Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 7

Investor compliance with the laws and regulations in the home countries of their investments should be part of their regulators' due diligence process. They, in turn, should be treated equitably in the home country of their investments especially in respect to their rights to shareholder benefits and concessionary arrangements under double tax agreements.

1.	Do domestic regulators monitor the procedures in place at their locally based cross-border custodians to assure compliance with the laws and regulations of the home countries of their investments?	No. There is no domestic regulators monitor the procedures of custodian in place. There is normally a strong dependency on People's Bank of China (PBOC), central bank in China, to keep custodians aware of and advise on compliance with local laws and regulations.
2.	What are the areas (e.g. benefits, investor compensation) where foreign investors are not treated in the same way as local investors?	There is no discrimination under Securities Law. There is one specific issue where problems may arise: Rights issues in mainland China may not be acceptable securities for certain investors due to their local country regulations.
3.	Can sales proceeds and income be repatriated without any restrictions?	There are no restrictions on repatriation of funds for foreign B shareholders. Sale proceeds and income derived from B shares invested by a foreigner are freely repatriable.
4.	Are double tax agreements simple to apply, and do foreign investors receive promptly their full entitlement to dividends and interest payments?	A-shares market: Whether or not a double tax agreement is in place, investors should clear the tax duty according to related government regulation on dividend, bonus shares etc. Dividends are distributed by depositories to investors via clearing participants efficiently. Dividend payments are irrevocable once paid. B-shares market: B share investors are exempted from tax no matter whether the double tax agreement is in place. Income received gross is handled efficiently as custodians normally operate as agents and credit the funds to the investors' cash account upon receipt.