Foreign firms launching private equity funds in China must do so via a separate Chinese entity under rules published by the country’s fund management industry regulator.
Investment decisions should also be made independent of offshore systems or institutions, the Asset Management Association of China’s guidance for foreign fund managers says.
Among other stipulations, the rules require Chinese operations to be carried out by personnel fully qualified to fund practices in the country. Firms must also be transparent about their corporate structures to local authorities and have a China-based system intact, in order to access and trace the transactional path, data, procedures and records.
The regulations are designed to fulfil the Chinese government’s June 2016 promise to open the country’s capital markets to foreign investment firms.
Their release came three days after global asset manager Fidelity International launched a Chinese onshore investment product through its Shanghai-based arm. It was the first foreign asset manager licensed to launch products in China, according to Reuters.
Other firms reportedly following suit include UBS, which is keen to make the move once investor interest in the country has peaked.
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