China Securities Regulatory Commission, Circular on Issues Relevant to Regulation of the Establishment of Fund Management Companies and Disposal of the Equity Interests

Issued: May 8 2006
Effective: as of date of issue

Main contents: Shareholders holding equity interests of a fund management company for less than one year may not transfer their equity interests (Article 4). For institutions that have transferred the equity interests of a fund management company in less than three years, the China Securities Regulatory Commission will not accept their applications for establishment of fund management companies or applications for acquisition of equity interests of fund management companies. Where an institution holding equity interests of at least two fund management companies increases its equity interests in one of the fund management companies and at the same time withdraws the equity interests in another fund management company, it shall not be bound by the aforementioned restrictions (Article 6). Shareholders of a fund management company may not hold equity interests of the fund management company on behalf of other institutions, nor may they entrust other institutions to hold equity interests of the fund management company on their behalf (Article 8). In the transfer of equity interests of a fund management company, if the transferee intends to be the major shareholder, it shall explain its consideration in the development strategies of the fund management company (Article 14).
Related legislation: PRC Company Law (Amended), Oct 27 2005, CLP 2005 No.10 p.21; PRC Securities Investment Fund Law, Oct 28 2003, CLP 2003 No.10 p.43; Measures for the Administration of Securities Investment Fund Management Companies, Sep 16 2004, CLP 2004 No.9 p.14 and Circular on Several Issues Relevant to the Implementation of the «Measures for the Administration of Securities Investment Fund Management Companies» , 2004
Repealed legislation: Circular on Matters Relevant to Regulating Transfers of Capital Contributions by Shareholders of Fund Management Companies, 2002