Trend-setter Shanghai

On January 11, the Shanghai municipality officially published its Implementing Measures for the Launch of a Pilot Foreign-invested Equity Investment Enterprise Project in the Municipality (上海市关于本市开展外商投资股权投资企业试点工作的实施办法) (Measures). The Measures provide detailed rules regarding how to set up a Foreign-invested Equity Investment Enterprise (FIEIE) and a Foreign-invested Equity Investment Management Enterprise (FIEIME).

The main purpose of the Measures is to solve hotly-debated issues regarding foreign exchange funds and the legal status of a foreign-invested private equity (PE) fund. Chapter 4 of the Measures is a key part related to the pilot project of FIEIEs and FIEIMEs (Pilot Programme). If an FIEIME or an FIEIE is qualified under the Pilot Programme, Chapter 4 provides solutions to the following three key issues: (i) restrictions of the State Administration of Foreign Exchange (Safe) Circular 142 on an FIEIME when investing in its managed fund; (ii) foreign exchange issues of an FIEIE; and (iii) the legal status of an FIEIE.