(Issued on December 26, 2002 by China Securities Regulatory Commission)

To the Shareholders of Fund Management Companies and Fund Management Companies:

Recently, the public has paid extensive attention to the fact that the shareholders of fund management companies intend to assign their
capital contribution. The act of legally assigning capital contribution by the shareholders shall be protect by the law. Some
problems arise from the process of assignment of capital contribution, which have disturbed the normal order of the fund
market. The fund industry is an area that needs to be highly regulated. The legal interests of the shareholders shall be
protected during the process of assigning capital contribution, and the purpose is to encourage the long-term development of fund
management companies. In order to protect the legal rights of the owners of funds and to maintain the sound and stabilized development
of the fund industry the following regulations have been promulgated according to the PRC Company Law: Tentative Methods Regarding
Security Investment and Fund Management; Circular Regarding Material Modifications of Fund Management Companies (No.Zhengjianjijinzi
20021, "Material Modifications Circular"), Circular Regarding Assignment of Capital Contribution of Shareholders from Fund
Management Companies
The Circular Regarding Assignment of Capital Contribution of Shareholders from Fund Management Companies states:
:
1. When a party assigns or is assigned the capital contribution of a fund management company the party shall conform with the relevant
regulations of PRC Company Law and Articles of Association of the Company. The Fund Management Company and relevant parties shall
strictly conform to the Material Modifications Circular when they carry out the formalities.

2. The directors of the Fund Management Company have fiduciary duties to the Company and all investors. The directors shall conduct
the duties duly to ensure the Company runs properly during the term of the assignment of the capital contribution of the shareholders.
3. The assignee shall meet the following requirements when he/she
accepts the capital contribution of the shareholders from the fund
management company:
(1) The paid-up capital shall be no less than 300 (Three hundred)
million RMB;
(2) The assignees business is in good condition;
(3) There are no bad records;
(4) Other requirements regulated by the China Securities Regulatory
Commission in accordance with the Rules of Prudent Custody.
If through the assignment the assignee becomes the majority
shareholder he/she shall also meet the following requirements:
(1) The Fund Management Company is a legally incorporated securities
company or a trust investment company;
(2) It has made profits in the past three consecutive years;
(3) Other requirements regulated by China Securities Regulatory
Commission in accordance with the Rule of Prudence.
4. The assignee who becomes the shareholder of the fund management
company after being assigned the capital shall be the actual
investor. It is forbidden to assign the capital contribution of the
fund management company by way of confidential agreements or placing
the shares in trust.
5. The shareholders shall not violate Article 35 of PRC Company Law
regarding "Right of First Refusal" when they assign their capital
contribution. It is forbidden to infringe the right of first refusal
of the other shareholders through methods of fraud, such as false
price of the assignment.
6. When the assignment agreement is signed by and between the
shareholders and other non-shareholder institution, both shall
inform the board of the fund management company in written regarding
the assignment and ensure the assignment-relevant documents are
authentic, exact and complete. The assignment-relevant documents
shall be as follows:
(1) The assignment agreement;
(2) The information of the assignee including but limited to: name,
legal representative, registered capital, legal address,
incorporation time, approval organization, business scope;
(3) Details of the ultimate right holder of the assignee, the actual
controller, the related parties, including but not limited to the
statement of relationship between the consignee and its main
shareholders, important related parties of main shareholders, the
related parties of main investors;
(4) The consignee's purpose for investing in the fund management
company;
(5) The letter of statement in which the consignee warrants and
represents that he is the actual investor and he has no obligations
to any non-disclosed third party;
(6) The legal opinions provided by the consignee's attorney
regarding the qualification of the consignee, and the
assignment-relevant documents are authentic, exact and complete;
(7) Other materials, which are closely related to the assignment,
other than commercial secrets.
7. The fund management company shall pass a board resolution when
the shareholders assign their capital contribution to
non-shareholder institutions. The parties of the assignment shall
submit assignment documents to the board meeting. The board meeting
has the right to require the parties to provide other further
documentation.
8. When the shareholders assign their capital contribution the fund
management company shall submit the application to the China
Securities Regulatory Commission according to the Material
Modifications Circular. When the shareholder assigns its capital
contribution to a non-shareholder institution, the fund management
company shall submit the following materials in addition to the
aforesaid materials:
(1) Assignment documents;
(2) The report made by the proposed majority shareholder regarding
the business rules and managing structure of the fund management
company;
(3) Board resolutions, other documents during the process of the
assignment, and legal opinions made by the attorney;
(4) Other materials as required by China Securities Regulatory
Commission in accordance with the Rule of Prudence.
9. China Securities Regulatory Commission can require the consignee
to provide the fund source of its investment and its security
investment including its stock account and list of shares. If
necessary, the China Securities Regulatory Commission may verify the
above information by itself or assign other organizations to verify.

10. The assignee cannot handle the relevant alteration formalities
and cannot execute the rights as a shareholder before it obtains the
approval from China Securities Regulatory Commission.

11. The fund management company shall declare the assignment of
capital contribution in public in accordance with the Material
Modifications Circular.
12. The founders of the fund management company shall not assign
their capital contributions within one year after the incorporation
of the company; the newly increased contribution by shareholder of
the fund management company and new shareholder's contribution shall
not be assigned within one year after the contribution unless
approved by the China Securities Regulatory Commission.

13. The China Securities Regulatory Commission supervises the
assignment of the fund management companies. For those assignments
that violate laws, the China Securities Regulatory Commission shall
reject the parties' application asking for management of the
securities and funds; revoke their relevant qualifications; stop
them from participating in the activities of security market and
make the relevant parties take legal responsibility for their
actions.
14. Rules regarding the Incorporation of a Fund Management Company
with Foreign Investment shall be applied when the assignee is from a
foreign country.
15. The Circular is effective as of its promulgation date.

Bright Jon  Attorney-at-law   Fax: +86-512-53516040
email@colaw.cn