Shenzhen and Hong Kong to support innovative services. One should support the development of the Shenzhen-Hong Kong cross-border inspection and testing services and explore a new model of customs supervision, to provide convenience for the technological innovation in Shenzhen and Hong Kong. One should focus on the development of high-tech services, building technology transfer platform and entrepreneurial investment platform, to encourage the establishment of technological institutions that conduct technical assessment, transfer of property rights and conversion of research results. One should support research and design, and design services such as the research and development as well as industrial design and test analysis. One should speed up the construction of Shenzhen-Hong Kong Innovation Circle and promote technology transfer and innovation conversion within the Pearl River Delta region.

5.2 To vigorously develop creative design services. Using the advantages of Shenzhen as a city of design, one should design the Sheznhen-Hong Kong cultural and creative industries guidance catalogue. One should build a cultural and creative industrial zone that could represent the future development trend and could attract entry of domestic and foreign well-known design agencies as well as well-known cultural intermediary service institutions. Qianhai should promote the development of cultural and creative industries and create an international cultural and creative center.

5.3 To vigorously develop professional services. One should relax the entry restrictions to a certain degree and seek to decentralize the approval authority. One should focus on the development of high-end consulting services and exhibition services such as planning, certification, management, business development strategy, corporate public relation, marketing and brand operation. One should speed up the development of human resources service, to encourage the

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development of architectural and engineering services, to support the development of health care services, to support Hong Kong service suppliers to establish professional service institution in the form of sole proprietorship, joint venture and partnership while providing personalized and high-end professional service. One should study to optimize the approval process, to shorten the approval period and to develop accounting and legal service.

6. To promote regional cooperation Within the Guangdong - Hong Kong partnership framework and the Guangdong - Hong Kong partnership Joint Conference mechanism, one should continue to strengthen the partnership between governments of Shenzhen and Hong Kong and come up with policies and measures to promote the development of Qianhai. One should actively explore the partnership mechanism and model of supervision of Qianhai’s major industries. One should strengthen the exchange and partnership of the legal industries from Shenzhen and Hong Kong. One should support charitable statutory bodies from Hong Kong to set up service platform in Qianhai. One should also explore the possibility of having Hong Kong residents to be involved in the management of Qianhai and encourage the business community and professionals from both Shenzhen and Hong Kong to have exchange and to establish partnership. The founding of the Qianhai Partnership and Development Forum provides an open platform to discuss the development of Qianhai. The strengths of Qianhai’s regional manufacturing service center should drive the industrial development, transformation and upgrade within the Pearl River Delta region. They should also drive the integration process of Shenzhen, Dongguan and Huizhou while strengthening the regional infrastructure such as transportation as well as urban construction. One should enhance interaction and partnership with other domestic economic centers, to broaden the scope of partnership, to promote industrial upgrade of domestic service industries, to strengthen exchanges and partnership with cities that have international and developed service industries in order to embrace international industrial shift and to attract regional headquarters of multinational companies to set foot in Qianhai. Qianhai should play an active role as an important driver of partnership between China and ASEAN; one should continue to seek new models of partnership and to expand the scope of partnership.

7. Protection measures 7.1 To strengthen infrastructure protection 7.1.1 The construction of transport facilities. Using the Guangzhou- Shenzhen expressway- the Hong Kong-Shenzhen Western Corridor, the Guangzhou- Shenzhen Expressway, Jihe Expressway and Shenzhen Cross River Tunnel as the basis, Qianhai is connected to the regional highway system. One should push for the planning and construction of Nanping Expressway and Haibing Boulevard to strengthen the transport connection with other major areas of Shenzhen City. Combined with the planning and construction of the Guangzhou - Dongguan - Shenzhen intercity rail lines, one should begin preliminary study of building a connecting line between the two airports in Shenzhen and Hong Kong and strive to strengthen the transport connection of Qianhai with Hong Kong and the Pearl River Delta region. Combining the construction of Hong Kong-Shenzhen Western Express Line and the Qianhai Terminal Building, the Qianhai Port will be an integrated functional area that is used for port inspection, transportation hub and commercial office. One should improve the urban road and build a high standard trunk road network system as well as a high density of internal road network. One should improve the design of road landscape. One should implement the bus-comes-first policy; using the rail transportation as the backbone, Qianhai should focus on the development of public bus. One should build bus transfer station, to strengthen the convergence of the railway transportation and the bus, to achieve “zero distance transfer”. One should improve the slow-moving transport system while creating great walking space for pedestrians.

7.1.2 Construction of two major municipal facilities. In accordance with the principles of quality of water supply, one should construct water supply pipe network in Qianhai and provide high quality drinking water. Thanks to the Nanshan Sewage Treatment Plant Phase II, Qianhai will build proper sewage treatment facilities and water reuse system. The floodway is designed based on the strongest flood that comes every 100 years whereas the seawall is designed based on the strongest tide that comes every 200 years. One should build energy-saving, intensive electricity supply as well as energy security system and to promote construction of smart grid. One should also build high level of

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information infrastructure, and actively develop the next generation of radio and television networks while speeding up the deployment of next-generation internet. One should promote the use of fiber cable and 3G network while building internet, communication networks and broadcast networks that are in line with international standard to promote construction and sharing of information infrastructure and other facilities.

7.1.3 Protection of ecological environment. Next to the three rivers of Shuanggjie River, Guimiaoqu and Chanwanqu, the large and small Nanshan as well as the coastline Qianhai Bay form a green corridor. One should strictly follow the environmental function zoning and water function zoning, setting strict environmental standards for construction projects. One should raise the efforts to control water pollution and continue to improve the water and air quality in Qianhai, leading to a better environment. Qianhai should focus on the development of green transportation, green buildings while actively promote projects such as renewable energy, water conservation and water recycling. Qianhai will become an energy-saving and environment-friendly area that is known for its low energy consumption and low emission.

7.2 Management of development One should strengthen the partnership between Shenzhen and Hong Kong. Based on the characteristics and law of development of manufacturing service industry, one should come up with new management models of development, high-standard construction and high-performance management while building a world-class modern service zone.

7.2.1 Management model of development. One must adhere to the principles of overall planning, coordinated development, government-led and market operation to develop Qianhai in an orderly fashion. The Qianhai Construction Authority handles all the major issues related to the development, construction and management in Qianhai. The management institution is established based on the principles of having a streamlined, efficient and flexible mechanism to explore and to improve the operation model of the statutory body that is

responsible for the management and development in Qianhai. One will establish the Qianhai Development Company to handle land development and construction of infrastructure. Taking full advantage of the market mechanism, one must attract domestic and foreign corporations from modern service industry to Qianhai. One should explore partnerships such as leasing development of specific projects, wholly owned business institutions and joint venture development.

7.2.2 The development of the management system. One should make efforts to explore system/mechanism that could facilitate the development of modern service industry; Qianhai is encouraged to follow international practices in areas that do not have a clearly defined policy or regulation and come up with legislations through the Special Economic Zone. Shenzhen is encouraged to come up with specific rules for implementation in areas that the nation only has regulations in principle. In areas where the nation already has specific regulations and the approval management of non-financial industrial products, Qianhai management institution has been assigned the management authority that is equivalent to that of cities separately listed on the State Plan. For special industries such as the financial industry, the regulatory body can set up specific institution for supervision.

7.3 Policies and measures One should actively explore the system/mechanism and policies that are conducive to the development of modern service industry, turning Qianhai into one of the best business environments in the world.

7.3.1 To create a proper and efficient government. One should strengthen the partnership between the governments of Hong Kong and Shenzhen in the field of public services, to promote the joint development of Qianhai service industry, to improve the exchange and partnership between Shenzhen and Hong Kong in urban management while improving the standard of urban management. One must build a clean and highly efficient service management institution, to reduce and to regulate administrative review; the goal is to provide convenient one-stop

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service in setting up corporation, acquiring business license, introduction of qualified personnel from abroad and registration of property right.

7.3.2 To build a fine example of socialist legal environment. One should supervise economic activities within Qianhai closely; within the scope of the legislative authority granted by the National People's Congress to the special economic zone, one must design regulations to promote development of Qianhai’s modern service industry; to strengthen partnership of civil mediation mechanism between Shenzhen and Hong Kong; in accordance with national laws and regulations, one should improve relevant legal working mechanism.

7.3.3 Tax relief policy. Within the framework of national tax reform, one should allow Qianhai to be the forerunner in the tax system reform of the modern service industry. One should promote closer partnership between Shenzhen and Hong Kong for the development of modern service industry and attract various kinds of high-level personnel to work in the Qianhai to create a good social and economic environment. For insurance companies registered in Shenzhen that provide international shipping insurance, their revenue is exempt from the business tax. For corporations that are registered Qianhai that are engaged in offshore outsourcing service business, their revenue is exempt from the business tax. For modern logistic corporations that are registered in Qianhai and meet the specified conditions, they can enjoy relief on business tax. One should actively study and improve the tax policy for the finance leasing companies. When the time is right, one can set up a pilot area in Qianhai; combined with the preferential policies for national e-commerce model city, one must explore the fiscal and taxation policies to encourage the development of e-commerce. One must come up with an evaluation standard for technically advanced service corporations. Those who have passed the evaluation can enjoy income tax rate of 15% for corporations; employee education and training expense that does not exceed 8% of the corporation’s total salary can be deducted from the corporation income tax.

7.3.4 Favorable land policy. Based on the needs for development and construction in Qianhai, one can use reclamation land for development and construction under

the premise of not exceeding the total land size for construction under the overall planning for land use, not affecting the safety during flood discharge, not causing damage to marine eco-environment.

7.3.5 To provide a convenient environment for port service. One should strengthen the partnership of ports in Shenzhen and Hong Kong and explore the partnership model in inspection and quarantine, border and port sector regulatory as well as the establishment of port supervision sharing mechanism. One should speed up the construction of “electronic port” and the process of customs clearance to create a more convenient customs clearance services for the people in Qianhai as well as goods and vehicles going in and out of Qianhai.

7.3.6 The convergence of social security services. One should encourage cooperation in education, health care, social security and other aspects to attract foreign staff to work and to live in the Mainland. Qianhai’s corporations should sign a labor contract with employees from Taiwan, Hong Kong and Macau and pay social insurance premiums in accordance with regulations. Mainland’s social insurance agencies should provide high quality, efficient and convenient social insurance management services for employees in Hong Kong in accordance with the law. One should create a good environment for qualified employees and establish an excellent mechanism for modern service industry professionals to gather, to study and formulate all kinds of attracting high-level, highly skilled service professionals supporting measures to strengthen the information exchange and personnel training of the Shenzhen and Hong Kong. One should actively explore the qualifications of practitioners of the two mutual recognition, and create a good and convenient working and living environment, increase investment in education and training, and take fully advantage of the colleges and universities, vocational schools and research institutions, to strengthen the service-related disciplines, to speed up the training of skilled personnel that can adapt to the concentrated development of Qianhai’s modern service industry and innovative personnel training system, to provide personnel support for the construction of Qianhai modern service industry cooperation zone.

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Guangdong province and relevant departments of the State Council should fully understand the great significance of the Shenzhen-Hong Kong partnership in the development of modern service industry in Qianhai and strengthen the planning and implementation of the overall development plan, combined with their respective functions, the development of specific policy measures to support the development of Qianhai’s modern service industry. Led by the National Development and Reform Commission, the coordination mechanism also includes relevant departments of the State Council, government of the Hong Kong Special Administrative Region, Guangdong Provincial Government and Shenzhen Municipal Government. These parties should be able to provide guidance and coordination on major issues with regards to the development of Qianhai. One should strengthen the supervision and review of the implementation of the plan. The city of Shenzhen is going to further improve the working mechanism, to define working responsibilities and to pay close attention to promote the implementation of the plan.

To promote the development of modern service industry in Qianhai is a major initiative in the new era of reform and opening up process. One must take the implementation as an opportunity to further free up the mind, to blaze new trails and to continue to play the leading role of the Special Economic Zone as a pioneer and a forerunner, leading to further glory of the Special Economic Zone.

Approval of The State Council on “The Supporting Policies of the Development and Opening up of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen”

(Guo Han [2012] No.58 June 27, 2012)

Guangdong Provincial People’s Government and National Development and Reform Commission, we have received the document Request Letter for Instruction in Support of the Relevant Policies in the Development and Opening up of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (draft for deliberation) (Fa Gai Di Qu [2012] No.767) from the National Development and Reform Commission (NDRC) and our reply is hereby given as follows:

1. Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone shall be supported to adopt pilot policies even more special than those of Special Economic Zones. It will be built into an innovation area for systems and mechanisms of modern service industry, a cluster area in the development of modern service, a pilot area in close co-operation between the Mainland and Hong Kong, and an industry upgrade leading area in the Pearl River Delta.

2. Qianhai’s financial reform and innovation shall be supported as a forerunner to build it into an experimental and exemplary zone for our financial industry in opening up to the outside world.

2.1 Qianhai shall be permitted to explore and expand the channels for the contra flow of RMB from abroad, in support of the development of offshore RMB business in Hong Kong in order to establish a new experimental cross-border RMB business innovation zone.

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2.2 The banking institutions in Qianhai shall be supported to issue RMB loans of overseas projects and actively study the way that the Hong Kong’s banking institutions can issue RMB loans to the enterprises and projects in Qianhai in the framework of the Closer Economic Partnership Arrangement (hereinafter referred to as CEPA).

2.3 The eligible enterprises and financial institutions registered in Qianhai shall be supported to issue RMB bonds in Hong Kong within the amount ceiling authorized by the State Council, which will be used for the development of Qianhai.

2.4 The setting up of equity investment fund of fund in Qianhai shall be supported.

2.5 The innovation and development of foreign equity investment funds as well as those from Hong Kong in Qianhai and their vigorous exploration of new models for foreign equity investment enterprises shall be supported in the settlement of exchange with capital funds, investment, fund management, etc.

2.6 The opening up of the financial market in Qianhai to Hong Kong shall be further promoted. The appropriate lowering of entry conditions for Hong Kong financial enterprises shall be supported to set up institutions to conduct financial businesses in Qianhai under CEPA.

2.7 In light of the national overall plan and the requirements for orderly development, Qianhai shall be supported to set up various kinds of innovation- oriented financial institutions conducive to amplifying the functions of the market, and to explore and advance the development of the trading platform for new types of factors. The reform of financial systems and mechanisms and the innovation of business models in Qianhai with a focus on serving the real economy shall also be supported.

2.8 Hong Kong financial institutions and other financial institutions at home and abroad shall be supported to set up international or national management and business headquarters in Qianhai to speed up raising the level of financial internationalization and promote the cluster development of the financial industry

and the headquarters economy in Qianhai. The specific measures for implementing the above-mentioned policies will be formulated by the National Development and Reform Commission, the People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission respectively after consultation with competent agencies according to the procedures.

3. Qianhai shall be supported to play a pilot role in exploring the tax system reform of the modern service industry in the framework of the national tax system reform.

3.1 On the basis of formulating an industry entry catalog and a preferential catalog, as regards the eligible enterprises in Qianhai, corporate income tax shall be levied at a reduced tax rate of 15%. The industry entry catalog and the preferential catalog will be formulated by the National Development and Reform Commission and the Ministry of Finance respectively with other competent agencies.

3.2 The subsidies obtained by the high-level overseas talents and short-supplied talents who work in Qianhai and satisfy the needs of the planned industrial development of Qianhai, which are temporarily granted by Shenzhen Municipal People’s Government for the negative balance of personal income tax in mainland China and abroad, shall be exempted from personal income tax.

3.3 The modern logistics enterprises registered in Qianhai and meet the specified conditions shall enjoy the business tax policy for pilot logistics enterprises.

4. Cooperation in legal affairs shall be enhanced.

4.1 The ways for Hong Kong arbitration agencies to establish affiliated agencies in Qianhai shall be explored.

4.2 Mainland China and Hong Kong law firms shall cooperate more closely to explore and improve the patterns of joint operation of law firms between them and to better implement the various measures on opening up to Hong Kong under CEPA and its

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supplementary agreements.

5. Qianhai shall be supported to build a Shenzhen-Hong Kong special zone for human resources, establish and improve a mechanism conducive to the gathering of human resources in the modern service industry, and create a comfortable working and living environment.

5.1 The management mechanism shall be innovated and the relevant policies and measures shall be studied and formulated to facilitate foreign talents, the talents of Hong Kong, Macao and Taiwan, overseas Chinese and returned overseas talents to work and live in Qianhai and facilitate their immigration.

5.2 Qianhai shall be brought into the scope of the pilot program of mutual recognition of professional qualifications in Guangdong province approved by the State Council.

5.3 The professionals with competence certificates in Hong Kong shall be permitted to directly provide professional services, the boundary of which is confined to Qianhai, to the enterprises and residents in Qianhai. The specific policies, measures and regulations shall be formulated by departments in charge if the trade concerned after consultation with competent agencies.

5.4 The professionals from Hong Kong with the certificates of Certified Public Accountant of China shall be permitted to serve as partners of mainland China accounting firms. The pilot trial procedures will be formulated by Shenzhen and will be implemented in Qianhai after the approval of the Ministry of Finance.

6. Qianhai shall be supported to implement pilot programs of cooperation between Shenzhen and Hong Kong in education, medical care, etc.

6.1 Hong Kong service providers shall permitted to set up solely-invested international schools in Qianhai with approval. The students recruited can include the children of the overseas Chinese with the right of long-term residence abroad working in

Qianhai and those of the returned Chinese with overseas education background.

6.2 Hong Kong service providers shall be permitted to establish hospitals with sole proprietorship in Qianhai.

7. Cooperation in the telecommunications industry shall be strengthened.

7.1 Hong Kong and Macau telecom operators shall be permitted to establish joint ventures of telecommunications business in Qianhai with those from mainland China in light of CEPA.

7.2 Innovations in the management modes of telecommunications operation shall be encouraged and the local telecommunications enterprises shall be supported to develop preferential telecom tariff schemes according to the local conditions of Qianhai.

7.3 The construction of a dedicated channel for international communication in Qianhai shall be supported to satisfy the needs for international communications of the enterprises in the zone.

8. Guangdong Provincial People’s Government needs to step up efforts in leadership, and to focus on the related work of organization and implementation. The Ministerial Joint Conference System for the construction of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone shall bring the role of coordination into full play. The relevant departments of the State Council shall intensify their guidance and services and promote the implementation of related polices and measures so as to create a sound environment for the development and opening up of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone.

State Council of the People’s Republic of China June 27, 2012

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Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Objectives of Reform and Innovation in 2014

(Shen Ban Zi [2014] No. 4 January 27, 2014)

To fulfil the spirits of the the Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee, focus on overcoming the difficulties of the development of Qianhai, maximize the cohesion of reform and innovation efforts and mobilize all positive factors, and to build up Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as Qianhai) as the most honest, fairest, most efficient and the most professional institutional innovated modern service industry zone, with the best image and of the highest international standard, the following objectives have been formulated.

1. To build an open, safe and efficient regional financial system 1) To establish Shenzhen Qianhai Financial Holdings as a platform for nurturing a new financial ecosystem.

2) To apply to the People’s Bank of China for broadening the range of funding sources and the application range of cross-border RMB loans, and for allowing overseas financial institutions to release loans. The usages of abovementioned loans must comply with the requirements stipulated in the “Industry Entry Catalog of the Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone”, and must not be used for investment in securities, derivative products or entrusted loans.

3) To apply to the People’s Bank of China, the State Administration of Foreign Exchange for permitting residents and non-residents in Qianhai to open domestic and foreign currencies free trade accounts in banks in Qianhai, to apply for

cross-border financing, guarantees and other services, to freely convert between domestic and foreign currencies within the account according to the offshore market prices. To realize free transfer amongst funds in Qianhai resident free trade accounts and offshore accounts, non-resident accounts outside Qianhai, non-resident free trade accounts and other resident free trade accounts. Incomes generated from Qianhai enterprises’ export can be deposited in free trade accounts. To establish a monitoring mechanism to monitor RMB exchange between the Qianhai resident free trade accounts and non-resident free trade accounts.

4) To apply to the People’s Bank of China, the State Administration of Foreign Exchange for allowing financial institutions in Qianhai, according to provisions of the People’s Bank of China, through the establishment of separated accounting unit, to open domestic/foreign currency free trade account for residents and non-residents in Qianhai. The risk exposure resulted from free exchange between domestic and foreign currencies in separated accounting unit should be hedged in the regional or foreign markets. Separated accounting units based on their risk management needs, according to the provisions, can engage in derivatives transactions in international financial market. Once approved, the separated accounting unit can carry out lending or repurchase transactions in the domestic interbank market within certain limits.

5) Allowed Qianhai banking institutions on the basis of three principles, “understanding of customers”, “understanding of business” and “due diligence”, with instructions regarding receiving and making payments submitted by corporations in Qianhai (except for the RMB settlement business for exports trading on the key regulatory list) and by individuals, directly engage in regular, direct-investment cross-border RMB settlement business.

6) To allow cross-border direct investments between Qianhai and offshore markets not to be subject to previous approvals, and to make/receive relevant cross-border payments and make foreign exchange with banks directly.

7) To allow overseas headquarters of PRC multinational corporations registered in

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Qianhai to manage of capital in foreign currencies as pilot programs in a centralized manner. Institutions in Qianhai, based on real currencies and duration needs, can carry out risk hedging management in Qianhai or offshore according to relevant provisions.

8) To apply to the People’s Bank of China, the State Administration of Foreign Exchange for setting up an international trade currency settlement centre for foreign exchange management and RMB management in Qianhai Bay Bonded Port Area as a pilot program, to encourage domestic enterprises that “go global” to develop global procurement and offshore trading business.

9) To encourage enterprises in Qianhai, based on business needs, to carry out two-way RMB capital pool business within the group, to provide payment/receipt of payment services under the current account for its domestic and foreign affiliates.

10) To explore innovative ways of cross-border RMB trade settlement by allowing cross-border e-commerce export enterprises registered in Qianhai to collect RMB trading funds from offshore third-party payment agencies through Hong Kong banks and domestic agent banks, on the conditions that Hong Kong is the location of the third party offshore trading fund payment agency and that cross-border electrical integrated information platform provides a full range of trading data.

11) To pioneer in the establishment of joint venture securities companies, joint venture fund companies and other financial institutions in Qianhai in the framework of CEPA and ECFA after the China Securities Regulatory Commission has issued provisions regarding the establishment of joint venture securities companies and of joint venture fund companies.

12) To pioneer to carry outcross-border securities investment business in Qianhai and a trial Qualified Domestic individual investors system (QDII2), to allow qualified Qianhai enterprises to make foreign security investments and foreign derivative investments according to relevant provisions.

13) To explore the issuances of private debt, micro-finance asset securitization products, accounts receivable asset securitization products and other cross-border transactions of RMB financial products in Qianhai.

14) To innovate in foreign exchange quota management framework under the capital account, to manage cross-border capital low with netting practice, to manage financial products according to respective category, to reuse the quota according to the transaction status.

15) To adopt different management measures for foreign financial investors and strategic investors: If RMB private equity companies registered in Qianhai, with foreign investment ratio not exceeding 10%, invest in industries which is foreign investment-encouraged, -permitted or -restricted, the investors will be treated the same as domestic investors. If private equity companies registered in Qianhai, with foreign investment ratio not exceeding 5%, invest in industries yet opened, the investors will be treated the same as domestic investors.

16) To promote the establishment of Internet financial institutions such as micro-loan companies, third party payment institutions and e-insurance companies initiated by private capital and based on large e-commerce data; to establish e-financial industry associations.

17) To establish new insurance agencies such as captive insurance companies and mutual insurance companies in Qianhai, to encourage foreign reinsurance companies and reinsurance brokerage companies to set up branches in Qianhai, to promote cross-border RMB reinsurance business between Shenzhen reinsurance agencies and Hong Kong insurance agencies.

18) To establish Qianhai financial supervision and coordination mechanism, to invite the Shenzhen branch of People’s Bank of China, Shenzhen Banking Regulatory Bureau, the Shenzhen Securities Regulatory Bureau, Shenzhen Insurance Regulatory Bureau to set up offices in Qianhai.

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2. To promote free trade between service industries in Guangdong and Hong Kong 19) Based on Shenzhen-Hong Kong cooperation meeting mechanism system, we shall speed up the forming of and improve the Shenzhen-Hong Kong Joint Working Group in Qianhai (including five working groups, i.e. financial policies, the legal environment, professional services and CEPA pilot, investment promotion, planning and construction), to regularly study and coordinate in order to solve major issues in Shenzhen-Hong Kong cooperation in the development and construction of Qianhai.

20) To actively seek the support of national ministries to allow apply national treatment to foreign investment in the region (including the purchase and sales of equity of companies listed in the Qianhai Equity Trading Center) before access permission as a pilot program; to study and formulate a negative list of foreign investment in the region (including the purchase and sales of equity of companies listed in the Qianhai Equity Trading Center), to explore the establishment of foreign investment facilitation management measures.

21) To coordinate the resolution of cross-border trade and e-commerce exporters tax rebate settlement seek to obtain cross-border trade import business e-commerce pilot qualifications. To establish an integrated service information platform which is integrated customs supervision, inspection and quarantine, tax rebate and cross-border payments, to address the needs of import and export business of Qianhai cross-border trade e-commerce.

22) To kick-start financial leasing SPV (special purpose vehicle) business, and to formulate Qianhai financial leasing industry development policies.

23) To seek to set up domestic factoring pilots, to formulate and introduce Qianhai factoring development policies.

24) To develop the proposal of core platform in Qianhai for Shenzhen-Hong Kong

shipping services; to explore to set up high-end shipping service base.

25) To support Qianhai to set up a bonded exhibition/trading center for high-end products in the Qianhai Enterprise Dream Park.

26) To build up the Qianhai Shenzhen-Hong Kong Youth Entrepreneurs and Innovation Hub, and to draw young entrepreneurs to run their business in the Hub. Imported apparatus, equipment, supplies and samples for Qianhai Shenzhen- Hong Kong Youth Entrepreneurs and Innovation Hub are treated as temporary import and export goods in the first two years since the date of import. In case that goods cannot be transported out of the country due to damages in research and development progress, the agency shall promptly report to the customs, a process the re-export procedures with certificates issued by relevant departments.

27) To attract more Hong Kong people to work in Qianhai, explore the way to pay Hong Kong Mandatory Provident Fund for employees of Qianhai entities, who are Hong Kong permanent residents.

28) Through cross-border delivery and payment, promote Hong Kong’s mobile operators to release “Qianhai Card”, to achieve a consistent level of fees between mobile communications services in Hong Kong and Shenzhen.

3. To build a demonstration zone of socialistic legal system 29) On the foundation of Qianhai Court, we shall establish Qianhai Commercial Court. Centered innovation and enhance the credibility of the judiciary, innovate trial mechanism in Qianhai, establish a commercial trial system with Shenzhen-Hong Kong cooperation characteristics and fitting to the need of modern service industry development in Qianhai.

30) To identify Hong Kong laws consultation mechanism to improve the litigation or arbitration progress for any contract disputes in Qianhai that are applicable to Hong Kong laws.

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31) To attract international professionals to participate in international commercial arbitration in Qianhai as directors, arbitrators, mediators, agents and etc., to enhance the credibility of Qianhai in international arbitration. To innovate cooperation model amongst Guangdong, Hong Kong and Macau arbitration and dispute mediation mechanisms, to build a diversified, international arbitration and dispute mediation mechanisms to provide arbitration and mediation services for Guangdong, Hong Kong and Macau enterprises.

32) To make innovation in anti-corruption models, developed and implemented “Institutional Safety Nets for the Opening and Development of Qianhai Cooperation Zone”, streamline activities, authorities and institutions, to compile “Guidelines for Controlling Corruption Risks of Posts”, to establish routines of anti-corruption education. To explore the integrated use of all kinds of anti-corruption monitoring model, and seek to create a pilot area of anti-corruption management.

4. To set up a pilot area of national talent management reform 33) To set up Professional Advisory Committees, i.e. finance, planning and construction, legal, in Qianhai. In these Committees, Hong Kong members account for at least one-third of the professional team.

34) To explore the establishment of talent bidirectional flow mechanism amongst statutory bodies, public institutions, and academy institutions.

35) Relying on the Guangdong, Hong Kong and Macau talent Cooperation Demonstration Zone platform,make use of regular communication and coordination mechanism between Hong Kong and Shenzhen governments, expand areas of cooperation in Shenzhen and Hong Kong people, deepen cooperation with institutions and industry associations in Hong Kong, establish Shenzhen and Hong Kong postdoctoral exchange program in Qianhai.

36) Create clusters of Qianhai modern service industry and international high-end talents, targeting to attract about 5,000 high-demanded and high-level talents.

37) To attract about 5,000 high-demanded and high-level talent with about 5,000 flats and living facilities.

5. To solve certain bottleneck problems 38) In accordance with the concept of compact city, coordinate with China South Aviation Authority to approve Qianhai Aviation Assessment, to efficiently utilize Qianhai’s vertical space.

39) To close the Pingnan railway acquisition negotiation as soon as possible, to confirm the disposal proposal.

40) With reference to the Shenzhen Bay model and using coastal recreation zone as the “front-line”, adopt advance high-tech means, innovate the border security management model, set up Qianhai Police Agencies. Strategically solve the historical problem on army barracks and land issues outside Qianhai.

41) To deepen reform and innovation on land management, to promote the decisive role of market in land resource allocation in Qianhai. To complete Qianhai land preparedness work as planned.

42) Complete the preliminary work of three finger-shaped and one circle-shaped corridors in Qianhai. Simultaneously, implement water pollution control work in the area besides Qianhai. Complete temporary water quality improvement projects in Guimiao Drainage.

43) Complete the preliminary work of major construction projects such as express way improvement on Yueliangwan Avenue, Mawan (including the cross-sea tunnel) and Haibin Avenue (Western part to Zhenhai Road).

44) Complete the south extension of Metro Line 5 and west extension of Metro Line 9, station location research and other preparatory work, finalize the proposals of

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south extension of Metro Line 5 and Qianhai section in west extension of Metro Line 9, station location and structural convergence. Simultaneously, complete the of preliminary work of Tinghai Avenue (Guiwan Section) municipal facilities, unit construction and new rail engineering design, to achieve economical and efficient use of land, underground space and orbit the site seamlessly.

45) With experiences gained from the pilot project, establish management system for innovative construction, introduce professional bodies in Hong Kong construction field, practicing professionals in Qianhai to work or start a business.

46) To complete the construction of the Enterprise Dream Park, and to introduce about 200 representative companies to settle in Qianhai.

To further implement the objectives of the General Secretary Xi Jinping’s important speech while he visited Qianhai, respective unit should keep the momentum of Qianhai’s innovation and reform, keep the sense of responsibility, keep catching up the time. According to the tasks, timeline clarified in this document, perform the duty efficiently, and speed up the implementation.

Office of Qianhai Development Leadership Group should play a co-ordination role. The Municipal Government supervision departments shall identify the “objectives” listed in the documents as the municipal priorities; strengthen supervision and inspection to ensure the tasks are completed on schedule.

Interim Measures on the Administration of Cross-Border RMB Loans for Qianhai

(Shen Yin Fa [2012] No.173 December 28, 2012)

Chapter 1: General Provisions

1. These Measures are formulated according to the spirit of the relevant documents such as the Overall Development Plan of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone and the Approval of The State Council on “The Supporting Policies of the Development and Opening up of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen” for the purposes of promoting the further development of offshore RMB business in Hong Kong and supporting the development and establishment of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as “Qianhai”).

2. For the purposes of these Measures, cross-border RMB loans for Qianhai shall mean the RMB funds borrowed by domestic enterprises that meet the conditions from banks operating RMB business in Hong Kong. Domestic enterprises that meet the conditions (hereinafter referred to as the “borrowing enterprises”) shall mean enterprises incorporated in Qianhai and actually operating or investing in Qianhai.

3. Borrowing enterprises shall operate the relevant business and perform the obligation of providing corresponding business information and the record-filing obligation in accordance with the provisions of these Measures.

4. For the purposes of these Measures, domestic settlement banks shall mean banking financial institutions in Shenzhen that conduct fund settlement for cross-border RMB loans in Qianhai. Domestic settlement banks shall operate the relevant business and perform the corresponding audit obligations in accordance with the provisions of

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these Measures.

5. Shenzhen central sub-branch of the People’s Bank of China (hereinafter referred to as the “Shenzhen branch of the People’s Bank of China”) shall, under the guidance of the head office of the People’s Bank of China, supervise cross-border RMB loan business in Qianhai in accordance with these Measures.

Chapter 2: Use, Terms and Interest Rates of Loans

6. Shenzhen branch of the People’s Bank of China shall implement balance management over RMB loans obtained by enterprises in Qianhai from Hong Kong based on the development status of RMB business in Hong Kong, the construction and development need in Qianhai and the need for macroeconomic regulation and control in China.

7. Cross-border RMB loans for Qianhai shall be used for construction and development in Qianhai provided that such usage conforms to the relevant policies of the State.

8. The terms of cross-border RMB loans for Qianhai shall be determined independently by the lenders and the borrowers within a reasonable scope based on the actual usage of the loans.

9. The interest rates of cross-border RMB loans for Qianhai shall be determined independently by the lenders and the borrowers and shall be filed with Shenzhen branch of the People’s Bank of China before the granting of the loans.

Chapter 3: Handling of Business

10. Borrowing enterprises shall submit the record-filing application to Shenzhen branch of the People’s Bank of China through domestic settlement banks before handling the business of cross-border RMB loans for Qianhai.

11. Borrowing enterprises shall, in accordance with the provisions of the Administrative

Measures for RMB Bank Settlement Accounts, submit materials such as business licenses to domestic settlement banks to apply for the opening of general deposit accounts to be used specifically for depositing the funds of cross-border RMB loans for Qianhai that are remitted from Hong Kong. Such accounts shall not be used for handling cash receipt and payment business.

12. Borrowing enterprises shall handle the repayment of the principal and interest of cross-border RMB loans for Qianhai by presenting materials such as loan contracts, letters of payment orders and tax payment evidence to domestic settlement banks.

13. The cross-border payment and settlement of cross-border RMB loans for Qianhai shall be handled through overseas clearing banks for RMB business or domestic agent banks.

14. When handling the business of cross-border RMB loans for Qianhai, borrowing enterprises and their domestic settlement banks shall report balance of international payments in accordance with the relevant provisions such as the Measures for the Declaration of Statistics on Balance of International Payments.

15. Domestic financial institutions and enterprises may, in accordance with the relevant provisions such as the Guarantee Law of the People’s Republic of China, the Property Law of the People's Republic of China and the Notice of the People's Bank of China on Clarifying the Relevant Issues on Cross-Border RMB Business, provide guarantee for cross-border RMB loans for Qianhai in forms such as guarantee, mortgage or pledge.

Chapter 4: Business Supervision

16. Domestic settlement banks shall examine the truthfulness of the use of funds of cross-border RMB loans by borrowing enterprises.

17. Domestic settlement banks shall seriously perform the information submission obligations and submit information about the opening of general deposit accounts

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opened in accordance with these Measures and information about the receipt and payment of cross-border RMB funds handled through such accounts to the information management system for the cross-border receipt and payment of RMB in a timely, accurate and complete manner.

18. Domestic enterprises that have to open RMB accounts in Hong Kong for the handling of cross-border RMB loans for Qianhai shall, within five working days after the occurrence of the business, report to Shenzhen branch of the People’s Bank of China for record-filing.

19. Domestic settlement banks shall earnestly perform the anti-money laundering and anti-terrorist financing obligations and prevent illegal and criminal activities such as money laundering and terrorist financing in accordance with the Anti-Money Laundering Law of the People’s Republic of China and the relevant provisions of the People’s Bank of China.

20. Shenzhen branch of the People’s Bank of China shall, in accordance with these Measures, conduct off-site regulation and on-site examination of the handling of the business of cross-border RMB loans for Qianhai.

Chapter 5: Supplementary Provisions

21. Where borrowing enterprises or domestic settlement banks violate the relevant provisions of these Measures, Shenzhen branch of the People’s Bank of China may suspend their handling of the business of cross-border RMB loans for Qianhai. The violation of the provisions of other laws and regulations shall be handled in accordance with the relevant provisions.

22. Shenzhen branch of the People’s Bank of China shall be responsible for interpreting these Measures.

23. These Measures shall come into effect on the date of issuance.

Detailed Rules of the Interim Measures on the Administration of Cross-Border RMB Loans for Qianhai

(Shen Ren Yin Fa [2013] No.3 January 7, 2013)

1. These Rules are formulated according to the Interim Measures on the Administration of Cross-Border RMB Loans for Qianhai (hereinafter referred as the Measures) and relevant laws and regulations, in order to specify the launch of the cross-border RMB loans for Qianhai.

2. Cross-border RMB loans for Qianhai defined in the Measures and these Rules shall mean the RMB funds borrowed by domestic enterprises that meet the conditions from banks operating RMB business in Hong Kong. Domestic enterprises that meet the conditions (hereinafter referred to as the “borrowing enterprises”) shall mean enterprises incorporated in Qianhai and actually operating or investing in Qianhai.

3. Shenzhen central sub-branch of the People’ Bank of China (hereinafter referred to as the “Shenzhen branch of the People’ Bank of China”) shall, measure the balance over RMB loans obtained by enterprises in Qianhai from Hong Kong based on the development status of RMB business in Hong Kong, the construction and development need in Qianhai and the need for macroeconomic regulation and control in China. Execution shall be carried forward after record-filing to the PBOC.

4. Cross-border RMB loans for Qianhai shall be used in accordance with the requirements of the Qianhai admittance catalogue and priority should be given to the needs of loans for import and other external payment.

5. Borrowing enterprises shall follow the provisions of the Measure and these rules by presenting materials such as loan record-filing, usage of the capital, the repayment

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of the principal and interest and etc. to domestic settlement banks. Domestic settlement banks shall be coordinated in the examination of the truthfulness and record-filing of the use of funds.

6. Domestic settlement banks shall examine the truthfulness of cross-border RMB loans by borrowing enterprises on procedures of loan record-filing, usage of the capital, the repayment of the principal and interest and etc., according to the provisions of the Measure and these rules. Relevant information and materials shall be submitted to the Shenzhen branch of the People’s Bank of China.

7. Borrowing enterprises shall submit the following application to Shenzhen branch of the People’s Bank of China through domestic settlement banks before handling the business of cross-border RMB loans for Qianhai: 7.1 Copy of Business License and Certificate of Institution Credit Code; 7.2 Loan Intention Letter or other comparable materials; 7.3 Loan Purpose Explanation Letter; 7.4 Loan Contract (can be submitted within 3 days of official granting of loans); 7.5 Corporation Credit Report, Major Shareholders Credit Report and Individual Credit Report of the Legal Representatives; 7.6 Other documents required by the Shenzhen branch of the People’s Bank of China; Domestic settlement banks shall examine the truthfulness and completeness of the record-file of cross-border RMB loans by borrowing enterprises. The Shenzhen branch of the People’s Bank of China shall notify domestic settlement banks whether record-file is permitted within 5 working days since application acceptance.

8. Borrowing enterprises shall submit materials including Qianhai Cross Border RMB Loan Record Form issued by the Shenzhen branch of the People’s Bank of China to apply loans from Hong Kong banks with RMB business. Qianhai Cross Border RMB Loan Record Form is valid for 3 months.

9. Borrowing enterprises shall, in accordance with the provisions of the Administrative Measures for RMB Bank Settlement Accounts, submit materials

such as business licenses to domestic settlement banks to apply for the opening of general deposit accounts to be used specifically for depositing the funds of cross-border RMB loans for Qianhai that are remitted from Hong Kong. Such accounts shall not be used for handling cash receipt and payment business. The deposit interest rate of such accounts in principle shall be executed by the demand deposit interest rate policy announced by the People’s Bank of China.

10. Before managing the credited funds, the borrowing enterprises shall submit loan contract, loan purpose examination letter, Qianhai Cross Border RMB Loan Record Form issued by the Shenzhen branch of the People’s Bank of China and other required materials, to domestic settlement banks. Domestic settlement banks shall notify Hong Kong lending banks to initiate fund transfer procedure upon verification.

11. Before spending the loan, the borrowing enterprises shall submit proof document of the usage of the fund to domestic settlement banks. Upon verification, feedback shall be submitted to Hong Kong lending banks by domestic settlement banks. The loan payment shall be transferred within the day after the acquisition of the paper consent of loan payment from Hong Kong lending banks.

13. The cross-border RMB loan shall not be used to invest in marketable securities and financial derivative market, shall not be invested in entrusted loans, shall not be purchased financial products and shall not be purchased real estate for non-self-use.

14. Domestic settlement banks shall conduct inspection on the flow and usage of Qianhai cross-border RMB loan. A complete set of business ledger and archive management system of Qianhai cross-border RMB loan shall be set up. Relevant certificate and materials shall be preserved in a careful manner.

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15. Domestic settlement banks shall report the following information as required: 15.1 Submit information about the opening of general deposit accounts opened in accordance with the Measures and information about the receipt and payment of cross-border RMB funds handled through such accounts to the information management system for the cross-border receipt and payment of RMB, the information of cross-border RMB credit financing business and other relevant information of Qianhai cross-border RMB business in a timely, accurate and complete manner; 15.2 Submit information about the Qianhai cross-border RMB business to the Shenzhen Risk Early Warning System of Borrowing Enterprises in a timely, accurate and complete manner; 15.3 Submit the lending situation of Qianhai cross-border RMB to the Shenzhen branch of the People's Bank of China within 10 working days of each quarter, including information on the name of the borrowing enterprises, loan terms, interest rate, loan amount and usage etc.; 15.4 Report any irregularities and violations of the cross-border RMB loan to the Shenzhen branch of the People's Bank of China in a timely manner.

16. Shenzhen branch of the People's Bank of China shall, in accordance with the Measures and these rules, conduct off-site regulation and on-site examination of the truthfulness of the business of cross-border RMB loans for Qianhai. Domestic settlement banks and the borrowing enterprises shall be included in the examination.

17. Shenzhen branch of the People’s Bank of China shall be responsible for interpreting these Measures.

18. These rules shall come into effect on the date of issuance.

Guiding Opinions by the People's Bank of China on Enforcing “The Several Opinions by the General Office of the State Council on Supporting the Stable Growth of Foreign Trade”

(June 11, 2014)

To the China Development Bank, all policy banks, State-owned commercial banks, joint-stock commercial banks and the Postal Savings Bank of China; the Shanghai Head Office, all branches, business management departments, central sub-branches of provincial capitals (capitals of autonomous regions) and central sub-branches of all cities at the sub-provincial level of the People's Bank of China; the China Foreign Exchange Trade System (National Interbank Funding Center), and the National Association of Financial Market Institutional Investors, with a view to enforcing the Several Opinions of the General Office of the State Council on Supporting the Stable Growth of Foreign Trade (Guo Ban Fa [2014] No. 19), and supporting the stable growth of foreign trade, these Guiding Opinions are hereby put forward as follows:

1. Financing channels available to enterprises shall be further broadened. Banking institutions are encouraged to actively innovate financial products and services, further expand the business of financing against export credit insurance policies, and make flexible use of working capital loans, import and export credit loans, factoring loans, bills discounting, loans against documents under letters of credit, external guarantee, etc., to step up credit extension support for importers and exporters with orders and profitable performance as well as integrated foreign trade service enterprises, and promote the export business of small and micro enterprises. It is important to support qualified enterprises to issue debt financing instruments of non-financial enterprises, and promote the mutual cooperation of collective notes for small and medium-sized enterprises (“SME”), SME regional prime notes, credit

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enhancement and other various innovations, so as to broaden the financing channels available to importers and exporters, including SMEs. 2. The role of policy-oriented financial initiatives in supporting foreign trade shall be fully displayed. The Export-Import Bank of China is encouraged to disburse more preferential export buyers' credit and preferential loans, simplify the procedures for examining and approving projects and funds under preferential export buyers’ credit and preferential lending, and extend more support to the “go global” strategy of enterprises, especially the import and export credit needs of SMEs. Policy-oriented financial institutions are encouraged to step up support for trade in services, and support the construction of key projects for trade in services.

3. Financial leasing business shall be actively developed. It is important to actively develop financial leasing business whose subject matters are tangible movable assets to support the import and export of large equipment. In addition, qualified financial leasing companies and other non-banking financial institutions are actively supported to issue financial bonds, participate in the pilot project of credit asset securitization, or adopt other means, to expand financing channels.

4. The process of RMB settlement for cross-border trade and investment shall be simplified. Banking institutions may, under the premise of the three principles of “understanding of customers”, “understanding of business” and “due diligence”, directly handle RMB cross-border settlement business under current account and direct investment according to the collection and payment instructions given by domestic enterprises.

5. The business of centralized operations of cross-border RMB funds shall be launched. Multinational enterprise groups may, in accordance with relevant provisions of the People’s Bank of China, carry out centralized operations of cross-border RMB funds, including two-way cross-border RMB fund pool business, centralized collection and payment of cross-border RMB under current account, etc. The headquarters of a multinational enterprise group may designate a member enterprise with independent legal person qualifications that is duly registered and established within the territory of the People’s Republic of China and that engages in actual operations or

investment (including a finance company) as the national or regional responsible enterprise for the centralized operations of cross-border RMB funds. Such a responsible enterprise may, when handling the centralized collection and payment of cross-border RMB under current account, adopt the settlement method of netting to net the total amount of receipt of the enterprise group against its total amount of expenditure under current account or the receipt of each member enterprise against its own expenditure. The obligations for reporting balance of payments statistics shall be performed pursuant to the provisions on declaration of balance of payments with regard to the business of centralized operations of cross-border RMB funds.

6. RMB settlement shall be launched for individual cross-border trade business. Banking financial institutions may provide settlement services for the cross-border RMB business of trade in goods and trade in services carried out by individuals. They may, under the premise of the three principles of “understanding of customers”, “understanding of business” and “due diligence”, directly handle RMB settlement of cross-border trade for clients against their valid personal identity proofs or industrial and commercial business licenses, and may require clients to submit relevant business documents where necessary.

7. Banking institutions are supported to cooperate with payment institutions in carrying out cross-border RMB settlement business. Banking institutions may cooperate with payment institutions that have obtained the business licensing of “Internet payment” pursuant to the law to provide RMB settlement services for the cross-border trade in goods and trade in services of enterprises and individuals. Banking institutions shall enter into cross-border e-commerce RMB settlement business agreements with payment institutions, and submit the same to the local branches of the PBOC for record-filing.

8. It is important to press ahead the construction of the credit investigation system of foreign trade enterprises. Efforts shall be made to enforce the Outline of the Social Credit System Construction Planning (2014-2020), promote various departments and industries to establish and improve the credit records of members of the public that they obtain during administrative and law enforcement operations, effectively

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strengthen the disclosure of government information, push for the inter-departmental sharing of credit information, make more use of credit services and products in administrative law enforcement, and vigorously promote the construction of the social credit system that covers foreign trade enterprises. It is also essential to promote the collection and application of the credit information of members of the public, including that of foreign trade enterprises, support the initiative to facilitate the construction of the database for the credit records of foreign trade enterprises, and provide foreign trade enterprises with basic financial services support.

9. The RMB exchange rate formation mechanism shall be further improved. It is necessary to continue improving the RMB exchange rate market-oriented formation mechanism, let the market play a bigger role in determining exchange rates, and promote the balance of international receipts and payments. According to the development of the foreign exchange market and overall economic and financial situations, efforts shall be made to enhance the two-way floating flexibility of RMB exchange rates, and keep RMB exchange rates largely stable at a reasonable and balanced level. Moreover, it is vital to further play the role of the market in determining exchange rates, improve the floating exchange rate system that is based on market supply and demand and is subject to management, and continue to promote the development of the markets for direct trading of RMB against other currencies.

10. More exchange rate risk hedging instruments shall be made available. It is crucial to step up innovation of foreign exchange products, increase trading varieties on the foreign exchange market, and study the innovation of products of foreign exchange option portfolios and futures business, in a bid to form a product mix featuring the combination of a variety of spot, forward, futures and options products, as well as the combination of exchange rate products and interest rate products. It is required to allow more participants on the foreign exchange market, lower the barriers to entry of the foreign exchange derivatives of commercial banks, and appropriately relax the eligibility requirements for small and medium-sized banks to engage in forward foreign exchange settlement and sales. In addition, the construction of trading, liquidation, information and other infrastructure shall be improved to better meet the

exchange rate risk hedging needs of enterprises and residents that are based on the principle of real needs.

11. A full range of financial services shall be provided for enterprises to "go global". Domestic financial institutions shall be supported to accelerate overseas expansion through cross-border merger and acquisition (“M&A”), cross-border RMB business, etc., develop client-centric and globally-unified credit extension, marketing, management and service systems, provide domestic and overseas M&A loans, syndicated loans and other indirect financing and direct financing, support large enterprises that are capable of M&A and are industry leaders to extend the industrial chain through strategic M&A, steadily extend supply chain financing to overseas markets, drive the export of Chinese equipment, materials, products, standards, technologies and services, and nurture multinational enterprise groups with core competitiveness. Enterprises with global footprints are encouraged to issue RMB-denominated bonds on offshore markets to fund overseas projects in full. Furthermore, it is important to encourage the development of various forms of RMB overseas investment and lending funds and M&A funds, so as to support enterprises to “go global” to promote industrial upgrading, and facilitate the sustained development of foreign trade.

All branches of the PBOC shall forward these Guiding Opinions to the banking financial institutions and payment institutions within their respective jurisdictions.

People’s Bank of China June 11, 2014

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Provisions on Centralized Operation and Management of Foreign Exchange Capital by Transnational Companies (Trial Implementation)

(Hui Fa [2014] No.23 April 18, 2014)

Chapter 1: General Provisions

Article 1 With a view to further facilitating trade and investment and serving real economy, these Provisions are hereby formulated.

Article 2 Transnational companies may, according to business needs, open master accounts for domestic foreign exchange funds with the banks of the places where they are located for centralized operation and management of foreign exchange funds of domestic member enterprises, and for handling the business such as the centralized receipt and payment of foreign exchange funds for current accounts and netting settlement.

Article 3 Transnational companies may, according to business needs, open master accounts for international foreign exchange funds with the banks of the places where they are located for centralized operation and management of foreign exchange funds of overseas member enterprises and the foreign debt funds borrowed from other overseas institutions.

The funds among master accounts for international foreign exchange funds and the funds between master accounts for international foreign exchange funds and domestic foreign exchange accounts of overseas institutions or overseas funds can be transferred freely. The funds in master accounts for international foreign exchange funds shall not

use the quota of the foreign debts of the enterprise but shall be subject to foreign debt registration as required.

At most 10% of the deposits collected by a domestic bank through master accounts for international foreign exchange funds may be used domestically. When quota of the short-term foreign debt balance is used, the funds in excess of 10% of the deposits collected through the master account for international foreign exchange funds may be used domestically.

Article 4 The net financed-in amount between a master account for domestic foreign exchange funds and a master account for international foreign exchange funds shall not exceed the centralized foreign debt quota of domestic member enterprises and the net financed-out amount between such two accounts shall not exceed the centralized outbound lending quota of the domestic member enterprises.

Article 5 A transnational company may, according to business needs, open a master account for domestic foreign exchange funds and a master account for international foreign exchange funds at the same time or choose to open one of the accounts.

Where a master account for domestic foreign exchange funds and a master account for international foreign exchange funds are opened at the same time, the financed-out and financed-in funds of foreign debts and outbound lending shall be handled through the master account for international foreign exchange funds. Where only a master account for domestic foreign exchange funds is opened, the financed-out and financed-in funds of foreign debts and outbound lending may be transferred from overseas directly into or out of the master account for domestic foreign exchange funds within the quota specified in Article 4 hereof. Where only a master account for international foreign exchange funds is opened, foreign debts and outbound lending shall be handled through such account.

Transnational companies and banks shall properly handle quota control and ensure that the financed-out or financed-in funds of foreign debts or outbound lending at any point in time do not exceed the specified quota.

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Article 6 A bank with which the account is opened shall be a bank rated as class B or above in the annual appraisal of implementation of provisions on foreign exchange administration in the preceding three years. The responsible enterprise shall, in principle, choose at most three domestic banks that are qualified for the business of settlement and sale of foreign exchange as the banks for handling the centralized operation and management of funds and the banks with which the accounts are opened shall operate and manage the relevant account transactions in accordance with these Provisions.

If a bank with which the account is opened is rated lower than B (exclusive) after it has commenced the business of centralized operation and management of funds, it may continue the original business.

Chapter 2: Record-Filing of Business

Article 7 A transnational company satisfying the following conditions may open master accounts for domestic foreign exchange funds and master accounts for international foreign exchange funds according to business needs:

7.1 It has real business needs; 7.2 It has sound foreign exchange funds management framework and internal control; 7.3 It has established corresponding electronic system for internal management; 7.4 Its scale of revenue and expenditure in foreign exchange for the last year exceeds US$100 million (calculated on consolidated basis for domestic member enterprises participating in the centralized operation and management of foreign exchange funds); 7.5 It has not committed any major violation of foreign exchange laws or rules in preceding three years (or since the date of its establishment if it has existed for less than three years). If it is within the List of Enterprises for Foreign Exchange Receipts and Payments under Trade, it shall be a Category-A enterprise according to the classification result for trade in goods; and 7.6 It satisfies other prudent regulatory requirements of the administration of foreign exchange.

Article 8 To open master accounts for domestic or international foreign exchange funds, the responsible enterprise shall apply to the branch or foreign exchange administrative office of the State Administration of Foreign Exchange in the place where it is located (hereinafter referred to the “branch of SAFE”) for record-filing and shall submit the following materials:

8.1 Application for record-filing, including, among other things, the basic information and business needs of the transnational company, the basic information of the responsible enterprise, the name list and shareholding structure of the participating enterprises, and the power of attorney issued by the transnational company to the responsible enterprise. If the application covers the business of centralized receipt and payment of foreign exchange for current accounts and netting settlement, a list specifying the names, organizational codes, places of registration and other relevant information of the domestic and overseas participating member enterprises is required; 8.2 Relevant certification materials, including the business licenses of the responsible enterprise and domestic member enterprises with the corporate seal of the responsible enterprise affixed thereto, finance business license and business scope approval document (to be provided by finance companies). For an overseas member enterprise, only the certificate of incorporation is required; 8.3 The business model, operational process, internal control system, organizational framework, system construction, risk control measures, data monitoring methods and the plan for technical service guarantee, etc. jointly formulated by the enterprise and the bank with which the account is opened; the signed Confirmation on Processing the Centralized Operation and Management of Foreign Exchange Funds by Transnational Companies (see Annex 1); If accounts are to be opened with two or more banks, the distribution of the centralized foreign debt quotas and outbound lending quotas among these banks shall be specified; and 8.4 Other materials as required by the administration of foreign exchange.

Article 9 Where the responsible enterprise applies for centralization of foreign debt quotas for the first time, it shall submit the following materials:

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9.1 Written application, including a list that states the names, organizational codes, places of registration of the member enterprises participating in the centralization of foreign debt quotas, the available foreign debt quota of each member enterprise, the registered contract amount and withdrawn amount of foreign debts and the centralized foreign debt quotas; and 9.2 The information print interface of the quota available for borrowing, foreign debt contract registration list and the foreign debt business line query list in foreign debt business query of the capital item information system of the member enterprises participating or partially participating in the concentration of foreign debt quotas. Special and sensitive sectors are not allowed to participate in and share the centralized foreign debt quotas.

Article 10 The administration of foreign exchange shall complete the record-filing procedures and issue record-filing notification within 20 working days from the date of submission by the responsible enterprise of complete application materials for record-filing. The record-filing notification shall include, among other things, the financed-in and financed-out quotas of foreign debts and outbound lending.

Article 11 If the responsible enterprise is a finance company, it shall comply with the provisions of the industrial competent department and manage the business of centralized operation and management of foreign exchange funds by transnational companies and other business (including its own assets-liabilities business) under separate accounts.

Article 12 If there is any change to the bank with which the account is opened, the responsible enterprise, the member enterprises or other relevant matters during the period of the business, the record-filing of the change shall be made with the branch of SAFE one month in advance.

If the bank with which the account is opened is changed, the following materials shall be submitted:

12.1 Application for change of the bank with which the account is opened, mainly

including the reason for the change, the proposed bank with which the account is opened and the method for disposing of the balance in the original account; 12.2 The business model, operational process, internal control system, organizational framework, system construction, risk control measures, data monitoring methods and the plan for technical service guarantee, etc. of the proposed bank with which the account is opened; 12.3 The bank statement of the balance in the original account with the business seal of the bank affixed thereto; 12.4 The signed Confirmation on Processing the Centralized Operation and Management of Foreign Exchange Funds by transnational companies; and 12.5 Other materials as required by the administration of foreign exchange.

If there is change in the foreign debt and outbound lending quotas or the business types of the member enterprises or the responsible enterprise, the photocopy of the record-filing notification shall be submitted in addition to submitting the materials according to Articles 8 and 9 hereof.

Article 13 If the classification result for trade in goods of the responsible enterprise is downgraded to Category B or C, the administration of foreign exchange shall, in light of the seriousness of the rule-breaking circumstances, give notice to the transnational company requiring the transnational company to change the responsible enterprise and submit application materials anew or cancel the qualification of the responsible enterprise for the business. If the classification result for trade in goods of any other member enterprise is downgraded to Category B or C, the responsible enterprise shall terminate the business thereof and go through the record-filing of the change in member enterprises with the administration of foreign exchange.

Article 14 If the responsible enterprise commits any violation of foreign exchange rules, the qualification of the responsible enterprise for the business shall be canceled from the date of the effectiveness of the punishment. If a member enterprise commits any violation of foreign exchange rules, the qualification of the member enterprise for participating in the business shall be canceled from the date of the effectiveness of the punishment.

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Chapter 3: Management of Master Accounts for Domestic or International Foreign Exchange Funds

Article 15 The responsible enterprise shall open the master accounts for domestic and/or international foreign exchange funds with banks by presenting the record-filing notification. The master accounts for domestic and international foreign exchange funds may be multi-currency accounts and allow for daylight and overnight overdraft. The overdraft amount can only be used for outbound payment and the foreign exchange funds once received shall be first used for repayment of the overdraft amount. Sub-accounts are allowed under said accounts according to business needs.

There is no limit on the number of the master accounts for domestic foreign exchange funds or the number of the master accounts for international foreign exchange funds, provided that the prudent regulatory requirements shall be complied with.

Article 16 Scope of receipts and payments of the master accounts for domestic foreign exchange funds

1. Scope of receipts 1.1 Foreign exchange earnings for current accounts obtained by domestic member enterprises from overseas directly; 1.2 Transfer-in of the foreign exchange accounts for current accounts, capital accounts, asset realization accounts, reinvestment special accounts and foreign debt accounts of the domestic member enterprises; 1.3 Foreign debts borrowed from overseas and the repaid principal of the outbound lending with interest thereon that are transferred into the master accounts for international foreign exchange funds within the specified quotas; 1.4 Deposits from purchase of foreign exchange (funds obtained from purchase of foreign exchange for outbound payments under current accounts or funds for outbound lending or purchase of foreign exchange for repayment of foreign debts); 1.5 Principal of financial products with interest thereon; and 1.6 Other receipts verified and approved by the administration of foreign exchange.

If a transnational company has no master account for international foreign exchange funds, the scope of receipts of its master accounts for domestic foreign exchange funds shall also include the foreign debt funds borrowed from overseas within the quota or recovered principal of outbound lending with interest thereon within the specified quotas.

The foreign exchange loan borrowed by a transnational company from a domestic depositary financial institution is not allowed to enter the master accounts for domestic funds (unless it is used for repayment of foreign debts or foreign exchange loan under outbound lending, etc.).

2. Scope of payments 2.1 Outbound foreign exchange payments for current accounts by domestic member enterprises; 2.2 Transfer-out to the foreign exchange accounts for current accounts, capital accounts, asset realization accounts, reinvestment special accounts and foreign debt accounts of the domestic member enterprises; 2.3 Outbound lending and the repaid principal of foreign debts with interest thereon that are transferred out to the master accounts for international foreign exchange funds within the specified quotas; 2.4 Foreign exchange settlement; 2.5 Transfer-out of the principal of financial products; 2.6 Payment of foreign-currency deposit reserve; and 2.7 Other payments verified and approved by the administration of foreign exchange.

If a transnational company has no master account for international foreign exchange funds, the scope of payments of its master accounts for domestic foreign exchange funds shall also include the outbound lending and the repaid principal of foreign debts with interest thereon within the specified quotas.

Article 17 The centralized foreign debt quotas of a transnational company = the foreign debt quotas of the domestic member enterprises participating in the centralization the registered medium-term and long-term foreign debt contract amount of the domestic

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member enterprises participating in the centralization the outstanding balance of the registered short-term foreign debts of the domestic member enterprises participating in the centralization the foreign debt quotas retained by the domestic member enterprises participating in partial centralization.

Article 18 The responsible enterprise may centralize all or part of the foreign debt quotas of the member enterprises.

Where the responsible enterprise centralizes all the foreign debt quotas, no member enterprise may borrow foreign debts itself effective from the date of submission of the application. If the responsible enterprise centralizes part of the foreign quotas, the remaining foreign debt quotas shall remain to be subject to the prevailing provisions on foreign debt administration. The specific administrative measures shall be formulated by the administration of foreign exchange of the place where the responsible enterprise is located upon verification with the administrations of foreign exchange concerned and consultation with the responsible enterprise and the banks with which the responsible enterprise opens accounts. In addition, the administrations of foreign exchange concerned shall check and verify foreign debt data with one another on a quarterly basis.

Article 19 The responsible enterprise shall handle foreign debt registration for the foreign exchange funds financed in from overseas through the master accounts for international foreign exchange funds. Foreign debt registration shall be made based on creditors and currencies, that is, the debt owed by the enterprise to each overseas creditor in each currency shall be deemed as a foreign debt. When handling the business related to withdrawal of funds for foreign debts or repayment of principal with interest thereon, the enterprise shall declare the international balance of payment accurately and provide the corresponding business number accurately in the “administration of foreign exchange approval document number/record-filing form number/business number”. The responsible enterprise shall go through the contract registration procedures with the administration of foreign exchange within 15 working days after the execution of the foreign debt contract and before the entry of the first sum of foreign debt in the account. The registration of change in foreign debts shall be handled according to the prevailing

provisions.

If a transnational company does not have a master account for international foreign exchange funds, borrowing of foreign debt funds into its accounts for domestic foreign exchange funds within the specified quotas shall be handled according to the preceding paragraph.

Article 20 The outbound lending by a transnational company shall be handled pursuant to the prevailing procedures for foreign exchange administration. Where the amount of the outbound lending exceeds 50% of the ownership equity of the domestic member enterprises, an application may be filed with the branch of SAFE. The branch of SAFE shall make decision through collective discussion according to the specified procedures.

Article 21 For the receipt, payment, settlement and sale in foreign exchange between the master accounts for domestic foreign exchange funds and overseas current accounts, including centralized receipt and payment in foreign exchange and netting settlement, the relevant banks shall handle relevant formalities according to the principles of “understanding of customers”, “understanding of business” and “due diligence” and other relevant principles. If the nature of the funds is not clear, the banks shall require the responsible enterprise to provide relevant documents. For the outbound payment for trade in services and other items, the taxation record-filing form shall be filed according to relevant provisions.

Banks and the responsible enterprise shall respectively keep relevant documents for five years for further reference.

Article 22 The settlement and sale in foreign exchange under current accounts, direct investment, foreign debts and outbound lending may be handled through master accounts for domestic foreign exchange funds on centralized basis.

For the foreign exchange funds (including foreign exchange capital, asset realization account funds and domestic investment account funds) pooled by enterprises under direct foreign investment of the responsible enterprise or the foreign debt funds, the

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procedures for foreign exchange settlement in the master accounts for domestic foreign exchange funds shall be handled by way of discretionary settlement. The RMB funds obtained from the foreign exchange settlement shall be transferred into the special RMB deposit account (capital accounts - account for pending payment of settled foreign exchanges) opened by the responsible enterprise for that purpose and may be paid directly within the business scope of each member enterprise after being verified to be true. The banks shall keep relevant documents for five years for further reference.

Enterprises and the banks with which the enterprises open accounts shall promptly and accurately submit foreign exchange settlement and payment data to the relevant business information system of the administration of foreign exchange. The banks shall, by reference to Appendix 4 Standards on Data Collection of Foreign Exchange Accounts (Version 1.1) of the Notice of the State Administration of Foreign Exchange on the Pilot Launch of the Capital Account Information System and Relevant Data Submission Work (Hui Fa [2012] No. 60), submit information on the opening of special RMB deposit accounts, and the receipts, payments and balance thereof. In that connection, the account nature code of RMB social deposit account is "2113" and account nature name is “capital accounts - account for pending payment of settled foreign exchanges”. The banks shall, by reference to the Notice of the State Administration of Foreign Exchange on Properly Adjusting the Foreign-Related Receipt and Payment Proofs and Relevant Information Submission Preparations of Domestic Banks (Hui Fa [2011] No. 49), use proofs of domestic receipt and payment to submit information on receipts and payments between their respective special RMB deposit accounts and other domestic RMB accounts.

The foreign exchange settlement of foreign exchange funds under direct foreign investment and foreign debt funds shall be used in line with the prevailing provisions on foreign exchange administration and shall not be used for any of the following purposes: 1. It shall not, directly or directly, be used for expenditure beyond the business scope of the enterprise or the designated scope for use of foreign debt funds or expenditure prohibited by laws and regulations of the State; 2. It shall not, directly or indirectly, be used for investments in securities or derivatives,

unless otherwise prescribed under laws and regulations; 3. It shall not, directly or indirectly, be used for extending entrusted loans in RMB (unless permitted under its business scope), repaying inter-corporate borrowings (including third-party advances) and repaying RMB bank loans that have been sub-lent to third parties; 4. It shall not be used to pay for the expenses related to the purchase of real estate not for self-use, except for a foreign-invested real estate enterprise.

If the responsible enterprise is a finance company, the member enterprises may apply to handle above business of foreign exchange settlement and sale at the finance company or the responsible enterprise may handle the business of foreign exchange settlement and sale with the banks in the name thereof. A finance company handling the business of foreign exchange settlement and sale for member enterprises shall be qualified for the business of foreign exchange settlement and sale and submit the data on foreign exchange settlement and sale to the administration of foreign exchange according to relevant provisions.

Article 23 The banks with which accounts are opened or finance companies shall submit the information on master accounts for international foreign exchange funds (code: 3600) and master accounts for domestic foreign exchange funds (code: 3601) to the administration of foreign exchange according to relevant provisions.

Article 24 The cross-border fund receipt and payment of master accounts for domestic or international foreign exchange funds shall be declared in accordance with the requirements on declaring the balance of international payments regarding the cross-border receipt and payment of funds in the Notice of the State Administration of Foreign Exchange on Printing and Issuing the “Operating Procedures for Declaring Statistics on Balance of International Payments via Financial Institutions” (Hui Fa [2010] No. 22). The fund receipt and payment between the master accounts for domestic or international foreign exchange funds and domestic non-residents shall be declared in accordance with the requirements regarding the transactions between domestic residents and domestic non-residents in the Notice of the Administration of Foreign Exchange on Clarifying and Adjusting Matters relating to Declaration of

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Statistics on Balance of International Payments (Hui Fa [2011] No. 34). The international balance of payment regarding centralized receipt and payment of foreign exchange and the netting settlement for current accounts via mater accounts for domestic foreign exchange funds shall be declared in accordance with Article 31 of these Provisions.

Article 25 For the transfer of funds between master accounts for domestic foreign exchange funds and master accounts for international foreign exchange funds, the declaration of international balance of payment is not required, but relevant data shall be submitted according to the requirements on transfer of funds among domestic residents prescribed in the Notice of the State Administration of Foreign Exchange on Properly Adjusting the Foreign-Related Receipt and Payment Proofs and Relevant Information Submission Preparations of Domestic Banks (Hui Fa [2011] No. 49), the Notice of the State Administration of Foreign Exchange on Commencement of the Use of Foreign-Related Receipt and Payment Proofs of Domestic Banks and Clarifying Relevant Information Submission Requirements (Hui Fa [2012] No. 42) and the Notice of the State Administration of Foreign Exchange on Promulgating the “Standards on Data Collection of Foreign Exchange Business of Financial Institutions (Version 1.0)” (Hui Fa [2014] No. 18).

Article 26 If the responsible enterprise is a finance company, the declaration shall be made in accordance with Notice of the General Affairs Department of the State Administration of Foreign Exchange on Strengthening the Declaration of Foreign Assets and Liabilities and Profits and Losses by Financial Institutions and Upgrading the Submission System (Hui Zong Fa [2012] No. 145) and the Notice of the State Administration of Foreign Exchange on Printing and Distributing the “System for Statistics of Foreign Financial Assets and Liabilities and Transactions” (Hui Fa [2013] No. 43). Specifically, the funds of the overseas member enterprises operated and managed on centralized basis via master accounts for international foreign exchange funds or borrowed funds from overseas shall be declared as the foreign debts of the responsible enterprise.

Chapter 4: Administration over Business of Centralized Receipt and Payment of Foreign Exchange and Netting Settlement for Current Accounts

Article 27 Centralized receipt and payment of foreign exchange means that the responsible enterprise handles the receipt and payment of foreign exchange for current accounts on behalf of domestic member enterprises through master accounts for domestic foreign exchange funds on a centralized basis.

Netting settlement refers to the operational method by which the responsible enterprise makes centralized accounting of the foreign exchange receivables and payables for current accounts of its domestic and overseas member enterprises through master accounts for domestic foreign exchange funds and combines the foreign exchange receipt and payment transactions in a specified period into single foreign exchange transaction. In principle, the netting settlement shall be made at least once for each calendar month.

Article 28 When handling the centralized receipt and payment of foreign exchange in trade in goods or netting settlement in trade in goods, domestic member enterprises shall go through registration procedures in respect of the List of Enterprises for Foreign Exchange Receipts and Payments under Trade in accordance with relevant provisions (except where the responsible enterprise is a finance company) and shall make reports on trade credit, trade financing or other business through the business monitoring system for foreign exchange for trade in goods (for enterprise use) in a timely and accurate manner in accordance with the provisions on administration of foreign exchange for trade in goods.

Article 29 The responsible enterprise may in advance purchase and deposit foreign exchange in master accounts for domestic foreign exchange funds according to the true and legitimate needs of foreign exchange payment in imports of domestic member enterprises.

If there is a gap of more than 180 days (exclusive)between the date of foreign exchange refund and the date of original receipt or payment or if it is impossible to refund the

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foreign exchange via original route according to relevant provisions due to special situations, the responsible enterprise shall go through the formalities for registration of foreign exchange for trade in goods with the administration of foreign exchange and provide the written application, original receipt/payment declaration documents, original import/export contract and foreign exchange refund contract, etc.

Article 30 The business of domestic member enterprises to be handled on the strength of the Registration Form for Receipts and Payments of Foreign Exchange for Trade in Goods as required by the Guidelines for Administration of Foreign Exchange for Trade in Goods and the detailed rules for implementation thereof shall not participate in centralized receipt and payment of foreign exchange and netting settlement and shall be handled according to prevailing provisions.

Article 31 For centralized receipts and payments or netting settlement for current accounts, declaration of balance of international payment shall be made according to following requirements:

The responsible enterprise shall declare the statistics of the balance of international payment for two types of data. One is the data of the actual receipts and payments of the responsible enterprise at the time of centralized receipt and payment or netting settlement (hereinafter referred to as the “actual receipt and payment data”); the other is the data of original receipts and payments of each member enterprise prior to the case-by-case restoration of centralized receipt and payment or netting settlement (hereinafter referred to as the “restoring data”).

When the actual receipt and payment data is not zero, the responsible enterprise shall make declaration through the domestic banks handling the actual external receipt and payment and the domestic banks shall mark the actual receipt and payment information with the transaction code of “999999”. When the actual receipt and payment data is zero (netting settlement is zero), the responsible enterprise shall virtualize a declaration data with the settlement being zero and fill out the Application for Overseas Remittance with the responsible enterprise being both payer and payee, transaction code being “999998”, country being “China” and other required items completed as the case may be or with

“N/A”. A domestic bank shall complete the submission of actual data before 12:00 at noon of the first working day (T＋1) after the date of its actual external receipt or payment (the date of netting settlement or accounting settlement when the netting settlement is zero). For the declaration of restoring data, the responsible enterprise shall confirm the point in time (T) of declaring the restoring data according to the date of actual external receipt and payment (the date of netting settlement or accounting settlement when the netting settlement is zero) and provide the banks actually processing or keeping accounts for processing external receipt and payment with the basic information and declaration information about the restoring data in the names of domestic member enterprises according to the principle of full receipt and full payment. A domestic bank shall complete the submission of the basic information about the restoring data before 12:00 at noon of the first working day (T＋1) after the point in time (T) for declaring above restoring data and complete the submission of the declaration information about the restoring data before 12:00 at noon of the fifth working day (T＋5) .

The declaration form number shall be prepared by the bank incurring actual receipt and payment and transaction code shall be based on the nature of the actual transaction. A domestic bank shall fill in the declaration number of the corresponding actual external receipt and payment data as the “bank business number” of the restoring data so as to set up the corresponding relation between centralized receipt and payment data and restoring data. Domestic banks shall provide the responsible enterprise with the declaration channel and other fundamental conditions and be responsible for transmitting the basic information and declaration information about the restoring data to the administration of foreign exchange.

Chapter 5: Supervision and Administration

Article 32 The responsible enterprise shall conduct business according to these Provisions and the record-filing notification of the administration of foreign exchange. If there is any change to the relevant matters during the period of business, it shall make the record-filing of the change with the administration of foreign exchange as required in a timely manner.

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The responsible enterprise and member enterprises shall declare the nature of the cross-border receipt or payment of funds and declare the statistics of the balance of international payment in strict accordance with relevant provisions.

Article 33 The banks with which accounts are opened shall properly review and verify the authenticity and compliance of the business of centralized operation and management of foreign exchange funds by transnational companies and the submitted materials, make appropriate registration and record-filing of the change of the relevant foreign exchange funds and carry out proper monitoring, review and quota management of the funds flow.

Article 34 The banks with which accounts are opened shall, in accordance with relevant provisions and in a timely, complete and accurate manner, submit the information on master accounts for domestic or international foreign exchange funds, accounts for pending payment of settled foreign exchanges and other accounts, the data regarding declaration of balance of international payment, domestic funds transfer, foreign exchange settlement and sale and other data, review the business data submitted by enterprises and assist the administration of foreign exchange with off-site monitoring.

Article 35 A branch of SAFE shall take the following measures to ensure the stable and orderly development of, and effective implementation of the policies for, centralized operation and management of foreign exchange funds:

1. Improving work mechanism, assigning responsibilities to specific persons and submitting data in a timely and accurate manner: The branch of SAFE shall designate a leading division or office and a contact person responsible for reporting to the SAFE. Within one year from the date of implementation of these Provisions, a branch of SAFE shall report in the form of document the business information and relevant statistical statement to the State Administration of Foreign Exchange prior to the tenth day of each month and report the list of the enterprises adopting centralized operation and management of funds within its jurisdiction and other relevant information on quarterly basis. Thereafter, it shall report the statistical statements in the name of comprehensive department on monthly basis, report the

list of the enterprises adopting centralized operation and management of funds within its jurisdiction and other relevant information on a quarterly basis, and report relevant business information on semi-annual basis (see annexes 2-5 for relevant forms). 2. Strengthening off-site monitoring and on-site audit and inspection: A branch of SAFE shall fully make use of the cross-border fund flow monitoring and analysis platform and other prevailing foreign exchange administration system, maintain function setup for list of transnational companies, and make comprehensive analysis of the data on master accounts for international or domestic foreign exchange funds in terms of foreign exchange receipts and payments, foreign exchange settlement and sale, transfer of funds, centralized receipt and payment of foreign exchange and netting settlement, etc. 3. Giving proper risk warning and window guidance to banks and enterprises: A branch of SAFE shall take effective measures to satisfy the demand of enterprises and gradually form the pattern of bi-directional flow of cross-border funds. It shall urge banks to establish operational procedures and internal control system and provide necessary technical service guarantee. The branch may require a responsible enterprise to audit the compliance of the business of centralized operation and management of foreign exchange funds if necessary. 4. Formulating, according to these Provisions and based on the local actuality, detailed requirements for access and other operational procedures which shall be implemented after being submitted to the State Administration of Foreign Exchange for record-filing according to relevant procedures.

Article 36 Where there is abnormal situation or violation of relevant rules on the part of an enterprise, the branch of SAFE shall suspend or terminate the various business of the enterprise within the scope of these Provisions and impose administrative penalty on the enterprise in accordance with the Regulations on Foreign Exchange Administration and other relevant laws and regulations. Where a bank with which accounts are opened fails to follow the principle of “understanding of customers”, “understanding of business” and “due diligence” in violation of the provisions on authenticity review or commits other rule-breaking acts, the branch of SAFE shall terminate the various business of the bank within the scope of these Provisions and impose administrative penalty on the

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bank in accordance with the Regulations on Foreign Exchange Administration and other relevant laws and regulations.

Chapter 6: Supplementary Provisions

Article 37 For the purposes of these Provisions, a transnational company refers to the consortiums of enterprise legal persons (excluding financial institutions other than finance companies) comprising of parent companies, subsidiaries and other member enterprises or institutions, with capital as the link.

Member enterprises refer to the companies within a transnational company that mutually hold shares directly or indirectly and are qualified as independent legal persons, including domestic member enterprises and overseas member enterprises.

A responsible enterprise refers to a transnational company performing the responsibilities for application, record-filing, implementation, data submission and information feedback regarding the main business, or a domestic company qualified as an independent legal person and authorized by a transnational company to perform above responsibilities. If the responsible enterprise is a finance company, it shall comply with the provisions of the industrial competent department in engaging in cross-border foreign exchange fund transactions.

For the purpose of Paragraph 2 of Article 3 of these Provisions, domestic foreign exchange accounts of overseas institutions include non-resident accounts opened by overseas institutions with domestic banks and the offshore accounts opened with the offshore banking departments with the qualification for offshore banking business.

Article 38 A single corporate group that complies with the conditions, such as a sound internal system, a scale of revenue and expenditure in foreign exchange for the last year exceeding USD 100 million, and no violation of foreign exchange laws or rules in preceding three years, may, according to business needs, apply to open a master account for domestic foreign exchange funds separately for handling netting settlement for current accounts, have the document review procedures simplified according to Article

21 of these Provisions or handle foreign exchange settlement procedures according to Paragraph 2 and Paragraph 3 of Article 22 of these Provisions; or it may open a master account for international funds separately for centralized management of overseas funds.

The entrusted loans under the framework of centralized operation and management of funds by transnational companies shall comply with the provisions on administration of domestic foreign exchange loans. Entity foreign exchange account is not required for handling relevant business. The funds can be directly transferred among member enterprises. It is not necessary to transfer the funds up to a master account for domestic foreign exchange funds and then transfer the funds down to member enterprises.

Article 39 The administration of foreign exchange may gradually improve the content of policies according to national macro adjustment and control policies, foreign receipt and payment situation and business development status.

Article 40 These Provisions shall take effect on June 1, 2014 and shall be interpreted by the State Administration of Foreign Exchange. The Notice of the General Affairs Department of the State Administration of Foreign Exchange on Issues relating to Submission of Data on Centralized Receipt and Payment of Transnational Companies (Hui Zong Fa [2013] No. 47) shall be repealed at the same time. The transnational companies that have already implemented the centralized operation and management of foreign exchange funds upon approval by the administration of foreign exchange may continue to apply the original framework and policies for centralized operation and management of funds or may apply these Provisions by providing the materials such as the materials about the business needs after the change (the materials already provided are not required to be provided again) and going through record-filing with the branches of the SAFE.

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Circular by the National Development and Reform Commission on Relevant Matters of Issuing RMB Bonds by Domestic Non-financial Institutions in Hong Kong Special Administrative Region

(Fa Gai Wai Zi [2012] No. 1162 May 2, 2012)

The Enterprises under the Central Government, Development and Reform Commissions of all Provinces, Autonomous Regions, Municipalities Directly under the Central Government, Cities Separately Listed on the State Plan and Xinjiang Production and Construction Corps:

In order to further promote the development of bond market in Hong Kong, standardize the activities of issuing RMB Bonds by Domestic Non-financial Institutions in Hong Kong Special Administrative Region, effectively prevent risk of external debts, according to relevant regulation of the state administration of external debts, relevant Matters of Issuing RMB Bonds of Domestic Non-financial Institutions in Hong Kong Special Administrative Region are hereby notified as follows:

1. The Domestic Non-financial Institutions mentioned in this circular refer to non-bank institutions with legal entity qualification registered within boarder of the People’s Republic of China.

The RMB Bonds mentioned in the circular refer to marketable securities priced in RMB, legally issued by domestic non-financial institutions in Hong Kong Special Administrative Region and repaid with principal and interest within one year (including one year) in accordance with the appointment.

2. The issuance of RMB bonds by Domestic Non-financial Institutions in Hong Kong

Special Administrative Region shall be reported to our commission for verification according to the procedures stipulated in the circular.

The enterprises under the Central Government can directly file an application to our commission; the local enterprises can file an application to the Provincial Development and Reform Commission of where it is registered, and report to our commission upon verification of the Provincial Development and Reform Commission.

3. The Issuance of RMB Bonds by Domestic Non-financial Institutions in Hong Kong Special Administrative Region shall meet the following conditions: 3.1 Equipped with sound corporate governance mechanisms; 3.2 Sound credit standing; 3.3 Equipped with relatively strong profitability; 3.4 The use of the raised funds shall be mainly used in investment projects of fixed assets and in conformity with state macro-control policy, industry policy, utilization of foreign capital and overseas investment policy and regulations on administration of fixed asset investment. In addition, the required relevant formalities shall be completed; 3.5 All the previously issued corporate bonds or other debts not defaulted or with delayed payment of principal and interest; 3.6 No substantial violations of laws or regulations in the latest three years.

4. Application materials for the issuance of RMB Bonds by Domestic Non-financial Institutions in Hong Kong Special Administrative Region shall include: 4.1 Application report of the issuance of RMB Bonds; 4.2 Resolution of the Board on approving the issuance of RMB Bonds or document with the same legal force 4.3 Proposes, maturity of bonds and scale of the proposedly issued bonds; 4.4 Issuance plan for the RMB Bonds; 4.5 Issuer’s financial statements and audited reports in the most recent three years; 4.6 Legal opinions; 4.7 Copy of Business License for Enterprise as a Legal Entity (duplicate); and

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4.7 Other documents or materials required to be provided by the commission.

5. After the acceptance of the application of domestic non-financial institutions by the commission, opinions from relevant parties shall be enquired and the decisions of approval or disapproval shall be made within 60 working days from the date of accepting the application.

6. Domestic Non-financial Institutions shall start bonds issuance work within 60 working days from the date of approval. The approval documents remain valid for one year, and the issuance of the bonds shall be completed within one year.

7. Raised funds of the bonds shall be used according to the approved purposes and shall not be appropriated for other purposes without authorization. If there are any significant changes, relevant adjustment procedures shall be performed according to procedures stipulated in the circular.

8. Domestic Non-financial Institutions shall report the conditions of the issuance of RMB Bonds to the commission in a written form within ten days upon the completion of issuance work of the RMB Bonds.

9. The external debts incurred by the issuance of the RMB Bonds by Domestic Non-financial Institutions in Hong Kong Special Administrative Region shall follow existing rules of external debts registration, repayment of principal and interest according to currently implemented regulations on administration of external debts.

10. The issuance, transaction, registration, trusteeship, settlement and information disclosure and other matters of the RMB Bonds in Hong Kong Special Administrative Region shall be implemented according to the relevant regulations of Hong Kong Special Administrative Region.

11. As to the RMB Bonds issued in Hong Kong Special Administrative Region by the overseas branch of domestic Non-financial Institutions, which is guaranteed by the domestic branch tenders, the domestic Non-financial Institutions shall report the

scale, maturity and the purposes of the raised funds of the bonds to the commission for record 20 working days before issuing the RMB Bonds.

12. The issuance of the RMB Bonds by Domestic Non-financial Institutions in countries or areas outside Hong Kong Special Administrative Region shall be implemented with reference to this circular.

The above mentioned regulations shall come into effect as of the date of promulgation.

National Development and Reform Commission May 2, 2012

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Memorandum of Cooperation between China Insurance Regulatory Commission and Shenzhen Municipal Government on Development of Shenzhen Innovative Insurance Pilot Zone

(March 28, 2010)

To further implement the spirits of the Seventeenth Party Congress and Opinions of the State Council on the Reform and Development of the Insurance Industry, Approval of the State Council on Shenzhen Comprehensive Reform Plan and Issuance by the National Development and Reform Commission on the Pearl River Delta Reform and Development Plan (2008-2020) ", and to accelerate the promotion of the development of Shenzhen Innovative Insurance Pilot Zone, promote the scientific development of Shenzhen insurance industry, make greater contribution to economic and social development of Shenzhen, China Insurance Regulatory Commission (CIRC) and the People's Government of Shenzhen Municipality have reached the following agreements after sufficient consultation and discussion.

1. Development direction, objectives and tasks of Shenzhen insurance industry in new trend 1) Development Direction. Currently, in accordance with the overall plan by the State Council, Shenzhen is undergoing a new round of reform on comprehensive facilities. As a national pilot area of the insurance industry for innovation and development, the insurance industry of Shenzhen should take full advantage of the favorable factors in all aspects to play a better demonstrational role in reform and innovation. CIRC and the Shenzhen Municipal Government will work more closely from a high starting point to construct an Innovative Insurance Pilot Zone high standard, making it the demonstration zone of China Insurance Regulatory Commission and local government cooperation, the experimental zone for commercial insurance serving

comprehensive economic and social development and pilot zone for national insurance industry reform and innovation. The two parties will co-ordinate and cooperate in the planning to achieve major breakthroughs, support and promote the reform and innovation of the insurance industry in Shenzhen in the following three aspects: first, it is important to support and promote economic and social services for the insurance industry overall, in the protection of economy, services improve people's life, reform and innovation on maintaining social stability. Second, to support and promote scientific development of the national insurance industry in the line with the law of the direction of marketization and the development of insurance industry, combined with the close reform and innovation connected with Shenzhen’s metropolitan features and advantages, which has significant demonstrational effect. Third, to support and promote the close cooperation between Hong Kong and the Mainland insurance industries to promote Hong Kong's prosperity and stability and to improve the level of innovation in the insurance industry in mainland.

2) Objectives and Tasks. To make full use of the three major functions of the insurance industry, namely, economic compensation, financing and social management, strive to construct economic risk prevention network, social well-being improvement network and social safety net that are adaptive to the economic and social development needs of Shenzhen, promote Shenzhen insurance industry to play a more significant role in higher-level and wider field services of economic and social situation, contribute significantly to the construction of “Happy Shenzhen”. At the same time, the insurance industry should excel in ideas and thoughts, systems and mechanisms, and talents to achieve scientific development, making the industry fully functional and filled with vitality.

2. Key areas of reform and innovation of Shenzhen’s insurance industry 3) Develop a pilot zone of investment commercial insurance agencies investing in medicine companies. With the implementation of the new national health care reform, promote commercial insurance companies to invest in medical companies, and explore operation models of new health care insurance to meet the public diversified demand for medical services and health insurance coverage.

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4) Promote the development of the personal tax-deferred pension insurance products pilot. Seek the support of ministries to further improve implementation plan so that personal tax-deferred pension insurance products could be piloted in Shenzhen, which plays an active role in improving the social security system

5) Accelerate the development of micro insurance products consistent with demographics of Shenzhen. Develop a variety of convenient micro life insurance products with appropriate coverage. Adopt effective models of insurance participation to continuously cover low-income population, especially migrant workers, to raise the level of protection.

6) Pilot for the Reforms on Commercial Auto Insurance Pricing Mechanism. Support and encourage insurance companies to develop commercial auto insurance products according to customer groups, sales channels and other market segments. Expand the floating range of commercial auto insurance rates and improve relevant factors of floating rate range to meet the market- diversification needs for insurance and accumulate experiences to improve commercial auto insurance pricing mechanism.

7) Further deepen Shenzhen-Hong Kong insurance cooperation. Support qualified Hong Kong insurance companies to set up China headquarters, branch offices and a variety of back-office services agencies in Shenzhen. Support Shenzhen and Hong Kong insurance agencies to share resources and collaborate in product development, channel development and settlement services.

8) Explore regulation on and innovation in insurance. Under the principles of strengthening supervision, preventing risks, protecting interests of the insured, and taking full geographical advantage of Shenzhen being adjacent to Hong Kong and Macau, drawing upon supervisory experiences of a mature insurance market, promote the reform and innovation of Shenzhen insurance regulatory system and mechanism as well as the means to constantly improve effective, scientific and law-abiding regulation to form a good regulatory environment for the pilot zone. Deepen the reform on human resource system regulation to build a high-quality and specialized insurance regulatory team. Explore the localization of regulatory of

corporate bodies in Shenzhen.

3. Main tasks of the China Insurance Regulatory Commission 9) Strengthen the leadership of the reform and innovation of Shenzhen insurance industry. Strengthen leadership and coordination to take a holistic approach towards reform and innovation of Shenzhen insurance industry. Pilot of the reform and innovation projects serving economic and social situation that possess nationwide demonstrational effects in Shenzhen and implement necessary regulatory policies. Support insurance regulatory innovation in Shenzhen. Guide and promote the transformation of development models of the insurance industry in Shenzhen, improve the quality of development, support and encourage reform on and innovation in products and services, management, usage of funds and other areas. Guide insurance companies to choose Shenzhen as a pilot base for reform and innovation within respective system.

10) Promote the development of Shenzhen as a regional insurance center. Support Shenzhen to attract a variety of insurance agencies, constantly enrich the insurance market system. Study new forms of insurance agencies such as captive insurance companies and mutual Insurance companies. Support the development of Shenzhen insurance intermediary market, steadily promote reform on insurance sales and marketing, support the establishment of national insurance agencies in Shenzhen, support qualified insurance intermediaries listed on the Shenzhen GEM. Support the development of actuarial, insurance adjusting and other service agencies in Shenzhen. Under the premise of compliance with laws and regulations, effective prevention of risk and satisfying the needs of asset allocation, support debt or equity investment of insurance funds in infrastructure projects in Shenzhen.

11) Formulate policies of strengthening Shenzhen-Hong Kong insurance cooperation. Under the premise of compliance with relevant laws and regulations and within the framework of CEPA, study policies of supporting Hong Kong insurance agencies enter Shenzhen market. Liberalize entry limits of Hong Kong residents and companies to enter the insurance intermediary market in Shenzhen and decentralize relevant approval rights. Promote mutual recognition of qualifications between

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Shenzhen and Hong Kong insurance practitioners.

4. Main tasks of the Shenzhen Municipal Government 12) Further strengthen the guidance of Shenzhen insurance industry. Include the reform and development of Shenzhen Insurance Pilot Zone in the overall economic and social development plan. Strengthen leadership to give full play to the role of Shenzhen Insurance Leading Group of the Reform and Innovation of Insurance, and constantly improve working mechanism to increase efficiency of decision-making and enforcement. Make Shenzhen Insurance Regulatory Bureau part of the municipal "three-antis", emergency management, comprehensive social security management, community health care, pension reform and other related working groups to guide and promote the insurance industry to function better.

13) Implement relevant reform and innovation policies for insurance industry. Provide policy support for investment in health insurance, pension institutions, select qualified hospital or nursing home as the pilot for equity investment by a commercial insurance agency. Study the use of commercial insurance long-term mechanism of social risk management involving government departments. Study the promotion of the micro-life insurance in all relevant industries with allowance from employers, benefits from insurance companies, self-payment and appropriate from government. Explore effective cooperation models between government departments and commercial insurance in the field of social health care insurance, gradually fulfill the entrustment of social health care insurance to the operation management of commercial insurance companies. Explore the establishment of the risk-sharing mechanisms of the cooperation between government and commercial insurance in the disposal of emergencies, to support risk security arrangements of public emergencies involving commercial insurance, develop relevant insurance products specified to emergent public health, social security and other unexpected events. Through local legislation or government regulations, etc., promote liability insurance such as technology insurance and public liability insurance of fire, medical liability insurance, liability insurance of environmental pollution and the development of liability insurance, travelling liability insurance, liability insurance of food and drug safety, et cetera. Support Shenzhen auto insurance information

platform. Provide financial support for the insurance public advocacy, and promote the insurance advocacy services in communities to further promote insurance knowledge, enhance social awareness of insurance, and guide media to create public opinion and environment conducive to the development of insurance industry.

14) To support insurance industry in risk prevention and mitigation. To establish an emergency response mechanism, improve emergency plans, support insurance regulatory authorities to prevent and mitigate risks and to timely cope with all kinds of emergencies to maintain the stability of insurance market. To set up cooperation mechanisms between insurance regulators and other relevant law enforcement departments in Shenzhen to crack down on illegal activities such as "fake insurance, fake cases, fake agencies", et cetera; to safeguard the legitimate interests of insurance individuals and insurance companies; to support Shenzhen insurance industry to establish long-term mechanisms for combatting business corruption and briberies; to support Shenzhen insurance industry to set up industry-wide credit system within municipal credit system, provide necessary financial and technical support to strengthen self-discipline and standardized operations to protect the interests of the insured.

5. Cooperation and coordination mechanisms 15) Mechanism of Leaders’ Mutual Visits. Leaders of both parties shall visit each other from time to time, consult on major innovation and the affairs of the development of Shenzhen insurance industry, and promote and implement it.

16) Mechanisms of Regular Tasks and Information Exchange. The department of Development and Reform of CIRC, Shenzhen Insurance Regulatory Bureau and the Shenzhen Municipal Finance Office are liaison units, responsible for the regular tasks and the exchange of information, and promote and implement specific work regarding Shenzhen insurance innovation and the development of pilot zone.

17) Mechanism of Major Research Projects Cooperation and Discussion. China Insurance Regulatory Commission and the Shenzhen Municipal Government could

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jointly organize high-profile international insurance forums; initiate major research on insurance projects to enhance the impact of Shenzhen insurance industry and capabilities of theoretical research on the insurance industry.

Provisions on Promoting the Development of Equity Investment Fund Industry

(Shen Fu [2010] No. 103 July 9, 2010)

These Provisions have been formulated for the purposes of carrying out the Outline of the Plan for the Reform and Development of the Pearl River Delta (2008-2020) and the Overall Plan on Comprehensive Reform in Shenzhen approved by the State Council, the development of the equity investment fund industry, reinforcing Shenzhen’s position as a regional financial center and enhancing economic structural adjustment and industrial upgrades.

1. Scope of application 1.1 For the purposes of these Provisions, an equity investment fund shall refer to a non-securities investment fund that is raised privately from targeted investors with main business activity of making equity investment and providing value-added services to non-listed enterprises (including private equity fund, venture capital fund, etc.). An equity investment fund may be organized in corporate form or partnership. For the purposes of these Provisions, an equity investment fund management enterprise shall refer to an enterprise that undertakes the duties of management of equity investment fund. For the purposes of these Provisions, a private securities investment equity fund management enterprise shall refer to an investment management enterprise filed with regulatory agencies, that issues wealth management products through trust companies with fund trusted with a third-party bank and main business scope of investing in securities market.

1.2 These Provisions shall apply to domestic-funded, foreign-funded, and Sino-foreign

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joint venture equity investment funds, equity investment fund management enterprises, and securities investment funds that are registered in Shenzhen and meet the following requirements: The registered capital (or subscribed capital contribution) of an equity investment fund shall be no less than RMB 100 million, made in cash only. The initial payment shall be no less than RMB 50 million. Shareholders and partners shall make the capital contribution in their own respective names. The contribution of each shareholder (partner) shall be no less than RMB 5 million. If an equity investment fund takes the form of Limited Liability Company or partnership, the number of shareholders (partners) shall be no more than 50; if it takes the form of private limited company, the number of shareholders shall be no more than 200. An equity investment fund management enterprise established as a limited company, its registered capital (or subscribed capital contribution) shall be no less than RMB 10 million. If it is established as a limited liability company, its paid-in capital shall be no less than RMB 5 million. Private securities investment fund management enterprises shall have registered capital above RMB 10 million and more than RMB 100 million asset under management.

2. Establishment of equity investment fund 2.1 Relevant departments in Shenzhen shall facilitate the registration process of equity investment fund, equity investment fund management enterprise and private securities investment fund management enterprise.

2.2 Equity investment funds and equity investment fund management enterprises may use the wording of "fund" or "equity investment fund" in their names.

2.3 Equity investment funds and equity investment fund management enterprises established in corporate form or partnership shall stipulate in their prospectus or partnership agreement that it should not raise money or issue funds publicly in any form.

2.4 The legal residence (business address) of the equity investment fund management

enterprise that undertakes the management responsibilitiesof the equity investment fund can be used as the fund’s legal residence (business address) for registration purposes.

3. Tax policies for equity investment funds

3.1 Equity investment funds and management enterprises in partnership shall not act as income tax payers. Partners shall pay their personal income tax or corporate income tax respectively following “allocation before tax payment” regime.

3.2 Individual limited partners that take the executive role in a partnership equity fund or management enterprise shall be charged at the five level progressive tax rate from 5% to 35% in accordance with the taxable item “income derived from production and business”. Individual limited partners that do not take the executive role in a partnership equity fund, shall be charged at the rate of 20% for personal income tax for investment gains from the partnership in accordance with the taxable item “income from interests, dividends and bonuses”.

3.3 Dividends, bonuses and other investment income from invested enterprises by partnership equity funds, is net income after corporate income tax. The income may, according to the partnership agreement, be directly distributed to legal person partners whose enterprise income tax shall be subject to relevant policies.

3.4 The general partner of a partnership equity fund shall be exempt from business tax if it makes investment in intangible assets or real property, participates in and accepts investor profit distribution, and jointly assumes investment risk. Business tax shall be exempt in the case of equity transfer.

3.5 Equity investment funds and equity investment fund management enterprises that invest in equity of non-listed small and median size high-tech enterprises for more than 2 years (including 2 years), may deduce 70% of the total investment to small and median size high-tech enterprises from their taxable income, if meet the

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requirements of Notice of the State Administration of Taxation on Income Tax Preferences for Startup Investment Enterprises (Guo Shui Fa [2009] No.87).

4. Supporting policies for equity investment funds 4.1 As the date these Provisions take effect, an equity investment fund that is established in corporate form could get a lump sum award based on its registered capital: RMB 5 million if registered capital reaches RMB 500 million; RMB10 million or RMB 15 million if registered capital reaches RMB 1.5 billion; RMB 15 million if registered capital reaches RMB 3 billion. Equity investment fund that is established in the form of partnership could get a lump sum award based on capital it has raised in the current year: RMB 5 million if raised capital exceeds RMB 1 billion; RMB 10 million if raised capital exceeds RMB 3 billion;RMB15 million if raised capital exceeds RMB 5 billion. Equity investment fund that has received awards shall not move away from Shenzhen in 5 years.

4.2 Equity investment funds that make investment in enterprises or projects in Shenzhen shall receive a lump sum award equivalent to 30% of income tax generated after exit of project that is retained by the local government. A single award shall not exceed RMB 3 million.

4.3 An equity investment fund or equity investment fund management enterprise that purchases office buildings for self-use in Shenzhen due to business needs, shall be granted a lump sum subsidy that amounts to 1.5% of purchase price, capped at RMB 5 millionin total. Subsidized office buildings shall not be leased or sold to outside parties.

4.4 An equity investment fund or equity investment fund management enterprise that newly rent office buildings for self-use, shall be granted rental subsidies that amounts to 30% of the rental based on market-guided price for 3 consecutive year. The total amount of subsidies shall be no more than RMB 1 million.

4.5 Equity investment funds，equity investment fund management enterprises and

private securities investment management enterprises shall be included in Shenzhen, hereby good quality and convenient services shall by provided in accordance with relevant regulations.

4.6 Senior management personnel of equity investment funds，equity investment fund management enterprises or private securities investment management enterprises that satisfy the requirements of and authorized by Human Resources and Social Security Administration Department, shall be entitled to preferential policies with respect to talent introduction, talent award, employment of spouses, children’s education and healthcare insurance.

4.7 Reward and subsidy fund stipulated in these Provisions shall be part of Special Funding for Financial Industry Development, hereby arranged and operated according to relevant regulations on management of Special Funding for Financial Industry Development.

5. Measures for promoting clustering of equity investment fund industry 5.1 All relevant departments in Shenzhen shall further optimize services in order to form a market environment in favor of agglomeration and healthy and orderly development of equity investment fund industry.

5.2 Establishment of equity investment fund industrial parks shall be promoted to leverage the agglomeration effect and attract domestic and foreign large equity investment funds and management enterprises to settle down. Service platform shall be established by the equity investment fund industrial parks to serve domestic and foreign equity investment funds and management companies registered in Shenzhen by providing comprehensive one-stop-shop office services and project matching support service, etc.

5.3 Development of foreign equity investment funds in Shenzhen shall be supported. Ensuing problems regarding registration, foreign exchange management, industry investment and exit mechanism of foreign equity investment funds and fund management institutions shall be actively studied and resolved.

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5.4 Social capital shall be encouraged and directed to invest in equity investment fund. Support shall be given to enterprise pension funds and local social security funds Equity to invest in investment funds registered and established in Shenzhen, in conformity with relevant provisions.

5.5 Commercial banks shall be encouraged to carry out equity investment fund custody business and mergers and acquisitions loan business in Shenzhen. Investments thereof made in the manner of trust in equity investment funds in conformity with laws and regulations shall be supported. Financial institutions such as securities companies, insurance companies, trust companies and finance companies shall be encouraged to invest in or establish equity investment funds and direct investment companies in Shenzhen in conformity with laws and regulations.

5.6 Training and knowledge sharing in the equity investment fund industry shall be supported. Communication and cooperation between equity investment funds and quality small-and-medium-sized enterprises in Shenzhen shall be promoted, hence to enhance the influence of equity investment fund industry.

6. Measures for promoting development of equity investment fund industry in conformity with norms 6.1 Industry association of equity investment fund shall be developed and regulated, and given full play to its role on the enhancement of industry self-regulation.

6.2 Professional rating agencies for equity investment fund industry shall be introduced in order to promote the establishment of the evaluation and rating system for equity investment fund industry in market-oriented approach, and guide the development of equity investment fund industry in conformity with norms.

6.3 All relevant departments of Shenzhen shall enhance supervision, risk precaution and risk management for the equity investment fund industry, and shall crack down in conformity with laws all kinds of illegal fund-raising activities in the name of equity investment fund.

Implementation Measures on the Pilot Program for Foreign-funded Equity Investment Enterprises in

Shenzhen

(Shen Fu Jin Fa [2012] No. 12 November 26, 2012)

Chapter 1 General Provisions

1. These Implementation Measures have been formulated for the purposes of carrying out the Approval of the State Council on “The Supporting Policies of the Development and Opening up of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen” (Guo Han [2012] No. 58), promoting and regulating the development of the equity investment sector in Shenzhen in accordance with relevant laws and regulations.

2. For the purposes of these Measures, a foreign-funded equity investment enterprise (including equity investment fund of fund) shall refer to an enterprise that is authorized by the Leading Group of Pilot Program for Foreign-funded Equity Investment Enterprise (hereinafter referred to as the “Leading Group”) and a foreign enterprise or individual has participated in its investment and establishment in Shenzhen according to law, with fund privately raised from domestic and foreign investors and the main business activity of making equity investment in non-listed enterprises. For the purposes of these Measures, a foreign-funded equity investment management enterprise shall refer to an enterprise that is authorized by the Leading Group and a foreign enterprise or individual has participated in its investment and establishment in Shenzhen according to law with the main business activity of sponsoring and establishing the equity investment enterprises, and/or undertaking the management of equity investment under the authorization.

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A foreign-funded equity investment enterprise may be organized in the form of partnership or in other form. A foreign-funded equity investment management enterprise may be organized in corporate form or partnership, or in other form. For the purposes of these Measures, a pilot enterprise shall refer to a foreign-funded equity investment enterprise or a foreign-funded equity investment management enterprise that is authorized by the Leading Group, whose investment and fund management activities are administered by the Leading Group independently.

3. The Municipal Government has established a leading group for the pilot program for foreign-funded equity investment enterprises, which shall be convened by the leader of the Municipal Government in charge of such affairs. Member entities include the Economy, Trade and Information Commission of Shenzhen Municipality, the Market Supervision Administration of Shenzhen Municipality， the Financial Industry Development and Service Office of Shenzhen Municipal Government, the Authority of Qianhai, the Development and Reform Commission of Shenzhen Municipality, the Shenzhen Branch of the People’s Bank of China. The Leading Group, subject to the guidance of relevance departments of the State, shall be responsible for organizing the formulation and implementation of all policies and measures by relevant departments, promoting the relevant pilot program for foreign-funded equity investment enterprises in Shenzhen, as well as coordinating solutions for relevant issues that arise in the course of the pilot. The office of the Leading Group shall be set up at the Financial Industry Development and Service Office of Shenzhen with the following principal duties: 3.1 Responsible for accepting applications for pilot foreign-funded equity investment enterprises and arranging for examination and approval thereof; 3.2 Responsible for arranging the record-filing and administration of foreign-funded equity investment enterprises and foreign-funded equity investment management enterprises that have received approval for pilots; 3.3 Responsible for accepting applications for pilot custodian bank and arranging for examination and approval thereof; 3.4 Responsible for formulating supportive policies relevant to foreign-funded equity investment enterprises, and supervising and urging the implementation of complementary measures by governments of all districts (counties);

3.5 Responsible for carrying out other routine work.

4. The purposes of the Pilot Program for Foreign-funded Equity Investment Enterprises in Shenzhen are to encourage foreign capital to invest in equity investment fund industry in Shenzhen, to build a market with reputation of qualified investors and excellent management teams, and to provide funding support to build a national innovative city and create “Shenzhen Quality”.

5. In order to deepen cooperation between Shenzhen and Hong Kong in the field of financial services and promote development of equity investment fund industry, the pilot work shall be first implemented and practiced in Qianhai and gradually carried out in other areas of Shenzhen.

Chapter 2 Establishment

1. The subscribed capital contribution of a foreign-funded equity investment enterprise shall not be less than USD 15 million, with capital contribution to be made in cash only; the partners shall make the capital contribution in their own respective names; except for general partners, the capital contribution of each of the other limited partners shall not be less than USD 1 million. The subscribed capital contribution of a foreign-funded equity investment management enterprise shall not be less than USD 2 million, with capital contribution to be made in cash only. At least 20% of the registered capital (or subscribed capital contribution) shall be in place within three months of the date of the issuance of the business license, with the balance to be paid up within two years. 2. A foreign-funded equity investment management enterprise, when applying for establishment, shall have at least two senior management personnel who shall both meet with the following the requirements: 2.1 At least five years of practical experience in equity investment or equity investment management activities. 2.2 At least two years of experiences in taking the senior management duties. 2.3 Experience in the practice of China-related equity investment or practical experience in a financial institution in China.

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2.4 Have neither record of violating the laws or regulations, nor pending economic dispute lawsuits in the most recent five years; and a positive personal credit record. For the purposes of these Measures, the "senior management personnel" shall refer to the management personnel who assume the post of deputy general manager or higher level, or other posts with equivalent duties.

3. Foreign investors of foreign-funded equity investment enterprises applying to be under the pilot program shall meet the following requirements: 3.1 A sound governance structure and a comprehensive internal control system, without having penalties imposed by judicial authorities and relevant supervisory authorities in the most recent two years. 3.2 Foreign investors or affiliated entities thereof have relevant investment experience. 3.3 Primarily formed by foreign sovereign funds, pension funds, endowment, charity funds, fund of funds (FOF), insurance companies, banks, securities companies as well as other foreign institutional investors approved by the Leading Group. 3.4 Other conditions required by the Pilot Program.

4. An enterprise applying to be under the trial program shall submit the pilot application to the Financial Industry Development and Service Office of Shenzhen through the executive partner of the foreign-funded equity investment enterprise or the equity investment enterprise intended to be established. The Financial Industry Development and Service Office of Shenzhen Municipal Government shall carry out the preliminary examination and call the relevant entities of the Leading Group to undertake an evaluation for approval of the pilot enterprise.

5. The Market Supervision Administration of Shenzhen Municipality shall seek the opinion of the Financial Industry Development and Service Office of Shenzhen Municipal Government, when the following changes occur at the time a pilot enterprise undertakes the following registration matters: 5.1 Changes to the business scope. 5.2 Change in partners. 5.3 Increase or decrease in the amount of subscripted or paid-up capital contribution and payment deadline of the subscription or payment.

5.4 Change in type of the partnership enterprise.

6. When a pilot enterprise goes through the procedure of cancellation, the Market Supervision Administration of Shenzhen Municipality shall inform the Financial Industry Development and Service Office of Shenzhen Municipal Government.

Chapter 3 Operation

1. Foreign-funded equity investment enterprises and foreign-funded equity investment management enterprises that are authorized by the Leading Group may indicate the wording of "equity investment fund" or "equity investment fund management" in their names. Except for foreign-funded equity investment enterprises, other foreign invested enterprises may not use the words "equity investment fund" or "equity investment fund management" in their names.

2. Foreign-funded equity investment enterprises may engage in the following activities: 2.1 Within the scope permitted by the State, undertake equity investment entirely with self-owned funds. The specific methods of investment include establishing new enterprises, investing in established enterprises, accepting the transferred equities of investors in established enterprises, and other methods permitted by the laws and regulations of the State. 2.2 Provide management consultation to the invested enterprises thereof. 2.3 Other relevant activities that have been approved by the examination and approval authority or the registration authority.

3. Foreign-funded equity investment management enterprises may be engaged in the following activities: 3.1 Sponsor the establishment of equity investment enterprises. 3.2 Entrusted to manage the investment operations of an equity investment enterprise and to provide relevant services. 3.3 Equity investment consultation. 3.4 Other relevant activities that have been approved by the examination and approval authority or the registration authority.

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4. Foreign-funded equity investment enterprises and foreign-funded equity investment management enterprises shall not conduct activities that are forbidden by existing laws, regulations and relevant policies of the State.

5. The contribution of foreign investors in cash shall be freely convertible currency, off-shore RMB or the RMB profits obtained within the territory of China thereof, or legal gains in RMB obtained as a result of such activities as share swaps or liquidation. Capital contribution by Chinese investors shall be made in RMB.

6. A pilot enterprise shall authorize a local bank that satisfies the requirements to be the custodian of the funds. The custodian bank shall supervise the utilization of the fund in the entrusted account of the pilot enterprise to be real and compliant, ensuring that the utilization of the fund in the entrusted account is within business scope of the pilot enterprise and pursuant to laws and regulations.

7. The pilot enterprise that is authorized by the Leading Group shall have its investment and fund management activities administered by the Leading Group independently.

8. The pilot enterprise may allocate profit, settle account or withdraw capital in accordance with prospectus or partnership agreement.

Chapter 4 Supervision

1. The Leading Group shall be responsible for supervising the pilot program. Each Leading Group member shall properly carry out the corresponding administrative tasks in accordance with their functions.

2. The Financial Industry Development and Service Office of Shenzhen Municipal Government shall carry out record filing and administration for the pilot foreign- funded equity investment enterprises. A pilot foreign-funded equity investment enterprise shall submit a report of the material events that have occurred in the course of the investment operation in the previous half of the year to the Financial

Industry Development and Service Office of Shenzhen Municipal Government every half year. The material events stated in the previous paragraph shall refer to: 2.1 Investments made by the foreign-funded equity investment enterprise. 2.2 Investments made by the foreign-funded equity investment management enterprise. 2.3 Revisions to material legal documents such as contracts, articles of association or partnership agreements. 2.4 Changes in senior management personnel. 2.5 Changes in the foreign-funded equity investment management enterprise under authorized management. 2.6 An increase or decrease in registered capital (subscribed capital contribution). 2.7 Division or merger. 2.8 Dissolution, liquidation or bankruptcy. 2.9 Other matters required by the Financial Industry Development and Service Office of Shenzhen Municipal Government.

3. The duties that shall be carried out by the custodian bank of a pilot foreign-funded equity investment enterprise shall include, but is not limited to: 3.1 Submit regular reports to the Leading Group office and the relevant entities of the Leading Group on such information as the operating conditions of the entrusted funds, and the investment projects of the pilot foreign-funded equity investment enterprise. 3.2 At the end of each fiscal year, submit the annual report of the domestic equity investment conditions of the previous year of the pilot foreign-funded equity investment enterprise that has been checked to be consistent by all parties to the Leading Group office. 3.3 Supervise the investment operations of the pilot foreign-funded equity investment enterprise. In the event that an investment has been made in violation of the laws and regulations of the State or the trustee agreement, execution shall not be granted and a report shall be immediately made to the Leading Group office. 3.4 Other supervisory matters stipulated by the Leading Group.

4. The Financial Industry Development and Service Office of Shenzhen Municipal Government may seek to learn the status of a pilot foreign-funded equity investment

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enterprise for which a record has been filed by way of letter and telephone inquiry, visit, or consultation with the custodian bank, and build a social supervision mechanism.

A pilot foreign-funded equity investment enterprise for which a record has been filed that has violated the provisions of these Measures shall be investigated by the Financial Industry Development and Service Office of Shenzhen Municipal Government in consultation with relevant departments. If the situation proves to be true, the Financial Industry Development and Service Office of Shenzhen Municipal Government shall order that the said enterprise to make rectification within 30 working days. The Financial Industry Development and Service Office of Shenzhen Municipal Government shall cancel the filed record of the enterprise which did not make rectification in due time, make announcement to the public and shall make an investigation in consultation with relevant departments. Punishment shall be rendered according to the severity of the situation. If a crime is constituted, the criminal liability shall be pursued in accordance with the law.

5. Play the role of the self-disciplinary organizations of the industry, enhance the self-discipline of the industry.

Chapter 5 Supplementary Provisions

1. Investors of Hong Kong Special Administrative Region, Macao Special Adminis- trative Region and Taiwan that invest in and establish equity investment enterprises and equity investment management enterprises in Shenzhen may go through relevant procedures with reference to these Measures.

2. These Measures shall become effective as of the date of promulgation.

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Operational Rules on the Pilot Program for

Foreign-funded Equity Investment Enterprises in Shenzhen

(Shen Fu Jin Fa [2013] No. 3 February, 2013)

1. These Operational Rules have been formulated for the purposes of carrying out the Interim Implementation Measures for the Launching of a Pilot Program for Foreign-funded Equity Investment Enterprises in Shenzhen (Shen Fu Jin Fa [2012] No. 12), promoting and regulating the development of the equity investment sector in Shenzhen.

2. These Operational Rules apply to acceptance of application, evaluation and approval for the pilot program.

3. The Leading Group of Pilot Program of equity investment enterprises (hereinafter referred to as the Leading Group) will be responsible for application for the pilot program, which shall be convened by the leader of the Municipal Government in charge of such affairs. Member entities include the Economy, Trade and Information Commission of Shenzhen Municipality, the Market Supervision Administration of Shenzhen Municipality，the Financial Industry Development and Service Office of Shenzhen Municipal Government, the Authority of Qianhai, the Development and Reform Commission of Shenzhen Municipality, Shenzhen Branch of the People’s Bank of China. The office of the Leading Group shall be set up at Shenzhen Financial Services Office.

4. In order to increase approval efficiency, all units of the Leading Group shall give priority to approval, simplify approval procedure and ensure an efficient, well- organized and normative pilot program for foreign-funded equity investment enterprises

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5. The pilot program shall be implemented in accordance with the principle of “merit and fitness”. Foreign investors of foreign-funded equity investment enterprises applying to be under the pilot program shall have met at least one of the following requirements: 5.1 Self-owned assets worth not less than USD 100 million or managed assets worth not less than USD 200 million in the previous fiscal year prior to the application. 5.2 Holder of asset management license issued by the Securities and Futures Commission of Hong Kong (or other foreign financial regulatory authorities). 5.3 The world’s well-known equity investment institute. (Top 100 in terms of asset under management rated and published by authoritative institutions).

6. A foreign-funded equity investment enterprise, a foreign-funded equity investment management enterprise and a custodian bank applying to be under the trial program shall submit the application to the Leading Group office.

7. The Leading Group office handles application all year round and summons a meeting of member entities to decide whether to grant an approval periodically. Decision will be made within 30 working days after the process is set off.

8. The authorized pilot enterprise will be granted an approval document on business qualification by the Leading Group office.

9. The authorized pilot enterprise with approval document on business qualification granted by the Leading Group office shall go through relevant formalities in accordance with the following procedure: 9.1 Apply to the Economy, Trade and Information Commission of Shenzhen Municipality for Foreign Invested Enterprise Approval Certificate when establishing a foreign-funded equity investment management enterprise in the corporate form. 9.2 Apply to go through the registration formalities at the Market Supervision Administration of Shenzhen Municipality. 9.3 Go through the foreign exchange registration and settlement formalities at Shenzhen Branch of the People’s Bank of China.

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9.4 Sign a lease agreement with Qianhai Authority to acquire a virtual address if registered in Qianhai.

10. A foreign-funded equity investment enterprise or a foreign-funded equity investment management enterprise applying to be under the pilot program must register in Shenzhen.

11. A foreign-funded equity investment enterprise or a foreign-funded equity investment management enterprise applying to be under the trial program shall submit the following application document: 11.1 Application form for establishment of foreign-funded equity investment management enterprise (or foreign-funded equity investment enterprise); 11.2 Feasibility Report; 11.3 Prospectus of the foreign-funded equity investment management enterprise (or partnership agreement of the foreign-funded equity investment enterprise); 11.4 Candidates for legal representative of the foreign-funded equity investment management enterprise (or the candidate list for board members or the candidate list for partners of the foreign-funded equity investment enterprise, if any); 11.5 Business licenses or identity document of the foreign investors that are authenticated by notary public of the host country and Chinese Embassy (Consulate General). Investors of Hong Kong Special Administrative Region, Macao Special Administrative Region shall provide business licenses or identity document and proof of investor’s that are authenticated by local notary public in accordance to laws; 11.6 Proof of financial licenses issued by foreign financial regulatory authorities (if any); 11.7 Proof of self-owned asset and asset under management; 11.8 Notice of pre-approval of the company name issued by Market Supervision Administration of Shenzhen Municipality; 11.9 Relevant information of the custody bank and relevant document signed with the custodian bank; 11.10 A letter of commitment as to the authenticity of all of the abovementioned information presented by the applicant;

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11.11 Other information required by the Leading Group.

12. A custodian bank applying to be under the trial program shall submit the following application document: 12.1 The pilot application. The document to be appended shall include authorization for foreign exchange operations, qualification for keeping custody of domestic securities investment fund, approval to provide RMB services and proof of a comprehensive internal control and risk management system. 12.2 The project proposal with disclosure of service content of the entrusted fund, special packages, value-added services and experience of managing entrusted account.

13. All documents must be A4 size and stapled into book form. A set of three copies shall be provided. Photocopy must be stamped with the official seal of the applicant. An original copy shall be carried at the same time the application is submitted for the purpose of examination.

14. These Operational Rules shall come into force as of the date of promulgation.

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Circular by the State Administration of Foreign Exchange on the Pilot Reform Concerning Administration Methods of Foreign Exchange Capital

Settlement of Foreign Investment Enterprises in Certain Areas

(Hui Fa [2014] No.36 July 4, 2014)

The branches and the foreign exchange administration departments of the State Administration of Foreign Exchange (SAFE) in Tianjin, Liaoning, Jiangsu, Hubei, Guangdong, Sichuan, Beijing, Chongqing, Heilongjiang, Zhejiang, Fujian, Guangxi, Guizhou (autonomous regions and municipalities), the SAFE branches in Shenzhen and Qingdao:

In order to further deepen the reform of the foreign exchange administration system, and to better facilitate foreign investment enterprises’ (hereinafter referred to as “FIEs”) business operation and capital operation, the State Administration of Foreign Exchange (hereinafter referred to as the “SAFE”) has decided to launch a pilot reform concerning administration methods of foreign exchange capital settlement of foreign investment enterprises in certain areas. The pilot areas include Tianjin Binhai New Area, Shenyang Economic Zone, Suzhou Industrial Park, Donghu National Independent Innovation Demonstration Zone, Guangzhou Nanshan New Area, Hengqin New Area, Chengdu Hi-Tech Industrial Development Zone, Zhongguancun National Independent Innovation Demonstration Zone, Chongqing Liangjiang New Area, Border Development and Opening-up Regions in Heilongjiang Province in which pilot foreign exchange administration reform is carried out, Wenzhou Pilot Zone for Comprehensive Financial Reform, Pingtan Comprehensive Experimental Zone, China-Malaysia Qinzhou Industrial Park, Guiyang Comprehensive Bonded Zone, Shenzhen Qianhai Shenzhen-Hongkong Modern Services Cooperation zone, and Qingdao Comprehensive

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Wealth Management and Financial Reform Pilot Area. The relevant issues are hereby notified as follows:

1. Discretionary Settlement of Foreign Exchange Capital of FIEs Discretionary settlement of foreign exchange capital of FIEs means that an FIE may, based on actual business needs, settle with a bank the foreign exchange capital in its capital account for which the local SAFE branch has confirmed capital contribution rights. An FIE registered within the pilot areas may tentatively settle up to 100% of the foreign exchange capital in its capital account. This percentage could be adjusted by SAFE according to the balance of international receipts and payments.

While the option of discretionary settlement of foreign exchange capital is now available, FIEs may also choose the current payment-based settlement method when using their foreign exchange capital. Under the principle of payment-based settlement, for each foreign exchange settlement, the bank should review the enterprise’s last foreign exchange settlement (incl. both discretionary settlement and payment-based settlement) for the authenticity and compliance of its capital usage.

Domestic original currency transfers and cross-border foreign payments of FIEs’ foreign exchange capital are governed by the current regulations related to foreign exchange management.

2. FIEs’ RMB funds gained from foreign exchange capital discretionary settlements shall be deposited into the settled foreign exchange pending account An FIE should open a special account - settled foreign exchange pending account - with the bank where it opened its capital account, in order to deposit the RMB funds gained from foreign exchange capital discretionary settlements and to make various payments. RMB funds obtained under the payment-based settlement system shall not be managed in the settled foreign exchange pending account.

Incomings of FIEs’ capital account include, foreign investors’ overseas remittances of foreign capital or subscribed capital contributions (incl. contributions from non-resident deposit accounts, offshore accounts and overseas individuals’ domestic

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foreign exchange accounts), foreign exchange capital or subscribed capital contribution from margin accounts specific for margins remitted from offshore accounts; funds transferred back after being transferred out compliantly, funds remitted from capital account(s) under the same name, funds returned due to revoked trades, interest revenues and other incomes registered with or approved by SAFE.

Outgoings of an FIE’s capital account include, settlements within its business scope, settlements remitted into the settled foreign exchange pending account, domestic original currency funds transferred to the specific account for margins remitted from domestic accounts, to capital account(s) under the same name, to the entrusted loans account, to the specific account for the centralized management of funds, to the specific account for offshore lending, the specific account for domestic re-investments, and the specific account for foreign debts, outgoings incurred due to the capital reductions or divestments of foreign investors, payments made from the current account, and other capital account outgoings registered with or approved by SAFE.

Incomings of FIEs’ settled foreign exchange pending account include: funds remitted from its corresponding capital account(s), domestic asset realization account, and domestic re-investment account, funds transferred back after being transferred out compliantly, funds returned due to revoked trades, interest revenues and other incomes registered with or approved by the SAFE.

Outgoings of an settled foreign exchange pending account include: settlements within its business scope, funds used for RMB margin and remitted to the specific account of centralized management of funds, repayment of RMB loans that have been used up, foreign exchange purchases and payments or direct repayment of external debts, capital reductions or divestments by foreign investors for foreign exchange purchases or direct payments, foreign exchange purchases or direct payments for current account outgoings, and other capital account outgoings registered with or approved by SAFE. Without the permission of SAFE, RMB funds in the settled foreign exchange

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pending account shall not be used for purchases of foreign exchange and remitted into the capital account. Funds in a settled foreign exchange pending account shall not be transferred to another settled foreign exchange pending account of the same name. RMB funds transferred out from settled foreign exchange pending account(s) for guarantees or payments of other margins shall be transferred back into the settled foreign exchange pending account, except for the cases of guarantee performance or breach of charges.

3. The FIEs’ capital should be used truthfully for the FIE’s own operational purposes within its scope of business. An FIE shall NOT use its capital and RMB funds obtained through discretionary foreign exchange settlement for any of the following purposes: 3.1 It shall not, directly or indirectly, use the foregoing capital and funds for expenditures beyond its business scope or for expenditures prohibited by the laws and regulations of the State; 3.2 It shall not, directly or indirectly, use the foregoing capital and funds for investment in securities, unless otherwise prescribed by laws and regulations; 3.3 It shall not, directly or indirectly, use the foregoing capital and funds to disburse RMB entrusted loans (unless it is within its business scope), repay inter- company loans(including third-party advances) or repay RMB bank loans that have been sub-lent to third parties; or 3.4 It shall not use the foregoing capital and funds to pay expenses relating to the purchase.

4. Facilitating FIEs to carry out domestic equity investment with settled foreign exchange. Excepts for domestic equity investment involving equity investment payment, FIEs with investment as the main business (including foreign investment companies, foreign-invested venture capital enterprises and foreign-invested equity investment enterprises) are allowed to directly settle their foreign exchange capital and transfer that amount into the account of an enterprise being invested, provided that the relevant domestic investment project is real and compliant. The settlement of foreign exchange capital by Investment FIEs for purposes other than for equity investment

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in domestic enterprises is still governed by payment-based settlement.

The domestic equity investment involving equity investment payments made by ordinary FIEs other than the above FIEs is governed by current regulations on domestic equity reinvestments. If using settled foreign exchange as domestic equity investment, the enterprise being invested shall first conduct domestic reinvestment registration and open a corresponding Account Pending Foreign Exchange Settlement Payment with the local foreign exchange bureau, after which the FIE transfers the RMB funds obtained from foreign exchange settlement, consisting of the actual amount of its investment, to the Account Pending Foreign Exchange Settlement Payment opened by the enterprise being invested. If investee companies continues with domestic equity investments, the above principles apply.

5. Further standardize the payment management of settled foreign exchange 5.1 Foreign investors, FIEs and other related applications subject are required to provide relevant authentic evidence to the foreign exchange bureau and bank, and then fill in ‘Direct Investment Related Account Payment Command Letter’ (see annex) when conducting the payment of RMB funds obtained from foreign exchange settlement (including direct payment of foreign exchange).

5.2 Banks should follow the principles of “understanding of customers”, “understanding of business” and “due diligence” and should undertake the responsibility for the authenticity of the audit when transacting the external payment of FIEs and payment of RMB funds obtained from foreign exchange settlement. Banks are required to audit the authentically and compliance of evidences of prior payment before each transaction of payments. Banks are required to retain the relevant evidences of settlement and payment of FIEs for five years. Banks should follow the requirement of SAFE as states in the Financial Institutions Foreign Exchange Business Data Acquisition Norms(Version 1) (Hui Fa [2014] No. 18) and submit the information of capital account, settled foreign exchange pending account (the nature of account code 2113) and relating account, cross-border payments and domestic transfer, and the exchange settlement account. When transferring funds between settled foreign exchange pending accounts and other

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RMB accounts, bank should submit the proof of payment within the territory to record the domestic transfers and fill in the code of funds use in the “invoice number” column (according to Hui Fa [2014] No.18 ‘7.10 The code of settlement use’); except for the payments of verified trades, the trading code of other transfers is ‘929070’.

5.3 For the FIEs do have a special reason unable to provide the evidences of authenticity temporarily, bank can transact related payments for FIEs under the premise of diligent review and confirming the real trading background. And bank should submit special events records to foreign exchange bureau through the relevant business system at the day of payment transaction. Bank should receipt and review the late submitted relevant evidences of FIEs 20 days after the completion of payments and should report of special events for the situation of late submission of evidence of authenticity to foreign exchange bureau through the relevant business system.

For the FIEs to use the capital fund in the name of petty cash, banks can require the FIEs to provide proofs of the authentically. The monthly limit of petty cash of a single FIE shall not exceed 600000 RMB.

For the FIEs applying a single payment by using all RMB in settled foreign exchange pending account or all foreign exchange capital, if FIEs cannot provide the proof of authentically, banks cannot conduct any settlement or payment for FIEs.

6. The settlement and management of foreign exchange account funds under other direct investment The fund settlement of domestic liquidity account and domestic reinvestment account of domestic institution refers to the capital account management of FIEs

The domestic liquidity account and domestic reinvestment account of domestic personal and the foreign liquidity account of domestic personal and domestic institution can be settled directly in bank with the registration certificate of foreign

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exchange bureau related business.

The fund settlement of preliminary expense account by foreign investors is governed by payment-based settlement.

The foreign exchange in overseas imported special margin account and domestic imported special margin account cannot be settled. Except for when guarantee performance or breach of charges, related margin should transfer to other foreign capital account approved and registered by the foreign exchange bureau and be used under relevant regulations.

The interest and investment income from the above direct investment account can be settled directly in bank under the relevant provisions of the current foreign exchange management.

7. Further reinforce the supervision and investigation by foreign exchange bureaus 7.1 According to the Regulations on the Foreign Exchange System of the People's Republic of China, Provisions on Foreign Exchange Administration of Direct Domestic Investments by Foreign Investors, foreign exchange bureaus should reinforce the business compliance guidance and verifications to the banks with FIEs capital settlement businesses. The verifications are including: require related main business subjects providing written instructions and operational materials, interview the person in charge, on-site inspection or copying the main businesses related information, reporting the violations and other irregularities. The banks with serious and willful violations would be suspended their foreign exchange capital businesses according to the relevant procedures. The FIEs with serious and willful violations would be disqualified. Before submitting a written explanation letter and corresponding corrections, they cannot conduct other foreign exchange capital businesses.

7.2 Once the FIEs and banks conducting settlement of foreign capital exchange and relating business violate this notice, the foreign exchange bureau will investigate

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and penalize according to the Regulations on the Foreign Exchange System of the People's Republic of China.

8. Other relevant issues This notice will be implemented as of August 4, 2014. This notice will prevail the prior inconsistent provisions. The foreign capital settlement of FIEs in pilot regions will be exempted from the Circular of the General Affairs Department of the State Administration of Foreign Exchange on Issues Concerning the Improvement of Business Operations with Respect to the Administration of Payment and Settlement of the Foreign Exchange Capital of Foreign-invested Enterprises (Hui Zong Fa [2008] No.142) and the Supplementary Circular of the General Affairs Department of the State Administration of Foreign Exchange on Issues Concerning the Improvement of Business Operations with Respect to the Administration of Payment and Settlement of the Foreign Exchange Capital of Foreign-invested Enterprises (Hui Zong Fa [2011] No.88).

Every pilot branches and foreign exchange management departments, please forward this notice to central sub-branches, sub-branches and banks in pilot areas. In case of any problems, please timely give feedback to Capital Management Division of the State Administration of Foreign Exchange.

Annex: Direct Investment Related Account Payment Command Letter

State Administration of Foreign Exchange July 4, 2014

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Measures on Finance Leasing Company Supervision

and Management

(Shang Liu Tong Fa [2013] No.337 September 18, 2013)

Chapter 1 General Principles

1. In order to promote the healthy development of China's financial leasing industry, standardize the business practice of financial leasing company, guard against operational risks, in accordance with the "Contract Law", "Property Law", the "Company Law" and other laws and regulations, and relevant provisions of the Ministry of Commerce, these Measures are hereby formulated.

2. The financial leasing company mentioned in this measure refers to enterprises engaged in finance leasing business in accordance with relevant provisions of the Ministry of Commerce.

The finance leasing business mentioned in this measure refers to the trading activity which the lessee pays the lease to the lessor for the usage of the required asset that the lessor purchased from the seller.

Financial leasing business should serve the real economy directly. It should play an important role in promoting the development of the equipment manufacturing industry, SME financing, upgrading business technology, equipment import and export, commodities circulation and so forth. It is a significant means to promote sector cooperation and development of the real economy.

3. Financial leasing company should have assets scale compatible to its business scale, financial strength and risk management capabilities. For those foreign investors

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which apply to set up financial leasing company must also comply with the relevant provisions of foreign investment.

4. Financial leasing company should have staff with professional knowledge, skills and experience in finance, trade, law, accounting and other relevant knowledge. They should have good track records, with no less than three years working experience in financial leasing, leasing or financial institutions as general manager with operation management experience, deputy general manager in charge of risk control or other senior executives.

5. The operation of business activities of financial leasing companies must abide by the provisions of the laws, regulations, and rules of the People's Republic of China, and must be harmless to national interests and public interests.

6. Ministry of Commerce is responsible for the implementation of national supervision of financial leasing companies. Provincial Commerce Authorities are responsible for the supervision of their respective administration area of financial leasing companies.

Provincial Commerce Authorities mentioned in this measure refers to commerce authorities of provinces, autonomous regions, municipalities, cities with independent planning, and Xinjiang Production and Construction Commerce Authority.

7. Financial leasing companies are encouraged to offer rental services through direct leasing or other methods to enhance the comprehensive asset management capabilities, carry out specialization and differentiation in management.

Chapter 2 Operating Rules

8. Financial leasing company is permitted to conduct direct leasing, sub-leasing, sale and leaseback, leveraged leasing, entrusted leasing, joint leasing and other forms of financial leasing business in conformity with relevant laws, regulations.

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9. Financial leasing company should take finance leasing as their main business, and is permitted to carry out finance leasing and leasing business-related properties purchase, lease residual value of property impairment reversal and maintenance, leasing transaction advisory and guarantee service, the transfer of receivables to third parties, acceptance of rental deposit and other business approved by relevant authorities

10. The leased property in a financial leasing business conducted by financial leasing company should have clear ownership and real existing profitable rights. Financial leasing company should not engage in deposits, loans, entrusted loans and other financial services. Without the approval of relevant authorities, finance leases and other business enterprises should not engage in lending with business partners in the same sector. Fund-raising activities undertaken by non-financial leasing business by using the name of finance lease were illegal.

11. If financial leasing company is importing leased property which requires import quota and license, the party who purchase the leased property or the property owner should complete relevant procedures with relevant provisions.

If financial leasing company is conducting business which is involved in foreign exchange management matters, they should comply with the relevant provisions of the State Foreign Exchange Administration.

12. Financial leasing company should, in accordance with the relevant provisions, establish a sound financial accounting system, accurately record and reflect the financial situation of enterprises, operating achievement and cash flows.

13. Financial leasing company should establish a sound internal risk control system, develop a good classification system for risk assets, a lessee credit assessment system, a recovery and disposal system and risk warning mechanism.

14. For the purpose of risk control and mitigation, the financial leasing company financial should carefully investigate their leasing projects, fully consider and

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evaluate the lessee's sustainable rent-paying capability, take a variety of ways to reduce their default risk, and strengthen their leasing project assessment and post-management.

15. Financial leasing companies should establish a connected transaction management system. When financial leasing companies vote or decide for the lessee for associated business transaction, all persons affiliated with the associated transactions should be avoided.

When financial leasing companies purchase equipment from associated production companies, the settlement price of the equipment should not be significantly lower than the price which the manufacturer sold to any third parties or price of equivalent quantities of equipment.

16. Financial leasing companies’ entrusted leasing and sub-leasing assets should be managed separately and their accounts should be prepared independently. Financial leasing company and lessee should reach a consensus on financial leasing related businesses such as guarantees and insurance to ensure secure transaction.

17. Financial leasing company should strengthen the management for the key lessee, control the business proportion from a single lessee and the lessee as associated parties, and pay attention to the prevention and diversification of business risk.

18. Financial leasing companies must complete the registration formalities according to relevant law and regulation of which the ownership of the leased property must be registered. If the leased property is not required to be registered, financial leasing company is encouraged to register in a specified system of commerce authorities to declare the ownership of the leased property.

19. Leaseback subjects should be able to play a role as economic function, and produce substantial economic benefit. The financial leasing company should pay attention to strengthening risk control when conducting leaseback business.

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20. Financial leasing companies should not accept the followings as subject matters for sale-leaseback business: the lessee has no transfer right on the objects, mortgages have been established on the objects, sealed or detained objects, or other defects on the ownership of the objects.

Before financial leasing companies sign leaseback agreements, they should review all related invoice of the leased object, purchase contracts, registration certificates, proof of payment, and documents for transfer of property rights and other evidences to confirm the property right of the objects.

21. Financial leasing companies should fully consider and objectively assess the value of the asset in sale-leaseback transactions. The purchase price of the assets should be reasonable and is not violating the pricing rules of accounting standards, and purchasing low value assets with high price was not permitted.

22. The risk assets of financial leasing companies may not exceed 10 times of the total amount of net assets.

23. Financial leasing companies should pay various taxes in strict accordance with relevant national provisions in a timely manner. Tax evasion or taxing a non-financial leasing business as a financial leasing business is strictly prohibited.

Chapter 3 Supervision and Management

24. Ministry of Commerce and the Provincial Commerce Authority should perform their regulatory duties in accordance with laws, regulations and rules of the Ministry of Commerce.

During the procedure of performing supervision duties by the commercial authorities, the management should be strengthened by law, and the business secrets of companies which they aware of are strictly confidential.

25. Provincial commerce authorities should strengthen their supervision management

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for financial leasing companies through a variety of ways, and continue to monitor business condition and risk of financial leasing companies; To strengthen the building of supervision team, place relevant staff in accordance with regulatory requirements and responsibilities, enhance professional business training and improve the level of supervision of staff.

26. Provincial commerce authorities should establish a notification mechanism for major event, risk warning mechanism and emergency handling mechanism, and should timely and effectively handle any emergencies in financial leasing industry.

27. In daily supervision, the Provincial commerce authorities should strictly supervise financial leasing company for illegal operations such as deposit acception, loan issuance, and operations beyond scope. The detailed description of such activities should be immediately reported to relevant department and Ministry of Commerce once the above mentioned operation is found.

28. Provincial commerce authorities should regularly analyze various key indicators including but not limited to the proportion of associated business transactions, risk asset ratio, the proportion of single-tenant services business, rent overdue rate, and pay attention to those companies with high indicators and potential operational risk.

Ministry of Commerce may delegate industry associations or other intermediary organizations to help understanding the situation.

29. Provincial commerce authorities should hand in written report of the details of development of financial leasing companies and regulatory conditions of their respective administrative areas in previous year to Ministry of Commerce annually on or before June 30. Major problems should be reported immediately once found.

30. Ministry of Commerce should establish and refine the "National Financial Leasing Enterprise Management Information System", information such as business activities, internal control and risk profile shall be understood and supervised through the use of information technology, the level of management and risk control

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capacity of financial leasing business shall be improved.

31. According to the requirement by Ministry of Commerce, financial leasing companies should use national financial leasing enterprise management information system to report relevant data in time. After the end of each quarter, company should report statistics of operation and a brief description of operation condition of last quarter within 15 working days. They should also complete last year’s annual statistics of operation and description, and submit an annual financial report audited by auditors before 30 April each year (including the Notes).

32. Financial leasing companies should inform provincial commerce authorities before making change in company names, registered address, registered capital, organizational structure, ownership structure and so on. Foreign-invested companies should go through examination and approval, filing, and other procedures in accordance with relevant provisions if any of the above mentioned changes is to be made.

Finance leasing company should modify their information of the above mentioned changes through national financial leasing enterprise management information system within 5 working days after the business registration procedures.

33. Commercial departments should pay attention to utilizing the role of industry associations, encourage industry associations to actively carry out industrial training, accreditation of staff, theoretical research, dispute resolution and other activities, support industry associations to strengthen the industrial self-regulation and safeguard the interests of the industry by law, coordinate with related authorities to carry out supervision of the industry, and maintain a fair and orderly market competitive environment.

34. If financial leasing companies have violated relevant laws, regulations, rules and regulations in these Measures, they should be penalized according to relevant regulations.

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Chapter 4 Supplementary Articles

35. Ministry of Commerce is responsible for the explanation of these Measures.

36. These Measures shall come into effect as of October 1, 2013.

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Notice by the General Office of the Ministry of Commerce on Strengthening and Improving the Approval and Administration of Foreign-Funded Financial Leasing Companies

(Shang Ban Zi Han, 2013 No.657, 11th July 2013)

Chapter 1 General Principles

The authorities of commerce of all provinces, autonomous regions, municipalities directly under the Central Government, cities separately listed on the State Plan, and Xinjiang Production and Construction Corps:

In recent years, with the rapid development of foreign-funded financial leasing companies, these companies are becoming important carriers and platforms for the effective use of domestic and overseas funds and the rational allocation of resources, of which investors become more diversified, service areas continue to be expanded and business mode is innovated continuously. In order to strengthen guidance to the approval of foreign-funded finance leasing companies at all localities and promote the sound development of the leasing industry, you are hereby notified of relevant matters as follows:

1. All local authorities of commerce shall, in the joint annual inspection of foreign-funded enterprises for the current year within their administrative regions, strengthen the information statistics and follow-up inspection on the foreign-funded financial leasing enterprises established after June, 2010. All local authorities of commerce shall, in accordance with the requirements of the Measures for the Administration of Foreign-Funded Lease Industry (hereinafter referred to as the “Administrative Measures”), gather and submit the business operation reports of foreign-funded financial leasing companies within their administrative regions for

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the previous year (see the specific format in Annex 1) and the financial reports audited by accounting firms to the Ministry of Commerce (Department of Foreign Investment Administration) before 30th of June 30 of each year (before 15th of August in 2013).

2. The Leasing Industry Committee of the China Association of Foreign-invested Enterprises (hereinafter referred to as the “The Leasing Industry Committee”) is responsible for the gathering and verification of reported materials. The Leasing Industry Committee should be noticed of the delayed report under any special circumstance before the specified date.

3. The name of company which has submitted documents as required shall be listed on the official website of the Ministry of Commerce (Column ‘Results Announcement’ on the website of Department of Foreign Investment Administration). Local governments are not permitted to complete subsequent changing formalities for those foreign-invested companies of which the company names are not announced on the official website of the Ministry of Commerce of the People’s Republic of China.

4. Those enterprises which did not start up a business, failed annual inspection and committed any illegal act should be urged and supervised during its correction. Timely report regarding the situation should be made to the Ministry of Commerce (Department of Foreign Investment Administration).

5. Local Governments should fulfill the commitment of the supervising institutions of foreign-invested leasing industry and foreign investment, enhance the subsequent management of foreign-invested leasing companies and coordinate their business development according to the Guidance of Entry Approval for Foreign-invested Leasing Company (see annex 2).

6. Foreign-invested leasing companies are not permitted to operate financial businesses such as deposit acception, loan issuance or loan entrustment. Without the approval from relevant department, businesses such as inter-bank offer and equity investment

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are not allowed to engage.

7. In order to manage fiscal and financial risks, according to the Notice of the State Council on Issues Concerning Strengthening the Management of Local Government Financing Platform Companies (Guo Fa [2010] No.19), foreign-invested financial leasing companies are not permitted to, directly or indirectly, finance any local government platform companies which engages in social welfare projects.

Annex: I. Statistics on the operation of foreign-invested financial leasing companies (omitted) II. Guidance of Entry Approval for foreign-invested financial leasing companies

Ministry of Commerce July 11, 2013

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Annex II:

Guidance of Entry Approval for Foreign-invested Financial Leasing Companies

1. Conditions on application 1.1 Regarding the qualification of investors 1.1.1 The applicants have to be companies, corporations or other economic organizations. Foreign investors or foreign holdings should be legally registered overseas with excellent credit and practical businesses. 1.1.2 Investors should provide the approval organizations with each of their auditing report of the most recent year which is approved by an accounting firm, those commented as equity insolvency are not qualified for the application. The total asset of foreign investors is amounted at least 5 million USD. 1.1.3 Investors with duration of operation less than 1 year are not qualified for the application. Qualified foreign investors establishing financial leasing companies in the name of special purpose vehicles are not subject to said requirement.

1.2 Regarding the qualification of practitioners 1.2.1 ‘Professionals’ mentioned in Rule 9.3 of Regulations on Foreign- invested Financial Leasing Companies means staff with excellent working record, related knowledge, skills and working experience such as financial service, trading, legal, accounting and engineering and technology management, demanded by his job duties. 1.2.2 ‘Senior Management’ means General Manager (Assistant General Manager), Head of departments, Chief Operation Officer, Financial Controller, Chief Risk Officer and Business Manager. 1.2.3 ‘With Corresponding Competency’ means being equipped with the expertise of his business areas and obtaining relevant license certificated by corresponding supervising institutions or authorized organizations, generally holding a bachelor degree or above.

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1.2.4 ‘At least 3 years of working experience’ means 3 years or more of working experience in managing financial leasing companies or related financial companies.

2. Application Materials 2.1 The authority should be aware of the application of establishing foreign- invested financial leasing companies, whether it includes major content such as a feasibility report with all required content, its business plans (direction and area), organization structure, cost-effectiveness analysis and risk management analysis.

2.2 The authority should verify whether the registered capital is fully funded and require the company to explain the situation of its businesses, operation and its use of proceeds, etc, for the capital increase application of established foreign-invested financial leasing companies.

2.3 If an investor and its holdings simultaneously establish more than one financial leasing companies within the border, they should submit an auditing report, capital verification report (must be submitted on schedule), and the explanation of its business situation. There should be a clear distinction between the business areas of the newly established one and the previously established one.

3. Approving Guidelines 3.1 The company name of foreign-invested financial leasing companies must be stated with ‘leasing(融资租赁)’.‘financial leasing (金融租赁)’must not be included in its name and business scope.

3.2 Financial leasing companies may operate financial leasing-related guarantee business as its minor business, and‘Guarantee (担保)’must not be included in the company name.

3.3 The background information of the actual beneficial owner must be disclosed and foreign asset review must be strictly conducted.

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3.4 ‘Total Amount of Investment’ does not need to be specified in joint venture contract or constitution. Item ‘Total Amount of Investment’ should neither exist in reply nor the certificate of permission. The registered capital must be USD 10 million or above.

3.5 The contribution ratio of foreign investment must be 25% or above.

3.6 If joint venture contract stipulates contribution by installments, the first installment of the contribution by foreign investors must not less than 15% of the subscribed capital contributions, and should be submitted no later than 3 months after the issuance of its operating license. Before all subscribed capital contribution has been submitted, the foreign investors should not be empowered with decision-making right of the enterprise, and its interests and assets should not be consolidated and included in their financial statement.

3.7 The duration of operation is generally less than 30 years.

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Opinions by the General Office of the State Council on Acceleration of the Development of Aircraft Leasing Industry

(Guo Ban Fa No. [2013] 108, December 19, 2013)

The people’s governments of all provinces, autonomous regions, and municipalities directly under the Central Government; all ministries and commissions of the State Council; and all institutions directly under the State Council:

As a productive service industry supporting the development of the aviation industry, the aircraft leasing business is an important industry correlated to aviation manufacturing, transport, general aviation and financial industry. Since the beginning of the new century, the aircraft leasing industry in China has developed rapidly, and the result was remarkable. However, due to various factors such as late starting, immature internal and external environment, there exists a large gap between the aircraft leasing industry in China and that in developed countries, problems such as the lack of the core competitiveness of enterprises, the imperfection of policy measures, and the weak linkage between industries remain conspicuous. Along with the advancement of building an affluent society in our country, the great potential of aircraft leasing business is revealing. In order to further advance the implementation of “Big aircraft” strategy and the transformation and upgrade of the manufacturing industry, improve the quality of aviation service, and optimize resources allocation, upon the approval of the State Council, the opinions on accelerating the development of aircraft leasing industry are provided as follows:

1. Seize the favorable opportunity to accelerate the development of aircraft leasing industry Accelerating the development of aircraft leasing business is conducive to the expansion of the scale of the fleet, improvement of the quality of aviation service

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and the overall capability to handle emergencies, optimization of finance resources allocation, and the promotion of the diversification of financial business and the balance of international payments, thus it has important practical significance and far-reaching strategic significance. In recent years, the aviation market in our country has developed rapidly and is becoming the most important emerging aviation market in the world. The next ten to twenty years will be the crucial period for exploiting the big aircraft market and the transforming and upgrading of the aviation manufacturing industry in our country, it is also the golden period for the development of the aircraft leasing industry in China. Currently our country is in a significant stage for the development of economic transformation and the fostering of new strategic industries, we should seize the favorable opportunity to accelerate the development of aircraft leasing business.

2. The full implementation of “Three Steps” strategy The spirits of the 18th party congress of the party and Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee shall be implemented, the reformation and opening up shall be deepened, the international and domestic market shall be faced, resources of all aspects shall be fully utilized; Business entity shall play a major role, the scale of policy support shall be enhanced, company and capital of all aspects shall be encouraged to enter the aircraft leasing industry, the core competitiveness of China’s aircraft leasing company shall be increased gradually, the coordinated development of aircraft leasing industry, aviation manufacturing industry, aviation transportation industry, and related industries shall be promoted, the “Three Steps” strategy shall be fully implemented.

Before 2015, under the circumstance of China, we should respect the market trend, learn from international experiences, and put forth efforts to create a policy environment that is conducive to the development of aircraft leasing industry.

Between 2015 and 2020, the environment for development shall be further optimized, government guidance shall be strengthened, and leading enterprises shall be fostered. The strengthening and expansion of domestic aircraft leasing market shall be supported, and the international market shall be actively exploited.

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Between 2020 and 2030, the cluster of aircraft leasing industry shall be created. Numbers of aircraft leasing companies with international competitiveness shall be developed. China shall become an important distribution center of aircraft leasing industry.

3. Policies and measures for promoting the healthy development of aircraft leasing industry 3.1 To improve purchasing and leasing management. The decision-making power of company shall be respected, aircraft leasing company shall be permitted to order and import aircraft directly. In accordance with relevant provisions, relevant government departments shall review and process related formalities independently for aircraft leasing companies which order and import foreign aircraft. 3.2 To increase financial support. The expansion of financing channels for qualified aircraft leasing company shall be supported, measures for financing shall include but not limited to issuing financial bond, corporate bond, short-term commercial paper, medium term note, and asset securitization. All types of funds such as PE fund, VC fund, and insurance fund shall be encouraged to enter aircraft leasing industry. 3.3 To optimize tax policies. Financing company shall enjoy same tax preferential policies as the airline company does when importing and leasing aircraft to domestic airline company under general trading procedure. The stamp duty of sales and purchases contracts, which occurred when aircraft leasing company is purchasing aircraft, is tentatively exempted for five years. 3.4 To expand the international market. Aircraft leasing company shall be supported to expand global business by using methods included but not limited to overseas investment, and merging and reorganization. By utilizing the advantage of Hong Kong’s role as the center for finance, trading, and shipping, aircraft leasing company shall be encouraged to establish specialized subsidiary company in Hong Kong for the purpose of expanding overseas market and improving level of internationalization. 3.5 To enhance risk management. A supervision mechanism shall be established based on moderate prudence, joint coordination, and scientific effectiveness. In order to prevent vital decision mistake being made and systematic risk being happened,

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under the premise of independent decision-making and assumption of risk, aircraft leasing company shall be urged to deepen the reform, complete their management structure, increase professional skill level, strengthen internal control, be aware of relevant law and policy in time, and be able to accurately judge market trends. 3.6 To create a more favorable environment. Supportive professional services such as accounting, auditing, taxation, insurance, evaluation, consultancy, agency, customs declaration, solicitor, arbitration, maintenance shall be developed. The entry-exit of aircraft, nationality registration and airworthiness management shall be improved, relevant supporting policies of customs special supervision zone shall be explored and innovated. The laws and regulations related to aircraft asset registration, trusteeship, trading, disposition, etc. shall be promoted. The establishment and expansion of aircraft trading market shall be accelerated. Aircraft leasing company shall be encouraged to develop domestic aircraft leasing business. Industry members shall play a role as the bridge and hub, and the self-discipline of the industry shall be reinforced. 3.7 To support piloting and pioneering programs. The industrial advantages established in Tianjin Binhai New Area, Shanghai Pudong New Area, and Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone shall be fully utilized, measures such as the withdrawal of risk reserve by aircraft leasing company in these three places shall be studied and explored, and the piloting and pioneering of such measures on the premise of controllable risk shall be encouraged.

Relevant departments in all regions shall be fully aware of the important significance of accelerating the development of aircraft leasing industry, achieve mental emancipation and reach a consensus, enhance the consciousness of the overall situation, strengthen organizational leadership, promote active communication and coordination, supervise with prudence by law, form a join-force of work, and advance the sustainable and healthy development of the aircraft leasing industry in our country.

State Council of People’s Republic of China December 19, 2013

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Opinions on Promoting the Pilot Program of Financial Leasing Industry in Shenzhen Qianhai Bonded Trade Port

(Shen Fu Jin Fa [2014] No.3 January 16, 2014)

In accordance with “the establishment of institutions such as finance leasing companies, auto finance companies, consumer finance companies and small loan companies to help strengthen the market operation shall also be supported” from the Overall Development Plan for the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, in order to advance the “Qianhai shall be supported to set up various kinds of innovation-oriented financial institutions conducive to amplifying the functions of the market, and to explore and advance the development of the trading platform for new types of factors. The reform of financial systems and mechanisms and the innovation of business models in Qianhai with a focus on serving the real economy shall also be supported” from the Approval of The State Council on “The Supporting Policies of the Development and Opening up of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen” (Guo Han [2012] No. 58), and to support the pilot program of exploring the financial leasing business innovation of Shenzhen Qianhai Bay Bonded Trade Port, our opinions on supporting the pilot program of financial leasing business in Qianhai are given as follows:

1. Market Entry Requirement 1) Financial leasing company (includes both foreign-funded and piloting domestic financial leasing company) shall be permitted to establish SPC and conduct financial leasing business (includes both financial and operational leasing) in Qianhai Bay Bonded Trade Port. The registration of SPC shall be processed by following the registration procedure for general company at the Market Supervision Administration of Shenzhen Municipality, and minimum registered capital is not required.

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2. Customs policy 2) All policies of Free Trade Port Zone shall be applicable to financial leasing company and SPC registered at the approved addresses within the boundary of the Qianhai Bay Bonded Trade Port.

3) The financial leasing company and the domestic aircraft company may issue a joint letter of assurance to the customs for tax payment assurance when domestic aircraft company is leasing imported passenger and cargo aircraft weighted over 25 tons from the financial leasing company or the SPC registered in Qianhai Bay Bonded Trade Port under the stipulation of General Administration of Customs of the People's Republic of China’s notice of strengthening the administration of tax reduction and exemption for importing aircraft by domestic aircraft company (GACC document No. [2011] 88).

4) In accordance with relevant state regulations, the domestic lessee shall enjoy preferential tax rate when leasing imported passenger and cargo aircraft weighted over 25 tons from the financial leasing company or the SPC registered in Qianhai Bay Bonded Trade Port, provided the customs declaration is done by the aircraft company and the pre-registration is done by the leasing company

5) The domestic lessee shall be permitted to pay tariff and import value-added tax by installment when leasing imported aircraft, vessel or large-scale equipment under bonded supervision from the financial leasing company or the SPC registered in Qianhai Bay Bonded Trade Port who also processed the entry pre-registration formalities. The financial leasing company and the lessee may issue joint letter of assurance to the Customs for tax payment assurance.

6) The entry formalities and docking for aircraft imported for leasing purpose is to be processed in designated temporary runway and dedicated area at Shenzhen Baoan International Airport.

3. Cross-border financing policy 7) Under the premise that all documents for proving the authenticity of the purchase of

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aircraft, vessel or large-scale equipment can be provided, the financial leasing company or the SPC registered in Qianhai Bay Bonded Trade Port shall be supported and assisted to obtain cross-border foreign currency capital by filing application to relevant state departments.

8) In order to expand financing channels, the financial leasing company or the SPC registered in Qianhai Bay Bonded Trade Port shall be supported to obtain cross-border RMB funds from Hong Kong’s financial institutions which provide RMB businesses.

Notes: SPC (Special Purpose Corporation) is an asset based (such as the aircraft, vessel, large equipment, etc.) SPV (Special Purpose Vehicle) established by the financial leasing company for risk isolation purpose.

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Interim Detailed Rules on Piloting Approving Foreign-invested Commercial Factoring Enterprises in Shenzhen

(Shen Jing Mao Xin Xi Wai Zi Zi [2013] No.73, August 12, 2013)

1. In accordance with Supplement 9 to CEPA that “Service providers of Hong Kong and Macau are permitted to establish commercial factoring enterprises in pilot areas in Shenzhen and Guangzhou" and Notice of the Ministry of Commerce on Permitting Service Providers of Hong Kong and Macau to Establish Commercial Factoring Enterprises in Pilot Areas in Shenzhen and Guangzhou (Shang Zi Han [2012] No.1091), we hereby, formulate the details to build up a commercial factoring system with a robust market, integrated functions and efficient services through the introduction of foreign investment.

2. Service providers from Hong Kong and Macau are permitted to establish foreign-invested commercial factoring enterprises (hereinafter referred to as the “commercial factoring enterprises”) in the form of Chinese-foreign equity joint venture, Chinese- foreign contractual joint venture or foreign-invested enterprises.

3. Applicants of commercial factoring enterprises from Hong Kong and Macau shall have excellent reputation. The senior management should include two or more management staff with management experience in finance industry and zero bad credit record. Service providers in Hong Kong and Macau should conform to the definition of "service provider" and related requirements stated in "CEPA to Hong Kong", the "CEPA to Macau" and its supplements.

4. Commercial factoring companies may engage in services such as trade financing, sales ledger account management, customer credit investigation, management and collection of accounts receivable and credit risk guarantees; but not permitted to

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engage in financial businesses such as accepting deposits and loans issuance and are restricted to specifically engage in or to be a fiduciary in collection business; and prohibited from debt collection.

5. The registered capital must be no less than RMB 50 million. The operating capital should be the registered capital, indirect financing such as bank loan, direct financing such as bond issuance and short-term external debt and mid long-term external debt. Risky asset must not be 10 times more than net asset value at the business starting time. Risky asset is confirmed by total asset minus cash, deposits and national debts.

6. The establishment and changing of commercial factoring companies must be approved by the Economy, Trade and Information Commission of Shenzhen Municipality (hereinafter referred to as ‘the Committee’) in accordance with the existing approval authority. After the issuance of ‘the certificate of approval for foreign-invested enterprises’, the application is then submitted to the Provincial Bureau of Foreign Trade and Economic Cooperation of Guangdong Province for record.

7. Commercial factoring companies with approval of establishment may apply for registration formalities to the Municipal Market Supervisory Authority; the Committee should copy the approval to related agencies such as the development of the Shenzhen Municipal Government Financial Services Office at the same time.

8. The company name should clearly state ‘commercial factoring’, ‘Other Commercial Services’ under ‘Leasing and Commercial Services Industry’ must be chosen during the delivery of the certificate of permission. (National Economic Activities Code 749)

9. Commercial factoring companies should registry the transfer on the pledge registration system of accounts receivable at Credit Reference Center of the People’s Bank of China.

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10. Commercial factoring companies should establish an appropriate system to improve business flow and operation, submit financial statements semiannually and legal explanation, report the situation of business development to the Committee and be responsible for the truthfulness, accuracy and completeness.

11. The Committee study and formulate measures to promote the development of commercial factoring industry, improve the regulations of commercial factoring market, encourage commercial factoring industry to establish self-regulatory organization, formulate the regulations of industry technique; support commercial factoring companies to join domestic industry associations.

12. The Committee shall review the development of commercial factoring businesses in Shenzhen annually, summarize lessons and experiences in operations, and report to Ministry of Commerce regularly.

13. The details shall come into effect 30 days after its announcement.

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Guidance on Further Enhancement and Normalization of Pilot Access and Review of Small Loan Companies (Trial implementation)

(Shen Fu Jin Fa [2013] No. 6 April 3, 2014)

To further promote the pilot work of Small Loan companies in Shenzhen, improve access qualification of pilot subjects, normalize review procedures, promote healthy and stable development of Small Loan companies, efficiently relieve financing issues of micro, small and medium-sized enterprises，and provide better service for overall socio-economically strategic development of the city, in combination of the pilot situation of this municipality, this guidance is hereby formulated based on Interim Measures for Administration of the Pilot of Small Loan Companies in Shenzhen Municipality（Shen Fu [2011] No. 35, hereinafter referred to the “Interim Measures”）.

1. Guiding principle 1.1 Principles of limited quality selection and rational distribution In combination with pilot situations of Small Loan Companies in this municipality, strictly follow the principle of “Selecting the superior and eliminating the inferior, cautiousness and prudence”, approve the application centralized, control the number of pilots moderately; Guide the Small Loan companies to balance the distribution in the municipality properly and support the micro- finance companies to set up pilots in districts originally outside Shenzhen Pass such as Bao'an District, Longgang District, Guangming New District, Pingshan New District, Longhua New District, Dapeng New district with priority.

1.2 Principles of improving the qualification of the access and strict regulation Based on existing access standard of Small Loan Companies, further raise the requirements of the minimum registered capital requirements and access criteria,

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actively explore the modest opening up, normalize the approval and modification procedures, strengthen follow-up supervision, and gradually establish a well- developed multilateral collaboration mechanism of Small Loan companies.

1.3 Principles of supporting some areas while restricting others in serving industrial entities To further guide the Small Loan Companies to follow the development path of market orientation, differentiation and characterization, serve the overall socio-economic development of this municipality, based on accelerating the transformation of economic development mode and promoting the transformation and upgrade of the industry, focus on supporting domains such as strategic emerging industries, modern services industries, the people’s livelihood, entrepreneurship and employment; encourage and support professionalized and characterized company entities such as scientific Small Loan Companies, industrial parks (professional market), communities (the joint stock cooperation) to carry out innovative pilot; combine with the current economic position of the country and requirements of the state of macro-control to moderately restrict enterprises participating in high-polluting industries and high-energy consuming industries and other limited control industries to take part in the pilot.

2. Types of the support with priority The pilot of the following types of Small Loan Companies shall be encouraged and supported with priority:

2.1 The companies providing services for micro, small and medium-sized enterprises in strategic emerging industries such as biology, internet, new energy, new materials, cultural creativity and IT industry of new-generation.

2.2 The companies based on promoting the implementation of self-innovation and strategy of industry-optimization transformation and upgrade,supporting innovative business incubators and construction of the industrial bases in this municipality and exploring and developing the pilot of high-tech Small Loan and venture investment business.

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2.3 The companies serving around high-end modern service industries including modern logistics, service outsourcing, trading exhibition, tourism industry and promoting the municipality's modern service industry to strive for internationalization, high-end orientation and low-carbonization.

2.4 The companies exploring to improve people’s livelihood and promoting the entrepreneurship to boost the employment and assist the poor.

2.5 The companies initiated and established depending on powerful and well-known large-scale enterprises, listed companies, financial organizations, industry association (chambers of commerce)

3. Strict enforcement of market access 3.1 The minimum registered capital The registered capital of a particular Small Loan company in the form of a limited liability company shall not be less than 300 million RMB. If a particular Small Loan company is in the form of company limited by shares, the registered capital shall not be less than 400 million RMB.

3.2 Qualifications of a main promoter and other investors 3.2.1 Qualification of a main promoter. The main sponsor of Small Loan companies shall not only conform to the regulations of the ‘Interim Measures’, but also meet of the following requirements: 3.2.1.1 The net asset shall not be less than 200 million RMB. Asset- liability ratio shall not exceed 65%, and in principle, the long-term investment amount after the implementation of project investment shall not exceed 60% of net assets (combined with the accounting statement); 3.2.1.2 Remain profitable for the last three consecutive years, the cumulative total amount of the net profit shall not be less than 60 million RMB, and the cumulative total amount of the tax payment shall not be less than 18 million RMB(combined with the accounting statement). 3.2.2 Qualification requirements of other investors. Other investors of Small Loan Companies, shall not only conform to relevant regulations of the “Interim

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Measures”, but also meet the following basic requirements: 3.2.2.1 Enterprises, social organizations and economic organizations that act as other investors shall be divided into two types according to the proportion of investment: The first type: if the investment proportion exceeds (including) 30%, they shall be approved with reference to the qualifications of main promoters in principle. The Second type: if the investment proportion is below 30%, they shall meet the following conditions: Establish over three years, and the net assets shall not be less than 100 million RMB, asset-liability ratio shall not exceed 65%, and in principle, the long-term investment amount after the implementation of the project investment shall not exceed 60% of net assets. Also, the investor should remain profitable for the two consecutive years and the accumulate total amount of net profit shall not be less than 20 million RMB, the cumulative total amount of tax payment shall not be less than 6 million RMB. (combined with the accounting statement). 3.2.2.2 Other investors shall explore and establish stock incentive mechanism of Senior Management of Small Loan Companies, the total shareholding ratio of core Senior Management shall not exceed 5%, and the investment of other individuals is temporarily restricted. 3.2.3 The contribution ratio of a main promoter shall not be less than 30% of total registered capital and the main promoter shall have comparative control on the shareholdings when marking application for the setup of a Small Loan Company; contribution ratio of other investing enterprises shall not be less than 5% of total registered capital. 3.2.4 In principle, same investor and its relevant parties shall only invest and set up one Small Loan Company.

3.3 Moderate opening up To support and guide non-local or oversea investors (including Hong Kong, Macao and Taiwan) with strength, experience and risk control capabilities to pilot in the city, if the domestic and oversea enterprises (including Hong Kong, Macao and Taiwan) registered outside the municipality are investors, in addition to complying with the “Interim Measures”, in principle, they shall also be banking

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institutions approved by relevant financial regulation and supervision authorities.

3.4 Restrictive in respect of industries of the investors Subject to the determination of relevant municipal departments, the enterprises involved in high-pollution, high-energy consuming industries and other enterprises restricted by their respective industries shall not be involved in piloting of Small Loan Companies; if investors or related parties are financing guarantee companies, pawn investment companies and real estate development companies, it shall be temporarily restricted.

3.5 Normalization of equity ownership transfer of investors Shares of Small Loan Companies can be transferred according to law, however, the shares held by investors shall not be transferred or pledged within 3 years from the date of establishment of the company; shares held by the board directors, senior management of the Small Loan Companies shall not be transferred during his tenure. After the expiration of the period, the transferees shall have the qualifications of main promoters or other investors. When the transfer is completed, newly changed shares held by investors shall not be transferred within three years from the date of modification registration.

4. Normalization of review procedures 4.1 Acceptance of materials Financial Industry Development and Service Office of Shenzhen Municipal People’s Government will appoint a special office, annually between March 1 to April 30, July 1 to August 31, to concentrate and accept enterprise declaration by two batches respectively, non-acceptance for overdue. Before the official declaration, the application materials shall be subject to the formal review of the competent administrative authorities of the administrative area (new area) where the Small Loan companies to be registered in, with a written letter of recommendation issued. Financial Industry Development and Service Office of Shenzhen Municipal People’s Government after received a letter of recommendation, application and other complete materials submitted by the enterprise, shall complete preliminary verification of application materials within

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15 working days, and issue an official receipt (see Annex). During application of the enterprise, the Municipal Financial Office of Shenzhen Municipal People’s Government can combine with the actual situation of the investors, as well as the districts of (new district) small and medium-sized enterprises financing needs, guide Micro-Loan companies to implement reasonable pattern and balanced development in the districts (new district).

4.2 Preliminary review of qualification Upon the completion of the preliminary review of materials, the Municipal Economic and Trade Information Commission, Public Security Bureau of Shenzhen Municipality, Market Supervision Administration of Shenzhen Municipality, Shenzhen Central Branch of the People’s Bank of China, Shenzhen Banking Regulatory Bureau and other relevant departments, in accordance with the division of responsibilities, to perform preliminary review on the pilot application of the Small Loan companies in accordance with division of their responsibilities and provide specific comments on the review: 4.2.1 The Municipal Economy, Trade and Information Commission is responsible for the determination whether the main promoter or major contribution enterprises and other shareholders of the enterprises are engaged in the financing guarantee, pawn investment, "high -energy consumption, high-pollution and resource" industry and other situations, with specific audit comment issued. 4.2.2 The Municipal Public Security Bureau is responsible for the determination whether the individual shareholders, aspiring legal representative, board directors, supervisors and senior management of the Small Loan companies have activities in violation of the law or regulations and issuing specific comments on the review. 4.2.3 The Municipal Market Supervision Administration is responsible for the determination of the credit information, taxation situation of the main promoters or contributing enterprises, whether they are involved in real estate and have activities in violation of the laws and regulations and issuing specific comments on the review. If necessary, the municipal Financial Office may seek and verify the comments of the municipal tax departments. 4.2.4 People’s Bank of China is responsible for the determination of the credit

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information and credit conditions of the main promoters or other contributing enterprises, as well as identity, credit information and condition of the individual shareholders, prospect legal representative, board director, supervisors and senior management of Small Loan Companies and issuing specific on the review. If necessary, the Financial Office may seek and verify comments from their working unit. 4.2.5 Banking Regulatory Bureau of Shenzhen is responsible for the determination of financial qualifications and experience of board directors, supervisors and senior management. If necessary, Financial Office may seek and verify comments from their working units.

4.3 Joint appraisal Municipal Financial Office shall hold joint appraisal conference on deliberation and approval of applications by Small Loan companies at pilot on a regular basis. Municipal Financial Office is the lead organization of joint appraisal conferences, other members of the conferences include Municipal Economy, Trade and Information Commission, Municipal Public Security Bureau, Municipal Market Supervisory Authority, Central Branch Bank of Shenzhen Municipality of the People's Bank of China, and China Banking Regulatory Commission Shenzhen Office. According to the declaration filed by the applicants and relevant departments’ feedbacks, the joint appraisal conference shall form final resolutions upon comprehensive research, selection and assessment.

4.4 Approval of business qualification Upon the review of the joint appraisal conference, to those eligible domestic funded Small Loan Companies, the Municipal Financial Office shall issue qualification documents for Small Loan business operation; as to those eligible Small Loan Companies involving investors of foreign companies, Hong Kong, Macao or Taiwan, the municipal Financial Office shall issue pre-approval documents for qualifications of Small Loan business. Before the municipal Financial Office issuing official approval documents, the applicants of the Small Loan Companies shall submit a capital verification report issued by a lawfully established capital verification institution (the received capital

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proved by capital verification report shall conform to the subscribed capital), workplace proof materials, and letter of commitment of application for access to local Small Loan supervision system (see attached), etc.

4.5 Handling of business start-up procedures The Small Loan Companies shall start business after completion of registration formalities in light of qualification documents for Small Loan business operation and obtaining business license in Municipal Market Supervisory Authority. Foreign, Hong Kong, Macao or Taiwan funded Micro- finance companies, before starting business, shall, in light of the pre-approval documents for qualification of Small Loan business issued by Municipal Financial Office, apply for administrative permission on foreign investment before Municipal Economy, Trade and Information Commission, and apply for official business qualification documents before Municipal Financial Office in accordance with capital verification report issued by a lawfully established capital verification institution. Small Loan Companies shall complete all of the preparation formalities for staring business within 180 days from the day on which review by the joint appraisal conference is completed. If the company fails to contribute the subscribed capital or to procure separate business site, the Municipal Financial Office must not issue formal business qualification documents and shall immediately disqualify their pilot qualifications; If the company fails to start business or the suspension period of business exceed 180 days from the day on which business license is issued, the municipal Financial Office shall disqualify their pilot qualifications upon verification.

4.6 Application materials In principal, detailed application materials shall be submitted in accordance with “Guidance on Verification of Pilot of the Small Loan Company (for Trial implementation)” (SFB [2009] NO.15) along with relevant tax materials. The application materials shall be submitted in the form of one original copy and electronic document with (CD) attached.

5. Enhancement of the supervision and industrial self-discipline

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5.1 Improve supervision mechanism Municipal Financial Office shall lead and organize member units of Joint Working Group, enhancing the guiding role of coordinated supervision mechanism on Small Loan Companies, strengthening risk monitoring system on Small Loan Companies involving in illegalities such as illegal fund-raising, extravagant profit collection, absorption of public funds, usury. Once any illegality is certified, it shall be transferred to the judicial organs for handling; If business activities violate relevant laws or regulations, any kind of modifications shall be postponed, punishments such as ceased production decision, disqualified business qualification and revoked license may be put on depending on the seriousness. The Small Loan Companies, after starting business, shall commence development of business information system, establishing access to local micro-credit companies MIS system within 180 days upon receipt of approval, submitting financial statements and business statistics on a regular basis.

5.2 Strengthen supervision of senior managers Municipal Financial Office, together with other relevant departments, shall implement interview mechanism before the perspective broad directors, supervisors and senior management of the Small Loan Companies are inaugurated; annually organize core management and relevant financial staff to sit for in-service training and qualification examination in several separated batches, and taking the interview mechanism, in-service training and qualification examination as important part of pre-review of their qualification.

5.3 Give a full play to self-regulatory organizations and build up channels for consumers’ complaint The municipal Financial Office shall give a full play to self-regulatory organizations, build up complaint station or reporting platform for the Small Loan consumers by coordinating relevant authorities such as organizations of consumer’s protection, strengthen the consumer’s protection in a timely manner, make a full use of and give a free rein to such working mechanisms as social supervision and self-regulation, intensify the supervision and restraint and safeguard market operation order for Small Loan business.

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6. Miscellaneous 6.1 This guidance shall be interpreted by the Municipal Financial Office.

6.2 This guidance shall come into effect as of its promulgation. In case of any disparities between this guidance and other provisions, this guidance shall prevail.

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Interim Measures on Supervision and Administration of Exchange in Shenzhen Municipality

(Shen Fu [2013] No.64, June 21,203)

Chapter 1 General Provisions

1. These measures are formulated for the purposes of strengthening the supervision and administration of the Exchange of the municipality, normalizing the market order, preventing and eliminating financial risks and maintaining social stability, and in accordance with Decisions of the State Council on Cleaning up and Rectifying Various The Exchange and Guarding against Financial Risks (Guo Fa 〔2011〕No.38), Implementation Opinions of the General Office of the State Council on Cleaning up and Rectifying Various The Exchange (Guo Ban Fa 〔2012〕No.37) and other relevant laws and regulations.

2. The Exchange mentioned in these Measures refer to various trading institutions which is established by law within the Municipality’s administrative area and those institutions are engaged in equity or bulk commodity transactions, including The Exchange which do not use “The Exchange” in their names. However, the exceptions are physical transactions of vehicles, real estate, etc. and those Exchange which are engaged in transactions of financial products approved by the State Council or the Financial Administration Department under the State Council.

These Measures shall also apply to branches set up in the Municipality by extramural Exchanges.

3. All The Exchanges shall strictly comply with state laws and regulations, being market-oriented, being independent in management, being self-financed, being

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self-disciplined, and being responsible for their own profits or losses. All lawful business activities of the Exchange shall be protected and subject to no interference by any organization or individual.

4. A system of Joint Conference on the Supervision and Administration of the Exchange of Shenzhen Municipality (hereinafter referred to “Joint Conference”) shall be set up. The Joint Conference shall comprise of the Propaganda Department of CPC Shenzhen Municipal Committee, Municipal Development and Reform Commission, Economic and Commercial Commission, Science and Technology Innovation Commission, Habitation and Environment Commission, Public Security Bureau, Tourism Bureau, State-owned Assets Supervision and Administration Commission, Market Supervision and Administration Bureau, Legislative Affairs Office, Financial Office, Administration Bureau of Qianhai, Shenzhen Central Branch of China’s Construction Bank, Banking Regulatory Bureau of Shenzhen, Securities Regulatory Bureau, Insurance Regulatory Bureau etc. The Joint Conference shall be convened by municipal leaders in charge of principal responsible person of each unit as members of the Conference. The Joint Conference may invite relevant departments to attend the conference if its work so requires. The office of the Joint Conference is set up in the Municipal Financial Office.

5. Duties of the Joint Conference: 5.1 To examine and approve the application for setting up The Exchange; 5.2 To determine the competent administrative authorities for The Exchange; 5.3 To deliberate on the major issues concerning the development of The Exchange; 5.4 To fulfill other matters assigned by the municipal government and interdepartmental Joint Conference on rectifying various The Exchange. 5.5 Duties of the Office of the Joint Conference: to take charge of the routine affairs of the Joint Conference and implement relevant decisions made by the Conference.

Duties of the member units of the Joint Conference: the statistical survey, routine supervision, determination of illicit activities and risk disposal of the Exchange, in light of trading management principles and functions of each unit.

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Duties of The Exchange: abide by laws and regulations and other state or Municipal provisions regarding to the Exchange, accept the supervision and administration, normalize business operation according to the law and take strict precautions against risks.

Chapter 2 Entry Requirements

6. In accordance with the principle of “Quota Control, Prudent Approval and Rational Distribution”, the municipal government shall have an overall plan for the number, scale, function and rational layout of the Exchange, formulate a program for their variety and framework and cautiously approve the setup of the Exchange.

7. The following conditions shall be met in application for the setting up of The Exchange: 7.1 The principal promoters and other contributors comply with required conditions; 7.2 The registered capital and paid-in capital comply with requirements 7.3 Qualified directors, supervisors, senior management (including general manager, vice general manager and staff of the same level, the same applies below) and other workers with relevant professional knowledge and experience; 7.4 Sound systems in terms of transaction system, corporate governance structure, risk control, disclosure of information, transaction safety protection, examination of investors’ qualification; 7.5 Business places and other facilities appropriate to the business scale; 7.6 Other conditions required by the Joint Conference and its Office.

8. The contributors of the trading market are limited to: the registered legal entities within the territory of the PRC; financial institutions, normal The Exchange and enterprises with similar or related services that are registered abroad (including Macao and Taiwan).

9. The organization of The Exchange shall be in the form of limited liability companies or joint stock limited companies with a registered capital of no less than RMB100 million and initial paid-in capital of no less than RMB 50 million.

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10. The principal promoters of The Exchange shall comply with the following basic requirements: 10.1 The net assets shall be no less than RMB 100 million with the asset-liability ratio not higher than 70%; 10.2 The consecutive gains in recent 3 years with the total net profits of no less than RMB 30 million and the total taxes paid of no less than RMB 10 million in recent 3 years; 10.3 The principal promoters should have no major violation of laws and regulations and enjoy a sound social reputation and credit record; 10.4 The principal promoters should have a sound corporate governance structure and internal control system; 10.5 The sources of the capital are true and legitimate; borrowed or entrusted capital is prohibited from forming the equity portion of the capital;

11. The following requirements shall be met by other contributors of the Exchange except the principal promoters: 11.1 Engage in regular business with a net asset of no less than RMB 10 million; 11.2 Enjoy a sound social reputation and credit record with no major violation of laws and regulations in recent 3 years; 11.3 Have a well corporate governance structure and sound internal control system; 11.4 The sources of the capital are true and legitimate; borrowed capital and capital entrusted by a third party is prohibited from forming the equity portion of the capital.

12. The principal promoter shall be the biggest shareholder with the subscribed capital of no less than 20% of the registered capital in the application to set up The Exchange

13. The trading market shall be established by more than 2 shareholders. The number of The Exchange set up by the same contributor shall, in principle, be limited to one.

14. The directors, supervisors, senior management and responsible persons of the branches shall meet the following requirements:

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14.1 Have more than 5-year management experience with a college education or above or medium grade professional title; 14.2 Have relevant professional knowledge of economics, finance, management related to the Exchange. 14.3 Have no record of violation of criminal laws or serious bad credit;

15. In application of setting up The Exchange, the principal promoter shall file the application to the Office of the Joint Conference and provide the following documents: 15.1 Application of setup, including the name, organization form, registered capital, initial paid-in capital, shareholding structure and scope of business of the Exchange to be set up。 15.2 The feasibility research report 15.3 Notification of the Name Pre-Approval 15.4 Information concerning business places 15.5 The certificate of contributors’ credit condition and other related materials; 15.6 Draft of articles of association; 15.7 Relevant documents pertaining to transaction and management system, trading varieties, etc.; 15.8 Qualifications and identity certificate of the legal representative, directors, supervisors and senior management; 15.9 Report on the verification of capital issued by legally established investment verification authorities (the report may be submitted after the obtainment of qualifications for setting up the Exchange) 15.10 Other documents required in accordance with the principle of prudence; The applicants shall be responsible for the authenticity of documents submitted.

16. Upon acceptance of the application by the Office of the Joint Conference, the member unit of the Conference shall provide preliminary opinions on the necessity of setting up the Exchange, competence of contributors, employment qualification of directors, supervisors and senior management, the compliance of transaction system and the effectiveness of risk control, etc.;

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17. Experts shall be organized by the Office of the Joint Conference to review the application for setting up The Exchange and issue expert opinions thereof as the reference for deliberation of the Joint Conference

18. Upon the approval of the Joint Conference, the application shall be submitted to municipal government for approval. In case “The Exchange” is indicated in the name of an entity to be set up, a written feedback thereof from the interdepartmental Joint Conference on rectifying various The Exchange shall be obtained before ratified by the municipal government.

19. After the ratification of the municipal government, the municipal financial department shall issue to the applicant the approval documents.

20. The applicant shall bring the approval documents to conduct registration for setup with market supervision and management department.

Chapter 3 Compliance Operation

21. The Exchange shall introduce and consummate effective systems in respect of risk control, information disclosure, transaction safety protection, examination of investors’ appropriateness and management of internal member of the Exchange and submit them to the Office of Joint Conference and the competent administrative authorities for record.

22. The Exchange shall safeguard the safety of the clients’ funds, introduce a third party depository system for earnest money in accordance with the relevant state and municipal provisions, subsequently enter into an agreement with depository banks on the supervision and management of the account and submit it to the Office of the Joint Conference and the competent administrative authorities for record.

23. The Exchange shall set up a fund to dispose of the risks of the Exchange for the purpose of education of the investors about investment risk, protecting the investors’ legitimate rights, making up major economic losses of the Exchange,

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preventing major risk incidents related to the Exchange, etc. The specific measures shall be enacted separately by the Office of the Joint Conference.

24. The Exchange shall be audited annually and submit an audit report of previous year to the Office of the Joint Conference and the competent administrative authorities before March 31th each year. The competent authorities shall take the lead to conduct annual inspection of the Exchange and may appoint external auditing institution to conduct audit if necessary and submit the annual inspection report to the Office of the Joint Conference for record.

25. The following business activities conducted by the Exchange shall be prohibited: 25.1 To distribute to the public any equities by splitting them into equal shares; 25.2 To adopt centralized competitive bidding or market-making system to conduct transactions; 25.3 To continuously list the equities in standardized trading units for trading. Any investors after the sale or purchase of the trading products sell or purchase the same products in 5 trading days; 25.4 The holders of the equities exceed 200 unless otherwise provided for by the law; 25.5 To conduct standardized contractual transaction by means of centralized transaction such as centralized competitive bidding, electronic match-up, anonymous transaction or market-making; 25.6 Not to engage in transaction of financial products such as insurance, credit and gold unless the activities approved by competent financial authorities of the State Council;

26. The Exchange may formulate detailed rules for implementation within the framework of these Measures and submit them to the Office of the Joint Conference and competent administrative authorities for record.

Chapter 4 Self-regulation

27. The Exchange of the Municipality shall set up self-regulatory organizations with a view to safeguarding the legitimate rights and interests of the members,

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coordinating the relationship among the members, providing services for members, maintaining fair competitions, helping communication between members and the government and promoting the development of the Exchange in the Municipality. The self-regulatory organization formed by the Exchange shall abide by the laws, rules and regulations, accept the guidance and supervision of the Joint Conference and shall not impair social and public interests.

28. Each of the Exchange may set up an internal self-regulatory organization for their members (the intermediary service agencies) and formulate management system for members.

Chapter 5 Supervision and Administration

29. Supervision and administration of The Exchange shall follow the principle of “overall planning and coordination, segregated administration, self-regulation”. The Joint Conference shall make an overall plan for and coordinate the supervision and administration of the Exchange; the competent administrative authorities shall be responsible for routine supervision and administration affairs; The Exchange shall establish a self-regulatory organization to carry out self-regulatory management.

All competent administrative authorities shall be determined by the Joint Conference based upon the administrative principle. In case there are other state provisions on the supervision and administration of The Exchange regarding bulk commodities, state-owned or cultural properties, those provisions shall prevail.

30. The competent administrative authorities shall set up a mechanism to combine off-site supervision with on-site inspection, carry out a thorough investigation of potential risks in the Exchange on a regular basis, build up risk information files, urge and guide the supervised to take precautions against risks, set up and improve the mechanism for social supervision, strengthen constraint and supervision on business practices of the Exchange; smooth the channel for information and report; formulate risk control/disposal plans; work with other relevant authorities to set up

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mechanisms for coordinating and disposing of risk events; report major risks to the Joint Conference and municipal government in a timely, accurate and comprehensive manner and in accordance with relevant requirements of emergency management.

31. The information submission system shall be established. The Exchange shall submit the monthly transaction data, quarterly business report and annual financial report to the Office of the Joint Conference and the competent administrative authorities.

The Office of the Joint Conference and the competent administrative authorities may request the Exchange to submit special report if the work so requires.

32. The following matters of the Exchange shall be subject to an advance approval by the competent authorities. Upon the issuance of the documents of approval for alterations, the competent administrative authorities shall copy the documents to the Office of the Joint Conference. After obtaining the documents, the Exchange shall register the alterations in the market supervision and administration departments in accordance with the law. 32.1 Adjustment of business scope; 32.2 Adjustment of major trading or management systems, etc.; 32.3 Merger or division; 32.4 Alteration of names; 32.5 Alteration of corporate structures; 32.6 Reduction of registered or paid-in capital; 32.7 Replacement of legal representatives, directors, supervisors, senior management and the branch responsible persons 32.8 Withdrawal of branches in the Municipality by extramural The Exchange; 32.9 Adjustment of shareholding structures; 32.10 Dissolution of the corporation; 32.11 Other major matters.

33. Any of the following matters of the Exchange shall be reported to the Office of the

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Joint Conference and the competent administrative authorities for record within 10 working days from the day when these events occurred: 33.1 Increase of registered or paid-in capitals 33.2 Increase or alteration of trading varieties 33.3 Alteration of business places 33.4 Withdrawal of extramural branches by the Exchange of the Municipality; 33.5 Adjustment of general trading or management systems; 33.6 Revision of articles of association; 33.7 Any other matters.

34. The Exchange of the Municipality shall not set up branches to conduct business in the Municipality; the setup of branches outside the Municipality shall be subject to the consideration and consent of the competent authorities before submitted to the municipal government for approval.

35. A liquidation group shall be formed in case the Exchange are dissolved. The liquidation shall be conducted in accordance with statutory procedures.

36. The competent authorities may take such measures as rectification in a specified period, cancellation of illegitimate trading varieties, stoppage of illegitimate trading activities in accordance with Decisions of the State Council on Rectifying Various The Exchange and Guarding against Financial Risks (Guo Fa〔2011〕No.38) in one of the following cases that occurred in the course of the operation of the Exchange. In a serious case, such measures, subject to the consideration and consent of the Joint Conference before submitted to the municipal government for approval, as closing down or outlawing the Exchange can be taken. If a crime is involved, the case shall be referred to the judicial organs in accordance with the law. 36.1 Trading activities that violated the provisions of article 25 of the Measures; 36.2 Failure to submit annual audit report to the Office of the Joint Conference and the competent authorities or to pass the annual inspections; 36.3 Suspected crimes such as misappropriating clients’ funds or committing frauds; 36.4 Alteration of the items listed in Article 32 of the Measures without the permission or of the items listed in Article 33 of the Measures without putting on records in

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time; 36.5 Appointment of unqualified directors, supervisors, senior management and the branch heads; 36.6 Failure to deposit and use the funds for risk disposal as required; 36.7 Failure to put the depository funds in a third party as required; 36.8 Conducting business activities beyond the approved business scope; 36.9 Rejecting or hampering off-site supervision, on-site or annual inspection; 36.10 Failure to submit documents such as statements or reports; submission of such documents as statements or reports that are falsified or conceal the major facts; 36.11 Other activities in violation of laws, regulations, administrative rules and normative documents.

37. The Exchange not approved shall be outlawed according to law.

Chapter 6 Supplementary Provisions

38. The Measures shall be interpreted by the Office of the Joint Conference jointly with other authorities concerned.

39. The Measure shall come into force as of the date of promulgation. The Exchange set up before the promulgation of the Measures, shall complete the rectification procedures before December 31st 2014 with reference to the requirements of the Measures in case of failure to meet the requirements of the Measures in respect of admission and management. In case of failure to complete the rectification in the specified period, the business operation shall be disqualified.

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Guidance on the Application for Establishments of Trading Market in Shenzhen

(August 6, 2013)

This guidance is formulated for the purpose of regulating the working procedures of the application for the establishment of the trading markets in Shenzhen and creating an open, fair and just environment for the application of the trading markets, and in accordance with the regulations of the Interim Measures for Supervision and Administration of trading markets in Shenzhen, and in combination with the practical situations:

1. Guiding Principles 1.1 The principle of “Quote control, prudent approval and rational layout”. The application for establishing trading markets shall be approved on the basis of limited and competitive selection, and in combination with the practical situation of Shenzhen and the qualifications of the applicants.

1.2 The principle of “Openness, Fairness and Justice”. Ensure the openness and transparency of the procedures of applying for the establishment of the trading markets, and introduce the mechanisms of the third-party expert verification as the references for the scientific decision-making of the Joint Conference.

2. Application Documents: 2.1 Applications for establishing the trading markets, including the basic information such as the name, address, business scope, registered capital, initial paid-in capital, equity structure, trading varieties, together with the materials such as the Notification of Name Pre-approval and business site, etc.

2.2 Research reports on feasibility, which shall include the purpose, criterion,

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feasibility and necessity of setting up the trading markets, analysis of the design of the trading varieties, industry situation, market prospect and capability of risk control, business development scheme and analysis of the socioeconomic benefits, etc.

2.3 Plans for establishing the company, which shall include draft articles of the association of a company to be set up, principal transaction rules and policies, management and risk control policies and analysis of the safety and stability of the transaction system, etc.

2.4 Basic information about the principal promoters, which shall include the name, registered and paid-in capital, registered address, legal representative, copies of the business license subject to the annual inspection of Administration of the Commerce and Industry, the situation of business development, audited financial reports in the most recent three years, taxation certificates in the most recent three years, credit reports of the enterprise together with documents certifying the principal promoter’s sound social reputation and operation in compliance with laws and regulations.

2.5 Basic information about the other promoters, which shall include the name, registered and paid-in capital, registered address, legal representative, copies of the business license subject to the annual inspection of the Administration of Commerce and Industry, the situation of business development, audited financial reports in the latest year, credit reports of the enterprise, together with documents certifying the principal promoter’s sound social reputation and operation in compliance with laws and regulations.

2.6 Qualification and identity certificates of the legal representatives, directors, supervisors and senior management, including certificates of working experience, education, professional title and no criminal record and personal credit reports, et cetera.

2.7 Capital verification reports issued by a legally established investment verification

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authority (the report can be provided after the obtainment of qualification for the business operation of the trading markets).

2.8 Letter of Commitment, which ensures the authenticity of all the application materials and the legitimate operation once approved (see Appendix 1).

2.9 Other documents required by the Joint Conference on Supervision and Administration of the Trading Markets of Shenzhen (hereinafter referred to as “the Joint Conference”) and its Office.

3. Format of the application documents 3.1 The application documents shall be bound up in orders prescribed in the preceding paragraphs. The bound book shall include a front cover, a back cover, contents and the number of pages. The front cover shall be marked with “Documents of application for establishing the trading markets in Shenzhen”, a specific name of the trading markets (“Exchange” shall not be contained in the name), name of the applicants and the date of application. Pages shall be numbered consecutively in Arabic numbers, which shall be indicated in the right side of the footer. Each part of the documents shall be separated by distinct marks and conforms to the content thereof.

3.2 The application documents shall be printed on standard A4 page, double- printed and loose-leaf bound. A complete application documents shall be bounded up into one volume, in fifteen (15) copies.

3.3 In principle, the above documents shall be written in Chinese. A Chinese version shall be attached thereto if the historical documents of the original documents provided are written in other languages and the Chinese version shall prevail.

3.4 The application documents shall be stamped the official seal of the applicants.

3.5 Apart from the paper materials, the applicant must also submit an electronic version in CD. Then Electronic version must be in the form of a CD and named in the

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form of “xxxx (name of the applicant) – xxxx(name of the trading markets). File format”.

4. Application procedures 4.1 Principal promoters shall submit the application documents to the Office of the Joint Conference (the Municipal Financial Office).

4.2 Once the Office of the Joint Conference accepts the application documents, they shall conduct a preliminary formal examination of the documents and invite the relevant member units of the Joint Conference to verify the authenticity of qualification of the promoters, the directors, supervisors and the senior management.

4.3 Once the application documents pass the preliminary formal examination, the Office of the Joint Conference shall organize experts to conduct a project verification and propose the expert opinion for the reference of the Joint Conference review. The procedures of the demonstration are as follows:

4.3.1 The Office of the Joint Conference shall randomly select a group of experts from the expert tank one day ahead of the formation of a project verification panel and the verification shall be conducted in the form of Roadshow and Defense;

4.3.2 Before the verification meeting, the Office of the Joint Conference shall organize the applicants to draw lots to determine the order of the verification;

4.3.3 The Office of the Joint Conference shall require the panel to sign the confidentiality and disciplinary commitment;

4.3.4 The Office of the Joint Conference shall describe the project, notes, rules, procedures and other relevant requirements of the verification to the panel and distribute the application materials on site(the materials will be collected after the meeting);

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4.3.5 The verification shall be hosted by the leader of the panel, who will be recommended by the Office of the Joint Conference and confirmed by the vote of the panel.

4.3.6 The panel shall review the application materials, which shall last for no less than 90 minutes;

4.3.7 The applicants shall show their projects to the panel through a projector within 30 minutes. The applicants shall prepare PPT for the roadshow, which shall include but not be limited to the following aspects: 1. Necessity and feasibility of setting up the trading markets, including the preparation, business plan, socioeconomic benefits, macro-economic environment and market prospect, et cetera.; 2. Qualifications of the shareholders and equity structures, including registered capital of the trading market to be established, the business capacity of the shareholders and information about the management team; 3. Business model and design, including innovativeness of the business model, designs of the trading varieties and integration with the Hong Kong , Macao and the International markets; 4. Information about policies and systems made or built, including transaction rules and policies, investor protections and risk control policies and transaction systems;

4.3.8 The panel shall questions the applicants and the applicants shall answer the questions in a total of no more than 30 minutes;

4.3.9 The experts shall propose independent opinions based on the project materials, roadshow and defenses and the Office of the Joint Conference shall summarize the panel’s opinions in witness of the leader of the panel in accordance with the rules;

4.3.10 The Office of the Joint Conference shall submit the application materials and the expert opinions to the Joint Conference for review.

4.4 Upon the approval of the Joint Conference, the application shall be submitted to municipal government for approval. In case of “Exchange” is contained in the

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name of the entity to be set up, a written feedback thereof from the Interdepartmental Joint Conference on Rectification of Various Trading Markets shall be obtained before approval of the municipal government.

4.5 After the approval of the municipal government, the municipal financial department shall issue the approval document to the applicant.

4.6 The applicant shall bring the approval document to register for setup with Market supervision and Management Department.

5. Special Instructions 5.1 Application for setting up trading markets

5.1.1 According to the principle “Prudent approval”, the Office of the Joint Conference shall, for the purpose of rational selection of high-quality projects, shall recommend the project scoring higher than 75 points (including 75 points) marked by the panel to the Joint Conference for review. In case the application is not approved, the Office of the Joint Conference shall not accept its application if the qualification of the project promoters and conditions for application have no major changes.

5.1.2 The Joint Conference shall approve the trading markets with great cautions if “Exchange” is contained in their names. If the trading markets to be established score high in the verification of the panel and have a sound prospect and potential to evolve into an influential trading markets nationally, the Joint Conference may consider the possibility of using “Exchange” in the name of the trading markets to The approved trading markets without using the word “established” in their names may apply an application to the Office of the Joint Conference for using “Exchange” in their names when having the potential to evolve into an influential trading markets nationally after one-year official operation. After comprehensive evaluation, the Office of the Joint Conference will submit the application to the Joint Conference for review.

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5.2 Development of the trading markets 5.2.1 Effective efforts will be made to guide and support the applicants of the same or similar qualification to co-establish the trading markets so as to complement each other.

5.2.2 The trading markets shall be open for business within six months after the approval.

5.2.3 To ensure the quality of the shareholders and prevent and control the financial risks, the shareholding structure of the trading markets shall not be adjusted in principle in the following three years upon approval. The capital increase, enlargement of shares or adjustment of equities of the trading markets shall be subject to the pre-approval of the Office of the Joint Conference and go through corresponding processes.

Office of the Joint Conference on Supervision and Administration of Trading Markets of Shenzhen (the Municipal Finance Office) August 6, 2013

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Appendix: Letter of Commitment

Made by the Office of Joint Conference on Supervision Administration of Trading Markets of Shenzhen (the Municipal Financial Office)

August 6, 2013

The Appendix

Letter of Commitment

××Company hereby makes the following commitments:

1. This company voluntarily contributes _____ to become a shareholder of Shenzhen ______Trading market Co. Ltd. (or company limited by shares), accounting for ______percent of the shares. As the shareholder, this company undertakes that the resources of the contributions are true and legitimate; that all the contributions are equity capital, not borrowed or entrusted capital; that the contributions are made in full and on time and shall not be withdrawn.

2. This company shall go through relevant processes strictly in accordance with the provisions of Interim Measures for Supervision and Administration of Trading Markets in Shenzhen and Guidance on the Application for Establishment of Trading Markets in Shenzhen. The application materials are true, accurate, and complete and absent of false statements or major omissions. In case of false statements or major omissions in the application materials, this company shall voluntarily bear the legal responsibility.

3. This company agrees that the Joint Conference on Supervision and Administration of Trading Markets of Shenzhen and its Office can use or authorize the relevant

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competent authorities or project verification experts to use the application materials on a lawful and rational basis on account of project review or expert verification.

4. This company undertakes to comply with laws and regulations and the state or municipal provisions concerning trading markets, accept the supervision and administration, operate business according to law and take strict precautions against the risk after the application for setting up the trading markets is approved.

5. This company undertakes to start the trading markets within half a year from the date of approval of the application for setting up the trading markets.

6. This company undertakes not to adjust the shareholding structure within 3 years from the date of approval of the application for setting up trading markets. This company shall adjust the shareholding structure in accordance with the provisions of Interim Measures for Supervision and Administration of Trading Markets in Shenzhen and Guidance on the Application for Setting up the Trading Markets in Shenzhen.

Company Stamp: Date:

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Circular by the Ministry of Finance, the State Taxation Administration on Preferential Corporate Income Tax Policies and Catalogue in Guangdong Hengqin New Area, Fujian Pingtan Comprehensive Pilot Zone, and Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Excerpt)

(Cai Shui [2014] No. 26 March 25, 2014)

Guangdong Provincial Department of Finance，Fujian Provincial Department of Finance, Shenzhen Municipal Department of Finance, the State Administration of Taxation and Local Tax Bureau:

The State Council announces The Catalogue of the Enterprise Income Tax Preferential Program at Guangdong Hengqin New Area， Fujian Pingtan Comprehensive Pilot Area, and Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone.

1. The industries encouraged by Guangdong Hengqin New Area, Fujian Pingtan Comprehensive Pilot Area, Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone will enjoy a favorable corporate income tax rate of 15%. The above mentioned industries refer to those whose main businesses are the industrial projects prescribed in The Catalogue of the Enterprise Income Tax Preferential Program (see annex) of the area and their main business income accounts for over 70% of the total income, following the sixth regulation of The Law of the People’s Republic of China on Enterprise Income Tax.

2. If the enterprise has institutions both inside and outside the zone, the corporate tax rate of 15% only applies to those inside institution. When determining if one

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institution meets the requirements, only relevant indicators of rule 1 of this circular of the inside institution itself will be examined, instead of those from outside institution.

3. If the enterprise meets the requirement of 15% tax deduction in this circular, Law of the People's Republic of China on Enterprises Income Tax together with its enforcement regulations, and other tax preferential terms made by the State Council, it may have the benefits at the same time; if they are in accordance with other preferential terms, the prime rate may prevail for them; if the enterprises can enjoy a 50 percent deduction of tax of regular deduction of tax, they may be exempted from the corporate income tax by a deduction of 50% according to the tax payable calculated by using the statutory tax rate of 25%.

4. Hengqin New Area herein this circular refers to Hengqin Island approved in Overall Development Planning of Hengqin by the State Council in August 2009; Pingtan Comprehensive Pilot Area herein this circular refers to Pingtan Comprehensive Pilot Area approved in Overall Development Planning of Pingtan Comprehensive Pilot Area by the State Council in December 2011; Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone herein this circular refers to Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone approved in Overall Development Planning of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone by the State Council in August 2010.

5. If Tax Authority could not determine if the main business of enterprises falls into The Catalogue of the Enterprise Income Tax Preferential Program, it may demand the enterprise to submit the documentary evidence issued by relevant authorities of provincial government (including deputy provincial government) or inferior competent administrative department.

This circular will be executed from the day of January 1st, 2014 until November 31st, 2020. Annex: 1.The Catalogue of the Enterprise Income Tax Preferential Program in Hengqin New Area (Omitted)

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2. The Catalogue of the Enterprise Income Tax Preferential Program in Pingtan Comprehensive Pilot Area (Omitted) 3. The Catalogue of the Enterprise Income Tax Preferential Program in Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone

The Ministry of Finance of the People's Republic of China, the State Administration of Taxation

March 25 2014

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Interim Measures on Financial Subsidy for Individual Income Tax of Overseas High-level and Short-supplied Talents in Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen

(Shen Fu [2012] No. 143, December 24, 2012)

1. These Measures are enacted pursuant to the Approval of The State Council on The Supporting Policies of the Development and Opening up of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen, The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone, and Ordinance on Qianhai Shenzhen –Hong Kong Modern Service Industry Cooperation Zone in Shenzhen Special Economic Zone, under the principle of formulating pilot fiscal and tax preferential policies within the national tax reform framework, with a view to attracting overseas high-level and short-supplied talents to work in Shenzhen Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone, establishing and improving a mechanism conducive to the gathering of human resources in the modern service industry, as well as providing personnel support for the construction and development of Qianhai.

2. For the individual income tax from wages and salaries paid by overseas high-level and short-supplied talents working in the preferential industries in Qianhai, the amount exceeding 15% of taxable income from wages and salaries shall be given full subsidy by the Shenzhen Municipal Government (hereinafter referred to as the Shenzhen Government). The above subsidy obtained by applicants shall be exempted from individual income tax.

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3. The term “overseas high-level and short-supplied talents” refers to overseas talents who work for more than one year in Qianhai enterprises or organizations of preferential industries and whose annual wages and salaries reach a certain scale. These talents shall be accredited by the Authority of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as the Qianhai Authority) in accordance with relevant principles of laws and administrative regulations of the Shenzhen Government. Specific accreditation measures shall be regulated by relevant government departments.

4. The term “income from wages and salaries of overseas high-level and short-supplied talents” refers to wages, salaries, bonuses, year-end extras, profit shares, subsidies, allowances and other income related to the tenure of an office or employment obtained by overseas individuals by virtue of the tenure of an office or employment in Qianhai.

The subsidy from Shenzhen Government shall be given to the income from wages and salaries which are taxed at progressive tax rates. The subsidy shall not be given to one-time income or contingent income that is taxed at a flat rate of 20%.

5. The Qianhai Authority and the Finance Commission of Shenzhen Municipality (hereinafter referred to as the Shenzhen Finance Commission), in accordance with the principles of clear responsibilities, normative procedures and collaboration, shall be responsible for budgeting, reviewing and appropriating the fiscal subsidy applicable in these Measures.

6. The Qianhai Authority shall be responsible for accrediting organizations, individuals applicable to these Measures, as well as the start date of fiscal subsidy. The qualification of applicants and the amount of subsidy shall be preliminarily examined by the Qianhai Authority and further reviewed by the Shenzhen Finance Commission. The Qianhai Authority shall establish and improve an archive system of qualified applicants. Applying organizations shall report to the Qianhai Authority for file when information of their applicants changes.

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7. The Shenzhen Finance Commission shall be the examination and approval organization of these Measures. The Shenzhen Finance Commission shall, in accordance with the results reported by the Qianhai Authority on examination of eligible organzations and individuals and the Individual Income Tax Payment Certificate of eligible applicants, as well as the subsidy appropriation standards, examine, approve and appropriate the subsidy.

8. The Qianhai Authority shall report the total amount of individual income tax subsidy to the Shenzhen Finance Commission by the end of every November, and together with the applying organizations, report materials including copies of business license, name list of overseas employees, payroll and Individual Income Tax Payment Certificate to the Shenzhen Finance Commission for record.

9. The Shenzhen Finance Commission shall review the total amount of subsidy reported by the Qianhai Authority and list it into the budget of Shenzhen Government at the corresponding level. The needed amount of subsidy shall be borne by both the Municipal Government and District Government according to the fiscal system of Shenzhen and its districts.

10. The appropriation of individual income tax subsidy of Qianhai shall follow the below principles:

1) Clear Criteria. The Subsidy given to the applicants shall be equal to the amount of individual income tax paid by the applicants in Qianhai that exceeds 15% of taxable income from wages and salaries 2) Proper Subsidy. Applicants who enjoy the individual income tax subsidy of Qianhai shall not enjoy other Shenzhen preferential talents policies with reducing individual income tax as main subsidy. 3) Convenient Operation. The Qianhai Authority and the Shenzhen Finance Commission shall process applications once a year. Applications of subsidy of the previous year shall be accepted from March 1st to 30th every year.

11. Applications shall be accepted only under the name of enterprises and organizations;

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individual applications shall not be accepted.

12. Before starting the process of Qianhai individual income tax subsidy every year, the Qianhai Authority shall, jointly with the Shenzhen Finance Commission, make an annual subsidy application guide according to the development of industries and introduction of talents in Qianhai. The guide shall specify detailed application requirements, procedures, materials and time limit and other necessary information.

13. After withholding and remitting individual income tax of overseas employees to the Local Taxation Bureau of Shenzhen Municipality and obtaining the qualification to apply for subsidy from the Qianhai Authority according to law, the applying organizations shall apply to the Qianhai Authority for the individual income tax subsidy of overseas high-level and short-supplied talents. All the applications shall be gathered and reported to the Shenzhen Finance Commission by the Qianhai Authority.

14. When applying for the individual income tax subsidy to the Qianhai Authority, applying organizations shall hand in the following materials: 1) Application reports by the applying organization; 2) Application form of Qianhai individual income tax subsidy of overseas high-level short-supplied talents and application list for individual income tax subsidy of overseas high-level and short-supplied talents. 3) Copies of passports, payroll, Individual Income Tax Withholding Return Form, copy of Individual Income Tax Payment Certificate and other valid documents admitted by the Qianhai Authority which help to accredit the qualification, income, tax payable and tax withheld of overseas high-level short-supplied talents.

15. When reporting the individual income tax subsidy to the Shenzhen Finance Commission after the preliminary examination of materials of applying organizations, the Qianhai Authority shall submit the following materials: 1) Accreditation documents of organizations and individuals applicable to these measures; 2) Preliminary examination results of the individual income tax subsidy of the

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previous year; 3) Annual list of examination results of individual income tax subsidy of overseas high-level short-supplied talents; 4) Copies of passports, payroll, Individual Income Tax Withholding Return Form, copy of Individual Income Tax Payment Certificate and other valid documents admitted by the Shenzhen Finance Commission which help to accredit the qualification, income, tax payable and tax withheld of overseas high-level short-supplied talents.

16. The Shenzhen Finance Commission review the materials handed in by the Qianhai Authority and appropriate the subsidy in accordance to the relevant provisions. The subsidy shall be directly appropriated from the Shenzhen Finance Commission to the appointed bank accounts of applying organizations instead of the personal bank accounts of the applicants. The applying organizations shall appropriate the subsidy to the personal bank accounts of their applicants within 10 working days after the organizations received the subsidy.

17. The Shenzhen Finance Commission shall, jointly with the Qianhai Authority, carry out a special inspection on the use of individual income tax subsidy in Qianhai every year.

18. Organizations and individuals who are subject to any of the following circumstances shall not apply for the subsidy: 1) failing to pay taxes according to law; 2) having an unfavorable credit record; 3) committing intellectual property violations; 4) violating laws or regulations.

19. Applicants, including organizations and individuals shall truthfully submit application materials and shall be responsible for the authenticity and accuracy of the materials. Once the applicants were verified that they have provided false materials or the applicants have failed to pay or underpaid the amount of tax payable, the applicants shall be disqualified; Subsidy given to those having the

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above acts shall be recovered; if the case constitutes a crime, it shall be transferred to the judicial organs for criminal liabilities.

The relevant information of applicants that have summited false materials shall be reported by the Qianhai Authority to personal credit information agencies and enterprises credit information center. Those applicants and applying organizations shall be disqualified for 3 years.

20. The Qianhai Authority and the Shenzhen Finance Commission shall be responsible for the confidentiality of the copies of passports, payroll, Individual Income Tax Payment Certificate and other materials concerning the privacy of the applicants.

21. These Measures are local pilot preferential policies implemented in Qianhai within the current national tax reform framework. After specific national regulations on the individual income tax subsidy of overseas high-level and short-supplied talents are formulated, those regulations shall be implemented. These Measures shall be superseded at the same time.

22. These Measures shall be subject to interpretation of the Shenzhen Government. The Shenzhen Finance Commission and the Qianhai Authority are authorized to interpret these Measures.

23. These Measures shall come into effect on January 1, 2013 and shall remain in force for 5 years. The Shenzhen Government reserves the right to modify, extend or terminate these Measures on the basis of actual implementation.

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Interim Measures on Accreditation of Overseas High-level and Short-supplied Talents in Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone

(Shen Qian Hai [2012] No. 151, December 29, 2012)

1. These Measures are enacted pursuant to the Approval of The State Council on The Overall Development Plan of Qianhai Shenzhen – Hong Kong Modern Service Industry Cooperation Zone (Guo Fan [2010] No. 86), Approval of The State Council on “The Supporting Policies of the Development and Opening up of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen (Guo Fan [2012] No. 58) and Ordinance on Qianhai Shenzhen –Hong Kong Modern Service Industry Cooperation Zone in Shenzhen Special Economic Zone, with a view to substantially ensuring the accreditation of overseas high-level and short-supplied talents Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as Qianhai).

2. These Measures are supporting measures of accreditation of talents for the Interim Measures on Financial Subsidy for the Individual Income Tax of Overseas High-level and Short-supplied Talents in Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen (hereinafter referred to as Measures of Individual Income Tax Subsidy).

Those who have enjoyed the preferential policy of Interim Measures on the Awards of Talents in Industry Development and Innovation shall not be eligible for the individual income tax subsidy for overseas high-level and short-supplied talents in Qianhai.

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3. The accreditation of overseas high-level and short-supplied talents shall be conducted in accordance with the needs of introduction of overseas talents in Qianhai and shall comply with the principles of objectiveness, openness, justice and fairness and be well-recognized in the industry and the society.

4. Applicants shall apply voluntarily for the accreditation which shall adopt a combined evaluation method with examination and approval as well as review. There shall be no limits on the number of accredited talents in principle.

5. Led by the Shenzhen Leading Group of Talents Affairs, the Authority of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as the Qianhai Authority) shall be responsible for the accreditation of overseas high-level and short-supplied talents in Qianhai.

6. Applicants applying for the accreditation of overseas high-level and short-supplied talents shall meet the following requirements: 1) bearing citizenship of non-roc countries, or residents from Hong Kong Special Administrative Region, the Macau Special Administrative Region, and Taiwan region, or overseas Chinese and returned overseas talents who have attained permanent residency of overseas countries; 2) having established or served in the enterprises or organizations which belong to the key industries of finance, modern logistics, information, technology and other professional services; 3) setting up business in Qianhai or working for enterprises and organizations registered in Qianhai; 4) paying individual income tax according to law.

Specific accreditation requirements shall be formulated by the Qianhai Authority in accordance with the needs of Qianhai construction, industry development and status of talent shortage in Qianhai and be summited to the Shenzhen Municipal Government for approval and implementation.

7. Applicants and organizations who are subject to any of the following circumstances

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shall not apply for the accreditation of overseas high-level and short-supplied talents: 1) failing to pay taxes according to law; 2) having an unfavorable credit record; 3) committing intellectual property violations; 4) violating laws or regulations.

8. Procedures of accreditation of overseas high-level and short-supplied talents shall be: 1) Individual application. Applicants shall apply to the enterprises or organizations they work in and summit relevant proof materials; 2) Review by organizations. Enterprises and organizations that the applicants work in shall review the qualification and employment of the applicants and report the materials to the Qianhai Authority; 3) Accreditation of talents. The Qianhai Authority shall conduct the accreditation according to the requirements of Article 6 and 7; 4) Announcement. Announcement on the talents who meet the requirements shall be made to the public; 5) Accreditation results. The Qianhai Authority shall issue a result to the overseas high-level and short-supplied talents who receive no objection during the announcement period.

9. The accreditation results issued by the Qianhai Authority and relevant materials of the applicants and organizations shall be the basis for overseas high-level and short-supplied talents to enjoy the Measures of Individual Income Tax Subsidy within Qianhai.

10. The accreditation results shall remain in effect for one year. In the beginning of each year, the enterprises and organizations that the applicants work in shall review and gather the application of their employees and report to the Qianhai Authority. In the fourth quarter of each year, the Qianhai Authority shall report the implementation of the year’s accreditation to the Shenzhen Leading Group of Talents Affairs.

11. Applicants and organizations shall truthfully summit application materials and shall

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be responsible for the authenticity and accuracy of the materials. The Qianhai Authority shall accept the application timely and be subject to public supervision.

12. These Measures shall be effective from January 1st, 2013.

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Detailed Rules on the Interim Measures on Accreditation of Overseas High-level and Short-supplied Talents in Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone

(Shen Qian Hai [2012] No. 151, August 13, 2013)

1. These Rules are hereby formulated in accordance with the Interim Measures on Financial Subsidy for Individual Income Tax of Overseas High-level and Short-supplied Talents in Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone of Shenzhen (Shen Fu [2012] No. 143) and the Interim Measures on Accreditation of Overseas High-level and Short-supplied Talents in Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone (Shen Qian Hai [2012] No. 151, hereinafter referred to as Interim Measures on Accreditation), with a view to facilitating the implementation of accreditation of overseas high-level and short-supplied talents in Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as Qianhai).

2. The Authority of Qianhai Shenzhen–Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred to as the Qianhai Authority) shall be responsible for the accreditation of overseas high-level and short-supplied talents in Qianhai.

3. Applicants for accreditation of overseas high-level and short-supplied talents shall meet the basic requirements prescribed in the Interim Measures on Accreditation, work for a consecutive term of one year for the employer with an actual working time in Qianhai of no less than 6 months in the applying year, and satisfy any of the following requirements:

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1) being the overseas high-level talents accredited by the national, provincial and Shenzhen municipal government; 2) serving as management or skilled talents in corporate headquarters registered in Qianhai and accredited in accordance with the Interim Measures on Encouragement of the Development of Corporate Headquarters in Shenzhen (Shen Fu [2012] No. 104), or Fortune 500 companies and their branches registered in Qianhai; 3) serving as middle management or above, or skilled talents of the same level in enterprises registered in Qianhai; 4) possessed of internationally-recognized licenses or urgently-needed patents in China.

Those who fail to meet the requirements of 1) to 4) but are overseas talents that satisfy the needs of the development of Qianhai and can prove their qualification, professional skills and achievements shall apply through their enterprises or organizations and shall be accredited jointly by the Qianhai Authority, relevant administrative departments and associations.

4. Individuals who satisfy the accreditation requirements of overseas high-level and short-supplied talents in Qianhai shall apply to the Qianhai Authority through their enterprises or organizations during January 1 to January 31 each year for the accreditation of the previous year.

5. When applying for the accreditation, enterprises and organizations shall submit the following materials: 1) an application letter and list of high-level and short-supplied talents of the applying enterprises and organizations for accreditation; 2) a copy of passports, payroll, labor contract, Individual Income Tax Withholding Return Form, copy of Individual Income Tax Payment Certificate (the original certificate ready for check); 3) application form for Qianhai individual income tax subsidy; 4) other valid documents that can prove the identity, qualification, income, taxable income, tax payable, and tax paid of the applicants.

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6. The Qianhai Authority shall accept the application if applying materials are complete and meet the requirements. Receipt shall be issued and preliminary examination results shall be provided within 15 working days. In case of complicated applications of which the examination cannot be finished within the prescribed time limit, the examination period may be extended reasonably with the prolonged time that shall not be over 10 working days.

7. After examination, the Qianhai Authority shall report the list of talents to the relevant departments including Public Security Bureau of Shenzhen Municipality, Human Resources and Social Security Administration of Shenzhen Municipality, Local Taxation Bureau of Shenzhen Municipality, Intellectual Property Office of Shenzhen Municipality, Financial Industry Development and Service Office of Shenzhen Municipal People's Government and the Shenzhen Provincial Office of State Administration of Taxation.

8. List of the accredited talents shall be announced on the official website of Qianhai Authority for 7 days.

9. When the talents receive no objection during the announcement period, accreditation results shall be given by the Qianhai Authority to the Finance Commission of Shenzhen Municipality and the applying enterprises and organizations and be reported to the Shenzhen Leading Group of Talents Affairs for record.

10. Applicants shall truthfully summit application materials and shall be responsible for the authenticity and accuracy of the materials. Once the applicants and applying organizations were verified to have provided false materials or defrauded the subsidy through other means, the applicants shall be disqualified for 3 years. The relevant information of applicants and applying organizations that have submitted false materials shall be reported by the Qianhai Authority to personal credit information agencies and enterprises credit information center.

11. These Rules shall be subject to interpretation of the Qianhai Authority.

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12. These Rules shall be effective from August 16, 2013 and shall remain in force for 2 years.

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Notice by the Ministry of Finance, the Ministry of Commerce on “Approval of the Integrated Pilot of the Service Sector of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone”

(Cai Jian Han [2012] No.81 July 16, 2012)

Shenzhen Municipal People’s Government:

Your request on “Establishing Integrated Pilot of the Service Sector of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone” has been received. Upon study, hereby notify the following:

1. To speed up the development of the service sector is an important way to transform the pattern of economic development, to restructure the economy and develop the economy in a scientific manner, as well as an urgent need for expanding consumption. The central government has released some supporting policies on the service sector over the years about capital investment、tax preferences etc.. Local governments have also formulated specific measures according to local conditions. In order to show the advantages of combing central and local policies, explore the effective mechanism to promote the development of the service sector, the Ministry of finance and the Ministry of Commerce approved to establishing the Integrated Pilot of the service sector of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone

2. Principally approve the idea of piloting, which is “to promote industry upgrading and strengthen cooperation between Shenzhen and Hong Kong of the service sector, carry out pilot actively, focus on supporting and developing manufacture-related

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service industry such as finance, modern logistics, information services etc. by gathering policy resources and innovation systems and mechanisms, to establish an important national manufacture-related service industry base and influential product- service center, to upgrade the industrial structure of Pearl River delta, to enhance Guangdong-Hong Kong-Macau cooperation, and to explore effective development model of the financial industry etc. It is aimed, through three years of piloting, GDP reach 40 billion RMB by 2014 and the annual average growth rate of the modern service industry of over 50 per cent.

3. Piloting shall be mainly carried out by regions. The Ministry of Finance and Ministry of Commerce will strengthen microscopic guidance and fundraising through existing channels to enhance capital support to piloting areas. Shenzhen shall perfect the pilot policy system, focus on supporting service-related industries in terms of market access, planning, land, tax etc., and increase financial support to no lower than central government investment scale. The fund invested by central or local government shall coordinate properly, through a variety of ways including financial aid, discount loans, equity investment and so on. It shall give supports to some key pilot projects with strong features of public welfare and public interests and key demonstrate projects of industrialization and market applications. In principle, projects that have been funded by central finance will not be entitled to local financial support.

4. Shenzhen City shall strengthen the leadership of piloting, set up a leadership team to coordinate significant issues and set up an exclusive taskforce to implement relative work. Shenzhen shall build a highly effective working mechanism with clear tasks and division of responsibilities and with distinct overall coordination for the city and districts, to help Qianhai Cooperation Zone fully function as a main body, and to ensure that pilot work can be carried out in order. Shenzhen shall establish information reporting system for pilot work. Working progress and related information of the pilot shall be reported to the Ministry of Finance and the Ministry of Commerce etc. quarterly.

5. Shenzhen Finance Commission and Economy, Trade and Information Commission of

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Shenzhen Municipality, along with the relevant departments in charge and Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone shall implement in accordance with “Framework Plan for the Integrated Pilot of the Service Sector of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone” as soon as possible. It should establish special funds and project management approach, and confirm specific methods of funding arrangements, appropriation and supervision, and explicit ways of project declaration, examination and approval, and acceptance inspection. The 2012 Project Arrangement and Plan shall be proposed in time, and shall be reported and record-filed to the Shenzhen Finance Commission and Ministry of Commerce. The project plan shall be executed only when there is no objection after public review.

6. Once Pilot Project implements, Shenzhen Finance Commission and Economy, Trade and Information Commission of Shenzhen Municipality with departments concerned, shall jointly strengthen the supervision of pilot funds and project, prudently perform the of project examination and approval, disbursement of funds and other related task work, and strengthen the tracking and supervision, to ensure financial security and policy effectiveness in accordance with the relevant provisions of these measures. According to the relevant requirements, self-evaluation for the progress of pilot work shall be carried out annually and annual work summary and next year work plan shall be submitted to Shenzhen Finance Commission and Economy, Trade and Information Commission at the end of each year. The Ministry of Finance and the Ministry of Commerce will carry out the pilot work evaluation work based on the regional self-evaluation, and adjust the support policy according to the assessment of the conditions.

7. Shenzhen Finance Commission, Shenzhen Economy, Trade and Information Commission shall join efforts in piloting modern services in a comprehensive way and explore an effective mode in developing modern services. Good experience shall be summed up in a timely manner. A variety of ways shall be adopted to expand publicity, to increase the impact of the policy and to give play to the leading role of modern service industry development.

Ministry of Finance, Ministry of Commerce July 16, 2012

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Measures on Administration of Special Funds for Service Sector Integrated Pilot in Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone

(Shen Cai Jian [2013] No.28 March 6, 2013)

Chapter 1 General Provision

1. With a view to advancing the development of Modern Service Industry of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (hereinafter referred as Qianhai Cooperation Zone) and improving the efficient use of Special Funds for Qianhai Cooperation Zone Service Sector Integrated Pilot (hereinafter the Special Funds), these Measures are hereby formulated in accordance with Approval of the State Council on the Overall Development Plan of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Guo Han [2010] No. 86), Measures of the Administration of the Central Government Finance on Enhancing the Special Fund for the Development of the Service Sector (Cai Jian [2013] No.4), “Notice of the Ministry of Finance and the Ministry of Commerce on “ Approval of the Integrated Pilot of the Service Sector of Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (Cai Jian Han [2012] No.81), and other related regulations.

2. The Special Funds will be applied to support Qianhai Cooperation Zone Modern Service Industry Pilot Area (hereinafter Known as the Piloting Area), to lead the modern service providers to gather, cluster, develop and innovate in Qianhai

3. The Special Funds consist of Funds for Modern Service Industry Integrated Pilot Area from Central Government and local supporting funds from Shenzhen Government. The use of local supporting funds shall abide by existing provisions.

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4. The use and management of the Special Funds shall follow the principles of openness, fairness and impartiality, and shall comply with the procedure of voluntary application, approval review, public notice, government review, special audit, performance evaluation etc.

Chapter 2 Duties and Assignment of Responsibilities

5. The leading group of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone Service Sector Integrated Pilot Work (hereinafter referred as the leading group) takes the responsibilities for the leadership of pilot work. Municipal finance committee, Qianhai Authority and other authorities in charge take the responsibilities for the management of the Special Funds.

6. The main responsibilities of the leadership team consist of the following: 6.1 Study and audit project supporting schemes and adjustment schemes. 6.2 Study and audit supporting scheme of major projects. 6.3 Study and audit detailed rules for implementation of this measure.

7. Main responsibilities of the Municipal Finance Committee: 7.1 Participate in formulating detailed rules for implementation of this Measure. 7.2 Conduct compliance review for the planned supporting projects. 7.3 Coordinate with Qianhai Authority and issue scheme for the use of the Special Funds. 7.4 Appropriate the Special Funds. 7.5 Supervise and inspect the use and management of the Special Funds. 7.6 Organize performance evaluation for the use of the Special Funds. 7.7 Other work assigned by the Municipal Government.

8. Main responsibilities of the Qianhai Authority: 8.1 Formulate detailed rules for implementation, project application guidelines and review standards of this Measure. 8.2 Organize project application, expert review, project publicity, site inspection and

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special examination and supervision, formulate project supporting schemes and adjustment schemes. 8.3 Coordinate with Municipal Finance Committee and issue scheme for the use of the Special Funds. 8.4 Set up supporting projects library, and track and manage the project progress and usage of funds. 8.5 Organize performance evaluation. 8.6 Other work assigned by the Municipal Government.

9. Municipal Development and Reform Committee, Economic and Trade Committee, Scientific and Technological Innovation Committee, Transport Committee, Finance Office and other member committees of the leading group, shall examine and supervise supported projects and the Special Funds within the respective responsibilities.

The Municipal Audit Bureau is responsible for auditing the use and management of the Special Funds.

10. Main duties of the entities using the Special Funds 10.1 Provide authentic application filling materials. 10.2 Prepare project budget. 10.3 Identify project implementation condition and self-raised funds, set performance goals. 10.4 Standardize the financial management; use the Special Funds in accordance with relevant regulations and its original purpose to ensure the safety of the funds. 10.5 Provide reports of project progress and project funds usage, and related financial reports; accept inspection and audit of the Special Funds usage from the relevant departments. 10.6 Organize project performance evaluation, and submit the performance evaluation report to the Qianhai Authority and the Municipal Finance Committee. 10.7 Coordinate with relevant departments for other work related to the Special Funds management.

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Chapter 3 Entities Supported and Requirements

11. Requirements for entities applying for the Special Funds: 11.1 Independent legal person qualification 11.2 Sound and standardized financial management system. 11.3 Financially sound 11.4 No illegal operation record.

12. Projects supported by the Special Funds shall accord to industry admittance catalogue of Qianhai Cooperation Zone, and meet one of the following requirements: Projects aiming at advancing the development of modern service industry of Shenzhen, and applied by modern service entities registered in Qianhai Cooperation Zone. 12.1 Projects serving Qianhai Cooperation Zone and applied by modern service entities registered in Shenzhen. 12.2 Detailed requirements for projects supported shall be formulated separately by the Qianhai Authority.

13. The Special Funds is for supporting the following industry： 13.1 Financial Industry. Projects helpful for the development of financial industry reform and innovation, on cross-border RMB business, wealth management, assets management, equity investment, construction of financial factor market, financial product innovation and financial agency service. 13.2 Modern Logistics Industry. Projects helpful for the development of forming high-end logistics industrial agglomeration in Qianhai Cooperation Zoon, on supply chain management, international integrated trade, logistics value-added services, logistics technology research and development services. 13.3 Information Services Industry. Projects helpful for the integrative development of Internet economic and real economy, on information transmission services, software and information technology services, and information content services. 13.4 The other industrial projects, include promoting modern service industry business model innovation, supporting modern service industry with green and low-carbon

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development, promoting the service platform construction of modern service industrial agglomeration of talents, enhancing the service platform construction of standardization of modern science and technology application, or new service innovation projects with focus on supporting by the Ministry of Finance and the Ministry of Commerce, or some other projects approved by the leadership team and recorded by the Ministry of Finance and the Ministry of Commerce.

14. Projects shall be funded in priority if pursuant to the followings conditions: 14.1 Having core technology, innovation business model, or promoting modern service industry 14.2 Having significant features, influence, good development foundation, and better socioeconomic benefit in modern services industry development, 14.3 Can effectively integrate various resources, and play a key role in upgrading service industry.

15. Projects shall not allow funding upon any of the follows: 15.1 Project has been funded during pilot period, or funded by other scheme of the Central Government. 15.2 Have serious default during the period of funding by other government in the last three years. 15.3 Due to suspected noncompliance under inspection or investigation, or have been punished by law enforcement less than 3 years. 15.4 Production safety accidents or quality accident happened during project implementation, causing a great number of economic loss or adverse social effect. 15.5 Do not comply with annual inspection or tax declaration. 15.6 Under serious proceedings or arbitration which might affect normal business activities. 15.7 Due to debt dispute, in adopting main property preservation measures by the people’s court.

Chapter 4 Support Approach and Quota

16. Projects support by adopting approaches of equity investment, financial aid, rewards

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for compensation, interest subsidy, rewards for settlement etc.. Principally, only one approach can be adopted by each project. 16.1 Equity investment mainly use for projects of factor trade service, talents service, information resources and the other similar platform projects, and projects with leading, demonstration, and agglomeration effects. 16.2 Financial aid mainly use for supporting projects with better public interest. 16.3 Rewards for compensation mainly use for projects have been implemented and achieved growth goal. 16.4 Interest subsidy mainly use for projects with large-scale investment and capacity to get bank loan. 16.5 Rewards for settlement mainly use for encouraging headquarter project and innovative project.

17. Standard of special funds as follows: 17.1 By adopting approaches of equity investment, financial aid and rewards for compensation, special funds should be no more than 20% of project total investment. For projects with better public interest, funds support should not be over 30% of project’s total investment. 17.2 By adopting approach of equity investment, single investment should not be over 50 million in principle. 17.3 By adopting approach of financial aid, single investment should not be over 20 million in principle. 17.4 By adopting approach of rewards for compensation, single investment should no more than 10 million in principle. 17.5 By adopting approach of interest subsidy, 3% interest subsidy of actual loans can be apply during construction period, the longest time for two years, total investment should no more than 20 million in principle. 17.6 By adopting approach of rewards for settlement, single investment should be no more than 3 million in principle.

18. Special funds shall be mainly used for: 18.1 Involving in the project construction and implementation of all kinds of hardware and software systems such as R&D, design, procurement, leasing, installation,

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testing, using, upgrade, maintenance, management, and other related costs. 18.2 All of the rewards for settlement should be used for enterprise’s business development. 18.3 Special funds shall not be used for employee wages, bonuses, allowances and welfare subvention etc.

Chapter 5 Project Application and Verification

19. The Qianhai Authority shall receive project application by entity units, who should be responsible for the authenticity and legitimacy of filing materials. Application materials include: 19.1 Project report, including project unit introduction, project overview, social benefit, economic benefit and environmental benefit analysis, introduction of project technology, application for funding, plans for use, and performance target etc.. 19.2 Project unit business license, organization code certificate, tax registration certificate, legal representative identity card (check original. Keep the copy for record) 19.3 Self-raised capital contribution certification. 19.4 Project approval documents, including investment project feasibility study report or project audits (record-filing) or other approval documents, and opinions from relevant departments such as planning department, land department, environmental protection department etc. 19.4 Project units which apply for interest subsidy shall provide loan agreement or contract signed with relevant financial institutions, and interest payment vouchers. 19.5 Results or certificate and other related materials.

20. The Qianhai Authority is responsible for project selection, experts review organization, site investigation, special review, and submitting preliminary examination opinion of supported projects after consultation with relevant functional departments’.

Supported projects shall receive review of compliance by the Municipal Finance Committee.

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The Qianhai Authority shall publicize supported projects which have passed compliance review. Publicity period shall be no less than 5 working days. Upon objection during public notice, supported projects shall be re-verified. Once the objection is established, application shall be rejected.

On condition that there is none objection to the project after public review, the Qianhai Authority and the Municipal Finance Committee shall submit project planning to the leadership team, and record-file to the Ministry of Finance and the Ministry of Commerce. The Municipal Finance Committee and the Qianhai Authority shall then release a special funds use plan.

Chapter 6 Fund Allocation and Management

21. Special fund for equity investment and financial aid shall adopt the special account and closed management mode. Project unites shall open regulatory account that specified by The Ministry of Finance according to the requirements of special funding plan and project approval documents. After special fund planning was approved, the ministry of Finance transfer fund to the regulatory account of project unit, regulatory bank classify and allocate fund according to project schedule and funds receivable.

Regulatory bank, authorized by the Ministry of Finance, shall refuse to transfer special funds with usage beyond legal scope or being changed.

22. The accounting treatment of project units shall be in accordance with the State financial and accounting system and contract requirement. To strengthen special funds management, separate account shall be adopted pursuant to the relevant state regulations on purchasing.

23. During execution, special funds that support the project, when encounter major change under unique circumstances, shall be reported to the leading group for approval, and permitted to implement upon approval. This requires record-filing to the Shenzhen Finance Commission and the Commerce Committee. When the

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project is terminated, all or partial special funds shall be withdrawn. Assets that gained from special funds shall be disposed in accordance with relevant National and local laws and regulations. The resulting losses shall be investigated for civil liability in accordance with relevant regulations.

Chapter 7 Supervision and Performance Evaluation

24. The special funds adopt regular reporting system. The project entity shall report the progress of project, utilization of special funds, and actual effect of the project to the Qianhai Authority before 31 December annually, and send a copy to the Municipality Finance Commission.

The Qianhai Authority shall supervise and inspect on the previous year special funds randomly at least once a year. The Bureau could delegate accounting firm to conduct special audit. The Municipality Finance Commission shall carry out spot check on management and usage condition of special funds.

25. Upon completion on supporting projects, the Qianhai Authority shall organize examination and approval, and prepare acceptance report of the supported projects.

26. The Qianhai Authority is responsible for the performance evaluation of the supported projects, and reporting the performance evaluation results to the Municipal Finance Commission.

The Municipality Finance Commission shall lead to conduct key performance evaluation and re-evaluation of special funds utilization.

Performance evaluation. Result will be an important evaluating basis for project entity when re-applying for special funds.

27. Special funds shall be used as dedicated purpose. Violation of financial discipline, misrepresentation, collecting, intercept or misappropriation from special funds etc., shall be ordered to correct by administration department; meanwhile, municipal

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finance commission, audit committee, and supervisory department within limited power to deal with the situation in accordance with Penalties and Sanctions Against Illegal Fiscal Acts Regulations, and recover special funds in accordance with provisions. Suspected crime shall be transferred to the judicial organ according to the law.

The entity with the illegal behavior whose fund application shall not be accepted within three years. The entity and the responsible person shall be put on a list of dishonest.

Special funds operating department, financial department and its staff in violation of the provisions of these measures, not earnestly performing their duties, and with breach of privilege, dereliction of duty, favoritism practice in management and supervision work shall be punished in accordance with the law. Suspected crime shall be transferred to the judicial organ according to the law.

Chapter 8 Supplementary Provisions

28. The administration fees of special funds shall be included in the annual department budget in accordance with relevant regulations.

29. The Municipal Financial Commission shall, jointly with the Qianhai Authority, be responsible for the interpretation of these Measures.

30. These procedures shall be in effective as of the date of announcement and valid for 3 years.

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Detailed Rules on the Provisions on Supporting the Development of Financial Industry of Shenzhen

(Shen Fu [2014] No.19, December 31, 2008)

1. With a view to promoting the development of the financial industry of Shenzhen, and based on the provisions of Notice of Provisions on Supporting the Development of Financial industry of Shenzhen (Shen Fu [2003] No.30), these detailed rules are hereby formulated.

2. Financial institution headquarter defined in this detailed rules refers to entities approved by the nation’s financial regulators and registered in Shenzhen, including but not limited to banks with independent legal person qualifications, security companies, insurance companies, fund management companies, option companies, trust investment fund, financing leasing companies and other operating financial enterprises.

The primary branch of financial institution headquarter defined in this detailed rules refers to branch offices of banking institutions, security companies, insurance companies, fund management companies, option companies, trust investment fund, financing leasing companies and other operating financial enterprises.

Financial service institution defined in this detailed rules refers to financial back office that is affiliated with financial institution headquarter, such as information technology and data processing center, credit card center, payment and settlement center, business operation center, customer service center etc. and other legal entity that specializes in financial service outsourcing. Financial service institution adopts the relevant preferential policies that are applied to the primary branch of financial institution headquarter.

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Executive defined in this detailed rules refers to senior management with qualification recognized by financial regulators, and employed by financial institutions. Senior management of financial service institution is subject to appointment files of headquarter or other statutory files.

3. The Shenzhen Financial Development Decision-making Advisory Committee (hereinafter referred to as “the advisory committee”, is a non-permanent deliberative institution to offer advisory opinions for municipal government on finance decision making. The advisory committee is consisted of experts and scholars, with each term of office of 3 years. The Finance Development Service Office of Shenzhen Municipal Government (hereinafter referred to as “the Finance Office”) is responsible for the routine work of the advisory committee.

Members of the consultation committee shall be nominated based on the solicitation of financial regulators and industry associations. The recruitment organization should be in the name of Shenzhen Municipal Government after its examination and approval.

4. The financial development special fund is allocated from the municipal government industry development fund since the beginning of 2003.

The financial development special fund is mainly for: rewarding financial institutions that set up headquarters and primary branches in Shenzhen; subsidizing financial institutions that purchase and construct land, newly purchase headquarter or self-use office of primary branch of financial institutions; subsidizing newly rent self-use office of financial institution headquarter and the primary branch; offering housing allowance to senior management employed by Shenzhen financial institutions; the reward scheme of municipal government financial innovation award; special fund for financial development and research task, Shenzhen-Hong Kong financial cooperation, research and communication, financial forum and etc. approved by the Municipal Government; other expenses that is approved by the Municipal Government to enhance Shenzhen’s financial industry development.

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The appliance of the finance development special fund should be examined by the Finance Office and the Municipal Finance Bureau, and approved by the Municipal Government. The Municipal Finance Bureau shall take the lead, together with the Finance Office, to formulate regulations of the usage of the special fund, which should seek approval of the Municipal Government.

Financial institutions should submit application materials as required when applying the lump-sum settle-down incentives and land and housing allowance, and should commit to operate in Shenzhen for 10 years.

5. The Financial Innovation Award is held once a year. The Finance Office is responsible for receiving application and organizing selection. The advisory committee review and grant awards in the name of Municipal Government.

Normal ranking of the Financial Innovation Award includes three first prizes, with reward of 1,000,000 RMB respectively, seven second prizes, with reward of 500,000 RMB respectively and eleven third prizes, with reward of 300,000 RMB respectively. Additionally, two special prizes are set up to reward regulatory innovation of financial regulatory bodies with reward of 1,000,000 RMB respectively. If there is no qualified reward for the year, the corresponding prize can be vacant.

6. For newly set-up or moved in financial institutions in Shenzhen, reward is implemented as the following principles: 6.1 Financial institution headquarter could get a lump-sum incentive based on its registered capital: RMB 20 million if registered capital= reaches RMB 1 billion and above (including 1 billion and so on and so forth); RMB 10 million if registered capital reaches between RMB 0.5 billion and RMB 1 billion; RMB 8 million if registered capital reaches between RMB 0.2 billion and RMB 0.5 billion; RMB 5 million if registered capital is below RMB 0.2 billion. For the above financial institution headquarters that are in top priority to introduce, can apply separately and the incentives can be raised accordingly.

Financial holding companies (Group) that are approved by nation’s financial

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regulators and are of operating financial institution headquarter registered in Shenzhen, if registered in Shenzhen, can enjoy the lump-sum incentives above.

6.2 A lump-sum incentive of RMB 2 million is rewarded to the primary branch of banking, security, insurance financial institutions. A lump-sum incentive of 500,000 is rewarded to the primary branches of other types of financial institution headquarters.

6.3 Headquarter of security, fund management, option companies and other financial institutions operating in Shenzhen (here refers to its comprehensive management, core business, capital settlement etc. operated in Shenzhen), if not registered in Shenzhen, can enjoy the incentives of primary branches of financial institution headquarters. The incentive balance will be complemented once its registered address is changed to Shenzhen.

6.4 For financial service institutions, a lump-sum incentive of RMB 2 million is given to those with more than 100 employees and a business area of more than 2,000 m². No more than RMB 5 million can be awarded to large financial service institutions. For the above large financial service institution headquarters that are in top priority to introduce, can apply separately and the incentives can be raised accordingly.

6.5 Insurance broker, insurance assessment and insurance agent companies that pay tax abide by the law and pay corporate income tax more than RMB 500,000a year in Shenzhen are eligible to enjoy the following lump-sum incentives: RMB 5 million for amount tax paid of more than RMB 5 million (including 5 million and so on and so forth); RMB 4 million for amount tax paid between RMB 4 million and RMB 5 million; RMB 3million for amount tax paid between RMB 3million and RMB 4 million; RMB 2million for amount tax paid between RMB 2 million and RMB 3 million; RMB 1 million for amount tax paid between RMB 1 million, and RMB 2 million; RMB 500,000 for amount tax paid between RMB 500,000 and RMB 1 million.

6.6 A lump-sum incentive of RMB 500,000 is awarded to the newly established

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financial training organization.

6.7 Domestic and overseas organizations that participate in the Shenzhen risky financial institution reorganization stays in Shenzhen after quality asset displacement or capital increase to RMB 100 million, and a lump-sum incentive of RMB 1 million can be awarded to the reorganized institution. Incentive of RMB 1 million, will be awarded to every 100 million RMB of increased capital. The maximum incentive is RMB 5 million.

7. Shenzhen Financial institution should acquire land usage right according to the regulations of the country and pay the land cost, if it needs to purchase land and build self-use office building (including headquarter supporting operation office) due to business development.

The municipal government can award 30% of the land cost (including ancillary fee and etc.) paid by the financial institution funded by the government finance. The self-use area of the office building should take up 60% of the total area.

8. Shenzhen Financial institution that needs to purchase land and build self-use office building (including headquarter supporting operation office) due to business development, can enjoy 5% allowance of the total financial institution headquarter housing price. There is a 3% housing allowance of the total price for the primary branches of financial institution headquarter. Office building that enjoys housing allowance cannot be sold for 5 years.

9. Shenzhen Financial institution that owns newly-rent self-use office building (including headquarter supporting operation office) is able to enjoy housing allowance for 5 consecutive years, of which the housing allowance of the first 3 years is paid at 30% of the market price of the house rent and the housing allowance of the last 2 years is paid at 15% of the market price of the house rent. The primary branch of Shenzhen Financial institution that owns newly-rent self-use office building (including headquarter supporting operation office) is able to enjoy housing allowance for 3 consecutive years, and the housing allowance is paid at 30% of the

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market price of the house rent. If the actual rental price of the office building is lower than its market price, the housing allowance is benchmarked against the actual rental price.

10. Senior vice executives and above position of Shenzhen Financial institution headquarter and the principle executives of the primary branch can enjoy housing allowance of RMB 1,000 per person per month. Meanwhile, they can apply for the Award of Industry Development and Innovation Talent.

11. The governmental departments concerned should include qualified financial institutions into the Shenzhen Big Corporation Express Service Scheme. Quality and convenient service should be provided to these financial institutions according to the standards and regulations of the Scheme.

12. Shenzhen Financial institution can identify an appropriate number of employees for the purpose of external business. The Foreign Affairs Office and the Public Security Bureau can approve the name list and prioritize these people’s passport, Hong Kong and Macau endorsement procedures relating to their business trip.

Financial institutions included in the Express Service Scheme can apply for unlimited number of quota that enjoys convenient Hong Kong and Macau endorsement procedures according to actual business need.

13. Under the approval of Human Resources and Social Security Administration of Shenzhen Municipality, senior executives and technical professionals employed by Shenzhen financial institutions can enjoy preferential policies on high-caliber talent introduction, spouse employment, children education, medical care and etc., according to The CPC Shenzhen Municipal Committee and the Shenzhen Municipal Government on Strengthening the Construction of High-caliber Professional Personnel (Shen Fa [2008] No.10).

14. A certain area of office building should be planned and constructed or purchased by

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the municipal government as financial innovation and development base, which can be rent to Shenzhen’s small and medium financial institutions at a preferential price, in order to support their innovative development. The Finance Office, together with Development and Reform Commission,

Urban Planning, Land and Resources Commission and district governments should put the detailed operation measure into practice.

15. With the approval of the municipal government, insurance broker, assessment, and agent companies registered in Shenzhen that are on the top 10 list according to the operation revenue announced by the CIRC annually and the financial legal entities that have special contribution to the development of the finance industry in Shenzhen, such as credit assessment (rating) agencies, finance industry rating agencies, coinage and escort service companies, can enjoy the relevant preferential policies of financial institution headquarter and the primary branch other than their settlement incentives.

16. These provisions shall become effective as the date of promulgation. On Printing the Detailed Rules for Implementation of Provisions on Supporting the Development of Financial industry of Shenzhen (Shen Fu [2003] No.57) promulgated by The Shenzhen Municipal Government on April 17, 2006 shall be repealed at the same time.

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Supplementary Provisions of Detailed Rules on Supporting the Development of Financial Industry of Shenzhen

(Shen Fu [2013] No. 12, February 4, 2013)

1. To adapt to the new situation of China's financial reform and opening up, to further improve financial supporting policy system of Shenzhen, and to attract more innovative financial institutions which are conducive to enhancing market function, consolidating and elevating. Shenzhen’s position as a national financial center, according to Several provisions of supporting the financial industry in Shenzhen (Shen Fu [2003] No. 30), this supplementary is formulated to compliment Detailed rules of supporting the financial industry in Shenzhen (Shen Fu [2009] No.6, hereinafter refers to as “Implementing rules”)

2. For newly established or settled banking institutions in Shenzhen, which approved by China Banking Regulatory Commission (CBRC), reward is implemented as the following principles： 2.1 A lump-sum incentive of RMB 2 million is rewarded to licensed banking institutions in addition to relevant preferential policies with reference to the rewards of the primary branch of financial institutions headquarters. The licensed banking institutions mentioned in these supplementary refer to specialized institutions with independent accounting and cost for a particular business establishment, which are directly under the headquarters of banking institutions with independent financial license and business license, including private banks, small business finance, cross-border asset trade, precious metals, bills, credit card and capital operation center. 2.2 A lump-sum incentive of 5 RMB million is rewarded to financial companies, village banks, which have the registered capital of over 500 million RMB (including 500 million RMB, as analogies go); 2 million RMB is rewarded for

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those who have the registered capital between 200 million RMB and 500 million RMB; in addition to relevant preferential policies with reference to the rewards of the primary branch of financial institutions headquarters

3. Approved or recorded by the China Securities Regulatory Commission (CSRC), newly established or newly settled securities, funds management and futures companies specialized subsidiaries in Shenzhen are rewarded in accordance with the following standards： 3.1 A lump-sum incentive of 5 million RMB is rewarded for asset management, proprietary trading, brokerage, underwriting and other professional subsidiary set up by securities companies, which have the registered capital of over 200 million RMB (including 200 million RMB, as analogies go); 2 million RMB is rewarded for those who have the registered capital between 100 million RMB and 200 million RMB; in addition to relevant preferential policies with reference to the rewards of the primary branch of financial institutions headquarters 3.2 A lump-sum incentive of 5 million RMB is rewarded for specific customer asset management, independent sales and other professional subsidiary companies (except direct institution) set up by fund management companies, which have the registered capital of over 100 million RMB (including 100 million RMB, as analogies go); 2 million RMB is rewarded for those who have the registered capital between 30 million RMB and 100 million RMB; in addition to relevant preferential policies with reference to the rewards of the primary branch of financial institutions headquarters 3.3 A lump-sum incentive of 2 million RMB is rewarded for asset management, stock risk management and other professional subsidiary companies (except direct institution) setting up by futures companies, which have the registered capital of over 50 million RMB (including 50 million RMB, as analogies go); 1 million RMB is rewarded for those who have the registered capital between 20 million RMB and 50 million RMB; in addition to relevant preferential policies with reference to the rewards of the primary branch of financial institutions headquarters 3.4 According to the current management of indentified assets monthly mean calculation of the increased part over the previous year, securities, funds management, futures companies specializing in asset management subsidiary are

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given additional rewards, and the assets management will be as the reward baseline for the next year. 1 million RMB is rewarded for every 100 million increase in assets management for those that have over 500 million (including 100 million RMB) in assets under management; the cumulative reward shall not exceed 10 million RMB. Fund management companies registered in Shenzhen shall enjoy additional rewards with reference to the standard size of assets under management. 3.5 All kinds of specialized subsidiaries registered in Shenzhen and in accordance with the above conditions shall also enjoy relevant preferential policies with reference to the rewards of the primary branch of financial institutions headquarters 3.6 The direct class agency, set up by futures company, securities, fund management companies, enjoy preferential policies with reference to equity investment fund companies. 3.7 The number of professional subsidiary companies, set up by the same securities, fund management, futures companies, that enjoy relevant preferential policies is capped at three. 3.8 Aiming to build a national wealth management center under the current circumstances of the fund industry，Shenzhen is planning office buildings shall be planned and constructed by the municipal government .Small and medium- sized fund management companies and professional asset management mechanism shall be supported to innovate to nurture excellent business Specific measures shall be formulated separately by municipal finance office with the municipal commissions of development and reform, planning, land and other relevant departments.

4. Approved by China Insurance Regulatory Commission, newly established or newly settled insurance institutions in Shenzhen are rewarded in accordance with the following standards： 4.1 Five million RMB is rewarded for newly established or newly settled national insurance brokers, insurance assessment, insurance agents and insurance sales company (including online sales, telephone sales), whose registered capital exceeds 500 million RMB (including 500 million RMB, as analogies go); 2 million RMB is rewarded for those that registered capital between 200 million RMB and 500

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million RMB; 1 million RMB is rewarded for those which registered capital between 50 million RMB and 200 million RMB; 4.2 Insurance intermediaries that are already registered in Shenzhen and complying with the above mentioned conditions shall enjoy relevant preferential policies with reference to the rewards of the primary branch of financial institutions headquarters 4.3 Insurance intermediary groups that registered more than three subsidies in Shenzhen shall enjoy relevant preferential policies of financial headquarters except settling in rewards. 4.4 Insurance Asset Management Companies, according to the current management of identified assets of the increased part over the previous year, shall be rewarded 1 million RMB for every 100 million increase in Assets management, the assets management will be used as the baseline for the next year and the cumulative reward shall not exceed 10 million RMB.

5. Innovative financial institutions set up in Shenzhen shall be rewarded in accordance with the following standards: 5.1 National product research and development center or innovation laboratory, which belongs to the headquarters of large financial institutions and is useful to promote financial innovation ability in the city, is approval a one-time award 1 million RMB by the government when its products and services in the domestic industry have a significant demonstration leading role. The large financial institutions headquarters mentioned in this supplementary refers to approval by National financial regulatory authorities, with the last year total assets in the industry in the area of the top five banks, securities, insurance business of financial institutions as an independent legal person. 5.2 Two million RMB is rewarded for newly established or settled in non- financial service institutions approved by People's Bank of China, with the registered capital of over 500 million RMB (including 500 million RMB, as analogies go); 1 million RMB is rewarded for those with the registered capital between 100 million RMB and 500 million RMB. 5.3 Two million RMB is rewarded for new or newly moved in supporting financial institutions with over 20 million RMB annual Corporate income tax in Shenzhen. The supporting financial institutions mentioned in this supplementary refer to the

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Professional institutions matching the condition of local service outsourcing enterprise, with a certain scale level and industry influence, which provide outsourcing services for financial institutions in the use of information technology, Business process optimization, the construction of public service platform, professional training and certification, and with the amount of Financial service outsourcing income to more than 70% of total business income. 5.4 Reference to the treatment of the primary branch of financial institutions headquarters, Credit, credit evaluation (rating), mint, financial transport company, and the financial media, financial training school and other professional institutions approval by Municipal Government, which have an important influence in the country and make a special contribution in Shenzhen financial market system enjoy the relevant preferential policies in addition to settle in. 5.5 Reference to the treatment of the primary branch of financial institutions headquarters, the Platform of financial market factors with great contributions to the adjustment of industrial structure and economic development enjoys the relevant preferential policies in addition to settle in.

6. For those headquarters of financial organizations who registered in Shenzhen intend to increase its share capital and undergo merge and acquisitions, shall be rewarded as following standards: 6.1 For those banks, Trust Investment Company, headquarters of Finance Leasing Company who undergo capital increase, mergers and acquisitions, are given a one-time award according to the following standards: 6.1.1 For those banks, trust investment company, headquarters of finance leasing company who satisfy financial supervision regulation and need to increase registered funds because of business development, are given one-time award: For those with registered capital increase more than 3 billion RMB (included 3 billion RMB), are rewarded 10 million RMB, those who are between 2 billion RMB and 3 billion RMB, are rewarded 5 million RMB, those who are between 1 billion RMB and 2 billion, are rewarded 2 million RMB. 6.1.2 For those banks, trust investment company, headquarters of finance leasing company who undergo capital increases, mergers and acquisitions and register in Shenzhen afterwards, will be given one-time merger rewards: for those whose

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value of mergers and acquisitions is more than 5 billion will be rewarded 10 million RMB, whose are between 3 billion RMB and 5 billion RMB, are rewarded 5 million RMB, whose are between 1 billion RMB and 3 billion, are rewarded 2 million. 6.2 To headquarters of securities companies, insurance companies, insurance asset management companies who undergo capital increase, mergers and acquisitions, are given a one-time award according to the following standards 6.2.1 For headquarters of securities companies, insurance companies, insurance asset management companies who satisfy financial supervision regulation and need to increase registered funds because of business development, are given one-time award for their capital increases: For those with registered capital increase more than 5 billion RMB(included 5 billion RMB), are rewarded 10 million RMB, those who are between 3 billion RMB and 5 billion RMB, are rewarded 5 million RMB, those who are between 1 billion RMB and 3 billion, are rewarded 2 million, those who are between 500 million RMB and 1 billion, are rewarded 1 million. 6.2.2 For those banks, trust investment company, headquarters of finance leasing company who undergo capital increases, mergers and acquisitions and register in Shenzhen afterwards, will be given one-time merger rewards: for those with registered capital increase more than 3 billion RMB( included 3 billion RMB), are rewarded 10 million RMB, those who are between 2 billion RMB and 3 billion RMB, are rewarded 5 million RMB, those who are between 1 billion RMB and 2 billion, are rewarded 2 million, those who are between 500 million RMB and 1 billion, are rewarded 1 million. 6.3 to headquarters of securities companies, insurance companies, insurance asset management companies who undergo capital increase, mergers and acquisitions, are given a one-time award according to the following standards. 6.3.1 For headquarters of fund management companies, futures Company headquarters who satisfy financial supervision regulation and need to increase registered funds because of business development, are given one-time award for their capital increases: For those with registered capital increase more than 5 billion RMB (included 5 billion RMB), are rewarded 5 million RMB, those who are between 2 billion RMB and 5 billion RMB, are rewarded 2 million RMB, those who are between 1 billion RMB and 2 billion, are rewarded 1 million.

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6.3.2 For those banks, trust investment company, headquarters of finance leasing company who undergo capital increases, mergers and acquisitions and register in Shenzhen afterwards, will be given one-time merger rewards: for those with registered capital increase more than 5 billion RMB (included 5 billion RMB), are rewarded 5 million RMB, those who are between 2 billion RMB and 5 billion RMB, are rewarded 2 million RMB, those who are between 1 billion RMB and 2 billion, are rewarded 1million.

7. Key financial institutions that the municipal government intends to attract could apply separately and rewards shall increase moderately.

8. Integrate the specialism and contribution from different section in the financial industry to further develop the incentive system for the industry development and innovative talents. The specific measures shall be formulated by the Shenzhen Human Resources Social Security Departments and the Shenzhen Finance Department.

9. Each district (including new district) shall refer to the area’s financial development layout, participate in Shenzhen’s financial development services actively, strengthen policy support, and gradually establish the policy system with relatively perfect urban linkages, under the guidance of the municipal financial office.

10.To complement the public financial service platform supportive system, explore the way of establishment of financial service center, to build up the "one-stop" government enterprise services and docking platform, and complete preferential policies of coordinating services, such as information exchange, investment, enhancement of human resources and the optimization of government services.

11. The Shenzhen Financial Department together with the Shenzhen Development and Reform Bureau, Financial Bureau, Land Planning and Shenzhen based Financial Supervision Department will timely adjust the award scope, object, standard and etc. of whole city financial preferential policy based on the requirement of national financial development trends and supporting object, and will execute after the

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approval of Shenzhen Municipal Government.

12. The financial institutions in this supplementary regulation which fulfill the verified condition of Shenzhen headquarter enterprises are applicable to the provisional regulation about encouragement of headquarter enterprise development, and are entitled to relevant policy.

13. Those Financial Institutions which are entitled to this Preferential Policy of Supplementary Regulation shall fulfill related conditions, upon the approval of Competent Department, shall be entitled to supporting policies of other industries but each organization is only allowed to receive the same payment for one time.

14. This supplementary is explained by Shenzhen Financial Office.

15. This supplementary shall become effective as of the date of promulgation until December 31 2015; anything that is not consistent with the supplementary shall be forfeited accordingly.

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The Selection Criteria of Shenzhen Financial Innovation Award

(Shen Fu Ban [2008] No.112 November 8, 2008)

Chapter 1 General Provisions

1. In order to fully mobilize financial institutions and financial professionals in Shenzhen to carry out financial innovation actively and proactively, to promote the development of the city’s financial industry, this document is formulated according to Shenzhen Municipal Government’s Regulations of Support on the Development of Financial Industry, its implementing rules, and the current situation in Shenzhen.

2. The selection criteria apply to the application for Shenzhen Financial Innovation Award and the related review and awarding activities by financial regulatory authorities and financial institutions in Shenzhen.

3. Shenzhen Financial Innovation Award is an honor awarded to financial regulatory authorities and financial institutions in Shenzhen for carrying out financial innovation. Award certificate does not constitute a direct basis for the ownership of the project result.

4. Authorized by the Shenzhen Municipal People’s Government, Shenzhen Financial Development Decision-Making Advisory Committee is in charge of the selection of Shenzhen Financial Innovation Award. Shenzhen Financial Development Decision-Making Advisory Committee Office (set up within the Financial Industry Development and Service Office of Shenzhen Municipal People’s Government) is in charge of the organization of the selection of Shenzhen Financial Innovation Award.

5. The application, selection and awarding of Shenzhen Financial Innovation Award are based on the principles of openness, fairness and impartiality. No organization or

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individual shall interfere.

Chapter 2 Award Setting and Reward Scope

6. The selection of Shenzhen Financial Innovation Award shall be carried out once per year.

7. Prizes Plan of Shenzhen Financial Innovation Award: Two Special Prize winners with the reward of RMB 1 million each, Three First Prize winners with the reward of RMB 1 million each, Seven Second Prize winners with the reward of RMB 500,000 each, Eleven Third Prize winners with the reward of RMB 300,000 each. It is valid to have shortfall in, but not to exceed, the number of prize owners of all prizes. The prize money will be awarded to winners directly by the Shenzhen Municipal People’s Government.

8. The First, Second and Third Prize of Shenzhen Financial Innovation Award shall be awarded to financial institutions which make outstanding contributions to financial innovation projects in research, development, application, and promotion. The Special Prize shall be awarded to financial regulatory authorities in Shenzhen and Shenzhen Stock Exchange which have significant achievements in and make outstanding contributions to reform and innovation in financial market supervision and financial risk prevention.

9. Prize winners shall be the institutions and authorities which lead and participate in majority of work on providing know-how, equipment and personnel in the phase of research, development, application, and promotion of financial innovation projects, and play in the main role of the work of organization, management, and coordination leading to the accomplishment of projects. Prize winners shall be the institutions and authorities which the primary contributors work in.

Chapter 3 Project Application and Requirements

10. Projects meet any of the following requirements are eligible to apply for the First,

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Second and Third Prize: 10.1 Projects which bring to the market new tools, new business and new services with better performance and quality by changing the matching and combination of financial elements. 10.2 Projects on which remarkable innovation of financial system or financial organization are achieved through the improvement of rules and regulations or changes in the form of institutional organization. 10.3 Financial innovation projects developed by the Shenzhen office of domestic and foreign financial institutions and their employees, and being the first to applied and promoted in Shenzhen.

11. Projects which apply for the First, Second and Third Prize shall meet all of the following requirements: 11.1 Projects developed within the recent two years and being on the market for no less than one year. 11.2 Projects generating significant economic and social benefits, playing a significant role in reducing business risk, improving business and income structure, and enhancing asset quality for the institution carrying out the project development, or having considerable demonstration effects on the industry development. 11.3 Projects not violating the existing financial regulations or policies.

12. Projects which apply for the Special Prize shall meet any one of the following requirements: 12.1 New regulatory measures for avoiding and preventing major financial risks adopted by financial regulatory authority’s Shenzhen branch. 12.2 New regulatory concept and model put forward by financial regulatory authorities’ Shenzhen branch to rectify and decrease deficiency in regulatory system, and mechanism and procedure designed for the fulfillment of the concept and model. 12.3 New regulatory scheme launched by financial regulatory authority’s Shenzhen branch to promote product and business innovation. 12.4 Innovative regulatory methods to improve regulatory work efficiency created by financial regulatory authority’s Shenzhen branch.

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13. Projects which apply for the Special Prize shall also meet both of the following requirements: 13.1 Project independently developed by financial regulatory authority’s Shenzhen branch or Shenzhen Stock Exchange, and being the first to be implemented across the country, or adopted by higher regulatory authorities and promoted across the country. 13.2 Project developed an accomplished in the recent two years with significant practical application effect.

Chapter 4 Application Procedure

14. Application procedure of the First, Second and Third Prize of the Financial Innovation Award: 14.1 Institutional and individual applicants shall fill in and submit six copies of the application materials issued by Shenzhen Financial Development Decision- Making Advisory Committee Office (electronic version attached). 14.2 Projects accomplished by cooperation between two or more institutions shall reach consensus on the application by the project initiator. Projects with controversial aspects of the ownership and main contributor (institution or individual) shall not be accepted. 14.3 The headquarters or regional headquarters of financial institutions are responsible for issuing review opinion for their branch’s applied projects. 14.4 Financial institutions’ application material shall be submitted to Shenzhen Financial Development Decision-Making Advisory Committee Office by the related industry association. If there is no specific industry association, application materials shall be submitted by the institution itself to Shenzhen Financial Development Decision-Making Advisory Committee Office.

15. Application Procedure of the Special Prize: 15.1 Institutional and individual applicants shall fill in and submit six copies of the application materials issued by Shenzhen Financial Development Decision- Making Advisory Committee Office (electronic version attached). 15.2 Application materials shall be submitted by the institution itself to Shenzhen

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Financial Development Decision-Making Advisory Committee Office.

Chapter 5 Review and Decision-making

16. Shenzhen Financial Development Decision-Making Advisory Committee Office is responsible for the review on the form of all application materials. Qualified application materials shall be submitted to the Prize Committee for review. In regard to unqualified application material, the applicant shall supplement application material within the stipulated time limit. Application shall be considered abandoned in the case of exceeding the above-mentioned stipulated time limit or the supplementary material failing to meet the requirements.

17. The Prize Committee is composed of experts engaged by Shenzhen Financial Development Decision-Making Advisory Committee. The Committee shall be in charge of the initial check and the review: 17.1 Initial check: The Prize Committee consists of a number of professional review teams. Each team is in charge of carrying out initial check of applied projects in its professional field and selects certain amount of projects for the review process. Projects applied for the Special Prize shall skip the initial check process and enter directly into the review process. 17.2 Review: Projects shall be graded by all experts of the Prize Committee and ranked in descending order to a shortlist approximately in proportion to the total number of 1:1.3. The shortlist shall be submitted to Shenzhen Financial Development Decision-Making Advisory Committee for final decision.

18. Shenzhen Financial Development Decision-Making Advisory Committee is in charge of making the final decision on the list of winners of the First, Second, Third, and Special Prize. Each committee member could make a statement for shortlisted projects. After, the Committee shall vote for the final winners of the First, Second, Third, and Special Prize based on the numbers of votes.

19. The Prize Committee and Financial Development Decision-Making Advisory Committee shall exercise review rights and voting rights in conformity with

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scientific, impartial and independent principles.

20. To meet the needs of the review work of the Financial Innovation Award, members of the Prize Committee and Financial Development Decision-Making Advisory Committee are authorized by Shenzhen Financial Development Decision-Making Advisory Committee to pay a site visit to institution applied for the Award or arrange hearing of projects.

21. The selection of the Financial Innovation Award are on the basis of rule of avoidance. Members of the Prize Committee or Financial Development Decision-Making Advisory Committee who has direct interest in or relationship with projects or candidates applied for this award shall avoid voting (The vote shall not be counted).

22. Members of the Prize Committee or Financial Development Decision-Making Advisory Committee involved in the selection shall make strictly confidential project know-how and selection process, and shall not disclose or take advantage of project achievements in any way.

Chapter 6 Publicity and Objection Handling

23. The selection of Shenzhen Financial Innovation Award shall receive social supervision. The Financial Industry Development and Service Office of Shenzhen Municipal People’s Government shall be responsible for publicizing notice of contemplated awarded project on public press. Any institution or individual who objects to the results of contemplated awarded project or person shall inform Shenzhen Financial Development Decision-Making Advisory Committee Office within 30 days after the notice being publicized, otherwise it is not accepted.

24. Any institution or individual who objects shall provide written materials with proof.

25. Objection can be classified into two categories: Substantial Objection and Non- Substantial Objection. Substantial Objection refers to objection to the

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innovativeness, progressiveness, and practicability of project and the authenticity of application materials. Non-Substantial Objection refers to different opinions on project’s primary contributor (institution/individual) and ranking of contributors. Objection does not include opinion on applicant, contributor or evaluation level of contributor.

26. Once accept the objection, Shenzhen Financial Development Decision-Making Advisory Committee shall conduct investigation. As for Substantial Objection, as long as it turns out to be true, the project’s prize will be disqualified, and all members of Shenzhen Financial Development Decision-Making Advisory Committee will be notified of the decision. As for Non-Substantial Objection, if applicant can eliminate the cause and factor of the objection, the awarding results shall not be changed.

Chapter 7 Awarding

27. The Shenzhen Municipal People’s Government is in charge of awarding winners of Shenzhen Financial Innovation Award certificates and prizes and publicizing honor notice.

Chapter 8 Supplementary Provisions

28. This Selection Criteria shall be interpreted by the Financial Industry Development and Service Office of Shenzhen Municipal People’s Government.

29. This Selection Criteria shall become effective as of the date of promulgation. The Criteria of Shenzhen Financial Innovation Award (Shen Fu Ban [2004] No. 178) promulgated on September 28th, 2004 by Shenzhen Municipal People’s Government shall cease in effectiveness on the same date.

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Notice on Further Supporting the Development of Equity Investment Industry

(Shen Fu Ban [2010] No. 100 December 4, 2010)

The people's governments of all districts, and all units directly under the Municipal Government:

The enactment of Provisions of Promoting the Development of Equity Investment Fund Industry (Shen Fu [2010] No. 103) (hereafter referred to the Regulations) has played an active role in attracting equity investment funds to settle in Shenzhen, and accelerating the development of equity investment fund industry. In order to strengthen Shenzhen Municipal Government's support for equity investment fund industry, and create a more favorable environment, supplementary provisions of relevant affairs, approved by the Shenzhen Municipal Government, are hereby issued as below:

1. Since the date of this notice, equity investment fund management enterprises that meet the requirements of the Provisions shall be rewarded with 100% of the share of sales tax revenue retained by the local government for the first two years, and 50% of the share of sales tax revenue retained by the local government for the three years followed. The newly-registered equity investment fund management enterprises shall be counted for as the date of becoming sources of sales tax revenue for the local government.

2. Since the day of this notice or since the profit-making year, equity investment funds and equity investment fund management enterprises that meet the requirements of the Provisions shall be rewarded with 100% of the share of corporate income tax

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revenue retained by the local government for the first two years and 50% of the share of corporate income tax revenue retained by the local government for the three years followed.

General Office of Shenzhen Municipal People's Government December 4, 2010

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Operation Rules on Applying for Shenzhen Equity Industry Development Funds

(Shen Fu Jin Fa [2011] No.5 August 16, 2011)

Chapter 1 General Provisions

1. The operation rules is for implement the Provisions of Promoting the Development of Equity Investment Fund Industry (Shen Fu [2010] No. 103) (hereafter referred to as the Provisions) and the Notice on Further Supporting the Development of Equity Investment Industry (Shen Fu Ban [2010] No.100) (hereafter referred to as the Notice), as well as for standardizing the application procedure for Shenzhen Municipal government development funds for equity investment industry.

2. These rules shall be applied to handling and reviewing of application for the development funds for equity investment industry, as well as fund appropriation thereafter.

For the purposes of these Rules, the development funds for equity investment industry (hereafter referred to development funds) shall refer to the capital appropriated from the municipal government’s special funds for financial development to promote the development of equity investment industry in Shenzhen .

3. Application and appropriation of the development funds shall be in accordance with the principles of “subsidized by government, applied by enterprises, and approved by department-in-charge.

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4. Financial Industry Development and Service Office of Shenzhen Municipal Government (hereafter referred to as the Department-in-charge) shall be responsible for acceptance and approval of the application for the development funds.

Finance Commission of Shenzhen Municipality (hereafter referred to as Finance Commission) shall be responsible for review of the results of the application and capital appropriation thereafter.

Chapter 2 Applicants

5. Domestic Fund, Foreign-funded Fund, and joint adventure Fund, equity investment fund management companies, and private equity investment fund management companies (hereafter referred to as applicants) that satisfy the requirements of the Provisions can apply for development funds stipulated in the Provisions and the Notice in accordance with these Rules.

6. To be eligible for application for the development funds, paid-up capitals of the equity investment fund management enterprise established in the form of partnership shall be no less than RMB 5 million.

7. In any year, an equity investment fund or an equity investment management enterprise in corporate form, that meet both the criteria of rewards for completion of investment cycle in local enterprises or projects and rewards for contribution to local government’s tax revenue through corporate income tax or sales tax at the same time, shall apply for only one of the two rewards, and cannot apply both.

The reward for completion of investment cycle in local enterprises or projects above shall refer to the reward given to the applicants for their contribution to local tax revenue through tax payment at withdrawal of investment in local enterprises or projects.

8. After partnership equity enterprises withdraw investment in local enterprises or projects, a lump-sum reward of 30% of share of partners individual income tax

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revenue retained by local government.

9. House-purchasing subsidies or rental subsidies can be applied by either the equity management enterprise or its entrusted equity management enterprise. The house-purchasing subsidies can only be applied for once. Maximum rental subsidies shall not exceed RMB 1 million.

10. An equity management enterprise can apply for settlement reward for three equity funds affiliated to it. If more than three, it shall call for separate application as a special project.

11. The applicants should operation in accordance with law and the supervision regulations of industrial regulatory department. Any applicants that fall to the following situations shall be forbidden to apply for the development funds: 11.1 The applicants that are still under the investigation of regulatory department; 11.2 The applicants who received administrative penalty from regulatory department and the penalty have not reached two years.

Chapter 3 Application Period and Required Materials

12. Relevant materials shall be submitted to the Department-in-charge for application for development funds. Application time for development funds are listed below: 12.1 Rental subsidies application shall be submitted between January 1st and February 28th every year. 12.2 Application for rewards for contribution to local government’s tax revenue through corporate income tax or sales tax and rewards for completion of investment cycle in local enterprises or projects shall be applied between May 20th and August 10th every year. 12.3 Applications for other development funds apart from (A) and (B) can be applied to the Department-in-charge on any workday.

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13. The following materials shall be submitted to the Department-in-charge for application for settlement award in Shenzhen: 13.1 The application report; 13.2 Copies of business registration certificate; 13.3 Copies of bank account; 13.4 Copies of tax registration certificate; 13.5 Copies of organization code certificate; 13.6 A letter of commitment to stay in Shenzhen for 10 years from the date of receiving funds; 13.7 Copies of fund management agreement; 13.8 Statement of consent to entrust the fund to the management enterprise; 13.9 Other materials required by the Department-in-charge. An equity fund in corporate form shall submit a copy of the most recent capital verification report in addition to all required materials above. An equity fund in form of partnership shall submit the following materials in addition to the application: 13.9.1 Copies of partnership agreement 13.9.2 Copies of the certificate of partners’ paid-in capital 13.9.3 Copies of bank custody agreement 13.9.4 Copies of letter of confirmation of custody fund received

14. The following materials shall be submitted to the Department-in-charge for application for awards for completion of investment cycle in local enterprises or projects: 14.1 The application report; 14.2 Copies of business registration certificate; 14.3 Copies of bank account; 14.4 Copies of tax registration certificate; 14.5 Copies of organization code certificate; 14.6 Copies of fund management agreement; 14.7 Introduction of investment projects; 14.8 Copies of payment credential of annual corporate income tax and application form of final settlement and payment of corporate income tax;

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14.9 Introduction of calculation of tax paid for investment projects; 14.10 Annual audit report issued by an accredited accounting firm; 14.11 Other materials required by the Department-in-charge. Partnership equity fund shall submit credential of personal income tax of natural person investors when withdrawing from allocation of project profits in addition to all required materials above.

15. The following materials are required to submit to the Department-in-charge for application for house purchasing subsidies: 15.1 The application report; 15.2 Copies of business registration certificate; 15.3 Copies of bank account; 15.4 Copies of tax registration certificate; 15.5 Copies of organization code certificate; 15.6 Copies of fund management agreement; 15.7 Copies of house-purchasing contract; 15.8 Copies of house-purchasing invoice; 15.9 Copies of real property ownership certificate approved by the administrative department for real estate; 15.10 A letter of commitment not to rent the real property in 10 years; 15.11 Other materials required by the Department-in-charge.

16. The following materials shall be submitted to the Department-in-charge for application for rental subsidies: 16.1 The application report; 16.2 Copies of business registration certificate; 16.3 Copies of bank account; 16.4 Copies of tax registration certificate; 16.5 Copies of organization code certificate; 16.6 Copies of fund management agreement; 16.7 Copies of real property lease contract registered with the administrative department for real estate; 16.8 Copies of annual rent invoice;

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16.9 Other materials required by the Department-in-charge. Applications for rental subsidies of new office shall submit a copy of previous lease contract in addition to all required materials above.

17. The following materials shall be submitted to the Department-in-charge for application for the sales tax contribution award: 17.1 The application report; 17.2 Copies of business registration certificate; 17.3 Copies of bank account; 17.4 Copies of tax registration certificate; 17.5 Copies of organization code certificate; 17.6 Copies of fund management agreement; 17.7 Copies of certificate of business tax payment in Shenzhen; 17.8 Copies of application form for final settlement and payment of annual business tax; 17.9 Annual audit report issued by an accredited accounting firm; 17.10 Other materials required by the Department-in-charge.

18. The following materials shall be submitted to the Department-in-charge for application for the corporate income tax contribution award: 18.1 The application report; 18.2 Copies of business registration certificate; 18.3 Copies of bank account; 18.4 Copies of tax registration certificate; 18.5 Copies of organization code certificate; 18.6 Copies of fund management agreement; 18.7 Copies of certificate of corporate income tax payment in Shenzhen; 18.8 Copies of application form for final settlement and payment of annual corporate income tax; 18.9 Annual audit report issued by an accredited accounting firm; 18.10 Other materials required by the Department-in-charge.

19. The report shall include a brief of the fund management institution, profiles of

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shareholders, partners as well as fund managers, introduction of equity investment fund, investment targets, industry analysis, and categories of development funds applied for. Standard format of the report shall be issued by the Department-in-charge.

20. All documents must be A4 size and stapled into book form. A set of three copies shall be provided. Photocopy must be stamped with the official seal of the applicant. An original copy shall be carried at the same time the application is submitted for the purpose of examination. The format of the application report and letter of undertaking can be downloaded from the official website of the Department-in- charge.

Chapter 4 Acceptance and Approval

21. The Department-in-charge shall accept the application if the applicant is qualified and the application materials are complete. The applicant shall be informed to supplement the missing materials before deadline if he or she is qualified. Application made by unqualified applicants shall be rejected..

22. The approval of development funds application shall be in accordance with the procedure as follow: 22.1 The Department-in-charge shall examine the application documents and put forward its opinions; 22.2 The Department-in-charge shall gather and make a list of all qualified applications and hand over to the Finance Commission for review; 22.3 After reviewing, the Finance Commission shall return to the Department- in-charge with comments; 22.4 Approved application shall be announced to the public by the Department- in-charge for no less than 10 days; 22.5 Applications with no objection during the announcement shall be granted a funding plan jointly by the Department-in-charge and the Finance Commission; 22.6 The Municipal Finance Commission shall appropriate the development funds in accordance with the funding plan, and report to the Shenzhen Municipal People’s

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Government on the relevant issues.

Chapter 5 Supplementary Provisions

23. These measures shall become effective as of August 16th, 2011 for the incoming 5 years.

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Opinions by Shenzhen Municipal Government on Accelerating Headquarters Development

(Shen Fu [2008] No.1 January 3, 2008)

The people’s governments of all districts, and all units directly under the Municipal Government:

Energetically develop headquarters is to implement the spirits of 17thCPC National Congress, carry out the scientific development view, accelerate modernization and internationalization of Shenzhen; it is also an important task for the construction of a harmonious Shenzhen and efficient Shenzhen. To encourage and promote the development of the headquarters in Shenzhen, speed up the formation of scale effect of headquarters, the following opinions are issued:

1. Fully understand the importance and urgency of the development of headquarters 1) Headquarter has a prominent strategic position in the transformation of development models. As a high-end link of international division, headquarters economy assembles corporate headquarters, generates a strong leading role and radiation economy on economic and social development, with tremendous characteristics such as highly-intellectual knowledge content, strong correlation of industry agglomeration, highly great attraction for enterprises. Headquarters economy has become an important symbol of competitiveness and level of modernization. Accelerating the development of headquarters economy, undertaking the shift of the high-end links of international manufacturing industry and service industry, which is conducive to promoting the internationalization of the construction of the Shenzhen City, merge the city into the global economy at a higher level. Accelerating the

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development of headquarters economy and promoting industrial structure adjustment and the organizational structure of the enterprise innovation is to speed up the optimization and upgrading of industrial structure, improve the quality and efficiency of economic development, enhance the service function of the internationalization of the city, strengthen the service of regional development and ability to participate in international competition, also facilitate the scientific development in Shenzhen.

2) Shenzhen is in the critical period of the development of headquarters economy. With the deepening development of economic globalization and intra industry division of labor, the Multi-National Corporation and the domestic large enterprise groups to speed up the adjustment of investment structure and layout of the pace, which bring the favorable opportunities for the development of headquarters economy in Shenzhen. Shenzhen has unique geographic advantages, also with strong competitiveness and strong ability of self-independent innovation in modern industrial system. Meanwhile, the relatively complete infrastructure and service system provide favorable conditions for the leap forward development of headquarters economy. With the development of the expansion of economic scale and pillar industry, domestic and foreign investment has accelerated the pace. Shenzhen attracts a larger scale of competitive headquarters, and the headquarters economy characteristics have initially appeared in Shenzhen, the headquarters enterprise’s cultivation and strengthening step forward into a new stage. At the same time, Shenzhen has not been fully ready to meet the requirements of the development of headquarters economy, such as policy support, planning layout, service training and other areas. To promote the development of headquarters economy, we must further enhance the sense of responsibility and urgency, seize the historic opportunity, and take effective measures.

2. The guidelines, basic principles and overall objectives 3) Guidelines. Comprehensively implement the Scientific Outlook on Development with the goal of creating a modern and international city in harmony and efficiency, in the main theme of promoting comprehensive service of international city, and with the support driven by internationalization, marketization and information

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service. To attract, stabilize and develop a group of enterprises by adhering to the combination of overall promotion and key support, and the combination of cultivation and introduction. Turn Shenzhen into a regional city with corporate headquarters by speeding up the agglomeration effect and spillover effect of the formation of corporate headquarters, and promoting economic development to be high-end, intensive and in large scale.

4) Basic principles The development of headquarters economy shall adhere to the combination of market orientation and government support, as well as encouraging corporate to grow up by competing, cooperating and going out; adhere to the combination of the development of headquarters economy and the adjustment of industrial structure, as well as forming a new pattern of mutual development and improvement between industrial structure adjustment and headquarters economy; adhere to the combination of brand cultivation and capital attraction, as well as attracting headquarters enterprises from all over the world to settled down in Shenzhen, guiding enterprises which have great potential competiveness to expand their business scope and radiation,; adhere to the combination of focusing on key points and paying attention on promotion as a whole, accelerating headquarter economy to develop efficiently, orderly and in gradient; ; adhere to the combination of “coming in” and “going out”, as well as encouraging current enterprises in Shenzhen to shift their business to high-end level, to construct the “headquarters-production” chain, and to realize win-win situation between regional development..

5) Overall objectives Establish favorable environment for the development of headquarters and the system of policy and services, with remarkable increase in the number of headquarters enterprises, the ability of sustainable development and the scale of headquarters economy, and a considerable size of cluster, of which CBD is the core. With five to ten years’ efforts, to strive for a number of enterprises to enter the list of Fortune Global 500, the global top 500 in professional fields, and Top 500 in China. By 2010, the value add of headquarters shall account for 9% of GDP and the direct tax contribution rate to Shenzhen shall reach 18%.

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3. Prioritize strategic focus, and speed up the formation of the basic framework of headquarters economy. 6) Actively attract domestic and international group headquarters and regional headquarters. Take the full advantages of Shenzhen’s geographical position, market system, business environment and international marketing network. Actively introduce domestic and foreign enterprises to establish headquarters or regional headquarters in Shenzhen on basis of accelerating the cooperation in priority industries and areas especially in Pearl River Delta and Pan Pearl River Delta. Make full use of the close relationship between corporate headquarters and industries in Shenzhen. Encourage multi-national corporations and large domestic enterprises to set up logistics centers, procurement centers, R & D center, intermediary service center, training center, tourism and exhibition service center in Shenzhen to improve the comprehensive service functions of the city. Encourage and support the enterprises with market development potential, industry scale advantages and excellent modern enterprise system rooted in Shenzhen; speed up the process of internationalization of enterprises and the city.

7) Develop a batch of headquarters enterprises in Shenzhen. To support the enterprises with high comprehensive strength to become bigger and stronger, and gradually form a number of proponent headquarters enterprises with broad market prospects, tremendous market potential, significant economy of scale and leading position in their industry. Support state-owned enterprises to create enterprise group with key advantage of enterprise group, encourage private enterprises to implement brand strategy and quality strategy. Encourage local enterprises especially with the brand advantages, scale advantages and a good momentum of development to take root in Shenzhen and thrive accelerating. Give prior support to local enterprises conforming to the industry development direction of Shenzhen, highly correlated to other industries and high-level development. 8) Build an “inside-cohesive, outside-connected” cultivation and support system. Conduct regional development strategy, and implement complementary advantage policy around the city. Support enterprises with strength in Shenzhen to actively expand business outside Shenzhen and exert advantages of independent innovation and industrial development. By means of capital operation, strategic cooperation

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and business restructuring, to join the restructuring and transforming of enterprises in other areas. While creating favorable atmosphere for their headquarters to cultivate, development and settled down, Shenzhen should actively further expand market space and resources, extend the industrial value chain, and realize the formation of complementary advantages, mutual benefits and practical open and interactive headquarters economy development, comprehensively create suitable atmosphere for industrial development of economic hinterland in Shenzhen characteristics.

9) Cultivation for headquarters enterprises in pillar industry. Adhere to the “Industry is Priority” development policy; enterprises shall develop with the combination of development of headquarters economy and pillar industries and the adjustments of industrial structure. Give full play to the advantages of Shenzhen high-tech, modern finance, modern logistics and cultural industries, to attract, support and cultivate batch of four-major-pillar industries based enterprises, and speed up the formation of industrial clusters with comparative advantages and core competitiveness. Take independent intellectual property rights and international famous brand as the focus, support the development of high-tech industries and advanced manufacturing headquarters enterprises to grow bigger and stronger, improve the capability of independent innovation in manufacturing industry. With the goal of construction of regional financial center, and the priority of the construction of financial safety as the priority, to support domestic and foreign banking, insurance, securities, funds and investment companies to set up headquarters investment center and transaction settlement center in Shenzhen. Take the "two ports" transportation industry, third party logistics as key points, and support logistics headquarters enterprise to set up information service, logistics and warehousing and other functions of their headquarters in Shenzhen, to raise modern logistics industry to an international level. Vigorously implement the culture supporting strategy, adhere to the correct direction of public opinion and the direction of cultural industry development, and continue to promote the reform of state-owned cultural enterprise groups, as well as found cultural enterprises groups with obvious advantages.

10) Accelerate the construction of the city agglomeration of headquarters base. Play an

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active role in guiding policy, fully mobilize three parties of Shenzhen municipal, district governments and enterprises to construct the base, optimize regional distribution based enterprises, and forma headquarter cluster which has relatively concentrated high-end service headquarters and closely related high-tech headquarters and industrial park. Headquarters in general functions will found in the special economic zone, while headquarters for professional purposes will found outside of the special economic zone. Based on financial, cultural and business advantages in Luohu, Futian, Nanshan Districts to improve services of finance, information, agency, trade and exhibition, etc. and to found Futian financial center, Luohu financial center and Nanshan financial center. According to the requirements of main function and assorted function of headquarters enterprises, strengthen the integration between the headquarters enterprise and park industries, a agglomeration base with high technology and advanced manufacturing will be planned and built in High-tech Park, Guangming Industrial Park, Giant Industrial Zone and Logistics Park, significantly focus on the development of R & D center, logistics distribution center, training center and other functional headquarters.

4. Improve support system to create a favorable operation environment for the development of headquarters economy. 11) To establish information platform of headquarters economy. Push forward the construction of digital Shenzhen, improve information level of Shenzhen, solidly promote the construction of e-government, optimize the government information network system, set up the information exchange platform, and achieve information sharing and communication. Regularly inform the Shenzhen municipal development planning, important development policy, important investment projects information and reform measures to the headquarters enterprises, encourage headquarters enterprises to participate in the government important decision-making consultation and important project planning and construction. Deeply promote openness in government affairs, provide fast and convenient consultation services of business, policy, regulations etc.

12) To optimize the professional service system. Accelerate the development of modern service industry, vigorously develop high-end service industry, accelerate

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the optimization of banking, insurance, investment, trade, exhibition, logistics, shipping, tourism, law, education, training and other professional service systems, consistently promote the scale and energy level of service industry, promote the service industry and headquarters economy to generate mutual benefit, provide a favorable back-up services to the headquarters enterprises. Insist on the people-oriented principle, preferentially develop the public services, effectively solve the hot and difficult problems in city traffic, public security, city management, and strive to create a harmonious social environment.

13) To promote the innovation of financial system. Deepening financial cooperation between Shenzhen and Hong Kong, actively and steadily push forward the financial innovation, optimize the financial market function, and provide a good financing environment for headquarters enterprise development. Support the financial headquarters that are settled in Shenzhen to join the governmental bond issue, the syndicated loan, the reorganization of state-owned assets and enterprises IPO. Strive for government to approve multi-national corporations in Shenzhen to set up internal funds centralized management institution, unified management of its own funds in order to meet the needs of headquarters enterprises capital management.

14) To implement independent brand strategy. Actively introduce, cultivate and protect well-known brands, form a good policy environment and market environment for good brands. Support and cultivate backbone enterprises, symbolized products to form a famous regional brand, form the domestic brands incubation center and brands radiation center with strong competitiveness. To encourage the industry organizations to take part in the international exhibition, enhance the overall image and strengths in the international market; enhance Shenzhen’s attraction to multi-national corporations. The headquarters enterprises which carry out overseas business will be given priority to apply relevant special funds supports.

15) Optimize the environment of credit and law. In accordance with WTO rules and application of those, to accelerate abutment to international convention to create a fair, stable legal environment. Improve the ability of enterprises to respond to

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changes in the international trade environment, strengthen the protection of intellectual property rights and the purification of intellectual property rights environment. The establishment and optimization of corporate headquarters and its senior management personnel credit information database, put this database into the whole social credit and social responsibility system, promote the headquarters enterprises to strengthen its own credit construction. Create a favorable municipal social service system with well-managed market, efficient credit in order to keep a high level of city civilization in Shenzhen.

5. Improve the policies and measures to strengthen supports for headquarters economy. 16) Formulate recognized standards of corporate headquarters. Set up relative standards for different categories of headquarters according to Shenzhen's industrial policy, consulting domestic and international conventions, and reasonably classifying headquarters enterprise into different types, Establish the gradient support mechanism and a clear support policy to each type of enterprise, according to different stages of development of enterprises.

17) Establish a special fund for headquarters economy. In order to strengthen the support of economy fund for the headquarters, at the begining of 2008 financial year, an economy development fund shall be set up and categorized as part of the government industrial development fund, and be inluded in the Shenzhen Industrial Development fund plan. This fund would provide support in setting up headquarters, office buildings and employee incentive scheme.

18) Broaden financing channels for enterprises. Integrate the policy resources that help enterprises IPO, support the headquarters enterprises develop financing program through the capital market, coordinate and solve the financing problems that exist during the IPO Process and Practices Encourage enterprises to actively use foreign capital for the headquarters, loans from international financial organizations and foreign government loan. Encourage the headquarters enterprise set up industrial investment fund. Guide headquarters enterprises to broaden the financing channels

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through asset restructuring, joint ventures, the issuance of bonds, and the introduction of venture capital funds.

19) Adopt a pro-active land support policy. Strengthen the land supply for corporate headquarters, the headquarters enterprise’s land is preferentially brought into the annual land supply plan, to satisfy the land needs of accredited corporate headquarters by providing a certain proportion of land through “tender, auction, listing" and other public operating ways among the yearly newly-supplied land. For those headquarters enterprises that need to purchase and lease offices, providing necessary assistance according to the headquarters types. To speed up the park functional replacement, optimize the supporting facilities, guide the conditional industrial park to become Integrated Industry and Trade Park, encourage the business production circulation enterprises, outsourcing enterprises put their management, logistics, sales headquarters into Integrated Industry and Trade Park.

20) The introduction and cultivation of corporate headquarters personnel. Increase the headquarters enterprise shortage of talent introduction and training, to establish the headquarters human resources reserve database, build talent base. Increase the introduction and training of shortage of skilled personnel, constructing the public personnel service system, and improve the level of talent training system. The headquarters enterprises accept graduates overseas students and skilled personnel who will be given protection priority and applied to Easy Access system. Encourage and assist headquarters enterprises to form a talent-training mechanism or platform with domestic and foreign high quality training institutions and famous universities. In some key researching areas, Shenzhen should actively introduce the extremely-high quality institution and programs from foreign countries. Encourage headquarters enterprises with the standardization construction to carry out professional certification training.

6. Provide facilitation measures, offering superior and high-efficiency service 21) Strengthen the government and corporate communication. Set up dialogue mechanism between mayor and headquarters enterprises, organize the "mayor

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-CEO dialogue". Municipal entrepreneurs service agents implement normalized service, communicate with headquarter enterprises at fixed periods. To establish specially-assigned person, special-line system, listen attentively to headquarter enterprises’ demands momentarily, coordinate and solve related issues. To establish entrepreneurs’ emergency coping mechanism, provide effective reply and rescue service.

22) Simplify administrative examination and approval formalities and procedures. When new enterprise headquarter handle operating registration, the items which need pre-approval belong to provisions by laws and regulations should be implemented advance examination and approval department pre-reviewing and enterprise commitment system. The affirmed headquarter enterprises could be brought into large-scale enterprise convenient express service list, and major industrial projects could enjoy municipal major projects convenient express service.

23) Headquarter enterprises personnel training shall be brought into government training programs. Combining with domestic and international trainings, providing corresponding on-the-job training to administrative staffs of headquarter enterprises actively. According to practical situation and the demands of headquarter enterprises, holding professional knowledge trainings such as economic and social development policies about the country and Shenzhen, economic situation, the relevant laws and regulations, WTO professional knowledge, foreign anti-dumping situation and international economy and trade conventions.

24) Provide customs convenience for the headquarters enterprises. The headquarters enterprises with the import and export business enjoy the "red channel" counter service. To deal with headquarters enterprises or projects, headquarters enterprises or projects will be preferentially brought into clients-coordinators system or the convenient path of high-credit enterprises mode, implement a convenient clearance management system. To actively provide policy guidance, customs clearance business consulting services and other assorted services for enterprises. Promote

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the improvement of clearance efficiency, achieve the digital supervision and informational services thru electronic port unified information platform, and improve the efficiency of exit and entry of people and logistics.

25) Establish a long-distance service mechanism for enterprises outside Shenzhen. Regard industry association as the main entity, rely on the government coordination assistance, found a long-distance Shenzhen business service institutions in order to strengthen communication and coordination with other local governments, practically help Shenzhen’s enterprises to solve long-distance market expansion problems, impenetrate the government services to whole process of regional cooperation. Promote the government service to step forward, actively contact and provide personalized service for the domestic and foreign enterprises that plans to invest in Shenzhen.

26) Provide high-level personnel work and convenient life service. Departments of personnel, foreign affairs, public security, and labor shall preferentially take the exit and entry business applications from the staff of headquarters enterprises; actively provide support and services for headquarters enterprises’ vehicles to obtain Shenzhen-Hong Kong license plate. Senior employees and their relatives have priority to apply for the residence permit. Besides, senior managers’ children will be preferentially offered high quality education.

7. Promote regional cooperation; expand the market space for headquarters enterprises. 27) Further promote cooperation between Shenzhen and Hong Kong. Actively explore new mechanisms, new modes so as to promote the cooperation in finance, trade, shipping, intermediary and other services between Shenzhen and Hong Kong. Explore and conduct offshore banking business, and currency settlement in same city, mutual recognition of qualifications and joint supervision, deepen the cooperation in financial infrastructure, RMB business, logistics support services, co-capital markets, financial product innovation, insurance and other aspects in two places. Positively develop information sharing, and enlarge the services for the newly established Hong Kong enterprises. Develop collaborative investment in

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Shenzhen and Hong Kong, so as to promote the development and growth of enterprises in Shenzhen and Hong Kong.

28) Encourage enterprises to participate in the regional cooperation. Accelerate implementing the cooperation strategy of "Unit in the south and north, reinforce in the East and West", take Shenzhen-Hong Kong Cooperation as the core, take pan-Pearl River Delta regional cooperation as the basis, and encourage superior enterprises to actively explore the market in other cities. Strengthen the cooperation with the Yangtze River Delta, Bohai Rim Economic Circle, and encourage enterprises to participate in the development of western, central and northeastern economic. Positively develop cross-district industrial park in Shenzhen, and steadily push the processing enterprises to transfer production processes, so as to realize the spatial separation between management and production. Make full use of China Hi-tech Fair, ICIF and other international and regional exhibitions, and organize corporate headquarters to participate in overseas exhibitions and domestic trade tech exhibition held by municipal government.

29) Enhance the investment level. Take the introduction of corporate headquarters as the core of city investment, take better serving for independent innovation, recycling economy, eco-city construction as the goals, take the introduction of corporate headquarters as the core, strive to make up for the missing in the industrial chain, introduce high-end services-industry projects, expand investment and other aspects, so as to achieve fundamental change in quality improvement for investment. Further play the role of Shenzhen as an investment platform, and encourage corporate headquarters to carry out investment activities and business promotion.

30) Encourage brand enterprises to "Expand outside" Accelerate the development of the city's multinational companies encourage qualified enterprises to engage in overseas investment and project contracting, to carry out cross-border mergers and acquisitions, cross-border operations and foreign economic and technological cooperation. Encourage industry associations to integrate the overall strength of the industry and establish marketing channels in foreign countries. Through the

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establishment of offshore processing enterprises, establishment of overseas retail outlets and accessing to foreign mainstream circulation networks and other forms, expand the international market space for products. Build government cooperation platform, and positively organize enterprises to participate in international trade fairs and trade shows, and guide enterprises to develop "Expand outside" strategy. For the corporate headquarters and superior backbone enterprises compliance with the relevant special fund management approach of national foreign economic and technical cooperation, we should actively recommend them to the national authorities to apply for special financial support.

8. Strengthen coordination; improve the development of headquarters economy working mechanism. 31) Establish the headquarters economic joint meeting system. The position of joint meeting convener shall be served by municipal leaders, members should be make up by the department leaders under municipal government, be responsible for developing policies to promote the development of headquarters economy, examine the funding and reward to coordinate the handling of major issues of economic development in headquarters.

32) Strengthen policy coordination. Develop "Executive Regulations in Relation to Accelerating the Development of Headquarters Economy" and "Measures for Authenticating Headquarter Enterprises in Shenzhen." For the city's existing support and subsidies and other incentives related to the original corporate headquarters, it shall be uniformly audited and released by joint meeting according to the confirmation of original policy. In accordance with the general requirements of the development of headquarters economy, the city departments, District People's Government propose and refine supporting policies and convenient measures, bring them into the city's policy system, and form join forces in policies.

33) Strengthen economy analysis and supervision for the headquarters. Amplify business management and supervision for corporate headquarters according to law, establish and improve corporate headquarters statistical analysis system and statistical accounting systems and headquarters corporate contact system, so as to

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comprehensively and accurately grasp the economic development of the headquarters in the city. Strictly implement national policies, preserve industry and economic security.

34) Give full play to the role of industry associations. Industry associations shall play an active role in acting as a bridge between government and enterprises, to help make the introduction, training, qualification and so on for corporate headquarters. Strengthen research, timely reflect industry trends, make policy recommendations, help enterprises coordinate to solve the problems, and guide the corporate headquarters to develop in a healthy direction.

35) Strengthen the research and advocacy of headquarters economy. Government departments and research institutions should strengthen the theoretical and empirical research for headquarters economy, and improve the ability and levels promoting economic development for headquarters. The media should strengthen the promotion scope for headquarters economy, and promote the policy, the role and the progress for headquarters economy according to plan, so as to form a good atmosphere in the city that is conducive to the economic development of headquarters.

Shenzhen Municipal People's Government January 3, 2008

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Note: This is an English translation of current Chinese policies originally published in Chinese. In the event of any dispution or misunderstanding as to the interpretation of the terms of these policies, the official Chinese version shall prevail.

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