Why PE funds need to file
February 28, 2012 | BY
clpstaff &clp articlesA new government circular has mandated nationwide filing for all private equity funds. Although the first national rule to regulate PE funds in China is a step forward, crucial questions remain unanswered
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The Circular on Promoting the Compliant Development of Equity Investment Enterprises(关于促进股权投资企业规范发展的通知) developed from Circular 253, which was promulgated in January 2011. Circular 253 required the PE funds established in six pilot areas (Beijing, Tianjin, Shanghai, Jiangsu, Zhejiang and Hubei) and with a capital amount of Rmb500 million ($79 million) or above to file with the National Development Reform Commission (NDRC). The new Circular mandates nationwide filing for all PE funds, regardless of the establishment jurisdiction or the capital size. It also sets out other principles, including a look-through investigation of ultimate investors and a universal custodian requirement.