Starting on February 7, fund advisors based in China will need to register, and enter into a reporting relationship, with the Asset Management Association of China (AMAC), a self-regulatory organization authorized by China’s securities regulator.
The details of the rules have yet to be fully clarified but it is clear GPs must:
• Register with AMAC and apply for AMAC membership at the same time;
• Make a filing with the AMAC when closing a fund. GPs must provide the fund’s investment focus, legal name, size, investors, fund agreement and similar information;
• Make quarterly and annual filings providing the AMAC with updated information.
The AMAC will disclose basic fund information to the public on its website.
AMAC will also be afforded certain powers, including on-site inspections, the suspension of filing status for securities violators and maintaining a public record of misconduct. Additionally, significant compliance issues will be referred by AMAC to the China Securities Regulatory Commission (CSRC) for enforcement.
The CSRC only became China’s private equity regulator in July. Previously, CSRC’s rival institution, the National Development and Reform Commission (NSRC), bore responsibility for the asset class.
The CSRC intends to create an internal unit to specialize in private equity regulations, said Debevoise & Plimpton Hong Kong partner William Chou at the time.
“What we understand, informally of course, is that within the CSRC they will eventually build out an organization that will handle private equity funds and within that enforce regulations that are to be developed with regards to private equity funds including their registration,” said Chou.