20
Qualified Foreign Institutional Investors (QFII) Brochure Special Edition
Qualified Foreign Institutional Investors (QFII) Brochure
Special Edition
PwC
QFII stands for Qualified Foreign Institutional Investors. The QFII Program is the
certification system which allows licensed professional foreign investors to trade Ren Min
Bi (RMB) denominated securities in China's mainland stock exchanges by converting
foreign currency to RMB within the quota obtained from relevant authorities.
By 2001, the Chinese securities market had already developed into one of the largest and
the most vibrant securities markets in the Asia-Pacific. However, because the proportion
of institutional investors in the Chinese securities market was far behind that of the level
of developed markets at that time, which seriously restricted the development of the
capital market in China, the QFII Program was introduced.
On 5th November 2002, the “Provision on Foreign Exchange Administration of Domestic
Securities Investment by Qualified Foreign Institutional Investors” was introduced. The
total investment quota available for the QFII Program was USD 10 billion in total initially,
and was increased to USD 30 billion in 2007. In recent years, foreign institutional
investors have increased their demands in investing in China’s capital market due to the
continuous growth of China’s economy and capital market. Since the implementation of
the QFII Program, it has been operating smoothly. Due to the long-term investment
strategy of those institutional investors in QFII accounts, the Program has been enriching
the investment structure of the domestic capital market, promoting the quality of listed
companies, enhancing the internationalization of the domestic capital market, and raising
general awareness of the economic and social development in China around the globe.
On 3rd April 2012, with the approval of the State Council, the China Securities Regulatory
Commission (“CSRC”), the People’s Bank of China, and the State Administration of
Foreign Exchange (“SAFE”) increased QFII’s total available investment quota by USD 50
billion with the cumulative available quota amounting to USD 80 billion in total. In
addition, SAFE’s QFII quota approval process has recently sped up. By June 2012, 172
foreign institutions had been granted QFII licenses, 37 of which were approved this year,
meaning the total number of granted foreign institutions in the first half of 2012 was close
to the sum of total in 2010 and 2011 together. Moreover, the number of foreign
institutions interested in applying for QFII licenses is growing with a geometrical base.
As the leading service provider of QFII audit and tax services in China (please refer to
Appendix 2 for details), we have received lots of enquiries about QFII’s set-up, operation
and other relevant issues. Therefore, we would like to use this platform to share with you
the development of QFII regulations, QFII’s setup and operation processes, as well as
other QFII related hot topics including accounting, auditing and taxation. We hope to
provide valuable reference to those foreign institutions who are interested in the QFII
Program.
Should you have any further questions, please feel free to contact us. We look forward to
providing a reliable and professional service to you in the future.
Yours faithfully
August 2012
Preface
PwC
Contact
Assurance Service Team
Tax Service Team
Alex Wong
Partner
+86 (21) 2323 3171
Jane Xue
Partner
+86 (21) 2323 3277
Kevin Xu
Partner
+86 (21) 2323 7615
Frank Shan
Partner
+86 (21) 2323 3487
Li Liu
Senior Manager
+86 (21) 2323 8023
Alex Jin
Senior Manager
+86 (21) 2323 2904
Matthew Wong
Partner
+86 (21) 2323 3052
Kenny Lam
Partner
+86 (21) 2323 2595
Hardy Chan
Senior Manager
+86 (21) 2323 2752
PwC
PwC
Index
5
Overview of China’s QFII Market 6
Overview of QFII’s Regulatory Development 8
Set-up and Operation Process of QFII and Relevant
Market Intermediaries 9
FAQ about QFII Accounting and Auditing 11
Hot Topics on QFII’s Taxation 13
Appendix 1: Major QFII’s regulations in effect 16
Appendix 2: PwC—the leading accounting firm in the
asset management industry 17
Appendix 3: Illustrative financial statements of domestic
securities investments of QFII 18
PwC
By June 2012, 172 foreign institutions were
granted QFII licenses, which include 23
commercial banks, 13 securities companies, 96
asset management companies, 11 insurance
companies, and 29 other institutions (endowment
funds and sovereign funds). From a geographical
point of view, those foreign institutional investors
come from 24 countries and areas, among which,
83 in East Asia, 52 in Europe, 34 in North
America, 2 in Australia and 1 in Africa.
17%
14%
13%
11% 6%
6% 5%
5%
5%
4%
14%
英国
美国
日本
香港
新加坡
台湾
韩国
挪威
法国
荷兰
其他
UK , 47.2, 17%
USA , 38, 14%
Japan, 34.4, 13%
Hong Kong, 29.25, 11%
Singapore, 16.25, 6%
Taiwan, 15.7, 6%
Korea, 13.98, 5%
Norway, 13.5, 5%
France , 13.25, 5%
Netherlands, 12.35, 4%
Others, 39.75, 14%
SAFE had approved 147 QFIIs by 15th June 2012
with a total investment quota of USD 27.363
billion. The total assets of QFII accounts has
reached RMB 265.6 billion, of which 74.5% is
stocks, 13.7% is bonds, and 9.6% is bank deposits.
11 commercial banks, including seven domestic
banks, have RMB 105.2 billion assets under
custody for the QFIIs. And 22 domestic securities
companies act as the securities brokers for the
QFIIs.
The chart below illustrates accumulative approved investment quota by country: (unit: USD 100 million)
Accumulative Approved Quota
6
Overview of China’s QFII Market
PwC
In recent years, with the continuous expansion of
China’s economy and ongoing development of its
capital market, foreign institutional investors have
increased their demands on the capital market in
China. Based on the government’s open-door
policy on financial expansion, we anticipate that
more and more qualified investors will enter the
Chinese capital market and QFII will become
important investors in A Share Market.
100
300
800
0
200
400
600
800
1000
2002年 2007年 2012年
The chart below illustrates total available quota of QFII: (unit: USD 100 million)
Total Available Quota of QFII
On 3rd April 2012, with the approval of State
Council, CSRC, the People’s Bank of China and
SAFE decided to increase USD 50 billion of QFII’s
investment quota to USD 80 billion as a total.
7
Overview of China’s QFII Market (cont’d)
PwC
In the QFII Program, qualified foreign institutional investors (hereinafter referred to as QFIIs) refer to asset management companies, insurance companies, securities companies and foreign institutions that comply with relevant regulations, and have been approved to invest in China's securities market. Investment quotas are granted to QFIIs by SAFE. The QFII Program is a securities investment mechanism that is implemented prior to the complete opening-up of the Chinese capital market to foreign investments. In this program, foreign investors may remit a certain amount of foreign currency and convert it into local currency with the approval of relevant authorities. Foreign investors can hence make investments in the local securities market through special purpose accounts. Their investments are under strict review. The capital gains and dividends received can be converted back into foreign currency for repatriation upon approvals. The key parts of the program include: qualifications, approval and registration, investment proportion, quota limitation, investment operations, transaction framework, control on inbound and outbound remittance of funds, etc. On 5th November 2002, CSRC and People’s Bank of China jointly promulgated “Temporary Regulation on Domestic Securities Investment by Qualified Foreign Institutional Investor" (QFII Temporary Regulation), which forms the regulatory foundation for the QFII operation. On 24th August 2006, CSRC, the People’s Bank of China and SAFE jointly issued “Measures on Administration of Domestic Securities Investment of Qualified Foreign Institutional Investors” (QFII Measures on Administration), which replaced the QFII Temporary Regulation. The QFII Measures on Administration regulates the operation of QFIIs in various aspects regarding qualification, approval procedure, custody, registration and accounting, investment, capital management and supervision etc. On the same day, the CSRC issued the “Notice on the Implementation of Measures on Administration of Domestic Securities Investment of Qualified Foreign Institutional Investors”, which further clarified detailed provisions on the QFII Program. On 24th May 2011, the CSRC issued “Trading Guidelines on Stock-Index Futures Investment of Qualified Foreign Institutional Investors”, which authorized QFII’s participation in stock-index futures trading.
On 27th July 2012, CSRC issued “Provisions Concerning Issues Related to the Implementation of the Administrative Measures for Securities Investments in China by Qualified Foreign Institutional Investors”, in which the major amendments include: 1. mark down minimum AUM requirements for asset managers and institutional investors to qualify as QFII; 2. enhance operational efficiency; 3. expand QFII investment range; 4. relax investment restriction ratios. The threshold of applying for a QFII license was lowered with the restrictions upon investment untied. As for foreign exchange administration, SAFE issued “Temporary Regulations on Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors” (Circular [2002] No.2) and “Notice on QFII’s Foreign Exchange Management of SAFE’s Comprehensive Office”(Huizongfa [2003] No.124), which was replaced subsequently by the “Provisions on Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors” issued by SAFE in 2009, which set forth provisions on the management of investment quota, capital account, foreign exchange, statistics and supervision regarding operation of QFII. Please refer to the appendix 1 for major QFII’s regulations in effect for further details.
8
Overview of QFII’s Regulatory Development
PwC
Set-up and Operation Process of QFII
Non-Open-ended China Fund Account
* As stipulated by SAFE, QFIIs applying repatriation for accumulated realized profits shall submit
certificates of tax payment, tax reduction or tax exemption issued by relevant tax authorities. As for tax
issues pending further resolution, a commitment letter should be presented to consent the QFII’s duty of
tax payment in arrears when tax issues are clarified in the future.
Application & Set-up
• Appoint local custodian bank
to submit the application；
• Apply to the CSRC for
qualification；
• Apply to the SAFE for
investment quota and
openning of foreign currency
account and RMB account
• Individual application no less
than the equivalent of USD
50 Million and accumulated
application no more than
USD 1 billion
Principal Remittance &
Investment Operation
• remit in the principal
within 6 months upon
the investment quota
approval
• Principal less than the
equivalent of USD 20
million, no settlement
should be made;
• The lock-up period is 3
months for pension
funds and insurance
funds, while for other
types is 1 year
• Open up a broker
account for investment
operations
• Within 10 working days
prior to actual
investment, notify
custodian banks to
make foreign exchange
settlements
Principal and Profit
Repatriation
• Apply to the SAFE for
principal repatriation
• For profit repatriation,
present audit report
issued by a CPA firm in
the PRC, tax clearance
certificate *on profits and
other documents as
required by the SAFE
9
Set-up and Operation Process of QFII and Relevant Market Intermediaries
PwC
Intermediaries Applicable Stage Service Content
Custodian Bank Set-up stage, operation stage, exit stage Asset custody, transaction execution, account
services
Investment Advisor Operation stage Recommendation on asset allocation and
individual investments
Securities
Company Operation stage Investment transactions
Public Accounting
Firm Operation stage, exit stage
Annual audit, profit repatriation audit, tax
consulting service
Law Firm(optional) Set-up stage, operation stage, exit stage Legal consulting service
Application & Set-up
• Submit the original copy of fund
prospectus and Chinese
translation to SAFE for filing
within 20 working days after
establishment of the Open-
Ended China Fund.
• Other requirements are the
same with Non Open-Ended
China Funds.
Principal Remittance &
Investment Operation
• Remit in the principal
within 6 months upon the
investment quota approval
• Lock-up period is 3
months
• Open up a broker account
for investment operations
• Within 10 working days
prior to actual investment,
notify custodian banks to
make foreign exchange
settlements
Monthly Capital
Remittance and
Repatriation
• Net subscription is
remitted-in as principal
• For net redemption,
calculate the principal and
profit ratio in accordance
with the formula*
• If net subscription or
redemption amount is less
than the equivalent of USD
50 million (inclusive), only
filing to SAFE is required;
If the amount exceeds the
equivalent of USD50
million, application need to
be submitted to SAFE
within 10 working days
prior to repatriation
Open-Ended China Fund Account Open-Ended China Fund refers to the open-ended securities investment funds launched overseas with more than 70% of its fund asset invested within China.
* For net redemption of Open-Ended China Funds, the distinction between principal and profit is based on the Custodian bank’s calculated principal and profit ratio as of the last day of trading the previous month. Principal ratio=Remitted-in principal/total market asset value ×100%, profit ratio=(1-principal ratio)×100%. If the total market asset value is less than the investment principal, which indicates a loss, the repatriated amount should be regarded as principal and will be allowed to be remitted-in in the future.
Involved Market Intermediaries
10
Set-up and Operation Process of QFII and Relevant Market Intermediaries (cont’d)
Set-up and Operation Process of QFII ( cont’d)
PwC
1. Why are QFIIs subject to annual audit?
As stated in article No.22 of Decree [2009] No.1 Provisions on Foreign Exchange Administration and the Measures on Administration of Domestic Securities Investment of Qualified Foreign Institutional Investors (the “Regulations on Foreign Exchange), “Report previous financial year’s ‘QFII Domestic Securities Investment Annual Financial Report and it should be audited by a certified public accountant in the PRC within the first three months of the following year.”
2. Other than annual audit, under which
circumstances shall QFII financial statements be audited?
Other than the above-mentioned annual audit, relevant audit reports should also be presented when QFIIs (non-China open-ended fund account) conduct profit repatriation. As stipulated by article No.18 of Regulations on Foreign Exchange, “Except for Open-Ended China Fund, other QFIIs which are to conduct repatriation for accumulated realized profits shall, after obtaining an audit report issued by certified public accountants in the PRC, apply to the local SAFE bureau where the custodian is domiciled for repatriation through the custodian with the following documents: 1. Application Letter and relevant supporting
documents on profit repatriation decision; 2. SAFE Certificate; 3. The audit report on investment profits
issued by certified public accountants in the PRC;
4. Tax clearance certificate on profits; 5. Other documents as required by SAFE.
Method A Method B
Trading expenses in
The initial
recognition
Into Costs Into P&L
Accrual of bond
interest Yes No
Bond valuation at
period-end Gross price Net price
Accounting
estimation upon
accrual of capital
gains income tax
Depends on
QFII’s
requirement
Depends on
custodian
bank’s
requirement
After reviewing, the local SAFE bureau will issue an approval document if it is approved. The custodian bank shall, based on the approval document, proceed with the foreign exchange and repatriation procedure for the QFIIs.”
3. What are the applicable accounting
standards for QFII in China?
The Ministry of Finance (Governing body responsible for accounting standards in China) has not clarified which accounting standards are applicable for QFIIs. What is available now, from a regulatory aspect, is that the format of QFIIs’ financial statements (please refer to the appendix 3 for details) is outlined in one of SAFE’s regulations. QFII’s major accounting policies are primarily drafted by custodian banks and sent to the QFII license holder for final confirmation. Special basis of preparation and significant accounting policies are fully disclosed in QFII’s annual financial statements. The QFII license holder and custodian banks jointly assume the accounting responsibilities. The comparison of two major accounting policies adopted by the majority of QFII custodian banks within the industry is summarized as follows:
11
FAQ about QFII accounting and auditing
PwC
4. What is the QFII’s accounting year? QFIIs’ accounting year is a full calendar year, i.e. starts on 1st January (or the date of commencement) and ends on 31st December.
5. What types of tax are applicable for QFIIs?
Major taxation types which apply to QFIIs include China business tax and corporate income tax. The effective QFII tax regulations and tax issues pending for resolution are as follows: China Business Tax: According to Cai Shui [2005] No. 155 issued jointly by the Ministry of Finance and the State Administration of Taxation PRC, QFIIs are currently exempt from business tax on realized capital gains.
Corporate Income Tax: According to Guoshuihan [2009] No. 47 <Circular on withholding tax (“WHT”) on dividends and interest derived by QFIIs from PRC tax resident enterprises> issued by the State Administration of Taxation, Pursuant to the new China Income Tax Law, QFIIs are subject to WHT at 10% of PRC sourced dividends and interest. For WHT on dividends, the PRC enterprises making the distribution should be the withholding agents. For WHT on interest, PRC enterprises making the payment should withhold the tax upon payment or when the payment is due. For QFIIs which are entitled to preferential tax treaty benefits for WHT of dividend and interest, QFIIs are required to submit application to the in-charge tax bureaus and can enjoy the relevant treaty benefits after obtaining approvals from the in-charge tax bureaus. Presently the Chinese tax authorities had not provided clarification or specific guidelines on whether the QFII portfolios are subject to income tax on capital gains from securities investments. According to the “Explanation Regarding the Provision on Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors” and “Answers to Technical Problems Regarding Notice on Foreign Exchange Administration of Domestic Securities Investment by Fund Management Companies and Securities Companies” posted on SAFE’s website, QFIIs’ profit repatriation should be supported with certificates of tax payment, tax reduction or tax exemption provided by tax authorities. As for tax issues pending further resolution, a commitment letter should be presented to consent the QFII’s duty of tax payment in arrears when tax issues are clarified in the future. For other hot topics on QFII’s taxation, please refer to the next chapter for further details.
12
FAQ about QFII accounting and auditing (cont’d)
PwC
The China tax position of QFIIs is always said to be
a contentious issue – i.e. whether QFIIs are liable
to China taxes on its income (including but not
limited to dividends, interests, and trading gains)
earned in China. This is because the current
corporate income tax laws and regulations, and the
business tax laws and regulations have not
specifically stated that QFIIs are subject to taxes in
China nor if they are totally exempted from taxes
in China.
Without any specific laws, regulations and
circulars stipulating that QFIIs are exempted from
China taxes, the better view, or a more prudent
view, should be that the income earned by QFIIs
should be subject to taxes in China.
Potential corporate income tax exposures:
Even if QFIIs agreed that they should be liable to
China tax on income earned in China, there are
still many other questions and issues which need
to be considered and resolved, in particular:
1. Under what circumstances should the QFII
be regarded as having a permanent
establishment in China? Would the
appointment of a custodian bank, a fund
administrator, or an investment
advisor/sub-advisor in China render the
QFII having a permanent establishment in
China? What are the “do’s and don’ts”, if
any, that the QFIIs should follow to mitigate
the permanent establishment risk?
2. What should be the tax basis in calculating
the tax payable on the gains arising from the
buying and selling of investments i.e.
transaction-by-transaction basis versus
portfolio-by-portfolio basis? Could the
trading losses sustained by the QFII be
carried backward or carried forward to set off
its taxable income?
3. Could the QFII be eligible for double tax
treaty protection on its trading gains? What
are the application procedures for double tax
treaty protection, if feasible, by the QFII?
4. When should the QFII file and settle its
taxes? To whom should the QFII file and
settle taxes with and how? Should the
custodian bank be liable to file the tax
returns and settle the tax liabilities on behalf
of the QFII?
5. How could the QFII repatriate the capital
and profits out of China? How could the
QFII obtain the tax payment certificates
from the competent authorities? How could
the QFII produce evidence to the bank
proving that withholding taxes had been
paid on the dividends and interests received
from the issuers and the debtors?
Potential business tax exposures:
Besides corporate income tax issues, QFIIs should
also be mindful of the business tax exposure on
income earned (with some exceptions).
13
Hot Topics on QFII’s Taxation
PwC
Tax costs have a direct implication on the rate of
return to the investors as well as the performance
fee received by the investment manager. It is
imperative for the QFIIs to have a thorough
understanding on the potential tax exposures in
China and to formulate a strategy to deal with any
unforeseen issues.
PwC can provide assistance to you on the
following areas:
1. Provide consulting services to the QFII on the
current China tax environment, the QFII
holding and business structure, housekeeping
rules & regulations etc with a view to
minimizing potential China tax liabilities
2. Provide the following compliance service:
a. Ascertain the in-charge tax bureau of the QFII
b. Agree with the in-charge tax bureau on the tax basis
c. Calculate the taxable income of the QFII
d. Prepare and submit the tax returns on behalf of the QFII
e. Apply for double tax treaty protection, if eligible
f. Obtain tax payment certificates from the various tax bureau
14
Our services
Appendix
15 PwC
PwC
Major QFII’s regulations in effect
Appendix 1
16
Measures on Administration of Domestic Securities
Investment of Qualified Foreign Institutional Investor
(24th August 2006, decree No.36 of the Securities
Regulatory Commission, the People’s Bank of China,
the State Administration of Foreign Exchange)
Notice on the Implementation of Measures on
Administration of Domestic Securities Investment
of Qualified Foreign Institutional Investor (24th
August 2006, Zhengjian Jijin Zi (2006) No.176)
Provisions on Foreign Exchange
Administration of Domestic Securities
Investment by Qualified Foreign Institutional
Investors (29th September 2009, Decree
(2009) No.1 of the State Administration of
Foreign Exchange)
Provisions Concerning Issues
Related to the Implementation of the
Administrative Measures for
Securities Investments in China by
Qualified Foreign Institutional
Investor (27th July 2012, Notice
(2012) No.17 of the Securities
Regulatory Commission)
Trading Guidelines on Stock-Index
Futures Investment of Qualified
Foreign Institutional Investor (4th
May 2011, Notice (2011) No.12 of the
Securities Regulatory Commission)
PwC
A global firm with a strong reputation PwC was originally set up in London in 1849, and after more than one hundred years of development, has now become a global professional services firm. We now have operations in 158 countries across 6 continents and approximately 169,000 professional employees. As the world's largest professional financial advisory organization , PwC had total revenues of $29.2 billion in fiscal year 2011 ending 30 June, 2011. Using our global services network, we are well positioned to help our clients whenever and wherever they are based. PwC is a consistent leader in all major global industries, offering high-quality services, abundant network resources and shared practical experience. The Number One accounting firm in China PwC, which is the largest accounting firm in China, has continuously ranked in first place for nine years in a row, first in the list in the Top 100 Annual Accounting Firms’ comprehensive assessment report, which is published by the Chinese Institute of Certified Public Accountants. We have over 14,000 professionals, of which 620 are partners of the firm. PwC China is well established in Beijing, Hong Kong, Shanghai, Singapore, Taipei, Chongqing, Chungli, Dalian, Guangzhou, Hangzhou, Hsinchu, Kaohsiung, Macao, Nanjing, Ningbo, Qingdao, Shenzhen, Suzhou, Taichung, Tai-nan, Tianjin, Amoy and Xi’an. Apart from our local professional staff, we also have many experienced expatriate managers and partners from the United States, United Kingdom, Germany, Australia, Hong Kong, Taiwan, Japan, Korea, Singapore and Malaysia etc. A dedicated and specialised global financial services team We have many dedicated teams which can provide a range of specialised services around the globe. Our global financial services team is composed of 34,000 professionals, including more than 1,900 partners. The professional services we provide are related to, but not limited to the financial services sector including banking, asset management, insurance and securities. PwC allocates industry specialised engagement teams to each of our clients to make sure they receive an industry specific and in-depth service. Around 30% of PwC’s global revenue come from financial services industries and we are the leader in each and every major sector of financial services industries globally.
We are recognised in China and globally as a reliable and high quality asset management services provider PwC has successfully built a high quality service provider reputation in the asset management industry in China and on a global scale. We provide services to 71 out of the 100 largest asset managers in the world. In China, PwC has been a leader in this emerging market since 1998 by retaining the number one market share position. We provide statutory audit and capital verification services to 480 out of the 889 open-ended funds which were launched prior to 31st December 2011; statutory audit services to 18 out of the 29 close-ended funds; statutory audit services for corporate and/or funds to 28 out of the 39 Sino-foreign Joint Venture fund management companies and 10 out of the 30 domestic fund management companies. We have maintained a dominant position in the provision of professional services to leading fund managers with a comprehensive product range. As of 31st December 2011, we provide services to all the top five fund management companies in China, as well as eight out of the top ten fund management companies measured by asset under management (“AUM”). As for the China QFII audit service market, according to the QFII investment quota approval list published by State Administration of Foreign Exchange up to 31st December 2011, PwC provide annual audit services to 43 out of 111 QFIIs in mainland China, with an accumulative approved investment quota of 22.233 billion dollars in total. We have an excellent business relationship with all the major QFII custodian banks in China including Hong Kong and Shanghai Banking Corporation (HSBC), Standard & Chartered Bank Corporation Ltd, Citi Bank Corporation Ltd, Bank of China Corporation Ltd, Industrial and Commercial Bank of China Corporation Ltd, China Construction Bank Corporation Ltd, Bank of Communications Corporation Ltd, Agricultural Bank of China Corporation Ltd and more. Comprehensive services with high quality PwC constantly meets the needs of our clients and wins public trust through the provision of high quality professional services. We enhance value for our clients and shareholders by leveraging our global network; we offer a variety of professional services for a range of different clients, including auditing, consulting and tax services. The core business consists of financial statements auditing and compliance reporting services, internal audit, Sarbanes - Oxley compliance audit, consultation of transactions in the capital market; international tax, M&A transfer pricing and tax management; M&A corporate restructuring, risk management, human resources management, enhancing value of financial function valuation, IT consulting services and more. In order to provide high quality and dedicated expert staff to our clients, we make sure to support them through risk management advice, accounting advice, audit technical support, IT support and various training programs. This gives us a solid foundation to ensure best quality services for you, our client.
Appendix 2
17
PwC—the leading services provider in the asset management industry
PwC
Assets
In which: Cash in bank
Investment in stocks
Investment in government bonds
Investment in other bonds
Other investments
Prepayment for purchase of securities
Receivable for sale of securities
Dividend receivable
Interest receivable
Other receivables
Liabilities
In which: Management fee payable
Custodian fee payable
Taxes payable
Payable for purchase of securities
Other payables
Net Assets
In which: Injected funds
Net gains/losses of current year
Accumulated gains
Balance Sheet
QFII Name: Custodian: Unit: Yuan(RMB)
Person preparing the financial statements: Person in-charge:
Contact phone number: Date:
Notes: The price of stocks, government bonds, other bonds and other investments are valued using the closing price of the last trading day of the year.
18
Appendix 3
Illustrative financial statements of domestic securities investment of QFII
PwC
Income
In which: Dividend income
Interest income
Other income
Expense
In which: Custodian fee
Management fee
Tax expenses
Other expenses(taxes)
Realized capital gains (losses)
Unrealized capital gains (losses)
Net gains/losses for the year
Accumulated gains at the beginning of the year
Accumulated gains at end of the year
Income Statement
19
Illustrative financial statements of domestic securities investment of QFII (cont’d)
Appendix 3
QFII Name: Custodian: Unit: Yuan(RMB)
Person preparing the financial statements: Person in-charge:
Contact phone number: Date:
Source: Provisions on Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors (Decree (2009) No.1 of the State Administration of Foreign Exchange)
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