Regulations Governing Offshore Structured Products Article 23

A trustee or sub-distributor shall explain the following matters to the investors before engaging in trust investment or brokerage trade involving offshore structured products or investing in such products for investment-linked insurance policies:1. Investing in the offshore structured product could result in loss of principal or loss exceeding the original principal due to change in interest rates, exchange rates, the market price of securities or other indexes.2. Investing in the offshore structured product could result in loss of principal or loss exceeding the original principal due to changes in the business or financial condition of the issuing institution or others.3. Investing in the offshore structured product could result in loss of principal or loss exceeding the original principal due to other material events that are deemed sufficient to affect the judgment of investors by the FSC.The trustee or sub-distributor shall also make explanation if the offshore structured product involved in trust investment or brokerage trade, or linked to an investment-linked insurance policy has a time period for the exercise and termination of contract rights and restriction on the validity of rights.A trustee or sub-distributor that engages in trust investment or brokerage trade involving offshore structured products or invests in such products for investment-linked insurance policies as provided in Paragraph 1 hereof shall fully disclose to and explicitly inform the investors of fees and methods of collection, the trading structure of investing in offshore structured products and possible risks, including the amount of maximum loss.Unless otherwise provided by law or regulations, the disclosure of information and matters of compliance mentioned in the preceding paragraph shall be undertaken in accordance with the self-regulatory rules set forth by respective trade association.