Recently, the Legislative Affairs Office of the State Council and the China Securities Regulatory Commission ("CSRC") have drawn up the Interim Administrative Regulations for Private Equity Funds (Draft for Comment) (the "Draft for Comment") to solicit opinions from all walks of life by September 30, 2017.
The Draft for Comment provides in 11 chapters, a total of 58 articles, for the private equity fund managers and custodians, fund solicitation and investment operation, provision of information, venture capital funds, etc. According to the Draft for Comment, it is stipulated that a private equity fund manager should be a legally established corporation or partnership. Any party falling under any of five listed circumstances, such as "where it is unable to pay off due debts", should neither act as a private equity fund manager, nor become the principal shareholder or partner of a private equity fund manager. Moreover, the Draft for Comment clearly states that private equity fund managers and sellers are prohibited from soliciting funds from any entities or individuals that are not identified as the qualified investors, publicizing or marketing private equity funds through public media before undesignated targets, or promising investors their capital will not be subject to any losses of principal or promising a minimum rate of return.