CHINA: An Introduction to Investment Funds (PRC Firms)

2023 Revamping the Regulatory Framework for Private Funds in China

2023年重铸中国私募基金监管体系 

The year 2023 marks a pivotal moment for the private fund sector in China. A consensus among industry experts is that the suite of legal and regulatory measures that came into force in 2023 – including the “Private Investment Fund Registration and Filing Measures”, the “Guidelines for the Registration of Private Fund Managers Nos 1–3”, the “Guidelines for the Filing of Private Investment Funds Nos 1–3”, and the “Regulations on the Supervision and Management of Private Investment Funds” (collectively termed the “2023 New Rules”) – signifies a new era of rigorous oversight for China’s private funds.

2023年对于中国私募基金行业来说是特别的一年。不少业界人士认为，2023年陆续生效/出台的《私募投资基金登记备案办法》、《私募基金管理人登记指引第1-3号》、《私募投资基金备案指引第 1 -3号》、《私募投资基金监督管理条例》等一系列法律法规（合称“2023年新规”），是中国私募基金进入强监管时代的标志。

Before 2023, the regulatory landscape for China’s private fund industry was predominantly shaped by the self-regulatory Asset Management Association of China, acting under the aegis of the China Securities Regulatory Commission (CSRC). The CSRC, as the governmental authority overseeing the sector, crafted industry-specific rules on select occasions – notably, the “Interim Measures for the Supervision and Management of Private Investment Funds” in 2014 and “Several Provisions on Strengthening the Regulation of Private Investment Funds” in 2020. Other higher-level legislative entities, such as the State Council, had not crafted departmental rules focused on the private fund industry before 2023. The “Securities Investment Fund Law” of 2015, for instance, concentrated more on public offering funds and overlooked private funds, resulting in a notable absence of targeted administrative regulations or departmental statutes for the sector. In retrospect, this might have been an intentional strategy to foster growth, subscribing to the notion that granting freedom facilitates expansion and that only when a robust industry has developed does the time come for careful regulation.

在2023年之前，中国私募基金行业适用的规则主要由行业自律组织，即中国证券投资基金业协会（一家根据中国证监会授权开展工作的社会团体），予以发布和更新。中国证监会作为主管该行业的政府部门，直接为私募基金行业制定规则的次数寥寥（分别为2014年《私募投资基金监督管理暂行办法》、2020年《关于加强私募投资基金监管的若干规定》）。而更高的立法机构（中国国务院等）在2023年之前未曾为中国私募基金行业专门制定过部门规则（例如，2015年《证券投资基金法》事实上更多关注公募基金、未涉及私募股权基金），从而导致私募基金行业长期以来缺乏一部专门针对该行业的行政法规、更遑论部门法律。从现在看来，这不排除可能是一种有意的栽培。给出充足的空间有利于育林，而在形成茁壮森林之后，则可以考虑进行适当的修剪。

By 2023, after almost ten years of growth, the magnitude of registered private funds in China had soared to CNY20 trillion, cementing their status as a critical component of China’s capital markets. Concurrently, the number of registered private fund management companies reached a turning point, declining from more than 24,000 in mid-2022 to just over 21,000 by the year’s end – a trend largely attributed to increased regulatory efforts to purge those private fund management companies who are unqualified or cease operation.

到了2023年，历经近十年的积累，中国境内登记备案的私募基金存续规模已达人民币20万亿元，私募基金成为了中国现今资本市场不可或缺的一股力量；但与此同时，登记备案的私募基金管理人的数量进入拐点，从2022年中2.4万多家，于2023年末下降到2.1万多家，其主要原因是监管加快了对不合格或僵尸管理人的出清。

The transformation of China’s regulatory system for private funds in 2023 can be attributed to two main factors:

 - a substantial enhancement and progressive overhaul of multiple regulations; and

 - the consolidation of a decade’s worth of emergent industry regulations, especially those self-regulatory in nature, into a cohesive and systematic framework that addresses practical challenges.

我们之所以说2023年重铸了中国私募基金监管体系，一方面是因为2023年发生了多部监管法规的迭代更新、监管力度的明显加强，另一方面也是表明中国私募基金监管体系并非另起炉灶，而是极大程度上归纳、整理、完善了过去近十年间应实务需求不断涌现的行业规则（尤其是行业自律规则），将碎片熔炼为体系。

The first administrative regulation for the private fund industry, the “Regulations on the Supervision and Management of Private Investment Funds” (enacted on 1 September 2023), largely mirrors its predecessor’s content. However, its administrative stature implies that breaching mandatory rules could now render contracts void, thus filling a legislative void in the industry.

私募基金行业的第一部行政法规，《私募投资基金监督管理条例》（2023年9月1日施行），大部分内容与此前规则并无实质差别，但其作为行政法规的位阶，使得相关强制性规则的违反后果可导向合同无效，填补了私募基金行业上位法的空缺。

The 2023 New Rules elevate the entry barriers for private fund managers and private funds – for example, by increasing the minimum capital requirements and complicating the process of changing actual controller, thereby discouraging “shell” entities. Notably, the regulations endorse a nuanced approach by setting lower capital requirements for venture capital funds and their managers compared with other types of funds (such as private equity funds and private securities funds), which fosters the growth of nascent venture capital initiatives.

2023年新规对私募基金管理人、私募基金的准入门槛有所提升（包括但不限于提高最低资本金要求、提高实际控制权变更难度等），这反映了监管对“壳机构”的劝退。但体现精细化管理的亮点是，2023年新规对创业投资基金及其管理人设置了低于其他类型（例如私募股权类、私募证券类）的基金及管理人的资本金准入门槛，给草根的创业投资基金留下了生长的土壤。

Additionally, the 2023 New Rules discard several outdated stipulations, such as the 1/2 limitation on the number of senior executives of fund managers serving concurrently and the ban on asset management products owning stakes in private fund managers.

2023年新规亦革除了过往规则中一些不合时宜的要求，比如取消私募基金管理人高管兼职人数不得超过1/2的上限、不再禁止资管产品对私募基金管理人持股等。

The author’s analysis of the government’s regulatory strategy as embodied in the 2023 New Rules reveals the following. 

2023年新规呈现出的政府监管思路包括：

1. Promotion of excellence and curtailment of mediocrity – given the significant divide between the top and bottom tiers within China’s private fund industry, a crucial objective of the 2023 New Rules is to eliminate substandard and fraudulent private entities, thus clearing the path for the expansion of high-calibre institutions.

扶优限劣。中国私募基金行业目前处在两极分化比较严重的一个阶段，头部机构与尾部机构的合规运作水平存在较大差别，因此2023年新规的一项重任就是出清伪劣私募机构、为优质机构展业开道。

2. Tailored regulation – this encompasses the continued different regulatory measures over private securities investment funds and private equity investment funds based on their operational substance, as well as supportive policies for venture capital funds, and specific measures for group fund managers, derived from policy goals and empirical insights.

差异化监管。这既包括根据业务实质对私募证券投资基金、私募股权投资基金延续一贯以来的区分管理模式，也包括根据政策目标对创业投资基金的扶持政策，以及根据实务经验对集团化基金管理人的特殊规定。

3. In-depth supervision – in light of the previous frenzy of trading “shell” entities, the regulatory focus is now on principal entities, setting benchmarks for the experience and stability of actual controllers of private fund managers, and creating stratified requirements and accountabilities for actual controllers, controlling shareholders, key investors and senior executives of private fund managers.

穿透式监管。私募基金行业一度出现过“买壳卖壳”的狂潮。现在，监管机构意图抓住关键主体，对私募基金管理人的实际控制人等角色提出从业经验、稳定性的要求，并根据具体角色的不同对私募基金管理人的实际控制人、控股股东、主要出资人、以及高管设置了不同层次的要求和责任，加强了对管理公司背后主体的监管。

4. Systematic procedural oversight – a notable feature of the 2023 New Rules is the updated checklists and protocols for registering private fund managers and filing private funds, which adopts the procedural regulatory philosophy of “one checklist for all, no exceptions” that was initiated in 2020.

流程清单化。2023年新规的亮点包含针对私募基金管理人登记、私募基金备案分别更新的材料清单、以及指引，贯彻了2020年开始的“一单尽列、单外无单”的流程监管思路。

An age-old Chinese adage states: “When the name is apt, the words follow suit, and when the words are appropriate, the endeavour prospers.” The 2023 New Rules stand as a critical milestone in the evolution of China’s private fund industry, sculpting a robust and comprehensive rule set for its future trajectory. The regulatory theme is clear and, in the author’s opinion, poised to make a profoundly positive impact on the industry’s sustainable growth.

中国有句古语，“名正则言顺，言顺则事成”，2023年新规是中国私募基金行业发展中极为重要的里程碑，为私募基金领域的后续发展重铸了高规格且完善的规则体系，监管思路的主基调也随之一一呈现，相信将对行业健康发展产生非常积极的影响。