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

 2018-06-26  51


· Area of Law: Securities

· Level of Authority: Industry Regulations

· Date issued:11-23-2016

· Effective Date:11-23-2016

· Status: Effective

· Issuing Authority: Associations

 

Questions and Answers regarding Private Fund Registration and Recordation (XII)
(Asset Management Association of China, November 23, 2016)
Question: How do the senior executives and ordinary practitioners of a private fund manager obtain the qualification to engage in the fund business? How to register the qualification to engage in the fund business?
Answer: The senior executives of a private fund manager may obtain the qualification to engage in the fund business by passing the examination for qualification to engage in the fund business or through qualification determination if certain conditions are met, among others. For details, please refer to the Questions and Answers regarding Private Fund Registration and Recordation (IX) and the Questions and Answers regarding Private Fund Registration and Recordation (XI). Ordinary practitioners of a private fund manager need to pass the examination for qualification to engage in the fund business.
The qualification to engage in the fund business should be registered mainly by an institution in a unified manner. For one that currently holds a position in an institution in the fund industry, the institution should apply to the Asset Management Association of China (“AMAC”) for registering the person's qualification to engage in the fund business. One that has passed the examination but currently does not hold a position in an institution in the fund industry need not look for an institution for the registration purpose, and may directly file an application with the AMAC for registering his or her qualification to engage in the fund business; and after the person takes a position in the relevant institution, the institution should apply to the AMAC for modification. The relevant functions of the practitioner management system of the AMAC is being improved, and system upgrading will be completed in the first quarter of 2017, by which full services will be provided for the fund business qualification registration of personnel of private fund managers. The specific registration flow will be announced in a separate notice.
In accordance with the relevant provisions of the Notice of Matters on the Examination for Qualification to Engage in the Fund Business (No. 112 [2015], AMAC), one that has passed the relevant subject tests for qualification to engage in the fund business may apply to the AMAC for registering his or her qualification to engage in the fund business within four years after passing the examination. If a person passed the relevant subject tests for qualification to engage in the fund business over four years ago, his or her test scores will be recognized and he or she may, as required, apply to the AMAC for registering his or her qualification to engage in the fund business before July 1, 2017. If a person who has passed the relevant subject tests for qualification to engage in the fund business but fails to register his or her qualification to engage in the fund business four years after passing the tests applies to the AMAC for registering his or her qualification to engage in the fund business after July 1, 2017, the person needs to take the examination for qualification to engage in the fund business again or make up 30-hour subsequent training for the last two years.
Question: How do private fund practitioners complete subsequent training hours as required?
Answer: Private fund practitioners should abide by the Securities Investment Fund Law and other laws, regulations, self-regulatory rules, and basic business rules, observe professional ethics, gain professional knowledge on funds, learn innovative business and advanced theories and technologies, update their technical knowledge and professional skills based on new business and new situations, and enhance their professional competence.
In accordance with the Announcement on Several Matters concerning Further Regulating the Registration of Private Fund Managers issued by the AMAC on February 5, 2016, a senior executive of a private fund manager who has obtained the qualification to engage in the fund business may maintain his or her qualification to engage in the fund business only after completing 15-hour subsequent training each year. One obtaining the qualification to engage in the fund business before December 31, 2015, needs to complete 15-hour subsequent training before December 31, 2016. One obtaining the qualification to engage in the fund business after December 31, 2015, needs to complete 15-hour subsequent training within one year of obtaining the qualification. Ordinary private fund practitioners who have obtained the qualification to engage in the fund business should also complete 15-hour subsequent training each year according to the aforesaid provisions.
Subsequent training includes two forms of training: face-to-face training and remote training. For face-to-face training, a person may follow the annual training plan and the notice of each training issued in the official website or the WeChat official account of the AMAC. For remote training, a person may log on the remote training system (http://peixun.amac.org.cn) to participate in the study, and both an institutional user and an individual user may register an account, select courses, make online payment, and take courses in the remote training system. After an individual's successful registration based on a valid identification and completion of corresponding training hours, information on his or her valid training hours will be recorded, and the person may inquire about it by logging on the “Practitioner Management-Training Platform-Training Hour Inquiry” on the official website of the AMAC.
Question: When a private fund manager conducts registration or the relevant senior executives apply for modification, what are the requirements for the legal representative, the chief compliance or risk officer, and other senior executives of the private fund manager?
Answer: For the protection of the interests of investors, the strict performance of the fiduciary duty of “wealth management on behalf of clients,” and the prevention of tunneling and moral risks, the senior executives of a private fund manager should act with due diligence, adhere to their duties, rationally allocate their energy in work, and comply with the following requirements when the private fund manager conducts registration or the relevant senior executives apply for modification:
(1) A senior executive should not concurrently hold a position in a non-affiliated private fund institution.
(2) If a senior executive concurrently holds a position in an affiliated private fund institution, the AMAC may require him or her to explain the rationality of concurrently holding the position in the affiliated institution, his or her competence, and how to fairly treat service recipients, among others. The AMAC will pay particular attention to the performance of duties by a senior executive who concurrently holds positions in multiple affiliates.
(3) If a private fund senior executive modifies the institution where he or she holds a position twice or more within one year, the AMAC will pay particular attention to the reasons for modification and his or her integrity.
(4) A senior executive of a private fund manager should sign a labor contract with the institution. When a private fund manager conducts registration or the relevant senior executives apply for modification, the resolutions and labor contracts on the positions of the legal representative, chief compliance or risk officer, and other senior executives should be uploaded.
Registered institutions should, in accordance with the aforesaid provisions, conduct self-inspection on positions concurrently taken by relevant senior executives of private fund managers. Next, the AMAC will, in accordance with the relevant provisions, verify the positions concurrently taken by the senior executives of private fund managers, and require institutions in noncompliance to take corrective action.
Question: According to recent media reports, in order to complete their registration and recordation, certain private fund institutions look for external persons qualified to engage in the fund business for “nominal employment,” how does the AMAC comment on it?
Answer: The senior executives in the private fund industry are elites in the industry and important subjects of self-regulation and service recipients of the industry. They should fully value their personal integrity records, be honest and trustworthy, conscientiously strengthen their integrity and self-discipline, and prevent moral risks.
Certain private fund institutions turn to external persons qualified to engage in the fund business for “nominal employment” in order to completing their registration and recordation, which violates the Measures for the Registration of Private Investment Fund Managers and Recordation of Funds (for Trial Implementation) and is an act of “providing false materials and information in the registration of private fund managers, recordation of funds, and submission of other information.”
In accordance with the Implementation Measures of the Asset Management Association of China for Disciplinary Actions (for Trial Implementation), once an individual's aforesaid violation is verified, the AMAC will include it in the individual's integrity file, and according to the seriousness of the circumstances, take disciplinary action against him or her, such as issuing a censure within the industry, putting the violator on a blacklist, and canceling the violator's qualification to engage in the fund business. Once a private fund manager's aforesaid violation is verified, the AMAC will issue a public censure, and publish the false submission; and if the circumstances are serious, suspend the processing of fund recordation for it, and revoke its manager registration. In addition, intermediary service providers that provide legal, accounting, outsourcing, and other services for private fund managers should not mislead or induce private fund managers to adopt “nominal employment” or otherwise evade the AMAC's rules on the fund business qualification management of senior executives of private fund managers. Once an intermediary service provider's aforesaid noncompliance is verified, the AMAC will issue a public censure; and if the circumstances are serious, suspend the processing of relevant business for it, and put it on a blacklist.