Asset Management Association of China, Measures for the Administration of the Offering of Private Investment Funds

These Measures shall apply to the stage where fund business outsourcing service institutions participate in private fund offering.

For the purposes of these Measures, the term “fund business outsourcing service institution” includes Fund Sellers that provide offering services to private fund managers, and institutions that provide to private fund Offering Institutions private fund offering-related services such as payment and settlement services, monitoring of private fund proceeds and settlement funds, and unit registration. The aforementioned fund business outsourcing service institutions shall comply with the administrative measures of AMAC relating to fund business outsourcing services (Article 3).

Main contents: An institution that has carried out private fund manager registration with the Asset Management Association of China (AMAC) may itself offer the private funds that it establishes, and an institution that has registered with, and secured fund sale business qualifications from, the CSRC and is a member of AMAC (Fund Seller) may offer private funds if engaged to do so by a private fund manager. No other institution or individual may engage in offering activities for private funds (Article 2).

An Offering Institution shall execute an account monitoring agreement with a monitoring institution, setting forth the terms expressly addressing the control of the dedicated account for the private fund proceeds and settlement funds, the division of responsibilities and assuring the security of fund transfer. The monitoring institution shall bear joint and several liability for assuring the security of the transfer of the private fund proceeds and settlement funds.

A commercial bank, securities company or other such financial institution with fund sale business qualifications may serve as both the Offering Institution and monitoring institution in the course of the offering of a private fund. An institution satisfying the foregoing circumstance shall establish a sound firewall system to guard against conflicts of interests (Article 13).

An Offering Institution may openly publicize, through lawful channels, only the private fund manager's brand, development strategy, investment strategy, management team, senior management information and the basic particulars of the recorded private funds announced by AMAC (Article 16).

An Offering Institution shall publicize and promote private funds to specific targets. Where the specific target determination procedure has not been carried out, it may not publicize and promote private funds to any party (Article 17).

Before promoting a private fund to investors, an Offering Institution shall carry out the specific target determination procedure by way of a questionnaire or other such means and assess investors' risk identification capabilities and risk bearing capacity. An investor shall undertake in writing that it satisfies the criteria for a qualified investor (Article 18).

Related legislation: Tentative Measures for the Regulation of Private Investment Funds: and PRC Securities Law (Revised in 2014)

Issued: April 15 2016

Effective: July 15 2016

Applicability: These Measures shall govern the raising of funds in a private manner from investors by private fund managers and by institutions that have registered with, and secured fund sale business qualifications from, the China Securities Regulatory Commission (CSRC) and are members of the Asset Management Association of China (hereinafter collectively referred to as “Offering Institutions”).

For the purposes of these Measures, the term “offering act” includes the promotion of private funds, the sale of fund units (rights and interests), the carrying out of the procedures for the subscription for/purchase of fund units (rights and interests), redemption (divestment), and other such activities (Article 2).

These Measures shall apply to the stage where fund business outsourcing service institutions participate in private fund offering.

For the purposes of these Measures, the term “fund business outsourcing service institution” includes Fund Sellers that provide offering services to private fund managers, and institutions that provide to private fund Offering Institutions private fund offering-related services such as payment and settlement services, monitoring of private fund proceeds and settlement funds, and unit registration. The aforementioned fund business outsourcing service institutions shall comply with the administrative measures of AMAC relating to fund business outsourcing services (Article 3).

Main contents: An institution that has carried out private fund manager registration with the Asset Management Association of China (AMAC) may itself offer the private funds that it establishes, and an institution that has registered with, and secured fund sale business qualifications from, the CSRC and is a member of AMAC (Fund Seller) may offer private funds if engaged to do so by a private fund manager. No other institution or individual may engage in offering activities for private funds (Article 2).

An Offering Institution shall execute an account monitoring agreement with a monitoring institution, setting forth the terms expressly addressing the control of the dedicated account for the private fund proceeds and settlement funds, the division of responsibilities and assuring the security of fund transfer. The monitoring institution shall bear joint and several liability for assuring the security of the transfer of the private fund proceeds and settlement funds.

A commercial bank, securities company or other such financial institution with fund sale business qualifications may serve as both the Offering Institution and monitoring institution in the course of the offering of a private fund. An institution satisfying the foregoing circumstance shall establish a sound firewall system to guard against conflicts of interests (Article 13).

An Offering Institution may openly publicize, through lawful channels, only the private fund manager's brand, development strategy, investment strategy, management team, senior management information and the basic particulars of the recorded private funds announced by AMAC (Article 16).

An Offering Institution shall publicize and promote private funds to specific targets. Where the specific target determination procedure has not been carried out, it may not publicize and promote private funds to any party (Article 17).

Before promoting a private fund to investors, an Offering Institution shall carry out the specific target determination procedure by way of a questionnaire or other such means and assess investors' risk identification capabilities and risk bearing capacity. An investor shall undertake in writing that it satisfies the criteria for a qualified investor (Article 18).

Related legislation: Tentative Measures for the Regulation of Private Investment Funds: and PRC Securities Law (Revised in 2014)