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Regulation of China CDM Fund

2016-06-15

Regulation of China CDM Fund, adopted at the meetings of department affairs of the Ministry of Finance, National Develoment and Reform Commission, Ministry of Foreign Affairs, Ministry of Science and Technology, Ministry of Environmental Protection, Ministry of Agriculture and China Meteorological Administration, is hereby promulgated and shall go into effect on the day of its promulgation.

Attachment: Regulation of China CDM Fund.

September 14, 2010


Regulation of China CDM Fund

Chapter 1 General rules

Article 1 This Regulation is formulated to reinforce and regulate the fund raising, managgement and operation of China Clean Development Mechanism Fund (“CDM Fund” or the “Fund”), so as to accomplish its mission.

Article 2 CDM Fund is a public institution that integrates government and market functions.

Article 3 The mandate of the Fund is to support China’s effort to address climate change and promote social and economic sustainable development.

Article 4 It shall follow the principles of openness and fairness to raise, manage and use the funds in a safe and efficient manner for their specified purposes.

Chapter 2 Management bodies and their responsibilities

Article 5 CDM Fund is governed by the Board of China CDM Fund and managed by China CDM Fund Management Centre.

Article 6 The Board is an inter-ministerial deliberative organ, which is comprised of representatives from NDRC, Ministry of Finance, Ministry of Foreign Affairs, Ministry of Science and Technology, Ministry of Environmental Protection, Ministry of Agriculture and China Meteorological Administration

The Board has a Chairman and a Vice-Chairman, each assumed by a representative from NDRC and Ministry of Finance.

The Board reviews the following items of CDM Fund:

(1) basic management regulations;

(2) strategic planning of the Fund, including the annual budget plan;

(3) application for grants and major investments;

(4) the annual budget and accounting;

(5) other major undertakings.

All of the above items shall be examined and approved by the Board of CDM Fund and submitted to NDRC and Ministry of Finance for their approval.

Article 7 CDM Fund Management Centre is responsible for the daily administration of the Fund, as well as the collection, management and use of the funds and is affiliated to Ministry of Finance.

Article 8 CDM Fund Management Centre performs the following duties:

(1) draw up fund regulations on management and operation;

(2) raise funds;

(3) manage the funds and carry out investments and wealth management activities;

(4) formulate and implement annual budget and accounting of the Fund;

(5) supervise and manage the operation of projects supported by the Fund;

(6) report major business activities of the Fund to the Board of CDM Fund;

(7) other activities that serve the purpose of the Fund.

Chapter 3 Fund raising

 

Article 9 Funding Sources:

(1) national revenue from the income gained by transferring emission reductions of greenhouse gases in CDM projects;

(2) operating revenue;

(3) donations from domestic and international institutions, organizations and individuals;

(4) other sources.

Article 10 With respect to this Regulation, the “emission reduction” means the state-certified emission reduction of greenhouse gases transferred through CDM projects; the “income from emision reductions” means the income gained by transferring emission reductions.

The income from emission reductions is owned by the state and the enterprise that implements the CDM project (the “project owner”) at the specified ratio. The part of the income from emission reductions attributable to the state (the “national revenue”) shall be totally included in the Fund.

Article 11 The national revenue will be collected by the Management Center from the project owners, or from the buyers of the emission reductions in accordance with the agreement on the transfer of emission reductions.

The project owner shall make the payment of the national revenue at the relevant ratio to the designated account no later than 15 business days after it gains the income from emissino reductions.

Article 12 The national revenue shall be paid in the currency as set out in the agreement on the transfer of emission reductions.

If it’s necessary to pay the national revenue in RMB while the agreement on the transfer of emission reductions otherwise requires, with the approval of the Management Center, the project owner may make the payment in RMB at the spot exchange buying rate on the date of the settlement of exchange within 15 business days after it gains the income from emission reductions. 

Article 13 The agreement on the transfer of emission reductions shall be signed between the project owner and the buyer of emission reductions.

The project owner shall file the copies of the agreement, business licenses and contact information of the two parties to the agreement to the Management Center no later than 15 business days after the agreement for the transfer of emission reductions becomes effective.

If there is any change to the above documents and information, the project owner shall notify the Management Center within 15 business days from the date it is changed.

Article 14 If any project owner fails to pay any or the full amount of the national revenue, or fails to make the payment in a timely manner, the Ministry of Finance and NDRC will take measures and give punishements in accordance with relevant provisions.

Chapter 4 Funding operation

Article 15 China CDM Fund's business focuses on grants and investments.

It uses grants to support activities in climate-related capacity building and promotion of public awareness.

Its investments mainly support industrial activities contributing to addressing climate change.

CDM Fund develops wealth management activities through bank deposits and purchase of treasury bonds, financial bonds and corporate bonds, etc.

 Article 16 The expenditure of the Fund includes the operating expenses and basic management costs.

 The operating expenses include grants and costs of development of investment projects.

 The annual expenditure of grants shall be in accordance with the actual requirements of the state efforts to address climate change.

 With respect to this Regulation, the “costs of development of investment projects” means the costs incurred in the project selection, survey, review and initiation, and is collected from the investment amount at a certain ratio.

 With respect to this regulation, the “basic management costs” means the running costs in the collection, management and use of the funds, including the administrative expenses of CDM projects. The basic management cost is collected from the net worth of the Fund at the end of the previous year at a certain ratio.

 The ratios of collection of the costs of development of investment projects and basic management costs will be decided by the Board of CDM Fund separately.

 Article 17 The Management Center shall control the risks of the uses of the funds.

 The funds shall not be donated for any use that doesn’t serve its purpose, nor used for investments in stocks, stock funds, real estate or futures and other financial derivatives.

 Article 18 The funds and the Management Centre shall prepare and keep accounts separately, and conduct budget and final accounting management.

Ministry of Finance will formulate the financial management process of the funds, and supervise and inspect the uses of the funds and the accounting records.

Chapter 5 Management of grants

Article 19 Grants support climate change related undertakings as follows:

(1)    policy research and academic activities;

(2)    international climate cooperation activities;

(3)    training programs for capacity building;

(4)    promotion of public awareness;

(5)    other items serving the purpose of CDM Fund.

Article 20 Grant applicants shall be institutions working on climate change in China with certain research or training capabilities.

Article 21 Grants applicants shall submit the project application. The grant application shall include the following items:

(1)    general information of the applicant;

(2)    background of the project;

(3)    project objectives;

(4)    main content and activities of the project;

(5)    main outcomes of the project;

(6)    implementation schedule of the project;

(7)    amount of the fund and the budget;

(8)    other relevant items.

Article 22 The grant application will be forwarded to NDRC by the relevant departments of the State Council or the provincial departments of development and reform (the “project organization and application unit”).

Article 23 NDRC will be responsible for the organization of the review of grant applications.

When a consensus is reached by the Board of CDM Fund after examination, the review results of the grants applications will be submitted for approval of NDRC and Ministry of Finance.

Article 24 The project organization and application units shall be responsible for the organization of the implementation of the grants.

Article 25 Grants are managed by contract, which explicitly provides for the rights and responsibilities and liability for breach of contract of the parties.

The contracts will be jointly signed by NDRC, project organization and application unit, China CDM Fund Management Centre and grant applicant.

Article 26 NDRC, CDM Fund Management Centre and project organization and application unit will be responsible for monitoring and verifying the project as well as project acceptance. NDRC and Ministry of Finance will penalize any illegal behaviors in this process.

Article 27 Rights of project-based research or other outputs shall be vested in accordance with relevant provisions of the contract.

Chapter 6 Management of investment

Article 28 China CDM Fund’s investment takes the following forms:

(1)    equity investment;

(2)    concessional loan;

(3)    financial guarantee;

(4)    other innovative means approved by the government.

With respect to the equity investments and concessional loans, their annual accumulated amount shall not exceed a certain proportion of the net asset value at the end of the previous year, which will be decided by the Board of CDM Fund separately. 

When making equity investments, CDM Fund shall not be the controlling shareholder of the investees. The exit routes and prices shall be determined based on the principles of openness, fairness and marketization.

The financial guarantees shall not exceed the quota set out in the annual budget of the Fund.

Article 29 Investment applicants shall be Chinese or Chinese holding companies engaged in the business related to mitigating and addressing climate change in China.

Article 30 Investment applicants shall submit the following documents to the CDM Fund Management Centre:

(1)    project application;

(2)    feasibility study report of the project;

(3)    enterprise's operating situation of the last 3 years;

(4)    copy of business license;

(5)    other relevant materials.

Article 31 The Management Centre will be responsible for selecting and evaluating the investment applications.

Majory investments shall be submitted to the Board of CDM Fund to reach a consensus before they are reported to NDRC and Ministry of Finance for approval; and the projects that are not major investments shall be examined and approved by the Management Centre in accordance with relevant rules and procedures, and filed with NDRC and Ministry of Finance for the record within 15 business days after approval.

The major investments in the previous sentence refer to the individual investments with the application of RMB 70 million or higher.

Article 32 The investments shall comply with the project examination and approval, verification or filing procedures provided in the relevant investment laws and regulations.

CDM Fund shall not provide any fund for any project before it is approved, verified or filed.

Article 33 CDM Fund Management Centre will be responsible for organizing the implementation, supervise and inspect, and check and accept the investment projects.

The assets and rights and interests from the investments shall be managed in accordance with the relevant financial rules and regulations.  

 Chapter 7 Supplementary provisions

Article 34 CDM Fund and the Management Centre shall accept the audits conducted by the auditing authorities in accordance with the law.

Article 35 With the approval of the Board of CDM Fund, the Management Cenre may employ external auditors to audit the income and expense scale, balance and operation situation of CDM Fund as well as the expenditure of the Management Centre.

Article 36 This Regulation shall go into effect on the day of its promulgation.

From : China CDM Fund

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