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

 2018-06-25  54


· Area of Law: Securities

· Level of Authority: Industry Regulations

· Date issued:03-31-2017

· Effective Date:03-31-2017

· Status: Effective

· Issuing Authority: Associations

 

Questions and Answers regarding Private Fund Registration and Recordation (XIII)
(Asset Management Association of China, March 31, 2017)
Question: When a private fund manager applies for private fund registration and recordation, how should it carry out the principle of professional management?
Answer: In accordance with Article 22 of the Interim Measures for the Supervision and Administration of Private Investment Funds and the Guidelines for the Internal Controls of Private Investment Fund Managers and other relevant self-regulatory rules issued by the Asset Management Association of China (“AMAC”), for the purposes of further carrying out the principle of professional management of private fund managers, effectively establishing a valid mechanism to prevent possible tunneling and conflicts of interest, and enhancing the internal controls of institutions in the industry, when a private fund manager applies for registration, it should choose only one institutional type from “private securities investment fund manager” and “private equity or venture capital fund manager,” among others, and one of the business types corresponding to the institutional type for registration. A private fund manager may only apply for recordation of private funds consistent with the registered business type of the institution, and should not manage private funds inconsistent with the registered business type of the institution. The same private fund manager should not concurrently conduct multiple types of private fund management.
Where a management institution of private funds does have the actual and long-term needs for multiple types of management of private funds, it may form independent business entities satisfying the requirements of professional management in terms of personnel, business systems, and internal controls, among others, and apply for registration of them as different types of private fund managers respectively.
Question: What corrective action should a private fund manager with multiple registered business types or concurrently conducting multiple types of private fund management take according to the aforesaid requirements for professional management?
Answer: Until now, 2,198 private fund managers have completed registration and recordation under the principle of professional management through the AMAC's “Comprehensive Reporting Platform for Asset Management Business” (https://ambers.amac.org.cn). To coordinate and unify the self-regulatory standards of the industry, a private fund manager with multiple business types registered in the “Private Fund Registration and Recordation System” (https://pf.amac.org.cn) should, according to the relevant subsequent arrangements of the AMAC, take corrective action according to the professional management requirements through the “Comprehensive Reporting Platform for Asset Management Business.”
Such a private fund manager should choose only one business type from its multiple registered business types as its business scope, confirm its institutional type, and apply for modification of its institutional type and business type through the “Comprehensive Reporting Platform for Asset Management Business,” to carry out the principle of professional management. Such a private fund manager may apply for recordation of new private funds only after completing the confirmation of modification of its institutional type and business type.
If any type of existing private funds recorded and operating under the management of such a private fund managers is inconsistent with the business type chosen by the manager in the “Comprehensive Reporting Platform for Asset Management Business,” their investment and operation may continue before the expiration of the fund contracts, company bylaws, or partnership agreement (hereinafter collectively referred to as the “fund contracts”), but they may not be open for subscription nor may the scale of fundraising be increased before the expiration of the fund contracts; and liquidation or clearing should be conducted upon expiration of the fund contracts without any renewal. Meanwhile, the AMAC will specially mention such circumstances in the relevant published private fund information. Such private fund managers should disclose information on such matters to relevant private fund investors in a timely manner, and protect the lawful rights and interests of investors.