New fund rules may lead to structural changes

January 15, 2012 | BY

Janice Qu

Private equity and venture capital funds are only allowed to target qualified investors that satisfy the requirements of new rules

Private equity and venture capital funds are only allowed to target qualified investors that satisfy the requirements of new rules regulating fundraising in equity investment enterprises (EIE). As a result, fund structures may require changes to ensure compliance, say counsel.

The Circular on Promoting the Standardized Development of Equity Investment Enterprises (关于促进股权投资企业规范发展的通知), which was published by National Development and Reform Commission (NDRC), is the first national regulation governing illegal fundraising by non-publicly traded enterprises.

The five-chapter Circular has put forward a series of standardisation requirements, one of which demands that existing limitations be adhered to on the number of investors in EIEs. This is of “the most practical importance”, according to Haibin Xue of Zhong Lun Law Firm.

This premium content is reserved for
China Law & Practice Subscribers.

  • A database of over 3,000 essential documents including key PRC legislation translated into English
  • A choice of newsletters to alert you to changes affecting your business including sector specific updates
  • Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
For enterprise-wide or corporate enquiries, please contact our experienced Sales Professionals at +44 (0)203 868 7546 or [email protected]