Original Title: Notice on the Issuance of the "Measures for Strengthening Capital Operations and Promoting Industrial Economic Development in Putuo District"

Chapter I General Provisions

Article 1 These Measures are formulated to further optimize government investment methods, standardize the management of fiscal fund investments, give full play to the industrial guidance role of capital operations, and promote high-quality regional economic development.

Article 2: As used in these Measures, “capital-based investment promotion” refers to the promotion of major investment projects in the district, the acceleration of the development of key industries, and the enhancement of the regional economic development capacity through methods such as state-owned capital investment and equity participation, in compliance with relevant laws, regulations, policies, and financial systems of the state and Shanghai Municipality.

Article 3: Funding sources primarily include various types of fiscal funds, such as but not limited to the District Industrial Innovation and Development Guidance Fund and funds allocated from the state-owned capital operating budget. The total fund size is 5 billion yuan, with an initial phase of 1 billion yuan. At the same time, central state-owned enterprises, municipal state-owned enterprises, and social capital are encouraged to actively participate to expand funding sources. Town and village collective funds are encouraged to participate in district-level capital-based investment promotion projects on a voluntary basis. When towns and villages independently carry out capital-based investment promotion, they may refer to these Measures for implementation.

Article 4: Capital investment promotion shall be actively carried out in accordance with the principles of “government guidance, scientific decision-making, controllable risk, and alignment of rights and responsibilities.” In principle, the projects to be invested in shall be corporate entities registered in Putuo District or operating through a physical entity established in Putuo District, and shall align with the development orientation of Putuo District’s key priority industries.

Chapter II Organizational Structure and Responsibilities

Article 5 To enhance the scientific rigor and effectiveness of investment decisions, a management system separating investment decision-making, operational management, and supervision and evaluation shall be implemented for capital investments. An Investment Decision-Making Committee, an external investment entity, a trustee institution, and a Supervisory Committee shall be established respectively to ensure the standardized and orderly conduct of capital investment promotion work.

Article 6 The Investment Decision-Making Committee (hereinafter referred to as the “Committee”) shall be chaired by the District Governor, with the Deputy District Governor in charge of comprehensive and industrial economic affairs serving as Vice Chair. Members shall include the principal officials of the District Development and Reform Commission, the District Finance Bureau, the District Justice Bureau, the District State-owned Assets Supervision and Administration Commission, the District Financial Affairs Office, the District Investment Promotion Office, and the entrusted institution. Meetings of the Committee shall be presided over by the Chair or Vice Chair, and relevant industrial departments shall be invited to attend as needed for the investment projects.The primary responsibilities of the Investment Committee include:

(1) Reviewing and approving major matters—such as investment plans, investment structures, and capital exit strategies—for capital investment projects with an investment amount of 30 million RMB or more; authorizing the entrusted agency to make decisions on capital investment projects with an investment amount of 30 million RMB or less, and requiring such decisions to be reported to the Office of the Investment Decision Committee for ex post facto filing; special matters may be considered on a case-by-case basis;

(2) Hearing and reviewing the annual investment plan and work summary for capital investment promotion;

(3) Hearing and reviewing the opinions and reports of the Supervisory Committee;

(4) Hear reports on the operational status of the District Industrial Innovation and Development Guidance Fund and the China-Israel (Shanghai) Angel Investment Fund;

(5) Other major matters requiring deliberation.

Article 7: The Investment Committee shall establish an Office, which shall be located within the District Financial Affairs Office. The Director of the Office shall be concurrently served by the principal official of the District Financial Affairs Office. The Office shall also be responsible for matters related to the District Industrial Innovation and Development Guidance Fund. The primary responsibilities of the Investment Committee Office include:

(1) Organizing and convening plenary and special meetings of the Investment Committee;

(2) Implementing resolutions adopted at Investment Committee meetings;

(3) Organizing the implementation, compiling, and reporting of daily work in accordance with the Investment Committee’s decisions;

(4) Filing post-approval records for projects decided upon by the entrusted institutions;

(5) Handling other matters assigned by the Investment Committee.

Article 8: Shanghai Putuo Industrial Guidance Investment Co., Ltd. (hereinafter referred to as the “Industrial Guidance Company”), as the district government’s external investment entity, shall have its duties as a government investor exercised by the District Finance Bureau pursuant to authorization from the district government; that is, the District Finance Bureau shall directly inject capital into the Industrial Guidance Company.

Article 9: Shanghai Putuo State-owned Capital Investment Co., Ltd. (hereinafter referred to as “Putuo Capital Company”), as the trustee, is responsible for executing the resolutions of the Investment Committee meetings, managing daily fund operations, and making investment decisions and exits within the authorized limits. Its primary responsibilities include:

(1) Establishing a pool of expert reviewers, to be implemented after approval by the Investment Committee;

(2) Organizing expert reviews to provide truthful, independent, objective, and impartial review opinions and recommendations on major matters such as project investments, offering consulting advice for project operations, and submitting expert review opinions and feasibility study reports for deliberation;

(3) Be responsible for process management and post-investment management of investment projects. Dispatch representatives to investee entities in accordance with investment agreements to participate in or monitor decision-making on major matters. Conduct quarterly tracking and analysis of ongoing investment projects and submit reports to the Investment Committee Office. Promptly submit reports to the Investment Committee Office for analysis and assessment in response to changes in the external environment or the project’s own circumstances;

(4) Cooperate with the Investment Committee Office in carrying out daily operations and execute other tasks assigned by the Investment Committee.

Chapter III: Investment Methods and Procedures

Article 10: Depending on project requirements, investments shall be made in specific projects or legal entities through direct investment or the establishment of joint ventures, within the scope permitted by laws and regulations. In principle, the investment amount for a single project shall not exceed 100 million yuan, and the Company shall not become the largest shareholder or the largest contributor to a single project or joint venture. Major projects that play a leading and driving role in industrial development shall be considered on a case-by-case basis. Project valuations shall follow generally accepted appraisal procedures and enterprise valuation methods. The investment term shall, in principle, not exceed 10 years.

Article 11 The process for fund participation in project investments is as follows:

(1) Project Application.

(2) Project Approval.

(3) Research and Feasibility Study.

(4) Expert Review.

(5) Investment Decision.

(6) Investment Implementation.

Article 12: Projects funded through capital investment initiatives or legal entities that contribute to regional economic development by investing in enterprises or projects within the district shall comply with the specific requirements set forth in the relevant provisions of the "Work Guidelines for the Implementation of the Putuo District Measures for Strengthening Capital Operations to Promote Industrial Economic Development."

Chapter IV Risk Control

Article 13 The entrusted institution shall establish a risk management system covering the entire investment process, strengthen pre-investment risk assessments and the formulation of risk control plans, and ensure proper reporting of major matters, risk monitoring, early warning, and risk mitigation during project implementation to prevent operational and integration risks after investment. Specific exit strategies shall be submitted to the Investment Committee for decision-making in accordance with prior agreements and relevant laws and regulations.

Article 14: When investing through a partnership, the entrusted institution shall not assume unlimited liability as a general partner and shall not interfere in the daily operations of the supported investment partnership. However, regarding the enterprise’s illegal, non-compliant, or policy-deviating conduct, the institution may exercise a veto right or demand rectification in accordance with contractual agreements.

Chapter V Supervision and Management

Article 15: A Supervision Committee shall be established, reporting to the Investment Committee. Members of the Supervision Committee shall be selected and appointed by the District Finance Bureau from relevant government departments, financial institutions, and professionals in finance, auditing, and law; each member shall participate in the Committee’s work in an independent capacity. An Office of the Supervision Committee shall be established within the District Finance Bureau. The Director of the Office shall be concurrently served by the principal official of the District Finance Bureau. The primary responsibilities of the Supervision Committee include:

(1) Establishing a performance evaluation system. The Office of the Supervisory Committee shall organize and conduct performance evaluations, regularly assessing the effectiveness of policy objectives regarding industrial guidance and cultivation in capital investment promotion, as well as the leverage and amplification effects of fiscal funds.The evaluation focuses on the new regional contributions generated by high-quality enterprises (projects) attracted to the district, the regional contributions generated by newly established enterprises (projects) and affiliated enterprises (projects) within the district, as well as other forms of regional contributions recognized by the Investment Committee. When necessary, third-party institutions may be commissioned to conduct independent performance evaluations to objectively and scientifically assess the actual achievements of capital investment promotion efforts, thereby guiding the healthy, efficient, and sustainable development of such work.

(2) Establish a supervision and inspection system. The Supervisory Committee shall conduct annual supervision and inspections of the operations of capital investment promotion and financial revenue and expenditure. It may, as required by work needs, commission professional institutions to conduct regular or special audits and report the results to the Investment Committee.

(3) Where an entrusted institution fails to perform or improperly performs its investment management duties, resulting in asset losses or other serious adverse consequences, the Supervisory Committee shall hold the enterprise’s management personnel accountable in accordance with relevant provisions such as the *Law of the People’s Republic of China on State-Owned Assets*, the *Opinions of the General Office of the State Council on Establishing a System for Accountability for Violations in Business Operations and Investments by State-Owned Enterprises*, and the *Implementation Measures for Accountability for Violations in Business Operations and Investments by Municipal State-Owned Enterprises in Shanghai (Trial)*.the "Regulations on the Accountability for Asset Losses in Enterprises under the Putuo District State-owned Assets System," and the "Notice on Promoting the Construction of a Work Mechanism for Accountability for Improper Business Operations and Investments by Management Personnel in Enterprises under the District State-owned Assets System," the Supervisory Committee shall hold the enterprise’s management personnel accountable.

Article 16: For errors or deviations that meet the circumstances and conditions for error tolerance as stipulated in the “Implementation Measures (Trial) on Incentivizing Management Personnel of Local State-Owned Enterprises in Shanghai to Take Initiative and Implement Error Tolerance and Correction” (Hu Wei Ban [2020] No. 27), error tolerance and correction procedures may be initiated in accordance with regulations.

Chapter VI Supplementary Provisions

Article 17 The District Development and Reform Commission, in conjunction with the District Financial Affairs Office, shall be responsible for interpreting these Measures.

Article 18 These Measures shall take effect on January 2, 2024, and remain valid for three years. The original “Measures for Strengthening Capital Operations and Promoting Industrial Economic Development in Putuo District” (Putuo Development and Reform Commission [2022] No. 17) is hereby repealed. In the event of any conflict between existing relevant regulations and these Measures, these Measures shall prevail.