PY0320240002

Pan Fa Gai Gui Zi [2024] No. 1

Notice of Panyu District Development and Reform Bureau, Panyu District Finance Bureau, Panyu District Bureau ofScience, Industry, Commerce and Information Technology on the Release of the Measures for the Administration of the Venture Capital Guiding Fund for Strategic Emerging Industries in Panyu District

Governments of all towns, subdistrict offices, and relevant institutions of Panyu District,

TheMeasures for the Administration of the Venture Capital Guiding Fund for Strategic Emerging Industries in Panyu District ishereby issued to you for your compliance and implementation. Problems encountered in the implementation shall be directly reported to the Development and Reform Bureau, the Finance Bureau, and the Bureau of Science, Industry, Commerce and Information Technology of Panyu District.

Appendix: The Measures for the Administration of the Venture Capital Guiding Fund for Strategic Emerging Industries in Panyu District

Panyu District Development and Reform Bureau

Panyu District Finance Bureau

Panyu District Bureau of Science, Industry, Commerce and Information Technology

February 7, 2024

Appendix

The Measures for the Administration of the Venture Capital Guiding Fund for Strategic Emerging Industries in Panyu District

Chapter I General Provisions

Article 1 In order to fully leverage fiscal funds to guide and drive and development of the strategic emerging industries in Panyu District, and to further regulate the operation and management of the Venture Capital Guiding Fund for Strategic Emerging Industries in Panyu District (hereinafter referred to as the “Guiding Fund”), these measures are formulated based on the local conditions in Panyu District, in line with relevant documents such as the Interim Measures for the Administration of Government Investment Funds(Cai Yu [2015] No. 210), the Interim Measures for the Administration of Government-Sponsored Industry Investment Funds (Fa Gai Cai Jin Gui [2016] No. 2800), and the Measures for the Administration of Government Investment Funds of Guangzhou Municipality (Sui Cai Gui Zi [2020] No. 2).

Article 2 The term “Guiding Fund”, as used in these Measures, refers to a policy-oriented parent fund established by Panyu District People’s Government and operated in accordance with market principles. The management of entrusted management, application and approval, investment operations, exits, supervision, and inspection of the Guiding Fund are subject to these Measures.

Article 3 Following the principles of “government guiding, market operation, scientific policy-making and risk precaution”, the Guiding Fund, through equity investment management institutions, shall establish subsidiary funds by means of equity participation from the parent fund, guiding social capital to invest in strategic emerging industries.

Article 4 The planned total scale of the Guiding Fund is one billion RMB, with a duration of 20 years. Full contributions will be made in installments from the district’s fiscal revenue and the annual contribution amount shall be dynamically adjusted based on the decisions of the District Government and the arrangements of the financial budget. The principal and investment returns recovered from the exit of investments in subsidiary funds shall be reinvested into the rolling cycle of the Guiding Fund for continuous utilization.

Article 5 The organizational structure of subsidiary funds may be determined based on practical considerations and may adopt either a limited partnership or corporate system. Under the limited partnership structure, the Guiding Fund shall contribute as a limited partner (LP) to the subsidiary fund; under the corporate system, the Guiding Fund shall participate in the subsidiary fund as a shareholder.

Article 6 The initiation, investment management, performance incentives, among others, of subsidiary funds shall operate independently in accordance with market principles, and hold their own responsibilities over gains and losses.

Article 7 Panyu District Development and Reform Bureau shall guide the entrusted management institutions of the Guiding Fund in organizing project application, due diligence, equity negotiations, expert reviews, and other related tasks. Based on the selection results of the entrusted management institutions of the Guiding Fund, in collaboration with the District Finance Bureau and the District Science, Industry, Commerce, and Information Technology Bureau, the District Development and Reform Bureau shall formulate an annual investment plan for the Guiding Fund and submit it to the District Government. Additionally, they shall organize and implement performance management of the Guiding Fund’s operations and supervise the implementation of relevant policy objectives.

The District Finance Bureau and the Development and Reform Bureau shall jointly issue funding plans, allocate fiscal funds as required by regulations, and, in coordination with the District Development and Reform Bureau, supervise and inspect the investment operations of the Guiding Fund and the utilization of its funds, as well as conduct performance evaluations.

Chapter II Entrusted Management Institutions

Article 8 Panyu District Development and Reform Bureau, in conjunction with the District Finance Bureau and the District Bureau of Science, Industry, Commerce, and Information Technology, shall select and determine the entrusted management institutions of the Guiding Fund in accordance with regulations and enter into entrusted management agreements. The entrusted management institutions of the Guiding Fund shall manage the Guiding Fund in accordance with relevant laws, regulations, rules, the requirements of the District Government, and the provisions of the entrusted management agreement.

Article 9 The entrusted management institutions of the Guiding Fund shall generally be equity investment management institutions and shall meet the following criteria:

(1) They shall be companies enjoying the status of a legal person, and have obtained the qualification as private equity fund managers from the Asset Management Association of China;

(2) Their paid-in registered capital shall not be less than RMB 100 million;

(3) They shall have at least five employees with over three years of experience in investment fund management and qualifications for fund practitioners;

(4) They shall have sound investment fund management systems and risk control mechanisms;

(5) They shall have experience in participating in the establishment and management of investment funds as investors, and have successful experience in managing government-sponsored guiding funds;

(6) They shall have maintained a favorable financial condition for at least the last three years, with no significant records of administrative or judicial penalties imposed by competent administrative or judicial authorities, and strictly manage government investment funds in accordance with entrusted management agreements;

(7) They shall comply with other provisions of laws, regulations, and rules at the national, provincial, and municipal levels.

Article 10 The entrusted management institutions of the Guiding Fund shall, according to the authorization, fulfill the following responsibilities within the scope of delegated authority:

(1) They shall conduct compliance reviews, due diligence, equity negotiations, expert reviews, among others, for the institutions applying for the Guiding Fund, and sign relevant legal documents such as Partnership Agreement orArticles of Association;

(2) They shall represent the Guiding Fund to exercise the rights and obligations of investors in the subsidiary funds within the limits of their contributions, and strictly comply with relevant laws, regulations, and rules such as the Partnership Enterprise Law of the People’s Republic of Chinaor the Company Law of the People’s Republic of Chinato effectively fulfill post-investment management of the Guiding Fund;

(3) They shall establish and improve internal decision-making and risk control mechanisms, and be responsible for the efficient and secure operation of fiscal funds;

(4) They shall submit written reports to the District Development and Reform Bureau, the Finance Bureau, and the Science, Industry, Commerce, and Information Technology Bureau on the operation and management of the fund, and project investments on a quarterly basis; report and resolve other significant issues that may adversely affect the security of fiscal funds and government credibility in a timely manner;

(5) Prior to April 30th of each year, they shall submit a written self-assessment report detailing the fund management status for the preceding fiscal year to the District Development and Reform Bureau, the District Finance Bureau, and the District Science, Industry, Commerce, and Information Technology Bureau.

(6) They shall be responsible for the exit of the Guiding Fund to ensure the safe recovery of fiscal funds in accordance with these Measures and the provisions of the entrusted management agreement.

(7) They shall fulfill other responsibilities as stipulated by laws, regulations, rules, and other normative documents.

Article 11 The entrusted management institutions of the Guiding Fund shall select a commercial bank with custody qualifications to act as the custodian, establish a separate account for the Guiding Fund in accordance with regulations, to provide dedicated management for the Guiding Fund. The custodian bank shall be responsible for account management, fund settlement, asset custody, and other related matters in accordance with the custodian agreement, and shall dynamically supervise investment activities. The custodian bank shall meet the following conditions:

(1) It shall be approved and recognized by the relevant national authorities as having the qualifications for fund custody;

(2) It shall have maintained a favorable financial condition for at least the past three years, with no significant records of administrative or judicial penalties imposed by competent administrative or judicial authorities.

Chapter III Investment Fields

Article 12 The main investment fields of the subsidiary funds established by the Guiding Fund primarily include intelligent and new energy vehicles, next-generation information technology, smart equipment and robotics, new energy and energy conservation, environmental protection, biomedicine and health, rail transit, new materials and fine chemicals, fashion and creative industries, digital creativity, quantum technology, blockchain, terahertz, natural gas hydrates, nanotechnology, as well as strategic emerging industry sectors explicitly identified by national, provincial, and municipal authorities. The focus is on investing in early-stage and early-to-mid-stage innovative enterprises.

Article 13 The amount reinvested in Panyu District by the subsidiary funds within five years after the disbursement of the Guiding Fund shall not be less than 1.5 times the actual paid-in capital of the Guiding Fund. The following situations shall be considered as investment in enterprises within the administrative region of Panyu District:

(1) If the subsidiary funds or other funds managed by the subsidiary fund management institution directly invest in legal entities in Panyu District, the amount shall be calculated based on the actual paid-in capital of the invested enterprise by the subsidiary funds or other funds managed by the subsidiary fund management institution.

(2) If the legal entities invested by the subsidiary funds or other funds managed by the subsidiary fund management institution relocate to Panyu District and engage in substantive business activities, the amount shall be calculated as 1.5 times the actual paid-in capital of the relocated enterprise by the subsidiary funds or other funds managed by the subsidiary fund management institution.

(3) If the subsidiary funds or other funds managed by the subsidiary fund management institution invest in enterprises recommended by the investment promotion department of Panyu District, and the enterprise establishes a legal subsidiary company in Panyu District through investment promotion and engages in substantive business activities, the amount shall be calculated based on the actual paid-in capital of the invested enterprise in the subsidiary company, not exceeding the investment amount of the subsidiary funds or other funds managed by the subsidiary fund management institution in the enterprise.

Article 14 The Guiding Fund and its subsidiary funds established shall not engage in the following businesses:

(1) They shall not engage in guarantees, mortgages, entrusted loans, or other businesses aside from financing guarantees;

(2) They shall not invest in secondary market stocks, futures, real estate, securities investment funds, corporate bonds below AAA rating, trust products, non-principal-guaranteed wealth management products, insurance plans, or other financial derivatives;

(3) They shall not provide sponsorship or donations to any third party;

(4) They shall not accept or indirectly accept deposits, or provide loans and interbank lending to third parties;

(5) They shall not undertake investments with unlimited joint and several liabilityoutside of Panyu District;

(6) They shall not issue trusts or collective wealth management products to raise funds;

(7) They shall not engage in other businesses prohibited by laws, regulations, or rules.

Chapter IV Applicant Institutions

Article 15 The applicant institutions shall primarily be equity investment (including venture capital) management institutions with independent legal personality, responsible for raising social capital and managing subsidiary funds in accordance with laws and regulations.

In addition to meeting the relevant legal requirements, the applicant institutions shall also meet the following conditions:

(1) The paid-in capital shall not be less than RMB 10 million, and shall be paid in currency form;

(2) They shall have completed the registration procedures as managers with the Asset Management Association of China or have completed filing procedures with corresponding venture capital registration management departments;

(3) They shall have at least three full-time senior management personnel with over three years of experience in equity investment or related businesses. The institution itself, its principal responsible person, or major shareholders holding more than 30% of the shares shall have participated in at least five successful investment cases and at least one exit case;

(4) They shall have standardized management and operations, with a strict and rational investment decision-making process and risk control mechanisms.

(5) They shall comply with national corporate financial and accounting system regulations, having sound internal financial management systems and accounting methods, and maintaining a favorable financial condition for at least the past three years;

(6) The fund manager, its directors, supervisors, senior management personnel, and other practitioners shall have had no major violations of laws in the past three years;

(7) They shall have appropriate business premises, safety precautions, and other facilities related to fund management operations;

(8) They shall have reserved at least three projects to be put into Panyu District that meet the criteria in the application field;

(9) They shall contribute no less than 1% of the size of the subsidiary fund.

Chapter V Approval Procedures

Article 16 The Guiding Fund shall select qualified cooperative institutions (referring to subsidiary fund management institutions) from the applicant institutions and establish subsidiary funds in accordance with the following procedures:

(1) Issuance of Guidelines: Panyu District Development and Reform Bureau shall formulate and publish annual application guidelines based on the work arrangements of the District Government and the actual needs of industrial development;

(2) Submission of Materials: Applicant institutions shall compile application materials in accordance with the application guidelines and the provisions in these Measures, and submit them to the entrusted management institution of the Guiding Fund.

(3) Review: The entrusted management institution of the Guiding Fund shall conduct compliance reviews, due diligence, equity negotiation, and expert reviews in accordance with the requirements of these Measures, formulate a list of cooperative institutions, and submit investment proposals of the Guiding Fund to the District Development and Reform Bureau.

(4) Publicity: After consulting the District Finance Bureau and the Bureau of Science, Industry, Commerce, and Information Technology, the District Development and Reform Bureau shall publish the list of proposed cooperative institutions and the investment proposals of the Guiding Fund for a period of 10 working days. Any issues identified during the publicity period shall be verified and addressed accordingly.

(5) Final Decision: After no objections are raised during the publicity period or if objections, upon verification, are found to be unsubstantiated, the District Development and Reform Bureau will formulate the investment plan of the Guiding Fund and submit it to the District Government for a final decision. Upon approval by the District Government, the Development and Reform Bureau will issue an official approval to the entrusted management institution of the Guiding Fund.

(6) Agreement Signing: In accordance with the approved investment plan of the Guiding Fund by the District Development and Reform Bureau, the entrusted management institution of the Guiding Fund shall negotiate with the subsidiary fund management institution and sign relevant legal documents such as the Partnership Agreement orArticles of Associationaccording to internal company procedures.

(7) Fund Disbursement: For the establishment of a subsidiary fund with additional financial contributions from the government, the entrusted management institution of the Guiding Fund shall submit a contribution request to the District Development and Reform Bureau. The District Development and Reform Bureau, in conjunction with the Finance Bureau, will disburse the additional financial contributions to the entrusted management institution of the Guiding Fund, which shall supervise the subsidiary fund to complete fundraising and establishment within the prescribed time frame and fulfill the procedures for the investment of the Guiding Fund in accordance with relevant regulations. For the establishment of a subsidiary fund using existing funds of the Guiding Fund, the entrusted management institution of the Guiding Fund shall handle the process according to relevant regulations.

(8) Post-investment Management: The entrusted management institution of the Guiding Fund shall formulate detailed guidelines for post-investment management in accordance with relevant laws, regulations, rules, and provisions of these Measures to ensure that subsidiary funds are primarily invested in specific industrial sectors, thereby safeguarding the secure operation of fiscal funds.

(9) Exit and Recovery: Upon exit from a subsidiary fund, the entrusted management institution of the Guiding Fund shall promptly handle procedures such as commercial registration changes in accordance with the provisions of these Measures and the entrusted management agreement. The funds (including returns) recovered upon exit shall be fully transferred to the designated account of the Guiding Fund. They shall be utilized in accordance with the relevant regulations stipulated in Article 4 and Article 16 (7) of these Measures, contributing to the continuous operation of the Guiding Fund.

Chapter VI Investment Management

Article 17 Each subsidiary fund shall raise a total fund amount not less than RMB 50 million. In principle, the Guiding Fund’s contribution to a subsidiary fund shall not exceed 20%, or exceed RMB 50 million, and shall not become the largest contributor or shareholder. The cumulative investment amount by a subsidiary fund in a single enterprise shall not exceed 20% of the paid-in scale of the subsidiary fund.

Article 18 Apart from the Guiding Fund, other contributors to the subsidiary fund shall be qualified institutional investors with a certain risk identification ability and risk tolerance capability. The primary initiator of the subsidiary fund shall have a paid-in capital of not less than RMB 10 million, and the single contributor’s investment shall not be less than one million RMB. All contributors shall contribute in currency form, which may be paid in installments. However, the initial capital contribution shall be paid within one year after the signing of legal documents such as the Partnership Agreement orArticles of Association and shall not be less than RMB 50 million. After the completion of commercial registration procedures for the subsidiary fund, the entrusted management institution of the Guiding Fund shall, within the contribution period stipulated in the aforementioned agreements, be the last to pay the funds according to the proportion of contributions from other contributors. Upon the expiration of the contribution period, the Guiding Fund shall no longer provide funds, and the cumulative contribution amount shall be determined as the paid-in capital.

Article 19 The subsidiary fund management institution shall extract a certain percentage of management fees according to market rules. The management fees shall be jointly paid to the subsidiary fund management institution by the entrusted management institution of the Guiding Fund and other contributors in accordance with the Partnership Agreement orArticles of Association of the subsidiary fund. The entrusted management institution shall allocate a portion of the management fees from the amount contributed by the Guiding Fund. Generally the annual management fee shall not exceed 2.5% of the actual paid-in capital of the subsidiary fund, with specific standards specified in the partnership agreement or entrusted management agreement.

Article 20 The custodian bank shall accept the entrustment of the subsidiary fund manager and sign a custody agreement to manage the separate account according to the agreement. The custodian bank shall allocate investment funds based on the compliance review report issued by the entrusted management institution of the Guiding Fund.

Chapter VII Withdrawal and Termination

Article 21 The period of continuous existence of the subsidiary fund shall generally not exceed 10 years.

Article 22 If the subsidiary fund has fulfilled the requirements of Articles 12 and 13 of these Measures, and there is a transferee, the Guiding Fund may timely withdraw from the subsidiary fund, and other contributors shall have priority in receiving the shares of the Guiding Fund under the same conditions. If the subsidiary fund has made a profit before the Guiding Fund withdraws, the Guiding Fund shall, after receiving corresponding dividends according to the contribution shares, withdraw as follows:

(1) For shares held by the Guiding Fund’s entrusted management institution for a period not exceeding five years (including five years), if the cumulative dividends are not less than the interest calculated based on the one-year LPR (Loan Prime Rate), the transfer price shall be determined with reference to the original investment amount of the Guiding Fund. If the cumulative dividends are less than the interest calculated based on the one-year LPR, the transfer price shall be no less than the sum of the original investment amount plus the difference between the interest calculated based on the one-year LPR and the cumulative dividends. The one-year LPR referred to above shall be based on the latest value published by the People’s Bank of China at the time when the Guiding Fund withdraws from the subsidiary fund;

(2) For shares held by the Guiding Fund’s entrusted management institution for more than five years, the Guiding Fund shall withdraw after determining the transfer price based on market principles.

Investors other than contributors to the subsidiary fund may purchase shares held by the Guiding Fund’s entrusted management institution in accordance with the principle of not less than the determined transfer price mentioned above, through public means.

Article 23 When the subsidiary fund undergoes liquidation (including dissolution and bankruptcy), debts and taxes owed to creditors shall be settled according to legal procedures, and the remaining assets shall be distributed on a pro rata basis according to the principle of equal rights for equal shares. The Guiding Fund shall bear limited liability based on its contribution.

Article 24 The entrusted management institution of the Guiding Fund shall stipulate in legal documents such as the Partnership Agreement orArticles of Association that, in the event of any of the following circumstances, the Guiding Fund may unilaterally withdraw without the consent of other contributors and may request the main sponsor or major shareholder of the subsidiary fund, the subsidiary fund management institution, and its actual controller to repurchase the Guiding Fund shares. The repurchase price shall be the original investment amount plus interest (calculated based on the difference in time between the capital contribution of the Guiding Fund and the withdrawal, and at a floating rate of 10% above the LPR for periods exceeding five years):

(1) The subsidiary fund has not engaged in investment activities within one year of the Guiding Fund’s capital allocation to the subsidiary fund’s investment account;

(2) Failure to meet the requirements stipulated in Articles 12 and 13 of these Measures (except in cases where the entrusted management institution of the Guiding Fund assesses that the returns from market-based exit are superior to unilateral withdrawal and chooses market-based exit);

(3) The investment field and direction of the subsidiary fund are not in line with policy objectives;

(4) Substantial changes occur in the subsidiary fund management institution;

(5) Substantial changes occur in the subsidiary fund;

(6) Other circumstances that do not comply with the provisions of the signed legal documents.

Article 25 Termination of the Guiding Fund. Following the termination of the Guiding Fund, the entrusted management institution of the Guiding Fund shall, under the oversight of the District Development and Reform Bureau, facilitate the liquidation process. Government funds shall be promptly and fully deposited into the national treasury in accordance with the relevant regulations of the fiscal treasury management system. Income belonging to the government shall be promptly and fully turned over to the finance department by the District Development and Reform Bureau as non-tax revenue.

Chapter VIII Incentive and Constraint Mechanisms

Article 26 The entrusted management institution of the Guiding Fund shall collect routine management fees for the management of the entrusted Guiding Fund. The District Development and Reform Bureau, together with the District Finance Bureau and the District Science, Industry, Commerce, and Information Technology Bureau, shall assess the entrusted management institution of the Guiding Fund annually based on investment areas, reinvestment ratio, information disclosure, risk control, and capital utilization efficiency. The management fee rate shall be determined based on the assessment results. The management fee shall be allocated from the existing funds of the Guiding Fund, calculated on a monthly basis, and paid annually for the expenses incurred in the preceding fiscal year. The entrusted management institution of the Guiding Fund shall submit an annual management fee payment application to the District Development and Reform Bureau based on the annual assessment results and the provisions of the entrusted management agreement. Upon approval by the District Development and Reform Bureau, the management fee shall be withdrawn from the special account of the Guiding Fund. Specific assessment methods shall be formulated by the District Development and Reform Bureau, together with the District Finance Bureau and the District Science, Industry, Commerce, and Information Technology Bureau. The specific management fee rate standards are as follows:

(1) If the assessment result is rated as excellent, the management fee rate shall be determined as follows based on the monthly cumulative amount of the Guiding Fund’s uncollected capital (calculated based on the amount and date of payment to the invested unit from the custody account): For amount of 100 million yuan or less, the rate is 1.2%; for amount between 100 million yuan and 500 million yuan (including 500 million yuan), the rate is 1%; for amount over 500 million yuan, the rate is 0.8%, decreasing inversely. The annual management fee shall not exceed five million yuan.

(2) If the assessment result is rated as qualified, the management fee rate shall be determined as follows based on the monthly cumulative amount of the Guiding Fund’s uncollected capital (calculated based on the amount and date of payment to the invested unit from the custody account): For amount of 100 million yuan or less, the rate is 1%; for amount between 100 million yuan and 500 million yuan (including 500 million yuan), the rate is 0.8%; for amount over 500 million yuan, the rate is 0.6%, decreasing inversely. The annual management fee shall not exceed five million yuan.

(3) If the assessment result is rated as unqualified, the annual management fee shall be halved compared to the management fee for a qualified assessment result, and the annual management fee shall not exceed 2.5 million yuan.

Article 27 To ensure adherence to policy guidance, the entrusted management institution of the Guiding Fund and the subsidiary fund manager shall, in the legal documents such as the Partnership Agreementor Articles of Association,stipulate that representatives or observers dispatched by the entrusted management institution of the Guiding Fund shall attend the investment decision-making committee of the subsidiary fund. They shall refrain from participating in the operational activities and daily management of the subsidiary fund management institution. However, in instances where violations of laws, regulations, or deviations from policies occur within the operations of the subsidiary fund, they may exercise veto power. Projects subject to veto by the entrusted management institution of the Guiding Fund shall not be invested in by the subsidiary fund. The subsidiary fund management institution is required to obtain a compliance review report issued by the entrusted management institution of the Guiding Fund before convening the investment decision-making committee.

Article 28 For the supervision of the subsidiary funds’ compliance with the requirements stipulated in Articles 12 and 13 of these Measures by the entrusted management institution of the Guiding Fund, and under the premise of “returning of principal before profit distribution”, a 15% incentive bonus from the investment appreciation income generated by the Guiding Fund’s exit from a single subsidiary fund (after deducting Guiding Fund’s investment, exit taxes, and other expenses from the recovered capital) shall be awarded to the entrusted management institution of the Guiding Fund. The annual bonus amount shall not exceed five million RMB. The entrusted management institution of the Guiding Fund shall apply for the bonus payment to the District Development and Reform Bureau in accordance with these Measures and the provisions of the entrusted management agreement. Upon approval by the District Development and Reform Bureau, the bonus shall be disbursed from the Guiding Fund’s special account.

Article 29 If the entrusted management institution of the Guiding Fund receives an unsatisfactory assessment result for two consecutive years, the District Development and Reform Bureau may, based on the circumstances and relevant provisions of these Measures and agreements, may lead a new selection process to identify another qualified management institution.

Chapter IX Supervision and Inspection

Article 30 The Guiding Fund shall implement a regular reporting system. The entrusted management institution of the Guiding Fund shall, within 15 days after the end of each quarter, submit a written report on the operation of the Guiding Fund to the District Development and Reform Bureau, the Finance Bureau, and the Bureau of Science, Industry, Commerce, and Information Technology. The report shall mainly include:

(1) The disbursement, exit, profit, and loss situation of the Guiding Fund;

(2) The operation of subsidiary fund investments and the completion of policy indicators.

Article 31 In the event of significant issues such as violations of laws and regulations during the operation of the Guiding Fund or potential major losses arising upon the Guiding Fund’s withdrawal, the entrusted management institution of the Guiding Fund shall, within three days of discovery, submit a written report to the District Development and Reform Bureau, the Finance Bureau, and the Bureau of Science, Industry, Commerce, and Information Technology, and promptly address and resolve the issues.

Article 32 The District Development and Reform Bureau shall regularly report to the District Government on the operation of the Guiding Fund. If it is found during supervision that the entrusted management institution of the Guiding Fund may have dereliction of duty or potential risks, the District Development and Reform Bureau, the Finance Bureau, and the Bureau of Science, Industry, Commerce, and Information Technology shall provide written rectification opinions or inquiries to the entrusted management institution of the Guiding Fund. If violations of the law or dereliction of duty are confirmed, the entrusted management institution of the Guiding Fund shall bear the corresponding legal responsibility for the losses incurred in accordance with the law.

Article 33 A fault-tolerant mechanism for the management and operation of the Guiding Fund shall be established. For investments made with decisions taken in accordance with the prescribed procedures, if investment losses occur due to force majeure, policy changes, or other factors, the responsibility of the entrusted management institution shall not be pursued. The performance evaluation of the Guiding Fund shall be based on the fund investment principles and market principles, considering overall efficiency, and conducting comprehensive performance evaluations of policy objectives and effects, without assessing the profits or losses of single subsidiary funds or projects.

Chapter X Supplementary Provisions

Article 34 These Measures shall enter into force from the date of issue and shall remain valid for a period of five years. Subsidiary funds that have already signed partnership agreements or articles of association and have not yet exited before the implementation of these Measures may also choose to comply with these Measures by signing supplementary agreements.

Form of Disclosure: Active Disclosure

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