China’s securities regulator announced wide-ranging rules on Sunday to oversee the country’s $2.9 trillion private investment fund sector.
The regulations were designed to standardise the industry’s development and strengthen regulatory oversight, with an aim to protect investors and boost the country’s economy and technological innovation, a statement from China Securities Regulatory Commission (CSRC) and the justice ministry said.
Signed by Chinese premier Li Qiang, the new rules will go into effect from September 1.
“The healthy development of the private investment fund industry will promote the formation of equity capital, effectively serving the physical economy, key economic fields and strategic industries. The investment sector will also help boost economic development, entrepreneurship and employment,” the official statement said in a post published on CSRC’s website, according to state media Global Times.
Beijing has created a chapter specifically for venture capital funds, as policymakers encourage investment into innovative technology start-ups, the statement said.
Private equity funds have invested close to 5 trillion yuan ($690.75 billion) in key technological areas including computing, semiconductors, pharmaceuticals and biology, the Global Times report said.
Core rules cover the obligations of fund managers and custodians, fund raising, identifying risk levels, supervision of venture capital funds, legal liability and overall supervision and management.
They will apply to private investment funds with different organisational forms such as contract, company and partnership. Private investment funds in China can invest in private equity or publicly traded securities.
The regulations have 62 items in seven chapters, the State Council said in a statement, according to state-run Xinhua news agency.
As of May, 22,000 private investment managers had registered with the Asset Management Association of China, managing around 21 trillion yuan in 153,000 funds, the CSRC statement said.
- Reuters, with additional inputs from Vishakha Saxena