A Sea Change: New Registration Scheme for Private Fund Managers in China

Ying White is a Partner at global law firm Clifford Chance’s Beijing office and heads the firm’s China investment funds and investment management practice. In this article, Ying discusses recent updates to China’s registration and compliance regime governing private investment funds operating in China.

In early February 2016, the Asset Management Association of China (AMAC), an association of fund management firms in China, introduced a series of new rules designed to revamp the registration and ongoing compliance regime governing privately placed investment funds and their managers. AMAC is a self-regulatory organization empowered by the China Securities Regulatory Commission (CSRC) to administer the regulation of the private funds industry in China.[1]

Who is Covered?

Private funds and private fund managers domiciled in China, including wholly-owned subsidiaries of international private equity managers in China (WFOEs), will all be covered by the new rules. In other words, if a WFOE wishes to market, sponsor or manage a domestic private equity fund in China, the WFOE must first be registered with AMAC and comply with AMAC’s various codes of conduct. When the fund is established, the WFOE must register the fund with the AMAC.

What has Changed?

Previously there were few rules on a manager’s conduct and registration. Now the new rules—covering manager registration, internal controls and information disclosure—have significantly raised the standards as well as compliance obligations and costs for fund managers operating in China. International private equity managers should take note of these new requirements as they plan their China operations.

Key Features and Requirements

Timing of Registering the First Private Fund

  • Any manager registered after 5 February 2016 must launch and register its first private fund within six months of its registration; failing which the manager will be deregistered by AMAC.
  • A manager registered on or prior to 5 February 2015 will be deregistered if it has not launched and registered a private fund by 1 May 2016.
  • A manager registered after 5 February 2015 will be deregistered if it has not launched and registered a private fund by 1 August 2016.

Senior Management’s Qualification Requirements

  • All senior management of a registered manager must obtain the Qualification for Funds Business Practice by 31 December 2016.
  • Senior management include legal representatives, general managers, deputy general managers and compliance/risk control officers.
  • The qualification can be obtained by passing AMAC exams or having requisite experience in investment management.
  •  Senior management must also attend ongoing training in order to maintain the qualification.

Mandatory Appointment of a Compliance/Risk Control Officer

  • A registered manager must have a compliance/risk control officer.

Submission of Chinese Legal Opinions

  • Managers must submit formal PRC legal opinions on good-standing, compliance, suitability, etc.:
  1. At the time of initial registration;
  2. At the time of filing a registration for a fund; and
  3. At the time of any update to reflect a material change (e.g. change of control, change of legal representative).

Regulatory Reporting

  • A registered manager must submit ad hoc, quarterly and annual reports to AMAC within the specified timeframe; failing which will result in suspension of the registration status.


Use of Distributors

  • A registered manager may only use qualified third-party distributors to market its fund products.
  • A qualified distributor must (i) have a fund distribution license issued by CSRC and (ii) be a member of AMAC.


China’s private fund managers have only been able to register vehicles since 2014. Developing an effective oversight regime governing manager registration, ongoing compliance monitoring and enforcement against violations has become a top priority of the regulators. More conduct rules and industry best practice guidelines are expected to be issued this year. International private equity fund managers will need to be prepared to adjust from a regulation-light to a regulation-heavy environment in respect to their China operations.

[1] For the purpose of this article only, “China” excludes the Special Administrative Region of Hong Kong, the Special Administrative Region of Macau and Taiwan.