Asset Management Association of China Releases Guidelines for Foreign Private Investment Registration

January 9, 2017 Advisory

On Jan. 5, the Asset Management Association of China (AMAC) released guidelines for foreign asset managers to launch private investment funds through Chinese subsidiaries. This comes two days after Fidelity International, through its Shanghai-based corporation, obtained a private fund management license, making it the first foreign asset manager allowed to launch products in China.

The Registration Instruction for Wholly Foreign-owned and Foreign-based Joint Venture Private Equity Investment Fund Managers (Registration Instruction) delivers on the Chinese government’s June 2016 promise to open the country’s capital markets to foreign investment firms.

The Registration Instruction details procedures and documents required for foreign asset management companies to obtain private fund management licenses in China. The rules provide needed clarity but also stipulate that foreign-invested private equity managers (FIPE managers) are subject to a number of additional requirements beyond compliance with regulations applicable to Chinese domestic fund managers. These additional requirements include:

Investment Process
FIPE managers must ensure that their China and domestic business are separate systems, and investment decisions should be made independent of offshore systems or institutions. Further, FIPE managers must have a China-based system intact, in order to access and trace the transactional path, statistics, procedures and records. Also, persons in charge should be explicitly designated to take responsibility for investment and transactional decisions.

Investment Practitioners
All parties including the legal representative, managing partner, general or vice managers, investment directors, compliance and risk management directors and other senior executives of FIPE managers must be fully qualified to fund practices in China. That said, compliance and risk management directors are not allowed to engage in investment activities.

Corporate Structures
FIPE managers are required to report various information on their corporate structures, including information about their subsidiaries, branches and affiliates located in China and other overseas affiliates that might significantly impact their investment business. Additionally, the Registration Instruction requires that the person or offshore financial institution in actual control of the FIPE manager must be identified.

Qualified Investors
FIPE managers should scrutinize investors to determine whether they are qualified. Four categories of investors have been predetermined to meet the necessary qualifications:

  • Social security funds, employer annuities or pension funds, charitable funds and other social welfare funds.
  • Investment plans that are legally established and recorded with the AMAC.
  • Private equity managers and practitioners that invest in their own private equity funds.
  • Other investors admitted by the China Securities Regulatory Commission.

A number of other foreign asset management companies have set up wholly foreign-owned enterprises (WFOEs) in China and have plans to launch their own Chinese ventures and onshore products. The Registration Instruction provides practical and actionable guidelines for asset management firms with international ambitions to make their ways into the Chinese capital market.

Contact Us
  • Worldwide
  • Boston, MA
  • Denver, CO
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • New York, NY
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
Worldwide
abstract image of world map
Boston, MA
225 Franklin Street
26th Floor
Boston, MA 02110
Google Maps
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Jefferson City, MO
3405 W. Truman Boulevard
Suite 210
Jefferson City, MO 65109
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
3770 Howard Hughes Parkway
Suite 200
Las Vegas, NV 89169
Google Maps
Las Vegas, Nevada
New York, NY
919 Third Ave., 37th Floor
New York, NY 10022
Google Maps
New York City
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
257 East 200 South
Suite 350
Salt Lake City, UT 84111
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri