Notice of Approval and Dispatch of the Measures to Promote the Development of Equity Fund in Tianjin Formulated by the Six Municipal Departments including Development and Reform Commission

To all district governments, county governments, commissions, bureaus and all subordinate units，

The Municipal People’s Government has approved the Measures to Promote the Development of Equity Fund in Tianjin formulated by the Municipal Development and Reform Commission, Financial Affairs Office, the Municipal Council of Business Affairs, the Municipal Bureau of Finance, the Municipal Bureau of Local Tax and the Municipal Administration for Industry and Commerce.

Herein with dispatched to you, appreciate your execution accordingly.

October 16 2009

Measures to Promote the Development of Equity Fund in Tianjin

The Measures are formulated in order to support speedy and healthy development of the equity fund, including industrial investment fund (same below), and to make Tianjin a hub of industrial (equity) investment fund in China in regard of distribution, management, exchange of fund and training of human resources

I. The Measures are applicable to domestic, foreign, joint equity funds and equity fund management organizations, including industrial investment fund management organizations, hereinafter referred as fund management organizations.

II. The Municipal Development and Reform Commission as the department in charge of the equity fund industry will be responsible of development planning and industrial instructions of the development of equity fund. It will organize the development of the industrial (equity) fund together and with recording management offices keep records of the equity fund and fund management companies.

III. The Municipal Council of Business Affairs takes responsibility for handling with establishment applications of foreign or joint equity funds and fund management organizations.

IV. The Administration for Industry and Commerce takes the responsibility of the registration of equity funds and fund management organizations.

V. Tianjin Industrial (Equity) Investment Fund Development and Recording Management Office takes the responsibility of studying the policies to promote the development of equity funds and fund management organizations and coordination as well as services.

VI. Partnership equity funds and partnership equity fund management companies are allowed to operate in the “tax after distribution” mode, in which each partner pays the personal income tax and business income tax respectively.

VII. In limited partnership equity fund, natural person as limited partner shall pay the personal income tax for “interest, dividend and bonus” or “income from transfer of property” at the rate of 20% according to the state regulations. Natural person as general partner, who is both executer of the business and investor, shall pay tax at the rate of 20% for the income from investment or share transfer if which are possible to be clearly divided. Legal person or organization as partner shall pay business income tax as per laws and regulations.

VIII. All fund management organizations and equity funds registered and recorded from 1 January 2006 to 31 December 2012will enjoy the following policies according to related municipal rules:

 (I) Counting from the day that a fund management organization pays the business tax for the first time, such tax shall be refunded in full amount shared by local revenue department for the first two years; and half amount refunded in the following three years.

(II) Counting from the profit-making year of fund management organizations, the local shared tax shall be refunded in full amount shared by local revenue of the local finance department for the first two years, and half amount refunded in the following three years.

（III) If fund management organizations build or purchase new offices for self use, the deed tax shall be exempted and Housing property tax for such real estate shall be exempted for three years.

 (IV) If fund management organizations build or purchase new offices for self use, a compensation of RMB1000 per square meter, RMB 5 million at most will be given; If fund management organizations rent new offices, a compensation of 30% of the rental will be given for the first three years. If the rental is higher than the guiding ones, the compensation will be calculated according to the guiding rentals. The area for compensation shall not exceed 1000 square meters and not exceeding RMB 1 million in total.

 (V) Senior managers employed by fund management organizations for successive two years purchase commercial residential house, automobile or attend vocational training for the first time, shall receive remuneration from finance department according to their paid personal income tax shared by local revenue with limit of the actual price of the house, automobile or training within five years.

(VI) Equity funds pooled in enterprises or projects in Tianjin shall receive a refund of 60% of the income tax for project profit shared by local revenue after sold or profit made.

IX. A project recommendation system shall be set up. Key projects suitable for equity fund investment will be recommended in priority to those fund management organizations registered and recorded in Tianjin. Those enterprises investing to equity fund will be gain priority to prepare to be listed on domestic and abroad stock market, as well as to enjoy the preferential policies in Tianjin.

X. The Municipal Government shall study the mechanism for registration of foreign equity fund and fund management organizations, foreign exchange management, industrial investment and withdrawal to support the development of foreign equity fund in Tianjin.

XI. The Government shall set up information statistics and rating system for equity fund, create a platform for project connections and withdrawal, guiding and training excellent fund managers and select qualified investors, thus to cultivate a favorable environment for the development of equity fund.

XII. The government will create a centralized business district in international standards and comprehensive service for fund management organizations in order to form an aggregation zone for equity fund.

XIII. To encourage equity funds to be registered in Tianjin and support project connections and equity exchange in Tianjin Equity Exchange and Tianjin Binhai International Equity Exchange.

XIV. To encourage commercial banks to run business of trust funds and merger loans for equity fund. Securities companies, insurance companies, trust companies and finance companies will be encouraged to invest in Tianjin or set up fund management organizations and equity fund.

XV. To support China Equity Fund Association to enhance the functions of the Association in self-discipline of the equity fund enterprises. To build an effective channel of communication between the Association and the authority. To organize vocational training for managers for the equity fund and so on.

XVI. Finance department mentioned herein refers to ones in the registration location of the equity funds or fund management organizations.

XVII. The Measures shall take into effect on the day of issuance.

Tianjin Development and Reform Commission

Financial Affairs Office of Tianjin Municipal People’s Government

Municipal Council of Business Affairs

Tianjin Municipal Bureau of Finance

Tianjin Municipal Bureau of Local Tax

Tianjin Municipal Administration for Industry and Commerce

September 8 2009