All entities concerned,

To accelerate the building of a high-end, high-precision and sophisticated economic structure in Beijing, and to attract social capital to jointly promote the development of high-end, high-precision and sophisticated industries and regulate the management and utilization of Beijing's High-end, High-precision and Sophisticated Industrial Development Fund, we hereby formulated the Administrative Measures for the High-end, High-precision and Sophisticated Industrial Development Fund in Beijing Municipality and issued to you for compliance and implementation.

Please be informed hereby.

Appendix: Administrative Measures for the High-end, High-precision and Sophisticated Industrial Development Fund in Beijing Municipality

Beijing Municipal Finance Bureau

Beijing Municipal Commission of Economy and Information Technology

December 1, 2015

Administrative Measures for the High-end, High-precision and Sophisticated Industrial Development Fund in Beijing Municipality

Chapter I General Provisions

Article 1 The Measures are hereby formulated to accelerate the building of a high-end, high-precision and sophisticated economic structure in Beijing Municipality, attract social capital to jointly promote the development of high-end, high-precision and sophisticated industries, and regulate the management and utilization of High-end, High-precision and Sophisticated Industrial Development Fund (the "Fund"), in accordance with Beijing-Tianjin-Hebei Coordinated Development Plan Outline, Made in China 2025 (State Council, Guo Fa [2015] No. 28), Catalogue for the Prohibition and Restriction of Newly-Increased Industries in Beijing, Interim Administrative Measures of Beijing Municipal Finance Bureau on Government Equity Investment Fund (Jing Cai Qi [2014] No. 2047), and other related laws, regulations and industry policies.

Article 2 Purpose of the Fund. The Fund aims to innovate the way of financial support, adopt market - oriented means to optimize the allocation of high-end, high- precision and sophisticated industrial resources in this city to boost cutting-edge, key and core technologies and high-end manufacturing sectors, absorb and introduce advanced technologies from home and abroad, accelerate the gathering of innovative factors such as talent, technology and capital, and attract social capital and professional institutions to invest in high-end, high-precision and sophisticated industries and promote the integrated development of capital and industry.

Article 3 Objective of the Fund. The Fund is set up in accordance with the principle of "policy, guidance, openness, and market-oriented", and is specifically used to support the development of high-end, high-precision and sophisticated industries in line with the strategic positioning of the capital city, as well as to optimize the investment and financing market environment. We will give full play to the guiding role of government funds, and cooperate with the capital market to jointly develop related supporting polices for high-end, high-precision and sophisticated industries, so as to support the establishment of the industrial development system for these industries.

Article 4 Source of the Fund. The Fund mainly comes from the special funds of this municipality to support industrial development, as well as other government funds, fund proceeds, social donations and social funds. 

Chapter II Utilization of the Fund

Article 5 Structure of the Fund. The Fund adopts a master-feeder structure, namely, the "1+N" model. The master fund is established by the municipal finance, while the feeder funds are set up jointly with social capital in the form of equity participation or partnership. According to the development characteristics of high-end, high-precision and sophisticated industries, we will select the fund types such as equity investment, M&A investment and debt investment funds, and timely adjust the investment direction and scale of the feeder fund and the thereof duly adjusted. We will formulate separately the relevant management rules for the feeder fund.

Article 6 Equity investment fund. We will select the competitive social investment management institutions to jointly set up equity investment funds to invest in enterprises in high-end, high-precision and sophisticated industries that are in the growth stage and have the industrial foundation, so as to promote their rapid development, growth and competitiveness.

M&A investment fund. We will select the competitive social investment management institutions to jointly set up the merger and acquisition investment fund, with the characteristics of transferring the equity of the acquired enterprises, optimize the allocation of industrial resources, and promote the merger and acquisition integration of enterprises in line with the high-end, high-precision and sophisticated industries.

Debt fund. We will select the competitive social investment and financing institutions to jointly set up the debt fund to provide debt financing support for high-end, high-precision and sophisticated enterprises.

Article 7 Fund duration. In principle, the duration of the master fund is 12 years, of which the financing period is 3-4 years and the exit period is 2 years. The duration of the feeder fund will be specified separately.

Article 8 The idle funds of the Fund are allowed to be used for bank deposits, purchases of Treasury bonds and other investments that guarantee the safety of the principal, and shall not be invested in the stocks, futures, foreign exchange, real estate of listed companies or other industries prohibited or restricted by the industrial policies of the Municipality.

Chapter III Management of the Fund 

Article 9 We will establish a working system of "Beijing Joint Meeting for the High-end, High- Precision and Sophisticated Industrial Development Fund" (the "Joint Meeting"), which is responsible for the decision-making, guidance, coordination, supervision and management of the Fund. The main responsibilities of the Joint Meeting include:

(i) To examine and approve the principles, direction and type of the utilization of the Fund;

(ii) To examine and approve the management rules and the implementation plan of the Fund;

(iii) To examine and approve the plans for the establishment and the exit of the nominal investors, the trustee institution, of the master fund, as well as the cooperative institutions of the feeder funds, and the establishment and the exit plan of the feeder funds;

(iv)To be responsible for the daily supervision and coordination of the Fund, and review the annual work report, work plan and development plan of the Fund; 

(v) To evaluate and assess the performance of use of the Fund;

(vi) To examine and approve plans for the disposal of the Fund proceeds; and

(vii) To examine and approve major issues such as the renewal and dissolution of the Fund.

Article 10 The Municipal Finance Bureau shall, on behalf of the Municipal Government, act as the investor of the master fund, and assume the responsibility of raising and performing the contribution of the master fund. The Municipal Finance Bureau and the Municipal Commission of Economy and Information Technology shall, in accordance with the procedures, determine the nominal investor of the master fund (hereinafter referred to as the "nominal investor"), whose main responsibilities include: 

(i) To be responsible for exercising the rights and obligations of the Fund to the extent of its capital contribution;

(ii) To guide, supervise and evaluate the daily operation and management of the master fund of the entrusted institution;

(iii) To enter into the fund custody agreement with the custodian bank of the master fund, and sign the strategic cooperation agreements with the shortlisted custodian banks of feeder funds, oversee the fund account and ensure the security of the funds;

(iv) To establish a fund expert database to provide advice on the operation and management of the Fund and joint meeting decision-making;

(v) To be responsible for formulating performance assessment management measures for the Fund and organizing the performance assessment of the Fund;

(vi) To organize and conduct fund policy research, investment and financing model innovation, publicity and promotion; and

(vii) Other work agreed upon at the Joint Meeting.

Article 11 The entrusted management institution of the master fund shall assume the daily management responsibilities of the master fund by means of appointment or public solicitation and after deliberation and determination by the Joint Meeting. Its main responsibilities include:

(i) To be responsible for the establishment of rules of procedure for the master fund, the daily management of the master fund, and the innovation of the fund promotion and management model;

(ii) To be responsible for the public solicitation, preliminary review, review, due diligence and business negotiation of the feeder fund cooperation institutions, and to implement the feeder fund implementation plan reviewed and approved by the Joint Meeting;

(iii) To dynamically manage, oversee and assess the investment progress of feeder funds, and make statistics, analysis, summary and evaluation of the implementation of each feeder fund, and issue regular and dynamic reports on the fund;

(iv) To be responsible for reporting major business matters, major financial matters and other information that will have a significant impact on the feeder fund to the Joint Meeting and the nominal investor. If any of the following circumstances is involved, it shall be reported to the Joint Meeting for deliberation: 

1. The feeder fund is terminated prematurely;

2. The consolidation of feeder fund or the adjustment of the way the feeder fund operates;

3. The adjustment to the management institution or investors of the feeder fund;

4. The material modification of the feeder fund contract/agreement; and

5. The entrusted exercise of the right to vote on major matters.

(v) To be responsible for proposing the exit plan of the feeder funds, and organizing the implementation of the exit of the funds after deliberation and approval by the Joint Meeting; and

(vi) Other matters agreed or assigned by the Joint Meeting or the nominal investor.

Article 12 To be responsible for the allocation of the Fund management fees and other related expenses, in consideration of the Fund management tasks, types, size and performance and in accordance with the amount less than 1% of the investment scale of the master fund. These fees and expenses shall be included in and paid from the municipal public finance budget.

Chapter IV Procedures for Selecting Feeder Fund Partner Institutions

Article 13 The Joint Meeting may determine the cooperative institutions for feeder funds by means of designation or open solicitation. The evaluation procedure for the latter is as follows:

(i) Open solicitation. Entrusted by the nominal investor, the entrusted management institution of the master fund solicits feeder fund cooperation institutions from the public.

(ii) Application by the applicant institutions. The applicant institutions shall submit the feeder-fund plan to the master fund trustee.

(iii) Review and due diligence. The entrusted management institution of the master fund shall organize relevant experts to review the cooperation plans of the feeder funds and put forward evaluation opinions, and the entrusted management institution of the master fund shall organize the due diligence investigation on the applicant institutions that have passed the evaluation.

(iv) Publication of decisions. According to the evaluation opinions and the due diligence report, the list of the proposed cooperation institutions shall be publicly announced upon the approval of the Joint Meeting. The publicity period shall be 7 working days. The master fund will not cooperate with the applicant institutions that have found problems and verified them during the publicity period.

(v) Establishment of the fund. The entrusted institution of the master fund shall conduct business negotiations with the cooperative institutions reviewed and approved by the Joint Meeting, and organize the establishment of the feeder fund.

Chapter V The Proceeds and the Exit of the Fund

Article 14 The investment income obtained by the master fund shall be mainly used to:

(i) To cover the losses of the master fund; and

(ii) To expand the size of the master fund.

Article 15 Where the master is less than two years from the exit period, there shall be no circular funds to invested it. Upon the maturity and liquidation of the master fund, its principal and investment income shall be turned over to the municipal Treasury, and incorporated into the municipal public finance budget for management.

Article 16 Upon the approval of the Joint Meeting, equities or partnership shares formed by the contribution of the master fund can be withdrawn by means of transfer, repurchase and liquidation as specified in the agreement. The means and price of exit shall reflect the market-oriented principle, and the proceeds from such exit shall be included in the special account of the master fund for management.

Chapter VI Supervision and Performance Evaluation of the Fund

Article 17 The department in charge of the Fund, the nominal investor, entrusted institution of the master fund and the cooperative institution of the feeder fund shall strengthen the guidance, coordination, supervision and management of the fund operation; establish the fund performance evaluation system, standardize the operation, and control the risk and ensure the healthy development of the Fund.

Article 18 The Joint Meeting shall deliberate, determine and entrust a third-party agency to conduct regular performance evaluation on the entrusted institution of the master fund, the cooperative institution of the feeder fund and the projects invested by them.

Article 19 The entrusted institution of the master fund, the cooperative institution of the feeder fund and the enterprises invested by the feeder fund shall use and manage the funds thereof in strict accordance with the relevant laws and regulations of the state, the financial accounting system and the contract/ agreements. The Joint Meeting may, upon deliberation and approval, revoke the fiduciary management qualification of the master fund, replace the cooperative organization of the feeder fund, and terminate the cooperation with the feeder fund. It shall be liable for compensation according to law for losses of fund assets; If the case constitutes a crime, the criminal responsibility shall be investigated according to law.

Article 20 Acts in violation of financial laws and regulations such as false reporting, false claiming, holding back and misappropriating funds, shall be dealt with accordance with relevant laws and regulations such as the Regulation on Penalties and Sanctions against Illegal Fiscal Acts (Order No. 427 of the State Council). If the case constitutes a crime, it shall be handed over to the judicial organ for handling according to law.

Chapter VII Supplementary Provisions

Article 21 These measures shall be interpreted by the Municipal Finance Bureau and the Municipal Commission of Economy and Information Technology.

Article 22 The Measures shall come into force 30 days after the date of its promulgation.