China Securities Regulatory Commission, Provisions for the Administration of the Subsidiaries of Fund Management Companies (Draft for Comments)

Unless otherwise provided by the CSRC, a subsidiary may not be the holding company for or control another enterprise.

A special purpose vehicle established by a subsidiary as a fund management platform company for the purpose of engaging in private equity investment fund management business is not subject to the first paragraph of this Article. A special purpose vehicle as mentioned above shall be wholly controlled by the subsidiary, may not engage in other business and may not have any further organizations established under it (Article 29).

Issued: August 12 2016

Main contents: A fund management company that establishes a subsidiary shall make its capital contribution thereto with its own funds and shall not hold less than 51% of the equity therein (Article 11).

A subsidiary shall establish internal control systems for the application of its own funds with reference to relevant provisions for the administration of fund management companies' own funds and ensure that the application activities for such funds comply with regulatory requirements in terms of authorized decision-making, compliance management, firewall management, information disclosure, etc.

When a subsidiary uses its own funds to make investments, the amount of investments in cash, bank deposits, sovereign bonds, publicly offered funds and other such highly liquid assets may not be less than 50% of the total amount of investments of such funds (Article 28).

Unless otherwise provided by the CSRC, a subsidiary may not be the holding company for or control another enterprise.

A special purpose vehicle established by a subsidiary as a fund management platform company for the purpose of engaging in private equity investment fund management business is not subject to the first paragraph of this Article. A special purpose vehicle as mentioned above shall be wholly controlled by the subsidiary, may not engage in other business and may not have any further organizations established under it (Article 29).