Premier Li Qiang of the State Council recently signed a State Council order, announcing the "Regulations on the Supervision and Administration of Private Investment Funds" (hereinafter referred to as the "Regulations"), which will come into effect on September 1, 2023. The Party Central Committee and the State Council attach great importance to the development and risk prevention and control of the private investment fund industry. In recent years, the private equity investment fund industry in China has steadily developed, playing a positive role in increasing the proportion of direct financing and promoting economic development. Develop specialized administrative regulations to regulate private investment fund business activities on a legal and standardized track, with the aim of encouraging the standardized and healthy development of the private investment fund industry, better protecting the legitimate rights and interests of investors, and further playing a role in serving the real economy and promoting technological innovation. The Regulations consist of 7 chapters and 62 articles, with a focus on the following content. One is to clarify the scope of application. Private investment funds of different organizational forms, such as contractual, corporate and partnership, are included in the scope of application. It is stipulated that raising funds in a non-public manner, establishing investment funds or legally establishing companies and partnerships for the purpose of investment activities, managed by private fund managers or General partner, and investing activities for the interests of investors are governed by these Regulations. The second is to clarify the obligations and requirements of private fund managers and custodians. Clarify the circumstances in which private fund managers, their controlling shareholders, actual controllers, directors, supervisors, senior management personnel, and other related entities are not allowed to become private fund managers. Clarify that practitioners should receive compliance and professional training in accordance with regulations. It is stipulated that private fund managers shall fulfill registration procedures with institutions entrusted by the State Council's securities regulatory authority in accordance with the law, and clarify the situation of deregistration. List the prohibited behaviors of shareholders, actual controllers, and partners of private fund managers, and clarify the requirements that private fund managers should continuously comply with. Clarify the responsibilities of private fund managers and private fund custodians. The third is to standardize the fundraising and investment operation of funds. Private equity investment funds shall be raised or transferred to qualified investors, and the cumulative number of investors in a single private equity investment fund shall not exceed the number prescribed by law. Private fund managers should match private investment fund products with different risk levels according to investors' risk identification ability and Assumption of risk ability. Strengthen regulatory monitoring of private investment funds after their fundraising is completed. Clarify the scope of private investment fund property investment and the prohibited businesses, and specify the investment hierarchy of private investment funds. Standardize the behavior of private fund managers and their practitioners. The fourth is to make special provisions for venture capital funds. The state provides policy support to venture capital funds, encouraging and guiding them to invest in growth and innovative entrepreneurial enterprises. Strengthen the coordination between supervision and management policies and development policies, clarify the conditions that venture capital funds should meet, and implement differentiated supervision and self-discipline management for venture capital funds that are different from other private investment funds. Fifth, strengthen supervision, management, and legal responsibility. It is stipulated that the supervision and management of private investment fund business activities should follow the Party and national line, policies, and decision-making arrangements. Clarify the regulatory responsibilities and measures of the securities regulatory authority under the State Council. Stipulate that the securities regulatory agency of the State Council, in conjunction with relevant departments of the State Council and provincial people's governments, establish information on the supervision and management of private investment funds
Edit：He Chuanning Responsible editor：Su Suiyue
Source：Xinhua
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