Interpretation of key points of the new regulations of the Measures for the Registration and Filing of Private Investment Funds

On the evening of February 24, 2023, AMAC issued the Measures for Registration and Filing of Private Investment Funds (hereinafter referred to as the Measures) and supporting guidelines, which are slightly adjusted compared with the Measures for Registration and Filing of Private Investment Funds (Draft for Comments) issued on December 30, 2022. This paper lists the key contents for interpretation (the text in the following box is the original excerpt of the Measures).

By Zhang Yao

PART.1

Provisions on the convergence of old and new rules

(1) The registration, filing and information change business that has been submitted for handling before the implementation of the Measures shall be handled by the Association in accordance with the current rules. The registration, filing and information change business submitted for handling after implementation shall be handled by the Association in accordance with the Measures.

(2) If a registered private fund manager submits to handle the change of registration and record information other than the actual control right after the implementation of the Measures, the relevant changes shall conform to the provisions of the Measures. If the actual change of control is submitted for handling, the private fund manager after the change shall fully meet the registration requirements of the Measures.

(3) From May 1, 2023, the registration, filing and information change matters that have been submitted before the implementation of the Measures but have not been completed shall be handled by the Association in accordance with the Measures.

Dehe interpretation:

May 1, 2023 shall be the demarcation point for the implementation of the Measures. If relevant registration, filing and information change are completed before then, the current rules shall be followed. After May 1, newly submitted or unfinished registration, filing and information change matters shall be handled in accordance with the Measures.

After the implementation of the Measures, handle the information change record matters except the actual control right change, and the change matters shall conform to the provisions of the Measures; Where the actual change of control is involved, the private fund manager shall fully comply with the registration requirements of the Measures. That is, where the change of actual control right is involved, the private fund manager shall complete the minimum paid-up capital contribution of 10 million yuan, and at the same time ensure that the name, business scope, investors and senior executives of the institution fully comply with the requirements of the Measures.

Institutions that have not submitted applications to the association so far are advised to carefully check their own situation against the requirements of the new regulations and submit applications for registration/change prudently.

PART.2

Interpretation of the basic ideas of the formulation of the Measures

1. On the basis of the Interim Measures for Supervision and Administration of Private Investment Funds in 2014, we have accumulated the experience and lessons of administrative supervision and self-regulation in the past eight years, and the content is more perfect, standardized and clear, which is in line with the latest theoretical research results.

2. Compared with the List of Application Materials for Registration of Private Equity Fund Managers implemented in September 2022, the Measures have made more standardized requirements for key subjects such as private equity fund managers, investors, actual controllers and senior executives.

3. Improve systems and mechanisms, strengthen penetrating verification, prudutely manage factors that may exist risks and hidden dangers, and strengthen industry compliance operation.

4. Implement differentiated self-discipline management, implement the concept of supporting the good and limiting the bad, and reserve certain discretion in certain qualification threshold conditions and self-discipline measures and means.

5. Strengthen the effective management of “fake, inferior and disorderly” private placement, curb the chaos of the industry and purify the industry ecology.

PART.3

Interpretation of the main points of subject qualification of private fund manager registration and filing in the Measures

I. Basic requirements of the manager

Article 8 of the Measures

The private fund manager shall be a company or partnership established in accordance with the law within the territory of the People's Republic of China and continue to meet the following requirements:

(1) in good financial condition and with paid-in monetary capital of no less than 10 million YUAN or equivalent in a freely convertible currency, if there are other provisions on private fund managers specialized in managing venture capital funds, such provisions shall prevail; 

(2) the capital contribution structure is clear and stable, the shareholders, partners and actual controllers have good credit records, and the controlling shareholders, actual controllers and general partners have relevant experience in meeting the requirements;

(3) The legal representative, managing partner or its appointed representative and senior management personnel in charge of investment management directly or indirectly hold a certain proportion of the equity or property shares of the private fund manager;

(4) The senior management has a good credit record, professional competence appropriate to the position and relevant work experience that meets the requirements; There shall be no less than 5 full-time employees. If there are other provisions on the private fund manager as stipulated in Article 17 of these Measures, such provisions shall prevail;

(5) Sound internal governance structure, sound risk control compliance system and conflict of interest prevention mechanism;

(6) Having the name, business scope, business site and facilities related to fund management business that meet the requirements;

(7) other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

The provisions of item 3 of the preceding paragraph shall not apply to private fund managers controlled by commercial banks, securities companies, fund management companies, futures companies, trust companies, insurance companies and other financial institutions, private fund managers controlled by the government and its authorized institutions, private fund managers controlled by institutions supervised by overseas financial regulatory authorities and other private fund managers that meet the provisions.

Dehe interpretation:

This article defines the framework requirements for the registration and filing of the manager. Compared with the “negative expression” in the draft for comments, it is adjusted to the usual “positive expression”, which is easy to understand.

1. Minimum paid-in capital requirement: 10 million yuan, same as the draft for comments. [This article has a great impact, and applicants who plan to register need to make preparations in advance. In addition, there may be room for adjustment in the future for managers who specialize in managing venture capital funds.]

2. Please refer to the relevant contents below for the relevant requirements of investors and senior executives.

3. Name and business scope requirements: there is little difference from the current requirements; Added from the draft for comments: the name shall not use “financial institutions, well-known private fund managers are the same or similar words that may mislead investors”.

4. Requirements of the business site: According to Article 8 of Guidelines for The Registration of Private Fund Managers No. 1 - Basic Operation Requirements, a private fund manager shall have an independent and stable business site, shall not use insufficiently stable sites such as shared space as business site, and shall not work in confusion with its shareholders, partners, actual controllers or related parties. Where the business premises are leased, the remaining lease term shall not be less than 12 months from the date of filing for registration, unless there are reasonable reasons.

The site shall be independent, shall not use shared space, and shall not have confused office with shareholders, partners, related parties, etc. At the same time, the site shall be stable, the starting point shall be the date of registration, and the remaining lease term shall be more than one year.

Second, sufficient and stable personnel

Article 21 of the Measures

A private fund manager shall maintain the adequacy and stability of the management team and relevant personnel. The senior management personnel shall continue to meet the relevant requirements of these Measures. After the resignation of the former senior management personnel, the private fund manager shall, in accordance with the provisions of the articles of association or the partnership agreement, appoint the senior management personnel who meet the requirements of the position to perform their duties on their behalf and appoint the senior management personnel who meet the requirements of the position within 6 months. The effective operation of internal governance and business shall not be affected by long-term absence.

The private fund manager shall not replace its legal representative, managing partner or its appointed representative, principal person in charge of operation and management, senior management personnel in charge of investment management and person in charge of compliance risk control before the filing procedures of the first private fund are completed.

Dehe interpretation:

This regulation identifies the practical problem that senior managers may have “gap periods” for private fund managers, and sets up a six-month “grace period” to hire new qualified personnel.

At the same time, it is required for the stability of personnel's tenure, and it is clear that legal persons and senior executives in investment and risk control positions shall not be replaced before the filing of the first private equity fund is completed. In the Measures and supporting guidelines, the requirements on the stability of senior executives' tenure also include the focus on “those who frequently change jobs in a short period of time,” which will be explained at the end of this paper.

3. Suspend the processing

Article 24 of the Measures

Under any of the following circumstances, the association shall suspend the registration of a private fund manager and explain the reasons:

(1) The institution to be registered and its controlling shareholders, actual controllers, general partners and major investors have been placed on file for investigation by public security, procuratorial or supervisory organs for suspected violations of laws and regulations, or are under investigation or inspection by financial regulatory departments or self-regulatory organizations, and the case has not been concluded;

(2) The proposed registration institution and its controlling shareholders, actual controllers, general partners and major investors have major litigation, arbitration and other legal risks that may affect normal operation, or major internal disputes that may affect the registration of private fund managers, which have not been eliminated or solved;

(3) Major negative public opinions on the proposed registration institution and its controlling shareholders, actual controllers, general partners, major investors and associated private fund managers have not been eliminated;

(4) CSRC and its local offices require the association to suspend the handling;

(5) Suspected of providing false records, misleading statements or major omissions of information and materials, handling relevant business by improper means such as cheating, bribery or illegal cooperation with intermediary agencies for the purpose of avoiding supervision and self-regulation, and the relevant situation is still being verified;

(6) other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

After the circumstances listed in the preceding paragraph disappear, the proposed registration organ may request the resumption of the registration of the private fund manager, and the time limit for the resumption shall continue to be calculated from the date of resumption.

Dehe interpretation:

The “suspension” mechanism in the Measures has changed substantially compared with the current requirements. The “suspension” clause in the Instructions to Registration of Private Fund Managers (hereinafter referred to as the Instructions to Registration) focuses on the absence or deficiency of various conditions of the applicant institution itself, including some subjective considerations; The handling method is to suspend the filing application for six months. The “suspension of handling” stipulated in the Measures focuses more on the concern of risks and hidden dangers; The treatment method is that after the listed situation is eliminated, the treatment can be resumed.

The first three provisions limit the risks and hidden dangers that may be involved in the application institution itself, controlling shareholders, actual controllers, general partners and major investors. The fourth item is the linkage with the administrative supervision of China Securities Regulatory Commission and local securities regulatory bureums. The fifth item is to suppress the illegal or even illegal behaviors of “black intermediaries”. Applicants should carefully choose intermediary agencies to cooperate.

Iv. Termination

Article 25 of the Measures

Under any of the following circumstances, the association shall terminate the registration of private fund manager, return the registration materials and explain the reasons:

(1) take the initiative to apply for withdrawal of registration;

(2) to dissolve or cancel according to law, to be cancelled or revoked of business license, to be ordered to close down or to be declared bankrupt according to law;

(3) Failing to supplement and correct the registration materials within 6 months from the date of return by the Association, or failing to make explanations, supplements or modifications according to the feedback of the Association;

(4) The suspension has not been resumed for more than 12 months;

(5) CSRC and its local offices require the association to terminate the handling;

(6) Providing information and materials with false records, misleading statements or major omissions, handling relevant business by improper means such as cheating, bribery or illegal cooperation with intermediary agencies for the purpose of avoiding supervision and self-regulation;

(7) Major business risks occur to the proposed registration institution and its controlling shareholders, actual controllers, general partners, major investors and associated private fund managers;

(8) Carrying out private fund business activities such as fund raising and investment management without registration, except as otherwise provided by laws and administrative regulations;

(9) it does not meet the registration requirements stipulated in Articles 8 to 21 of these Measures;

(10) Other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

If the proposed registration institution is terminated for the registration of a private fund manager due to the circumstances specified in Item 9 of the preceding paragraph, and the registration is terminated again due to the circumstances specified in item 9 of the preceding paragraph, it shall not apply for the registration of a private fund manager again within 6 months from the date of termination for a second time.

Dehe interpretation:

The “termination handling” mechanism is set up in the Measures, which replaces the “non-registration” content in the current “Registration Instructions”. As for the handling method of “termination”, the author believes that the time for institutions terminated by the association due to the above circumstances to apply to the association for registration again is not limited, but if the termination is terminated due to the circumstances specified in Item 9 of the preceding paragraph, the application for registration will be suspended for 6 months.

The first, second, seventh and eighth items are easy to understand; The third and fourth items are intended to urge the applicant organization to complete the rectification as soon as possible; Item 5 is also linked with CSRC and local securities regulatory bureau; The sixth is to suppress “black intermediaries”; Item 9 should be brought to the attention of each applicant institution. Before submitting to AMAC for registration and filing for the first time, it must ensure that the institution complies with the relevant requirements on manager registration and filing in the Measures.

5. The application shall be submitted within 12 months after the industrial and commercial registration

Annex 2 Article 2 of Guidelines for Registration of Private Fund Managers No. 1 - Basic Business Requirements

The company or partnership that requests the registration of private fund manager shall be established for the purpose of carrying out private fund management business, and shall request the registration of private fund manager within 12 months from the date of industrial and commercial registration of market subjects, except for those that need to be postponed due to policy changes of relevant state departments and other circumstances.

Dehe interpretation:

To clarify the requirements of professional operation again, the application institution shall be established for the purpose of carrying out private fund management business, and submit for registration and filing within 12 months after the establishment. This regulation has dealt a thorough blow to the institutional shell behavior of hoarding “subjects to be put on record” in the market. Please also make it clear to the applicant: only a concise and clear subject set up for the professional operation of private fund management is convenient for registration and filing.

PART.4

Interpretation of key points of shareholders, partners and actual controllers of private fund managers in the Measures

I. Negative list of investors' background

Article 9 of the Measures

Any of the following circumstances shall not serve as the shareholder, partner or actual controller of the private fund manager:

(1) Failing to make capital contribution with lawful self-owned funds, making capital contribution with entrusted funds, debt funds and other non-self-owned funds, holding equity and property shares by entrusting others or accepting entrustment from others in violation of regulations, having circular capital contribution, cross-shareholding or complex structure, concealment of association;

(2) The governance structure is not sound, the operation is not standardized and stable, it does not have a good financial position, the ratio of assets and liabilities and leverage is inappropriate, and it does not have the ability to continue capital supplement matching the operating conditions of the private fund manager;

(3) The controlling shareholder, actual controller or general partner has no relevant experience in operation, management or asset management, investment or related industries, or the relevant experience is less than 5 years;

(4) The controlling shareholder, actual controller, general partner and major investor hold positions in the non-affiliated private fund manager, or have been engaged in conflict business in the recent 5 years;

(5) other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

If the actual controller of the private fund manager is a natural person, he/she shall serve as the director, supervisor or senior manager of the private fund manager, or the managing partner or his/her appointed representative, unless otherwise provided for.

Dehe interpretation:

This provision is a significant change from the current rules.

For the “legal self-owned capital contribution” and other matters stipulated in the first item, the author always insists on this requirement in the audit under the current rules, so as to eliminate the suspicion of the investor's acting; The addition of the word “violation” before “entrusting others or accepting the entrusting method of others” seems to mean that there is compliance with the entrusting others to hold shares on their behalf.

The second item is a new requirement for institutional investors, that is, institutional investors as managers shall have sound governance structure, standardized and stable operation, good financial status, and continuous capital supplement ability matching the operating status of private fund managers.

The third item is a mandatory provision for the actual controller to have more than 5 years of relevant industry experience, and the specific requirements are as follows:

Annex 3 Guidelines on Registration of Private Fund Managers No. 2 - Shareholders, Partners and Actual Controllers Article 9 If the actual controller of a private securities fund manager is a natural person, relevant experience as stipulated in Item 3, Paragraph 1, Article 9 of the Measures for Registration and Filing includes:

(1) Engaging in securities asset management, securities and futures investment with its own funds and other related businesses in commercial banks, securities companies, fund management companies, futures companies, trust companies, insurance companies and relevant asset management subsidiaries, or holding the position of department head or above or having considerable position management experience;

(2) Engaging in securities and futures investment management related work in enterprises or listed companies controlled by governments at or above the prefectural and municipal level and their authorized agencies, or serving as senior managers or having considerable position management experience;

(3) If the private equity fund manager is engaged in securities and futures investment or serves as a senior manager, the private equity fund manager shall operate normally, comply with regulations and have no record of major violations of laws and regulations during his/her term of office;

(4) Engaging in securities asset management and other related businesses in asset management institutions under the supervision of overseas financial regulatory authorities, the asset management institutions they work for shall have good international reputation and business performance;

(5) to be engaged in economic management or other related work in government departments or institutions and have corresponding management experience;

(6) Engage in securities, fund and futures related legal and audit work in a law firm or accounting firm filed with the CSRC, and hold the position of partner or above for no less than 5 years;

(7) Other relevant work experience as stipulated by CSRC and the Association.

The investment management work experience mentioned in the preceding paragraph does not include personal investment experience in securities or futures.

The above provisions have been greatly adjusted compared with the relevant requirements in the draft for comments:

1. In addition to funds and asset management products, commercial banks, securities/funds/futures/trust/insurance/asset management subsidiaries and other formal financial institutions engaged in securities and futures investment related business with their own funds shall be included within the acceptable scope; The positions of senior management personnel in the above-mentioned institutions originally stipulated in the draft for comments are now adjusted to the positions of department heads and above.

2. It is once again reiterated that the private fund manager where the senior executive/investment personnel worked shall operate normally and have no record of major violations of laws and regulations.

3. It is clear that the working experience of an asset management institution supervised by an overseas financial regulatory authority in securities asset management can be identified, but the working institution should have a good international reputation and business performance, so it can be understood that the overseas institution should be a well-known institution.

4. The newly added experience of being a partner or above in securities, fund and futures related legal and audit work in law firms and accounting firms recorded by CSRC can also be recognized.

Annex 3 Article 10 If the actual controller of a private equity fund manager is a natural person, relevant experience as stipulated in Item 3, Paragraph 1, Article 9 of the Measures for Registration and Filing shall include:

(1) Engaged in asset management, equity investment with its own funds, issuance sponsor and other related businesses in commercial banks, securities companies, fund management companies, futures companies, trust companies, insurance companies and relevant asset management subsidiaries, or holding the position of department head or above or having considerable position management experience;

(2) Engaging in equity investment management related work in enterprises or listed companies controlled by governments at or above the prefectural and municipal level and their authorized agencies, or serving as senior managers or having considerable position management experience;

(3) If the private equity fund manager is engaged in equity investment or serves as a senior manager, the private equity fund manager shall operate normally, comply with regulations and have no record of major violations of laws and regulations during his/her term of office;

(4) If an asset management institution under the supervision of overseas financial regulatory authorities is engaged in equity investment and other related businesses, the asset management institution it works for shall have a good international reputation and business performance;

(5) to be the head of the equity investment management department in an enterprise with good operation, sound compliance and a certain business scale, or to be a senior manager or to have considerable position management experience, or to be an expert, professor or researcher in a relevant field in a large and medium-sized enterprise with a certain technical threshold, or to be an expert, professor or researcher in a relevant field in a scientific research institution;

(6) to be engaged in economic management or other related work in government departments or institutions and have corresponding management experience;

(7) Engage in securities, fund and futures related legal and audit work in a law firm or accounting firm filed with the CSRC, and hold the position of partner or above for no less than 5 years;

(8) Other relevant work experience as stipulated by CSRC and the Association.

The above provisions have a great adjustment compared with the relevant requirements in the draft for comments, and appropriately broaden the recognition situation:

1. It is clear that commercial banks, securities/funds/futures/trust/insurance/asset management subsidiaries and other formal financial institutions engaged in equity investment related business of their own funds, issuance sponsor and other related business are included in the acceptable scope; The positions of senior management personnel in the above-mentioned institutions originally stipulated in the draft for comments are now adjusted to the positions of department heads and above.

2. It is once again reiterated that the private fund manager where the senior executive/investment personnel worked shall operate normally and have no record of major violations of laws and regulations.

3. It is clear that the working experience of asset management institutions supervised by overseas financial regulatory authorities in equity investment can be identified, but the working institutions should have good international reputation and business performance, which can be understood as overseas institutions need to be well-known institutions.

4. The relevant recognition conditions for engaging in equity investment in general enterprises have been added: holding the position of head of equity investment management department or above in enterprises with good operation, stable compliance and certain business scale, or holding relevant professional and technical positions in large and medium-sized enterprises with certain technical threshold, or being experts, professors and researchers in relevant fields in scientific research institutions.

5. The newly added experience of being a partner or above in securities, fund and futures related legal and audit work in a law firm or accounting firm recorded by CSRC can also be recognized.

In addition, there is a clear distinction between the actual controllers who serve as securities/equity managers, that is, the experience of securities industry and the experience of equity investment industry cannot be recognized each other, which strictly limits the feasibility of establishing both securities managers and equity managers under the name of the vast majority of the same actual controllers.

As for Item 4 of Article 9 of the Measures, it is consistent with the current standards. At the same time, in accordance with Article 6 of Appendix 3, if the investor is engaged in conflict business, the total direct or indirect shareholding proportion in the manager shall not exceed 25%.

If a natural person serves as the actual controller of the private fund manager, he/she shall, in principle, serve as the director, supervisor, senior manager of the private fund manager, or the managing partner or his/her appointed representative. This paragraph broadens the scope of “legal representative, senior executive or managing partner and appointed representative” as limited in the draft. The starting point of the establishment is that the actual controller should be deeply tied with the private fund manager, not to do “throw away the boss”.

Negative list of risk status of investors

Article 15 of the Measures

Under any of the following circumstances, it shall not serve as a private fund manager, nor shall it become the controlling shareholder, actual controller, general partner or major investor of the private fund manager:

(1) any of the circumstances prescribed in Article 16 of these Measures;

(2) It has not been more than 3 years since the date of revocation of the registration of a private fund manager by the Association;

(3) It has not been more than 3 years since the date of termination of registration of private fund managers by institutions and their controlling shareholders, actual controllers and general partners due to the circumstances listed in Item 6 and Item 8 of Paragraph 1 of Article 25 of these Measures;

(4) The private fund manager and its controlling shareholder, actual controller and general partner who are deregested due to the circumstances listed in Article 77 of these Measures have not been more than 3 years since the date of deregesting;

(5) There are major business risks or major risk events occur;

(6) There is a conflict of interest between the business engaged in and private fund management;

(7) It has significant bad credit records that have not been repaired;

(8) Other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

Dehe interpretation:

This article is also listed in the form of a negative list, aiming to “limit the bad” and strictly control risks. For those who have violated the self-regulatory rules or have risks, the association will restrict their application for manager registration or proposed appointment as major investors. At the same time, Article 7 and Article 8 of Appendix 3 are restrictions on controlling shareholders, actual controllers, general partners and major investors shall not violate regulations and other risk matters; For possible risk factors, the association will strengthen verification and consult relevant departments for opinions as appropriate.

Capital adequacy & restriction on transfer

Article 20 of the Measures

The private fund manager shall maintain sufficient capital to meet the needs of continuous operation, business development and risk prevention, and the shareholders and partners of the private fund manager shall not make false capital contribution or withdraw capital contribution.

The equity, property shares or actual control rights held by the controlling shareholder, actual controller or general partner of a private fund manager shall not be transferred within 3 years from the date of registration or change of registration, except under any of the following circumstances:

(1) Administrative transfer or change of equity and property shares in accordance with regulations;

(2) transfer of equity and property shares between different entities controlled by the same actual controller;

(3) The private fund manager implements equity incentive for employees, but does not change the status of the actual controller;

(4) acquisition of equity or share of property due to statutory reasons such as inheritance;

(5) other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

Dehe interpretation:

For the manager who has put on record and the application institution who intends to put on record, there are provisions restricting the transfer, that is, the transfer shall not be made within 3 years from the date of registration or change of registration. The association launched this regulation to limit “shell buying and selling” and other illegal transfer behavior. However, exemptions were made for the five cases listed above.

In addition, the requirements to ensure sufficient capital and investors shall not make false contributions or withdraw their contributions are consistent with current rules.

PART.5

Interpretation of the legal representative, senior management personnel, managing partner or their appointed representative of the private fund manager in the Measures

I. Negative list of senior executives

Article 10 of the Measures

Under any of the following circumstances, he shall not serve as the legal representative, senior manager, managing partner or his appointed representative of the private fund manager:

(1) having been engaged in conflict business in the last five years;

(2) It does not meet the fund qualification and practice conditions stipulated by the CSRC and the association;

(3) lack of operation and management ability suitable for the proposed position, or lack of relevant work experience that meets the requirements;

(4) other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

The legal representative, managing partner or its appointed representative, principal person in charge of operation and management and senior management personnel in charge of investment management of a private securities fund manager shall have more than 5 years of relevant working experience in securities, fund and futures investment management.

The legal representative, managing partner or its appointed representative, the principal person in charge of operation and management and the senior management personnel in charge of investment management of the private equity fund manager shall have more than 5 years of working experience in equity investment management or related industry management.

The person in charge of compliance risk control of a private fund manager shall have more than 3 years of investment related work experience in law, accounting, auditing, supervision and audit, or compliance, risk control, supervision and self-discipline management in the asset management industry.

The senior management personnel responsible for investment management of a private fund manager shall also have investment management performance that meets the requirements.

Dehe interpretation:

For legal representatives and investment-related senior executives, the Association makes it clear that they have fund qualification and more than 5 years of industry experience, and are not allowed to engage in conflict business in the recent 5 years, so as to cut off the possibility that there may be risks and hidden dangers with conflict business.

The specific requirements for senior executives with more than 5 years of relevant industry experience are as follows:

Article 4 of Annex 4 Guidelines on the Registration of Private Fund Managers No. 3 - Legal Representatives, Senior Managers, Managing Partners or their appointed Representatives The relevant work experience of the legal representative, managing partner or its appointed representative, principal person in charge of operation and management and senior management personnel responsible for investment management of a private securities fund manager as stipulated in paragraph 2 of Article 10 of the Measures for Registration and Filing refers to one of the following circumstances:

(1) Engage in securities asset management, securities and futures investment with its own funds and other related businesses in commercial banks, securities companies, fund management companies, futures companies, trust companies, insurance companies, relevant asset management subsidiaries and other financial institutions, and hold positions of fund manager, investment manager, trust manager or above; Or serve as a senior manager of the aforesaid financial institution or have considerable position management experience;

(2) Engaging in securities and futures investment management related work and serving as the principal of investment, or serving as a senior manager or having considerable position management experience in enterprises and listed companies controlled by governments at or above the prefectural and municipal level and their authorized agencies;

(3) If a private securities fund manager is engaged in securities and futures investment and holds the position of fund manager or above, or holds the position of senior manager, the private fund manager shall operate normally, comply with the law and have no record of major violations of laws and regulations during his/her term of office;

(4) Engaging in securities asset management and other related businesses in asset management institutions under the supervision of overseas financial regulatory authorities, the asset management institutions they work for shall have good international reputation and business performance;

(5) to be engaged in economic management or other related work in a government department or public institution and have corresponding management experience, or to be the head of other business departments in a financial institution specified in item 1 of paragraph 1 of this Article;

(6) Engage in securities, fund and futures related legal and audit work in a law firm or accounting firm filed with the CSRC, and hold the position of partner or above for no less than 5 years;

(7) other circumstances stipulated by the CSRC and the Association.

The senior management personnel responsible for investment management shall have one of the relevant work experience as specified in items 1 to 4 of the preceding paragraph.

Annex 4 Article 5 The relevant work experience of the legal representative, managing partner or its appointed representative, principal person in charge of operation and management and senior management personnel responsible for investment management of a private equity fund manager as stipulated in paragraph 3 of Article 10 of the Measures for Registration and Filing refers to one of the following circumstances:

(1) Engage in asset management, equity investment with its own funds, issuance sponsor and other related businesses in commercial banks, securities companies, fund management companies, futures companies, trust companies, insurance companies and related asset management subsidiaries and other financial institutions, and hold positions of fund manager, investment manager, trust manager, sponsor representative or above; Or serve as a senior manager of the aforesaid financial institution or have considerable position management experience;

(2) Engaging in equity investment management related work and serving as the principal of investment, or serving as a senior manager or having considerable position management experience in enterprises and listed companies controlled by governments at or above the prefectural and municipal level and their authorized agencies;

(3) If a private equity fund manager is engaged in equity investment and holds a position above that of a fund manager, or holds a senior management position, the private equity fund manager shall operate normally, be in sound compliance, and have no record of major violations of laws and regulations during his/her term of office;

(4) If an asset management institution under the supervision of overseas financial regulatory authorities is engaged in equity investment and other related businesses, the asset management institution it works for shall have a good international reputation and business performance;

(5) to be the head of the equity investment management department in an enterprise with good operation, sound compliance and a certain business scale, or to be a senior manager or to have considerable position management experience, or to be an expert, professor or researcher in a relevant field in a large and medium-sized enterprise with a certain technical threshold, or to be an expert, professor or researcher in a relevant field in a scientific research institution;

(6) to be engaged in economic management or other related work in a government department or public institution and have corresponding management experience, or to be the head of other business departments in a financial institution specified in item 1 of paragraph 1 of this Article;

(7) Engage in securities, fund and futures related legal and audit work in a law firm or accounting firm filed with the CSRC, and hold the position of partner or above for no less than 5 years;

(8) other circumstances as stipulated by CSRC and the Association.

The senior management personnel responsible for investment management shall have one of the relevant work experience as specified in items 1 to 5 of the preceding paragraph.

The above provisions are basically the same as those of the actual controller, with only slight differences in specific positions.

The person in charge of compliance risk control shall have more than 3 years of investment related work experience in law, accounting, auditing, supervision and audit, or compliance, risk control, supervision and self-discipline management in the asset management industry. The specific requirements are as follows:

Appendix 4 Article 6 The relevant work experience of the person in charge of compliance risk control as stipulated in Paragraph 4 of Article 10 of the Measures for Registration and Filing refers to any of the following circumstances:

(1) Engaging in investment-related compliance management, risk control, supervision and auditing, legal affairs and other related work in commercial banks, securities companies, fund management companies, futures companies, trust companies, insurance companies and relevant asset management subsidiaries and other financial institutions;

(2) If the private fund manager is engaged in compliance management, risk control, supervision and auditing, legal affairs and other related work, the private fund manager he/she works for shall operate normally, be in sound compliance, and have no record of major violations of laws and regulations during his/her tenure;

(3) Engaging in securities, fund and futures related legal and audit work in law firms or accounting firms, or investment related legal affairs, financial management and other related work in listed companies;

(4) to engage in financial supervision in the financial regulatory department and its dispatched offices, or to engage in self-regulatory work in the self-regulatory organization of the asset management industry;

(5) other circumstances stipulated by the CSRC and the Association.

The person in charge of compliance risk control shall not hold the position of general manager, executive director or chairman of the board, executive partner or its appointed representative of the private fund manager.

Regarding the requirements for the person in charge of compliance risk control, the Association did not differentiate between securities/equity categories. Accredited institutions include: Commercial banks, securities/fund/futures/trust/insurance/asset management subsidiaries and other formal financial institutions, private fund managers, law firms, accounting firms, listed companies, financial management departments and their dispatched offices engaged in compliance control, risk control, supervision and auditing, legal affairs, audit, financial management and other work are all included in the identification. The content of the official draft is adjusted to some extent compared with the draft for comments, and the identification rules are broader and clearer.

Requirements on the person in charge of compliance risk control concurrently holding other positions: Because the risk control post needs to fulfill the independence of the post, it is not allowed to concurrently hold other positions.

Ii. The shareholding/paid-in of legal & investment executives shall not be less than 20%

Article VI of Annex 2

The term “directly or indirectly holding a certain proportion of the equity or property shares of the private fund manager in total” as stipulated in Item 3, Paragraph 1 of Article 8 of the Measures for Registration and Filing means that the legal representative, managing partner or their appointed representatives and senior management personnel in charge of investment management all directly or indirectly hold a certain proportion of the equity or property shares of the private fund manager. And the total paid-in capital of the private fund manager shall not be less than 20% of the paid-in capital of the private fund manager, or not less than 20% of the minimum paid-in capital of the private fund manager as stipulated in Item 1, Paragraph 1 of Article 8 of the Measures for Registration and Filing.

Dehe interpretation:

The starting point of setting this rule is to ensure the stability of the core personnel of the institution and deeply bind the senior executives with the institution through equity links. Not only to the subscribed capital as the standard, for the paid-in capital amount also put forward the minimum of 20% of the paid-in capital requirements. There is no specific limitation on how the legal representative/managing partner or appointed representative and senior executives of investment business shall agree among themselves.

Investment performance requirements for securities executives

Article VII of Annex 4

The investment management performance of the senior management personnel responsible for investment management of a private securities fund manager as stipulated in paragraph 5 of Article 10 of the Measures for Registration and Filing refers to the investment management performance of commercial banks, securities companies, fund management companies, futures companies, trust companies, insurance companies and related asset management subsidiaries and other financial institutions. The performance of securities fund futures products or securities self-investment managed by a fund manager or the person in charge of investment decision-making, or the performance of private securities fund managed by a private fund manager as an investment manager, or other investment management performance that meets the requirements.

The investment performance prescribed in the preceding paragraph shall be the investment performance for more than two consecutive years in the recent 10 years, and the management scale of a single product or single account shall not be less than RMB 20 million. In case of joint management by more than one person, specific materials shall be provided to explain the scale of products under its management; If the relevant materials cannot be provided, the calculation shall be based on the average size.

The investment performance mentioned in paragraph 1 of this Article does not include securities and futures investment with individual or other enterprises' own funds, investment in fund products as an investor, investment related to assets in other people's securities and futures accounts, mock trading and other investment performance that cannot reflect investment management ability or does not belong to securities and futures investment.

Dehe interpretation:

Key tips in the performance identification of securities managers:

1. In addition to the conventionally recognized product performance, the self-supporting investment performance of financial institutions is clearly accepted, excluding the self-supporting accounts of general enterprises other than financial institutions.

2. Compared with the draft for comments, the original time requirement of “more than two consecutive years in the last five years” is adjusted to “more than two consecutive years in the last 10 years”, and the recognition time period is expanded.

3. For products jointly managed by multiple people, the specific scale of their own management shall be proved; If it is impossible to provide supporting materials, the calculation shall be based on the average scale.

4. Personal securities investment/account management on behalf of others/simulated disks are not recognized.

Iv. Investment performance requirements of equity executives

Article VIII of Annex 4

The investment management performance of the senior management personnel responsible for investment management of a private equity fund manager as stipulated in paragraph 5 of Article 10 of the Measures for Registration and Filing refers to the experience of leading investment in the equity of unlisted enterprises in at least two projects in the recent 10 years, with a total investment amount of not less than 30 million YUAN. And at least one project shall be withdrawn through initial public offering and listing, equity acquisition or equity transfer, or other investment management performance that meets the requirements.

Leading investment refers to relevant personnel presiding over due diligence, investment decisions and other work. The above performance requirements shall provide due diligence, investment decision, industrial and commercial rights confirmation, project withdrawal and other relevant materials.

The project experience prescribed in the preceding paragraph does not include equity investment in industries prohibited or restricted by the state, equity investment in industries in conflict with private fund management, project investment participated in as an investor and other relevant project experience that cannot reflect investment management ability or does not belong to equity investment.

Dehe interpretation:

Key tips in the identification of equity manager projects:

1. Two project experiences of leading investment in equity of unlisted enterprises in recent 10 years.

2. The total investment amount shall not be less than RMB 30 million.

3. At least 1 project has been completed and withdrawn. Compared with the draft for comments, the deletion of the word “success” seems to mean that the exit result can be recognized even if it is not ideal.

4. Relevant personnel shall be engaged in due diligence, investment decision and other leading work, and specific certification materials shall be in the form of due diligence, investment decision, industrial and commercial right confirmation, project withdrawal, etc.

5. The association will not recognize the investment in industries prohibited or restricted by the state, private equity conflict industries, personal investment projects, etc.

6. Negative list of senior executives' background

Article 16 of the Measures

Under any of the following circumstances, he shall not serve as a director, supervisor, senior manager, managing partner or his appointed representative of the private fund manager:

(1) having been sentenced to criminal punishment for committing the crimes of corruption and bribery, dereliction of duty, infringement of property or undermining the order of the socialist market economy;

(2) having been imposed administrative penalties by financial regulatory authorities for major violations of laws and regulations in the recent 3 years;

(3) It has been banned from entering the market by the CSRC and the implementation period has not expired;

(4) being subject to administrative regulatory measures taken by CSRC or disciplinary measures taken by the Association in the recent 3 years, if the circumstances are serious;

(5) It has not been more than 5 years since the date of the termination of the bankruptcy liquidation or the revocation of the business license of the company or enterprise in which he works or the director, supervisor, senior manager, managing partner or his appointed representative who is personally responsible for the bankruptcy liquidation of the company or enterprise due to mismanagement or the revocation of the business license due to violation of the law;

(6) It has not been more than 5 years since the date of dismissal of fund managers, fund custodians, employees of securities and futures trading venues, securities companies, securities registration and clearing institutions, futures companies and other institutions and staff of state organs who have been dismissed due to illegal acts or disciplinary acts;

(7) lawyers, certified public accountants, employees of asset appraisal institutions and investment consulting employees whose practice certificates have been revoked or disqualified due to illegal acts, and it has not been more than 5 years since the date of revocation or disqualification;

(8) Due to violation of professional ethics such as honesty and credit, public order and good customs, or major violations of laws and regulations, major doubts or serious negative social impacts have been caused and have not been eliminated; It has not been more than 3 years since it has been mainly responsible for major violations or major risks of the enterprise it works for;

(9) Controlling shareholders, actual controllers, general partners, legal representatives, managing partners or their appointed representatives, responsible senior managers and directly responsible personnel of institutions whose registration as private fund managers is terminated due to the circumstances listed in items 6 and 8 of Paragraph 1 of Article 25 of these Measures; It has not been more than 3 years since the date of termination of the institution's registration as a private fund manager;

(10) The controlling shareholder, actual controller, general partner, legal representative, managing partner or its appointed representative, responsible senior management personnel and directly responsible personnel of the private fund manager whose registration is deregrated due to the circumstances listed in Article 77 of these Measures have not been more than 3 years since the date of deregrated of the private fund manager;

(11) the amount of the debt is relatively large and the debt has not been paid off when due, or the person is listed as a serious trust-breaking person or included in the list of persons subject to enforcement for trust-breaking;

(12) Other circumstances stipulated by laws, administrative regulations, CSRC and the Association.

Dehe interpretation:

The above provisions also start from the idea of "limiting inferiority" and are combined with the provisions of the Company Law and the CSRC system for senior executives. Please make sure that the applicant organization does a good job of reciting the personal information of senior executives in advance to avoid violating relevant regulations.

Vi. Part-time jobs for senior executives

Annex 4, Article X

The following circumstances of the legal representative, senior manager, managing partner or its appointed representative or other employees of a private fund manager shall not fall within the scope of part-time jobs as stipulated in Articles 11 and 12 of the Measures for Registration and Filing:

(1) to hold positions in non-profit institutions such as institutions of higher learning, research institutes, social organizations and social service institutions;

(2) to act as a director or supervisor in other enterprises;

(3) holding positions in the private equity funds under its management;

(4) Other circumstances determined by the Association.

Dehe interpretation:

First of all, the premise of part-time jobs for senior executives is reiterated:

1. Shall not hold part-time jobs in non-affiliated private fund managers.

2. Shall not work part-time in private equity conflict business institutions.

3. Senior executives need to ensure that they have enough time and energy to perform their duties, and part-time jobs need to be reasonable.

Secondly, the association does not identify the above circumstances as part-time jobs as stipulated in this article. Including part-time jobs in non-profit financial institutions such as colleges and universities, research institutes, social organizations and social service institutions; As a director, supervisor, etc.

Vii. Senior executives shall not frequently change their institutions

Article 11 of Annex 4

A private fund manager shall not employ affiliated personnel, and shall not register a private fund manager by means of false employment of personnel.

Where a private fund manager employs persons who frequently change their jobs in a short period of time as senior managers responsible for investment management, it shall conduct due diligence on their integrity record, professional ethics and professional ethics.

If the senior management of a private fund manager holds positions in more than 3 non-affiliated units within 24 months, or provides the same performance materials for more than 2 registered private fund managers within 24 months, the aforementioned work experience and investment performance shall not be recognized.

Dehe interpretation:

In the Measures, the frequent job changes in a short period of time and the unrecognized performance conditions are further clarified, so as to restrict the stability of senior executives:

1. If you hold positions in 3 or more non-related units within 24 months, your work experience and investment performance will not be recognized.

2. If the same performance materials are provided to two or more registered private fund managers within 24 months, the work experience and investment performance will not be recognized. The “same performance” mentioned in this article is understood by the author to mean that the performance generated in the same working experience is “same performance”.

The above content is only for the interpretation of the key contents of the registration of private fund managers in the Measures for the Registration and Filing of Private Investment Funds. Due to the space factor, the relevant provisions on the background of shareholders of groups, listed companies, state-owned enterprises, foreign capital and the filing of private fund cannot be listed in detail. If you have relevant consulting questions, please call for detailed inquiries.