State Council to Strengthen Regulation, Prevent Risks and Promote High-Quality Development of Private Investment Funds

The General Office of the State Council recently released the Guiding Opinions on Strengthening Regulation, Preventing Risks, and Promoting the High-quality Development of Private Investment Funds (the "Opinions").

The overall framework and core measures of the Opinions include: at the entry stage, giving full play to the dual control functions created by both the comprehensive pre-registration assessment and consultation prior to enterprise registration, and the private fund registration and filing; at the ongoing regulation stage, intensifying administrative oversight, strengthening look-through supervision and the capability to identify leads, strictly combating illegal and criminal activities, promoting internal constraints within the industry, and enhancing the supervisory roles of custodians and intermediary service institutions; at the exit stage, promoting the "dual exit" of private funds and business entities that fail to meet regulatory requirements. With respect to risk disposal, the Opinions call for creating a synergy through enhanced information sharing among relevant parties and joint risk mitigation and disposal efforts between central and local authorities. With respect to the development of the regulatory framework, the Opinions focus on addressing shortcomings in information disclosure rules, fundraising, mandatory custody arrangements, among other areas. Meanwhile, specific arrangements are set forth in strengthening supervision over government investment funds and state-owned enterprise investment funds, and in preventing private investment funds from being used as tools for illegal activities. Several measures to promote the standardized and sound development of the private investment fund industry are also introduced.



(Source: https://www.gov.cn/zhengce/content/202606/content_7071204.htm)

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