Disclosure Requirements – Investment Funds – China
Disclosure Category: 2
Clearstream Banking S.A (“CBL”) may be required, pursuant to the Regulation on the Administration of Securities Registration and Settlement, (“Registration Regulation”) and fund documents to disclose, upon request, in the case of holding Mainland China investment funds through the Mutually Recognised Funds (MRF) platform.
In order to comply with the applicable legislation, customers with holdings in Chinese investment funds or entering into transactions in the Chinese market through the MRF must consent, and are hereby deemed to consent, to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CBL the required information to be disclosed. Customers who do not grant such authority cannot hold such investment funds / financial instruments in their accounts with CBL.
Customers are advised that local laws and regulations, as well as the fund documents, may require CBL to disclose information on CBL customers and ultimate beneficial owners to the authorised requestors (for example, fund manager, transfer agent, registrar, regulators).
Pursuant to the Registration Regulation, the Registrar of the Mainland China Funds approved for distribution under the MRF, may need to request CBL for beneficial owner information for the purpose of performing its duties for the registration of the Mainland China fund shares/units. The relevant fund documents and agreements may also include the requirement for CBL, as a nominee, to provide CBL customer and beneficial owner information upon request.
Background and legal basis
If holding China-domiciled funds in Hong Kong through the MRF scheme, disclosure requirements may arise from the Mainland China Registration Regulation. Contractual agreements signed during the subscription stage may also contain the disclosure obligations with regards to the information on beneficial ownership.
Failure to comply with the disclosure request from the fund managers, or its agents may result in liabilities as outlined in the individual agreements signed with the investment funds.
The information contained in the Disclosure Requirements is based on the legal opinion obtained by CBL that was issued on 17 August 2016. CBL believes the information to be correct as of that date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CBL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and customers should seek advice from independent professional counsel.
Customers are responsible for ensuring compliance with disclosure requirements and agree to indemnify and hold harmless, CBL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CBL arising out of or resulting from such non-compliance.