Article 12 Fund managers shall be assumed by the fund management companies established according to law.To be a fund manager, the ratification of the securities regulatory department under the State Council is required.

Article 13 For establishment of a fund management company, the following conditions shall be satisfied and the approval of the securities regulatory department under the State Council is required:

1. Having the articles of association which are in conformity with the present Law and the Company Law of the People's Republic of China;
2. Having a registered capital of no less than 100 million RMB and all of the capital being paid-in monetary capital;
3. Principal shareholders having good business performance and public reputation in the securities business, securities investment consultation, trust assets management or other financial assets management, having no record of violation of law within the last 3 years, and having a registered capital of no less than 300 million RMB;
4. The number of persons with fund practice qualification reaching the statutory requirement;
5. Having business sites, security facilities and other facilities relating to fund management business that comply with the requirements;
6. Having sound internal auditing and monitoring system and risk control system;
7. Other conditions provided for by laws and administrative regulations and those provided for by the securities regulatory department under the State Council and approved by the State Council.

Article 14 The securities regulatory department under the State Council shall, within 6 months from accepting the application for establishment of a fund management company, make the examination pursuant to the conditions specified in Article 13 hereof and the principle of prudent regulation, make the decision whether to grant the approval or not, and notify the applicant, and shall explain the reasons if no approval is granted. Where a fund management company is to establish any branch, modify its articles of association, or alter any other major matters, it shall apply to the securities regulatory department under the State Council for approval. The securities regulatory department under the State Council shall, within 60 days from the day of accepting the application, make the decision whether to grant approval or not, and notify the applicant, and shall explain the reasons if no approval is granted.

Article 15 None of the following personnel may be a securities practitioner of a fund manager:

1. Those being given criminal penalties for the crime of bribery and embezzlement, malfeasance, or encroachment of property, or the crime of undermining the socialist market economic order;
2. The directors, supervisors, factory directors, mangers and other senior executives who are personally liable for the bankruptcy and liquidation due to poor management or the revocation of business license due to violation of law of the companies and enterprises in which they hold office, provided that it has been less than 5 years since the day of the end of the bankruptcy liquidation or of the revocation of business license;
3. Those with large amount of outstanding personal debts;
4. The practitioners of fund managers, fund trustees, securities exchanges, securities companies, securities registration and settlement institutions, futures exchanges, futures brokerage companies and other institutions, and the state functionaries that have been dismissed due to violations of law;
5. The lawyers, certified accountants, practitioners of assets evaluation institutions and assets verification institutions, and practitioners of investment consultation institutions whose practice licenses have been revoked or who have been disqualified due to violations of law;
6. Other personnel that may not engage in the fund business as provided for by any law or administrative regulation.

Article 16 The managers and other senior managerial personnel of a fund manager shall be familiar with the laws and administrative regulations concerning securities investment, have the qualification for fund practice, and have worked in the field relevant to the position they hold for more than 3 years.

Article 17 The selection or change of the managers and other senior managerial personnel of a fund manager shall be submitted to the securities regulatory department under the State Council for examination in accordance with the conditions for holding such office provided for by the present Law and other relevant laws and administrative regulations.

Article 18 The directors, supervisors, managers and other practitioners of a fund manager may not hold any position in the fund trustee or other fund managers, and may not conduct any securities transactions and other activities that impair the fund property and the interests of the fund share holders.

Article 19 A fund manager shall perform the following duties:

1. Raising the fund according to law and handling or entrusting other institutions recognized by the securities regulatory department under the State Council to handle the offering, subscription, redemption and registration of fund shares;
2. Making fund records;
3. Applying separate management and separate account books to different fund properties it manages to make securities investment;
4. Determining the scheme on distribution of fund proceeds according to the stipulations of the fund contract and distributing profits to the holders of fund shares in good time;
5. Making fund accounting and preparing the fund financial accounting report;
6. Preparing midterm and annual fund reports;
7. Calculating and publicizing the net value of the fund assets and determining the prices for subscription and redemption of the fund shares;
8. Handling the relevant information disclosures related to the management of the fund property;
9. Convening the fund share holders'' meeting;
10. (10) Keeping the records, account books, statements and other relevant materials of the fund property management;
11. Exercising litigation rights or carrying out other legal action in the name of the fund manager for the interests of the fund share holders;
12. Other duties provided for by the securities regulatory department under the State Council.

Article 20 A fund manager may not conduct any of the following acts:

1. Mixing its own property or the property of others with the fund property to make securities investment;
2. Treating different fund properties it manages unfairly;
3. Seeking benefits for any third party other than the fund share holders by using the fund property;
4. Unlawfully promising the fund share holders to make benefits or bear losses;
5. Any other acts prohibited by the securities regulatory department under the State Council in accordance with the relevant provisions of the laws and administrative regulations.

Article 21 With respect to a fund manager under any of the following circumstances, the securities regulatory department under the State Council shall, according to its powers, order that fund manager to make rectification or disqualify it as a fund manager:

1. Having committed any serious violations of laws or rules;
2. No longer meeting the conditions provided for in Article 13 hereof;
3. Other circumstances provided for by laws and administrative regulations.

Article 22 Under any of the following circumstances, the duties of a fund manager shall terminate:

1. Being disqualified for fund management;
2. Being dismissed by the fund share holders'' meeting;
3. Being dissolved, or cancelled, or declared bankruptcy according to law;
4. Other circumstances stipulated in the fund contract.

Article 23 Where the duties of a fund manager terminate, the fund share holders'' meeting shall appoint a new fund manager within 6 months; before the appointment of the new fund manager, the securities regulatory department under the State Council shall designate a temporary fund manager.

A fund manager shall, upon termination of its duties, keep in good conditions the materials of fund management and process the formalities for handover of the business in good time, the new fund manger or temporary fund manager shall take over the business in good time.

Article 24 A fund manager shall, upon termination of its duties, retain an accounting firm to audit the fund property, publicize the auditing results and put on record with the securities regulatory department under the State Council.