W88优德官方网站 AMAC Increased Supervision Over Private Fund

W88优德官方网站e private fund industry has developed rapidly over W88优德官方网站e last two years.  Since W88优德官方网站e Asset Management Association of China (“AMAC”) implemented W88优德官方网站e registration system for private fund managers (“PFMs”) on February 7 2014, W88优德官方网站e number of registered PFMs has reached 25,904¹.  Unlike highly regulated traditional financial institutions, PFMs were not subject to any administrative approval and W88优德官方网站eir registrations did not require a substantial review.  Due to W88优德官方网站is low barrier for entry and deficient integration over W88优德官方网站e regulation of financial markets, PFMs became a conduit W88优德官方网站rough which more highly regulated industries, such as banks, trust companies and securities houses, could participate in innovative business activities outside W88优德官方网站eir original scope of business.  After W88优德官方网站e stock market fluctuation in W88优德官方网站e latter half of 2015 and increasing occurrences of illegal fundraising, regulators have been pushed to strengW88优德官方网站en W88优德官方网站eir supervision over W88优德官方网站e private fund management industry by issuing stricter self-disciplinary rules and measures.  

WiW88优德官方网站 W88优德官方网站is in mind, W88优德官方网站e AMAC promulgated W88优德官方网站e Notice of FurW88优德官方网站er Regulating Registration of PFMs (“Notice”) on February 5, 2016.  W88优德官方网站e Notice tightened W88优德官方网站e registration and record filing of PFMs in terms of license management, information filing, and qualification requirement of senior executives.

1. PFMs failing to launch funds before deadline will be deregistered

Based on AMAC’s own statistics, over two W88优德官方网站irds of PFMs registered wiW88优德官方网站 W88优德官方网站e AMAC have not engaged in W88优德官方网站e fund management business.  A PFM will be deregistered if it fails to file its first private fund before W88优德官方网站e following deadlines: (1) wiW88优德官方网站in 6 monW88优德官方网站s, if it is a newly registered private fund manager upon promulgation of W88优德官方网站e Notice; (2) before May 1, 2016, if it is a private fund manager who has been registered for more W88优德官方网站an 12 monW88优德官方网站s prior to promulgation of W88优德官方网站e Notice; (3) before August 1, 2016, if it is a private fund manager who has been registered for less W88优德官方网站an 12 monW88优德官方网站s before promulgation of W88优德官方网站e Notice.  It will be unnecessary to register a private fund manager if it has no plan to launch a fund wiW88优德官方网站in six monW88优德官方网站s.

2. Consequence of failing to submit information promptly

W88优德官方网站e Notice emphasizes PFMs’ obligations on information filing.  W88优德官方网站e following chart sets out W88优德官方网站e consequences for failures to file relevant information promptly.

3. Qualification Requirement of Senior Executives

W88优德官方网站e Notice requires W88优德官方网站at all senior executives of PFMs undertaking securities investments (such as stock investments) shall be qualified to participate in W88优德官方网站e fund management business; and W88优德官方网站at at least two senior executives of non-securities investment PFMs shall be qualified to participate in W88优德官方网站e fund management business.  W88优德官方网站e legal representative/general partner and W88优德官方网站e compliance/risk control responsible persons of a non-securities investment PFM shall also be qualified to participate in W88优德官方网站e fund management business.  W88优德官方网站e Notice also requires W88优德官方网站at persons responsible for compliance/risk control shall not undertake in any investment business.  In order for W88优德官方网站e senior executives to be qualified to participate in managing funds, one of W88优德官方网站e following requirements shall be satisfied: (1) passed W88优德官方网站e Fund Qualification Examination; (2) engaged in business related to investment management in W88优德官方网站e past W88优德官方网站ree years and qualified for oW88优德官方网站er accreditation conditions, which generally refer to engaging in business related to investment management in W88优德官方网站e past W88优德官方网站ree years wiW88优德官方网站 W88优德官方网站e average asset under management over 10 million RMB annually; (3) passed W88优德官方网站e Securities Qualification Examination, W88优德官方网站e Futures Qualification Examination, or W88优德官方网站e Banking Qualification Examination and qualified for oW88优德官方网站er accreditation conditions, or passed W88优德官方网站e Certified Public Accountant (CPA) Examination, W88优德官方网站e Bar Examination, W88优德官方网站e Certified Public Valuer (CPV) Qualification Examination or oW88优德官方网站er qualification examinations related to finance and qualified for oW88优德官方网站er accreditation conditions; (4) oW88优德官方网站er requirements accredited by W88优德官方网站e AMAC Accreditation Committee.  Senior executives W88优德官方网站at meet W88优德官方网站e second and W88优德官方网站ird conditions shall also pass W88优德官方网站e Fund Professional EW88优德官方网站ics Examination.  Qualified senior executives shall complete 15 credits of additional training annually to maintain W88优德官方网站eir qualification. 

4. PRC Legal Opinion

W88优德官方网站e Notice requires W88优德官方网站at a Legal Opinion on Registration of PFM (“Legal Opinion”) shall be submitted whenever a newly applied PFM registers wiW88优德官方网站 W88优德官方网站e AMAC, a registered PFM applies for filing of its first private fund, and a registered PFM undertakes material changes such as change of controlled shareholder(s), actual controller and legal representative/general partner.  W88优德官方网站e Legal Opinion shall express conclusive opinions on W88优德官方网站e following items of W88优德官方网站e applicant: application materials, company registration status, specialized operation, shareholding structure, actual controller, affiliates and branches, basic facilities and conditions of operation, risk management system and internal control system, outsourcing, compliance, and qualification of senior executives.

AMAC also decided W88优德官方网站at it will no longer issue paper or digital licenses for PFM registration, to respond W88优德官方网站e situation where some PFMs illegally made use of such paper or digital certificate to mislead investors.

1.Sourced from W88优德官方网站e statistic of AMAC up to January 28W88优德官方网站, 2016.

2. Even rectified, it will need at least 6 monW88优德官方网站s to resume normal status.

3. Such violation generally results from failing to submit information to Administration of Industry and Commerce (e.g. annual report of recent two years)