Questions and Answers regarding Private Fund Registration and Recordation (XIV)

 2018-06-23  23



  • Area of Law Securities
  • Level of Authority Industry Regulations
  • Date issued11-03-2017
  • Effective Date11-03-2017
  • Status Effective
  • Issuing Authority Associations



Questions and Answers regarding Private Fund Registration and Recordation (XIV)
(Asset Management Association of China, November 3, 2017)
Question: Under which circumstances should the Asset Management Association of China (“AMAC”) disapprove the registration of private fund managers? How should the AMAC handle such circumstances?
Answer: In accordance with the Securities Investment Fund Law of the People's Republic of China, the Interim Measures for the Supervision and Administration of Private Investment Funds, the Measures for the Registration of Private Investment Fund Managers and Recordation of Funds (for Trial Implementation), the Announcement on Several Matters concerning Further Regulating the Registration of Private Fund Managers and relevant self-disciplinary rules, the AMAC will not approve the registration of any institution that applies for the registration of a private fund manager under any of the following circumstances:
I. The applicant, in violation of the provisions on the raising of funds in the Securities Investment Fund Law of the People's Republic of China or the Interim Measures for the Supervision and Administration of Private Investment Funds, offers private funds in violation of any provision before applying for registration, and conducts public publicity and recommendation or raises funds from any unqualified investor.
II. The applicant provides or the applicant colludes with a law firm, an accounting firm or any other third-party intermediary, among others, in providing false registration information or materials; or the provided registration information or materials have any misleading statement or material omission.
III. The applicant concurrently operates private lending, civil financing, allocation of funds, small-sum wealth management, petty loans, P2P/P2B, crowd financing, factoring, guarantee, real estate development, trading platforms or any other business in conflict with the private fund business as prescribed in the Questions and Answers regarding Private Fund Registration and Recordation (VII).
IV. The applicant is included in the list of serious illegal and dishonest enterprises in the national system for the publicity of enterprises' credit information.
V. The applicant's senior executive has any serious bad faith records in the recent three years, or is taken against the measure of prohibition from entering the market by the CSRC in the recent three years.
VI. Any other circumstance prescribed by the CSRC and the AMAC.
For the purposes of effectively maintaining the normal operation order of the private fund industry, urging private fund managers to conduct standard operation, urging law firms to perform due diligence, truly playing the role of market-oriented professional checks and balances of legal opinion rules, further enhancing the transparency of registration of private fund managers, and promoting the sound development of the private fund industry, from the date of issuance of these Questions and Answers, on the basis of registered rules for the publicity of private fund managers, the AMAC will further publicize the applicants of which the registration is disapproved and the information on the involved law firms and lawyers, and establish the following work mechanism:
I. The AMAC will, on a periodical basis, announce the names of applicants of which the registration is disapproved and the reason for disapproval, and at the same time, publicize the list of law firms and their designated lawyers that issue legal opinions for such institutions.
II. Where a law firm and its designated lawyers provide legal services relating to the registration of private fund managers to one institution of which the registration is disapproved, and issues positive conclusive opinion, the AMAC will, in a timely manner, remind the law firm and its designated lawyers the requirements for due diligence and regulatory compliance of relevant businesses by multiple means such as telephone communication and on-site interview.
III. Where the designated lawyers of a law firm has provided legal services relating to the registration of private fund managers for two or more institutions of which the registration is disapproved, and issued positive conclusive opinions, out of prudential consideration, within three years from the date of publication of the second institution it serves and of which the registration is disapproved, the AMAC will require the applicant to which the designated lawyers are providing legal services relating to the registration of private fund managers to report the reexamination opinion issued by other practicing lawyers retained by the law firm on the applicant's registration of private fund managers. The applicant may also retain any other law firm to issue the legal opinion once again. At the same time, the AMAC will notify the relevant information to the law firm where the relevant designated lawyer holds a position.
IV. Where a law firm has provided legal services relating to the registration of private fund managers for three or more institutions of which the registration is disapproved on an accumulative basis and issued positive conclusive opinions, out of prudential consideration, within three years from the date of announcing the third institution it serves and of which the registration is disapproved, the AMAC will require the applicant to which the law firm provides legal services relating to the registration of private fund managers to retain any other law firm to issue another legal opinion on matters concerning the registration of private fund managers. At the same time, the AMAC will notify the relevant information to the justice administrative authority and lawyers' association at the place where the involved law firm is located.
V. The principles as set forth in Articles 2, 3 and 4 should apply, mutatis mutandis, if a law firm and its designated lawyers issue a legal opinion on access to the AMAC or any other special legal opinion for a registered private fund manager that has any false record, misleading statement or material omission, and has issued a positive conclusive opinion.
Where the legal opinion issued by the law firm and its designated lawyers for the applicant on the registration of the private fund manager is negative conclusive opinion, but the applicant refuses to provide it to the AMAC, the law firm and its designated lawyers may serve the negative conclusive opinion and relevant certification materials upon the applicant, and at the same time, send a copy to the mailbox of the AMAC: pflegal@amac.org.cn (the name of the e-mail should be “name of the applicant-name of the law firm or name of the lawyer-negative conclusive opinion.” Where under such a circumstance, the registration of the institution should be disapproved upon recognition, the AMAC will publicize the information on the institution, and indicate that the law firm and its designated lawyers issued negative conclusive opinion. Such a circumstance should not be included in the accumulative number of cases in the aforesaid publication mechanism.
The AMAC restates that when a private fund manager applies for registering the applicant, law firm or any other intermediary service agency, it should greatly cherish its reputation, prudentially select the subjects of business cooperation, and assess the qualification of partners and capability to conduct business operation. In the course of applying for the registration of a private fund manager and providing relevant services, it should have good faith, perform due diligence, and should not damage the lawful rights and interests of itself, the other party or investor.
Question: Whether a private fund manager that fails to complete the recordation of the first private fund may handle the modification of major matters of the legal representative, actual controller or controlling shareholder?
Answer: In accordance with the Interim Measures for the Supervision and Administration of Private Investment Funds, the Guidelines for the Internal Control of Private Investment Fund Managers, the Guidelines for Private Investment Fund Contracts and other relevant requirements, for the purposes of guaranteeing the stability of corporate governance, organizational structure and management team of new registered private fund managers, and guaranteeing that private fund managers implement business operation plans and internal control rules filed by private fund managers when carrying out registration applications in a continuous and effective manner, from the date of issuance of these Questions and Answers, the institution that applies for the registration of a private fund manager should make a written commitment that: the institution that applies for registration guarantees the stability of its organizational structure and management team, and before the completion of recordation of the first fund product, it will not modify major matters of the legal representative, controlling shareholder or actual controller, and will not replace the general manager, person in charge of regulatory compliance or risk control or any other senior executive at will, unless it is otherwise prescribed by any law or regulation or any force majeure occurs.
The AMAC restates that when a private fund manager that has management scale handles an application for the modification of major matters of the legal representative, actual controller or controlling shareholder, it should, in addition to submitting the special legal opinion as required, also provide relevant certification materials to fully explain the reason for the modification matter and its rationality. It has performed the relevant voting procedures of the meeting of fund share holders, shareholders' meeting or partners' meeting as agreed upon in the fund contract, bylaws of the fund company or partnership agreement. It has disclosed information on major matters involved to private fund investors in a timely, accurate and complete manner in accordance with the relevant provisions of the Measures for the Disclosure of Information on Private Investment Funds and those agreed upon in the fund contract, bylaws of the fund company or partnership agreement.