1、Shanghai Guidebook for Overseas Asset Manager Supervised by Shanghai MunicipalFinancial Regulatory BureauAsset Management Association of ChinaShanghai Securities Regulatory BureauCompiled byShanghai Asset Management AssociationShanghai Asset Management AssociationShanghai Guidebook for Overseas Asse

2、t Manager 2022Building Consensus and Working Together for a New Chapter in the High-Standard Opening-Up of the Fund IndustryOver the course of its 31-year history,from the establishment of the Shanghai and Shenzhen stock exchanges to the birth of the Beijing Stock Exchange,Chinas capital market has

3、been keeping pace with Chinas reform and open-up.Its fund industry is no different.Facing a worldwide pandemic and a complex global situation,Chinas fund industry has domonstrated strong resilience and potential with an open mind to international cooperation,an inclusive approach to growth challenge

4、s,and a high standard for a new chapter in opening-up.The opening-up of Chinas capital market and fund industry requires the implementation of both the“going global”strategy and the“bringing in”strategy.As opening-up measures set out in various policies are put into effect,Chinas goals to open its c

5、apital market and improve its multi-tiered market system and structure have become clearer.Learning from the asset management experience and practices in ForewordShanghai Guidebook for Overseas Asset Manager 2022overseas markets and fostering a diverse range of market entities are an important way t

6、oward a more robust market economy and national governance system.We firmly believe that opening-up means not only more open policies for both domestic and overseas parties,but also a process by which they build mutual understanding,wider consensus,and mutual trust.Therefore,strengthening dialogue w

7、ith all stakeholders has been a major objective for Chinas fund industry.We understand that it is inevitable that different jurisdictions,for their unique political,economic,cultural,and historical background and legal traditions,also differ in their legal and regulatory systems.Accordingly,we are d

8、edicated to international engagement to better understand the unique systems and position of each countrys fund industry,and to inform them of the structure,legal framework,history,and achievements of Chinas fund industry,in order to build consensus and mutual trust to promote the joint,healthy,harm

9、onious,and high-quality development of the international fund industry.Shanghai is one of the regions at the very forefront of Chinas reform and opening-up;its achievements have been numerous and exciting.Globally,it is becoming one of the cities with the highest concentration of global financial in

10、stitutions,a most complete financial market,and a most friendly business environment.According to the 14th Five-Year Plan for the Building of Shanghai International Financial Center,by 2025,Shanghai will establish a world-class financial ecosystem by building“two centers,two hubs,and two magnets,”i.

11、e.,enhancing its status as a global asset management center and fintech center;establishing and consolidating its position as an international green finance hub and a hub for the cross-border use of RMB;and building and highlighting its role as a magnet for international financial professionals and

12、for financial institutions.In May 2021,the General Office of Shanghai Municipal Peoples Government issued the Opinions on Accelerating Building Shanghai into a Global Asset Management Center,which states that Shanghai will become an integrated and open asset management market with a high concentrati

13、on of industry resources,a high level of international engagement,and a mostly complete ecosystem,a key hub for asset management in Aisa,and one of the leading asset management centers in the world in five years.As one of the most open cities in China,Shanghai prides itself on its pro-market practic

14、es,law-based business environment,and a high concentration of domestic and foreign-invested financial institutions and financial talent.It has made pioneering and milestone progress in investment and trade facilitation and liberalization,as well as in financial opening-up and innovation.Shanghai is

15、also one of the birthplaces of the Chinese fund industry.It has witnessed just about every significant moment of the industry,including the creation of the first fund companies in China,the first wave of Sino-foreign joint venture fund management companies,the first closed-end,open-end,index,money m

16、arket,and Qualified Domestic Institutional Investor(“QDII”)funds,the first wholly foreign-owned public fund manager,and the first wholly foreign-owned private securities fund manager(“WFOE PFM”).Shanghai todaywith its institutional innovations,ever-more friendly foreign investment policies,and expan

17、ding range of financial servicesis demonstrating its determination to achieve greater financial openness and innovation and to build itself into a global asset management center and fintech center.We cordially welcome overseas asset management firms to do business in China and in Shanghai in particu

18、lar,and to build synergy with domestic asset management firms,so as to provide Chinese investors with a richer selection of asset management services and,at the same time,to enjoy a share of the opportunities from Chinas economic growth.Table of ContentsWhy China1.Important Role of China in the Glob

19、al Economy2.Huge Prospects of Wealth Management Market3.A More Open Financial Market4.Complete RMB Price Benchmark SystemChapter 1 Why Shanghai1.Shanghai Overview 2.Complete Financial Market Framework3.An Open Shanghai4.Excellent Business Environment 5.Full Range of Financial Institutions 6.Innovati

20、ons in Financial Reform7.Cutting-Edge Fintech8.A Deep Talent PoolChapter 3 0101010Overview of Fund Management Services in China1.Public Fund Management 2.Private Asset Management Business of Securities and Futures Institutions3.Private Fund ManagementChapter 2 09 0807070202050101Shanghai

21、Guidebook for Overseas Asset Manager 2022Overview of the Fund Management Industry in Shanghai1.Public Fund Management Industry2.Private Fund Management Industry 3.International Asset Management Firms4.Shanghai Asset Management Association(SAMA)Chapter 4 Fund Types and Legal Framework1.Public Funds2.

22、Private Asset Management Business of Securities and Futures Institutions3.Private Funds Chapter 6 23222121Laws,Regulations,and Regulatory Policies1.Public Funds 2.Private Asset Management Business of Securities and Futures Institutions3.Private Funds Chapter 5 68383838Fund Serv

23、ice Providers1.Fund Operation Service Providers2.Securities and Futures Brokers3.IT System Service Providers4.Accounting Firms and Law Firms5.Benchmark Data ProvidersChapter 8Tax Policies on Funds1.CIT2.VAT3.Other Taxes4.Requirements for Compliance with the Common Reporting StandardChapter 104545444

24、343Chapter 73531302525Application and Approval of Products and Institutions1.Public Funds 2.Private Asset Management Business of Public Fund Management Companies3.Private Funds4.Cross-Border Investment Pilot SchemesChapter 9414040Fund Offering1.Public Fund Offerings2.Private Fund OfferingsShanghai G

25、uidebook for Overseas Asset Manager 2022Other Helpful Information on Doing Business in China1.Company Establishment2.Working in China as Overseas Individuals(including those from Hong Kong SAR,Macau SAR,and Taiwan Region)3.Taxes Chapter 1148484850Relevant Government Authorities,Institutions and Othe

26、r Organizations1.Financial Regulatory Authorities2.Self-Regulatory Organizations and Service InstitutionsChapter 12525256Afterword6566DisclaimerAppendix57Opinions on Accelerating the Development of Shanghai as a Global Asset Management Center01|Why ChinaChapter 1 Why China1.Important Role of China i

27、n the Global EconomyChina has consistently been the top contributor to world economic growth since 2006.Between 2013 and 2021,China averaged an annual growth rate of 6.5%,significantly higher than the world average of 2.9%1during the same period.Since overtaking Japan to become the worlds second-lar

28、gest economy in 2010,China has maintained the second position in the world by gross domestic product(GDP)and is accounting for an increasing proportion of the world economy.According to the International Monetary Fund(IMF),Chinas GDP in 2021 was USD 17.7 trillion,representing 18.5%of the worlds tota

29、l,a 7.1 percentage point increase over 2012.According to the World Investment Report 2022 released by the United Nations Conference on Trade and Development,China has become one of the worlds most appealing economies.In 2021,foreign direct investment(FDI)in developing countries in Asia rose 19%year-

30、on-year,and capital inflow to China,the main destination of FDI,increased 21.5%year-on-year to USD 181 billion1.1 Source:World Investment Report 2022 2 Source:National Bureau of Statistics3 Source:2021 China Private Wealth Report jointly released by China Merchants Bank and Bain&Company2.Huge Prospe

31、cts of Wealth Management MarketFrom 1952 to 2021,China saw a surge in GDP from RMB 67.91 billion to RMB 114.1 trillion,accounting for more than 18%of the world economy,and a growth in GDP per capita from RMB 119 to RMB 81,000,indicating a rapid rise in the residents wealth2.In Table 1:Foreign Direct

32、 Investment in ChinaYearChinas GDP as Percentage of Global TotalFDI Ranking201916.7%2nd in the world2020202117.4%18.5%2nd in the world2nd in the world2020,China had 2.62 million high-net-worth individuals whose personal investable assets exceeded RMB 10 million,giving a compound annual growth rate(C

33、AGR)of 15%between 2018 and 20203.Together,these individuals held RMB 84 trillion of investable assets,Shanghai Guidebook for Overseas Asset Manager 2022 Why China|02 4 Source:Future of Wealth Management Industry Trends and Prospects in China and Beyond,KPMG5 Source:World Investment Report 2022 6 Sou

34、rce:Asset Management Statistics(Fourth Quarter,2021),AMAC 7 Source:Boston Consulting Group 8 Source:Society for Worldwide Interbank Financial Telecommunication(SWIFT)9 Source:IMF report 10 Source:SWIFT statisticsAs the international community increasingly recognizes China s efforts on legalization,m

35、arketization and internationalization in the capital market,China A shares and bonds are being included into mainstream international indices with continuously increasing weights.MSCI has announced that,from March 2019 to November 2019,the inclusion factor of all China large-cap A shares in the inde

36、x would be increased from 5%to 20%,and China mid-cap A shares(including eligible Growth Enterprise Market stocks)would be included in the MSCI index with a 20%inclusion factor.From April 1,2019,RMB-denominated Chinese treasury bonds and policy bank bonds have been included in the Bloomberg Barclays

37、Global Aggregate Index.Full inclusion was achieved in November 2020 at a weight of 6.3%.Indeed,RMB has emerged as the fourth-largest denomination currencyafter USD,EUR,and JPYfor bonds.In September 2019,FTSE Russell raised the inclusion factor for A shares from 5%to 15%.In September 2019,S&P Dow Jon

38、es officially added 1,099 China A shares into its S&P Emerging BMI with an inclusion factor of 25%.On February 28,2020,J.P.Morgan Chase&Co.3.1.2 Integration of Chinas Capital Market into the Global Indexor about RMB 32.09 million per person in 2020.Nationwide personal investable assets reached RMB 2

39、41 trillion,recording a CAGR of 13%between 2018 and 2020.KMPG estimates that from 2021,the total investable assets of Chinese residents will grow at 10%each year to hit USD 50 trillion by 20254.With the changing socioeconomic structure and residents increasing awareness of wealth management,a substa

40、ntial increase is expected in the proportion of publicly offered funds(“public funds”)and privately offered funds(“private funds”).The capital market products held by Mainland residentsstocks,bonds,public funds,and private fundshave been growing at a markedly faster pace in recent years.Their CAGR r

41、eached around 27%between 2018 and 2020,much higher than that of individuals total investable assets over the same period5.By the end of the fourth quarter of 2021,the assets under management(AUM)of Chinas asset management industry amounted to RMB 67.87 trillion,up 15.1%6.year-on-year.The Boston Cons

42、ulting Group predicts that the industry would grow at a yearly average of 15%between 2018 and 2025,significantly higher than the average of 6%for the rest of the world7.3.A More Open Financial Market3.1 RMB Internationalization and the Integration of Chinas Capital Market into Global IndicesAs the o

43、fficial entry of RMB into the special drawing rights(SDR)currency basket greatly facilitated the cross-border use of RMB,the total amount of cross-border RMB receipts and payments is increasing rapidly.At the end of 2021,RMB overtook JPY as the fourth-largest payment currency in the world8.As of the

44、 fourth quarter of 2021,the proportion of RMB assets held by the worlds foreign reserve administrators had reached 2.79%,the highest level since IMF began to report RMB reserve assets in 3.1.1 RMB Internationalization2016.This puts RMB reserve assets in the fifth place globally9.As of December 2021,

45、RMB has taken a 2.7%share in international payments10.In early 2021,six government ministries and commissions in China,including the Peoples Bank of China(PBOC),jointly issued the Notice on Further Optimizing the Cross-Border RMB Policy to Support the Stability of Foreign Trade and Foreign Investmen

46、t(Yinfa 2020 No.330).This Notice aims to streamline the cross-border RMB settlement process and enhance the administration of cross-border RMB investment and financing,and has further relaxed the requirements on payment and receipt under capital accounts.officially included Chinese treasury bonds in

47、to its benchmark emerging-market indices.Starting from October 29,2021,Chinese treasury bonds have become part of the FTSE World Government Bond Index(WGBI);full inclusion is to be completed over a 36-month schedule.Current weight is around 6%.With this,Chinese treasury bonds have become part of thr

48、ee major global bond indices.3.2 Opening up of the Capital MarketAs the demand for Chinese assets keeps rising,China has established numerous mechanisms to make its capital market more accessible to foreign investors.In 2003,China established the Qualified Foreign Institutional Investor(“QFII”)schem

49、e to make its capital market accessible to foreign institutional investors.In December 2011,the RMB Qualified Foreign Institutional Investor(RQFII)scheme was introduced on a pilot basis to permit investment of offshore RMB in the Mainland.In September 2019,the State Administration of Foreign Exchang

50、e(“SAFE”)removed the investment quota for QFII and RQFII.On September 25,2020,CSRC,PBOC,and SAFE released the Administrative Measures for Domestic Securities and Futures Investment by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors.At the same time,CSRC is

51、sued supporting rules for its implementationthe Provisions on Issues Related to the Implementation of the Administrative Measures for Domestic Securities and Futures Investment by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investorswhich has greatly facilitated

52、 foreign investment in the Mainland by further lowering the barrier to entry and expanding the scope of 3.2.1 QFII and RQFIIpermissible investments.As of the end of September 2022,723 foreign institutional investors have gained access to Chinas capital market11.From September 2,2022,QFIIs and RQFIIs

53、 have been allowed to participate in the trading of some futures and option contracts listed on the four futures exchanges of China(i.e.,China Financial Futures Exchange,Zhengzhou Commodity Futures Exchange,Shanghai Futures Exchange,and Dalian Commodity Futures Exchange)12.03|Why China11 Source:Chin

54、a Securities Regulatory Commission 12 Source:China Securities Regulatory Commission 13 Source:Tsinghua PBCSF Global Finance Forum 14 Source:2021 market statistics released by HKExOn November 17,2014,the Shanghai-Hong Kong Stock Connect was officially launched.On December 5,2016,the Shenzhen-Hong Kon

55、g Stock Connect was officially launched.With increasingly strengthened connections between the securities infrastructure in the Chinese Mainland and Hong Kong SAR,the turnovers of the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect are increasing month over month.As of the

56、end of October 2021,total turnover of northbound trading under Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect was RMB 63.14 trillion with a net inflow of RMB 1.53 trillion;total turnover of southbound trading under the two schemes was HKD 22.93 trillion,with a cumulative net f

57、low of HKD 2.14 trillion into Hong Kong13.In 2021,total turnover of northbound trading under the two schemes was RMB 27.6 trillion,up 31%year-on-year;the figure in the other direction rose 70%year-on-year to HKD 9.3 trillion14.3.2.2.Stock Connect:Shanghai-Hong Kong and Shenzhen-Hong KongIn August 20

58、10,the PBOC issued the Notice on Issues Concerning the Pilot Program on Investment in the Interbank Bond Market with RMB Funds by Three Types of Institutions 3.2.3.Opening up of the Interbank Bond Market:CIBM Direct and Bond ConnectShanghai Guidebook for Overseas Asset Manager 2022Why China|04 Inclu

59、ding Overseas RMB Settlement Banks,thereby permitting overseas central banks and monetary authorities,RMB settlement banks in Hong Kong and Macao,and overseas banks offering RMB settlement services for cross-border trades to enter Chinas interbank bond market under the settlement agent model.This ma

60、rks the official opening up of Chinas interbank bond market.In February 2016,the PBOC released Announcement 2016 No.3(“Matters Concerning Investment in the Interbank Bond Market by Overseas Institutional Investors”),allowing overseas financial institutions and their financial products to invest in t

61、he interbank bond market under the settlement agent mode.This access model is referred to as CIBM Direct and heralds the full opening-up of the interbank bond market.On July 2,2017,the PBOC and the Hong Kong Monetary Authority jointly announced the approval of the Bond Connect scheme between Hong Ko

62、ng and the Mainland.In July 2020,the PBOC and the CSRC jointly released an announcement,approving the connectivity of infrastructures between the interbank bond market and the stock exchange bond market.On May 27,2022,the PBOC,CSRC,and SAFE jointly published the Announcement on Matters Concerning Fu

63、rther Facilitating the Investments of Overseas Institutional Investors in Chinas Bond Market(2022 No.4),which makes coordinated arrangements for promoting the opening-up of both the interbank bond market and the stock exchange bond market,centralizes the management of market access and cross-border

64、capital flows for overseas institutional investors,and encourages overseas institutional investors with approved access to the interbank bond market to invest in the stock exchange bond market directly or through stock connectivity schemes.According to the PBOC Shanghai Head Office,as of the end of

65、June 2022,overseas institutions held RMB 3.57 trillion of bonds in the interbank market,of which 92.2%or RMB 3.29 trillion were under the custody of China Central Depository&Clearing Co.,In 2015,the scheme for Mainland-Hong Kong mutual recognition of funds was launched.By the end of Q1 of 2022,38 fu

66、nds in the Mainland and 47 funds in Hong Kong had been registered under the scheme.In April 2019,the China-Japan ETF Connect was launched.Currently,there are 4 ETFs listed on Shanghai Stock Exchange,1 ETF on Shenzhen Stock Exchange,and 6 ETFs on Tokyo Stock Exchange.In 2020,four ETF products were si

67、multaneously listed on the Hong Kong Exchanges and Clearing Limited(HKEx)and the Shenzhen Stock Exchange(SZSE).In June 2021,one ETF product from Shanghai and another from Hong Kong were listed on HKEx and SSE simultaneously.In May 2021,SSE entered into a memorandum of understanding with the Korea Ex

68、change to facilitate discussions on a possible China-Korea ETF Connect.In a joint announcement in June 2022,CSRC and the Securities and Futures Commission(SFC)of Hong Kong approved the inclusion of eligible ETFs in the Mainland-Hong Kong stock connect schemes.On July 4,2022,trading of ETFs under the

69、 Mainland-Hong Kong stock connect schemes was officially launched.The first wave consisted of 87 ETFs15.3.2.4.Two-Way Opening-up of Public FundsChina has lifted foreign ownership cap for fund management companies as of April 1,2020.In June 2021,CSRC granted a license to BlackRock Fund Management,Co.

70、Ltd.,marking the establishment of Chinas first wholly foreign-owned public fund management company.In September,BlackRock 3.3.1 Public Fund Management Companies3.3 Opening up Policies for Institutions15 Source:CHINAFUNDLtd.(“CCDC”).CCDCs data show that,as of the end of June 2022,CIBM Direct accounte

71、d for RMB 2.62 trillion or 79.6%of the bonds held by overseas institutions.in 2002 33%in 200549%in 201851%100%April 1,202005|Why ChinaThanks to Chinas increasingly accessible financial market and loosening control on foreign exchange under capital accounts,foreign capital now has much greater flexib

72、ility in choosing where and how to invest in Chinas equity market.In January 2011,Shanghai officially issued the Implementing Measures for the Pilot Program of Foreign-invested Equity Investment Enterprises in Shanghai,marking the launch of the QFLP(Qualified Foreign Limited Partnership)pilot scheme

73、 in the Mainland.This scheme offers a“fast track”for pilot foreign private equities(PEs)to invest in domestic enterprises.Beijing,Tianjin,Chongqing,Shenzhen,Suzhou,Hainan,and Qingdao have since launched their own version of the scheme.3.3.3 Private Equity Fund Managers4.Complete RMB Price Benchmark

74、SystemAs an important indicator of monetary and fiscal policies,and one of important financial risk parameters,Chinese treasury bond yield curves compiled by CCDC is widely used by the Ministry of Finance(MOF),the PBOC,the China Banking and Insurance Regulatory Commission(CBIRC),and other government

75、 departments,and displayed on their offcial website.The three-month ChinaBond government bond(CGB)yield is used by the IMF as a representative RMB interest rate to calculate the SDR interest rate.CCDC publishes more than 3,500 yield curves of various type,including government bond yield curves on a

76、daily basis.This complete suite of yield curves accurately reflects the price and risk changes in the bond market and provides a pricing reference for more than RMB 145 trillion of financial assets.CGB yield curves are used by nearly 1,500 domestic and foreign institutions for pricing analysis and r

77、isk monitoring.4.1 Chinese Treasury Bond Yield CurvesFund Management launched its first public fund,raising about RMB 6.881 billion from more than 111,000 subscribers.In August 2021,Fidelity International received an approval from CSRC to establish FIL Fund Management(China)Co.,Ltd.Neuberger Berman

78、Fund Management(China)Co.,Ltd.was approved in September 2021 and has recently announced the receipt of a public fund license.Other major names in the asset management industry,such as Schroders,AllianceBernstein,and VanEck,have also applied for the establishment of a wholly foreign-owned fund manage

79、r.Figure 1:Progression of Foreign Ownership Cap for Fund CompaniesOn June 30,2016 at CSRCs approval,the Asset Management Association of China(“AMAC”)released the Responses to Questions regarding Registration and Filing of Private Funds(No.10),allowing foreign-invested financial institutions to set u

80、p wholly foreign-owned private securities fund managers(“WFOE PFMs”)in China.In February 2019,the first wave of qualified foreign-invested private fund managers(PFMs)were approved to offer investment advisory services.In February 2019,qualified foreign-invested PFMs were granted access to the interb

81、ank bond market.In June 2019,restrictions on foreign-invested private funds participation in the Hong Kong Stock Connect were removed.3.3.2 Private Securities Fund ManagersShanghai Guidebook for Overseas Asset Manager 2022ChinaBond New Composite Index,ChinaBond Treasury Bond Aggregate Index,ChinaBon

82、d Finance Bond Aggregate Index,and ChinaBond Credit Bond Index are the major benchmark indices-reflecting the overall trend and yield of the RMB bond market,which are provided by CCDC(https:/ has the most comprehensive RMB bond index series,which consists of more than 1,400 indices from more than 10

83、 index families,including aggregate indices,theme 4.2 Benchmark Indices in Chinas Bond Marketindices,green bond indices,and more.ChinaBond indices are listed on Singapore Exchange Limited(SGX),Luxembourg Stock Exchange(LuxSE),and ChongWa(Macao)Financial Asset Exchange(MOX);ETF products tracking Chin

84、aBond indices are listed on the Taiwan Stock Exchange(TWSE),New York Stock Exchange(NYSE),and SGX.The ChinaBond index information is available globally through domestic and foreign information providers,providing a representative investment benchmark and an effective tracking target for overseas inv

85、estors with exposure to the Chinese bond market.Why China|06 Chapter 2 Overview of Fund Management Services in ChinaBy the end of the fourth quarter of 2021,the total AUM of public fund management companies and their subsidiaries,securities companies,futures companies,and PFMs was approximately RMB

86、67.87 trillion16,comprising RMB 25.56 trillion of public funds managed by public fund companies,RMB 8.24 trillion of private funds managed by securities companies and their subsidiaries,RMB 7.39 trillion of private funds managed by fund companies and their subsidiaries,RMB 3.96 trillion of pension f

87、unds managed by fund companies,RMB 354.9 billion of private funds managed by futures companies and their subsidiaries,RMB 20.27 trillion of private funds managed by PFMs(consisting of RMB 6.31 trillion of private securities funds,RMB 13.14 trillion of private equity and venture capital funds,RMB 4.8

88、15 billion of private asset allocation funds,and RMB 814.012 billion of other types of private investment funds),and RMB 2.25 trillion of special asset-backed schemes.At the end of December 2021,there were 151 public fund management firms,consisting of 137 fund management companies(including 45 fore

89、ign-funded firms and 92 domestic-funded firms),12 securities companies or asset management subsidiaries of securities companies with a public fund license,and 2 insurance companies with a public fund license.These public fund management firms managed 9152 fund products of various types17.Since 2012,

90、the AUM of public funds has achieved high growth for 10 consecutive years,reaching RMB 25.56 trillion by the end of 202118.1.1 Rapid Growth of AUM1.Public Fund ManagementFigure 2:AUM Growth of Public Funds in Past 10 Years2000021AUM（th）YoY Change（）2.873.004.548.409.1

91、611.6013.0314.7719.8925.564.53%51.33%85.02%9.05%26.64%12.33%13.35%34.66%28.51%16 Source:Asset Management Statistics(Fourth Quarter,2021),AMAC17 Source:China Securities Regulatory Commission 18 Source:AMAC07|Overview of Fund Management Services in ChinaShanghai Guidebook for Overseas Asset Manager 20

92、22At the end of 2021,China became the worlds fourth largest open-end fund market at an AUM of USD 3.53 trillion,or 4.97%of the worlds total.AUM of public funds worldwide,ranking first in Asia19.1.2 Public Fund AUM Ranking Fourth Globally and First in Asia19 Source:Worldwide Regulated Open-end Fund D

93、ata,Investment Company Institute(ICI)20 2022 China Securities Investment Fund Fact Book21 Source:AMAC 22 Source:Asset Management Statistics(Fourth Quarter,2021),AMACBy the end of 2021,there were 1,423 million active fund accounts20.1.3 Over 1,400 Million Fund Investment Accounts1.4 Pivotal Role of P

94、ublic Fund Management Companies with Foreign CapitalBy the end of the fourth quarter of 2021,the total AUM of securities and futures institutions through private asset management services was RMB 15.99 trillion22.2.Private Asset Management Business of Securities and Futures InstitutionsThe asset man

95、agement industry has always been at the forefront of the opening up of Chinas financial markets.The Sino-foreign equity joint venture public fund management companies have operated in China for 19 years,since the inception of the first joint venture public fund management company in 2002.They have b

96、een playing a pivotal role in the public fund development in China.As of the end of August 2021,44 out of the 151 companies with public fund license in China had a combined AUM of RMB 11.39 trillion,or 47.4%of the total21.Table 2:AUM of Private Asset Management Business of Various Institutions17,872

97、7,2934,1341,7248.245.072.320.36End of the Fourth quarter of 2021Number of ProductsAUM(tn)Asset management products of securities companiesAsset management products of fund companiesAsset management products of subsidiaries of fund companiesAsset management products of futures companiesOverview of Fu

98、nd Management Services in China|08 23 Source:Speech by Fang Xinghai,Vice Chairman of CSRC,at the 2022 China Wealth Forum24 Source:Monthly Report on Registration of Private Fund Managers and Filing of Private Fund Products(Issue 12,2021)25 Source:Securities TimesAt the end of the fourth quarter of 20

99、22,there were 24,610 PFMs registered with AMAC,managing 124,098 private funds with a total AUM of RMB 20.27 trillio22.This makes China second only to the United States in both the number and AUM of private funds23.As of December 2021,Shanghai,Shenzhen,and Beijing were the top three places of registr

100、ation for PFMsat 4,531,4,308,and 4,296 managers respectively together representing 53.4%of the total number in China.Managers in those three cities were overseeing 35,323,19,783,and 19,689 products,amounting to 60.3%of the national total;the aggregate AUM of those products were RMB5.07 trillion,RMB

101、2.27 trillion,and RMB 4.26 trillion,or 58.7%of the national total24.3.Private Fund ManagementAs of the end of the fourth quarter of 2021,there were 9,069 private securities fund managers in 3.1 Private Securities FundsAs of the end of the fourth quarter of 2021,there were 15,012 private equity and v

102、enture capital fund managers registered with AMAC,who were managing 45,311 products with a total AUM of RMB 13.14 trillion,an increase of RMB 1.58 trillion or 13.7%from the close of 2020.Among those,there were 30,800 private equity funds with a total AUM of RMB 10.77 trillion,an increase of 4.8%and

103、9.1%,respectively,from the close of 2020,and 14,511 venture capital funds with a total AUM of RMB 2.37 trillion,an increase of 39.6%and 40.2%from the close of 2020 22.3.2 Private Equity Funds and Venture Capital FundsChina,managing 76,818 funds with a total AUM of RMB 6.31 trillion,up RMB 2.01 trill

104、ion or 46.7%compared with the end of the fourth quarter of 202022.As of May 2022,there were 37 WFOE PFMs who were managing 217 products,of which 184 were active,with a total AUM of RMB 58.5 billion25.09|Overview of Fund Management Services in ChinaShanghai Guidebook for Overseas Asset Manager 202226

105、 Official Website of the Shanghai Municipal Peoples Government27 Source:Wenhui Daily28 Source:The Global Financial Centres Index 31(GFCI 31)ReportChapter 3 Why Shanghai1.Shanghai Overview26 At the end of 2021,Shanghai had 16 districts with a total land area of 6,340.5 square kilometers and a permane

106、nt population of 24.8943 million at an average life expectancy of 84.11 years.Shanghais GDP in 2021 totaled RMB 4.32 trillion,equaling a per capita GDP of RMB 173,600,continuing to lead other provinces,municipalities,and autonomous regions.Located in eastern China where the Yangtze River meets the P

107、acific Ocean,Shanghai,together with the neighboring provinces of Zhejiang,Jiangsu,and Anhui,forms the Yangtze River Delta Region.This is one of the most developed,open,and innovative regions in China.The quickening integration of the region offers vast potential for Shanghais asset management sector

108、.In 2021,Shanghai,Zhejiang,Jiangsu,and Anhui achieved a total GDP of RMB 27.61 trillion,or 24.13%of the national total.Of the top 10 cities by fiscal revenue,five(Shanghai,Suzhou,Hangzhou,Nanjing,and Ningbo)were from the region.This region also leads in terms of the populations wealth,accounting for

109、 6 of the countrys top 10 cities by per-capita disposable income in 2021.The introduction of the Yangtze River Delta integration strategy has made it even easier for financial institutions to develop and expand their wealth management business from Shanghai to the whole region.According to the Imple

110、menting Plan for the 14th Five-Year Plan for the Integrated Development of the Yangtze River Delta Region,by 2025,the region will achieve substantial integration,such that 70%of the permanent population will live in urban areas;research and development investment will make up 3%or more of the GDP;an

111、d the public spending will reach RMB 21,000 per capita.Shanghai has one of the most complete financial market systems among Chinese cities.It operates stock,bond,currency,foreign exchange,gold,futures,insurance,commercial papers,and trust markets and offers a robust platform for the efficient alloca

112、tion of financial assets,especially RMB-denominated assets.In 2021,Shanghais financial market posted an aggregate turnover of RMB 2,511.07 trillion and supplied more than RMB 18.3 trillion in direct financing.As of the end of 2021,there were 2,037 SSE-listed companies,up 13.17%from the end of 2020.T

113、otal market cap hit RMB 51.97 trillion,an increase of 14.14%year-on-year and ranking third worldwide.In 2021,SSE itself ranked third in the world by issuance size and fourth by trading turnover.In addition,the Shanghai Futures Exchange is the largest market for a number of futures products27 and was

114、 among the global top three by volume in spot gold and in crude oil futures.In 2021,the Global Financial Centres Index(GFCI)placed Shanghai fourth in its ranking28.3.An Open ShanghaiShanghai,bearing the urban spirit of“embracing diversity,pursuing excellence,and staying open-minded and humble”,disti

115、nguishes itself through its openness,innovation,and tolerancea vivid reflection of Chinas development and achievements in the new era.In terms of the opening-up history,few other Chinese 2.Complete Financial Market Framework Why Shanghai|10 29 Source:Official WeChat Account of the Shanghai Municipal

116、 Peoples Governmentcities are comparable with Shanghai.Shanghais development traces back to the Tang and Song Dynasties,when the city prospered due to maritime trade(through the Maritime Silk Road).The Yuan and Qing Dynasties witnessed the burgeoning of Shanghai,due to national strategic needs,econo

117、mic interests,and its right geographical surroundings after its port was opened in 1843,immigrants from other provinces of China and other countries jointly contributed to the development and prosperity of the city,and thus Shanghai gradually formed a unique community of shared common interests of C

118、hinese and foreigners.As a rare safe harbor during the turbulent times,a large number of populations,industries,capital,technologies,information,and cultures.In particular,young immigrants with different backgrounds who were not content with their situation poured into Shanghai,which maintained the

119、citys momentum of rapid development.Backing onto the Yangtze River and facing the Pacific Ocean,Shanghais open attitude is fundamental to its success.High-quality opening up has always been an essential path to Shanghais high-quality development.“Embracing diversity”is the most cherished element in

120、Shanghais urban spirit.Shanghai,as a stage for elites to strive together,excels in its tolerant culture,prosperous and diversified economy,free and harmonious thinking,among many other aspects.Shanghai is one of the best places in China for financial development and has all the necessary infrastruct

121、ures for the efficient allocation of global resources.It is the first city in China to establish a financial court,a court for financial arbitration,a financial consumer protection bureau,and a financial dispute resolution center and the first to release a white paper titled“Building a Rule-of-Law E

122、nvironment for the Shanghai International Financial Center”.It is home to the PBOCs Credit Reference Center which has created a national basic database for business and individual credit information.The city boasts nearly 500,000 financial professionals and a wide range of specialized service provid

123、ers such as accounting firms,law firms,and 4.Excellent Business Environmentrating agencies.Shanghai has also been adopting an ever-tougher stance against illegal financial activities.In 2020,Shanghai unveiled the 3.0 version of its business environment improvement plan to fully promote its one-stop

124、government service portal and build a more internationally competitive business environment.At an executive meeting in September 2021,the State Council approved the Opinions on Launching Pilot Programs on Innovation in Business Environment,naming Shanghai among the first wave of cities to pilot poli

125、cy innovations in relation to the business environment.In December 2021,the Shanghai Municipal Government issued the Implementation Plan of Shanghai Municipality for Launching Pilot Programs on Innovation in Business Environment,introducing 172 reform measures covering market ecosystem,government af

126、fairs,investment,foreign business related,innovation,and regulatory environment,enterprise full cycle services,innovation engine,regional cooperation,and legal environment29.In addition,in the Doing Business 2020 report released by World Bank in July 2021,China climbed from the 36th place to the 28t

127、h in the ranking for protection of minority investors.As a demonstration city of China,Shanghai has in place sophisticated frameworks for protecting minority investors.Under the supervision of CSRC Shanghai Office,the Shanghai Joint Peoples Mediation Committee for Securities,Fund,and Futures Dispute

128、s provides professional mediation services.The China Securities Investor Services Center,also established in Shanghai,offers yet another safeguard for minority investors.Furthermore,in October 2020 the Shanghai Investor Protection Union was founded in Shanghai at the sponsorship of 30 organizations

129、including the CSRC Shanghai Office,Shanghai Municipal Financial Regulatory Bureau,and the Shanghai Financial Court.Shanghai is one of the Chinese cities boasting the most complete range of financial institutions.They produce strong synergies and provide a solid foundation for the global expansion of

130、 Shanghai-5.Full Range of Financial Institutions11|Why ShanghaShanghai Guidebook for Overseas Asset Manager 2022Chinese financial authorities have released numerous policies to support financial reform and innovation in Shanghai.In August 2013,the State Council approved the creation of the China(Sha

131、nghai)Pilot Free Trade Zone(“Shanghai FTZ”),which was inaugurated in September 29 to explore financial innovation.This was followed up by the creation of the Lin-gang Special Area with the August 2019 release of the General Plan for the Lin-gang Special Area of China(Shanghai)Pilot Free Trade Zone b

132、y the State Council.February 2020 saw the issuance of the Opinions on Further Expediting the Building of Shanghai into an International Financial Center and Orienting the Financial Sector to Support the Integrated Development of the Yangtze River Delta,which contains detailed measures for encouragin

133、g pioneering financial reforms in the Lin-gang Special Area.At present,the financial asset investment companies of the Big Five banks of China(ICBC,Bank of China,China Construction Bank,Agricultural Bank of China,and Bank of Communications)have been 6.Innovations in Financial ReformFintech has revol

134、utionized how we work and live.Global networks and cutting-edge technologies such as AI provide the technical foundations for the smarter and more efficient global investment activities of the asset management industry.Shanghai is one of the most important hubs in China for fintech enterprises.It wa

135、s where Chinas first fintech firm,CCB Fintech,7.Cutting-Edge Fintechbased asset management institutions.The number of licensed financial institutions operating in Shanghai has risen from 1,515 in 2016 to 1,707 at the end of 2021,around 30%of which are foreign-funded30.At the end of 2021,17 of the wo

136、rlds top 20 international asset managers have established their business entities in Shanghai31;more than 80 prominent international asset managers have enrolled in Shanghais Qualified Foreign Limited Partners(QFLP)pilot scheme and more than 50 domestic asset managers in its Qualified Domestic Limit

137、ed Partners(QDLP)pilot scheme.As of the fourth quarter of 2021,29 of the 33 WFOE PFMs registered with AMAC were based in Shanghai32.Shanghai has become the first choice for China-based subsidiaries of foreign-funded financial institutions.In addition,2,234 equity investment managers are registered i

138、n Shanghai;Shanghai-based insurance asset management companies and public funds account for more than 30%of the total AUM of such firms nationwide.approved to engage in equity investment other than for debt-for-equity swap in Shanghai;banks wealth management subsidiaries to set up Shanghai-based sub

139、sidiaries specializing in equity investment and direct investment;overseas financial institutions to establish and invest in pension management companies in Shanghai;and insurance asset management companies to establish specialized asset management subsidiaries in Shanghai.In July 2021,the CPC Centr

140、al Committee and the State Council jointly issued the Guidelines on Supporting the High-Level Reform and Opening-Up of the Pudong New Area and Building It into a Pioneer Area for Socialist Modernization.The Guidelines calls for strengthening the market,product offerings,institutions,and infrastructu

141、res of the financial sector;supporting the Pudong New Area to develop the offshore RMB market and offer cross-border trade settlement and overseas financing services;building a trading platform for international financial assets;and enhancing Chinas influence in the pricing of key commodities.In add

142、ition,on August 12,2021,the 14th Five-Year Plan for the Development of the Lin-gang Special Area of China(Shanghai)Pilot Free Trade Zone was released.According to the Plan,the Lin-gang Special Area will focus on building the digital economy and shaping itself into an international data hub during th

143、e 14th Five-Year Plan period.The Plan has for the first time proposed security evaluation and a public service platform for cross-border data flows to ensure they are secure and controllable,and permits the testing of non-local storage of data of specified domains if those data do not involve state

144、secrets or personal privacy.30 Source:Wenhui Daily31 Source:Yicai32 Source:Wenhui Daily Why Shanghai|12 33 Source:TheP34 Speech by Wu Qing,Member of the Standing Committee of the CPC Shanghai Municipal Committee and Vice Mayor of Shanghai,at the 2021 Shanghai International Financial Center Developme

145、nt Forum on December 25,2021Shanghai has a wealth of higher education resources.In 2021,Shanghai boasted 64 colleges and universities with an enrollment of 548,700 students and 135,700 students graduated.At present,there are close to 500,000 financial professionals working in Shanghai34.In addition

146、to its impressive roster of top universities,Shanghai is also reforming its talent program by introducing a broad range of support services to attract financial institutions and professionals alike.8.A Deep Talent Poolwas established,in 2018.National commercial banks followed CCBs footsteps with the

147、 creation of fintech subsidiaries such as BOC Fintech,BOCOM Fintech,and CIB Fintech.In 2020,HSBC Fintech Services(Shanghai),the first foreign-funded fintech company,was established in the Lin-gang Special Area.Also in that year,the Shanghai Insurance Exchange launched the Insurance Exchange Chain sy

148、stem which applies blockchain technology to insurance transactions33.In August 2021,the 14th Five-Year Plan for the Building of Shanghai International Financial Center was unveiled,making it clear that Shanghai would build itself into“two centers”,i.e.a global asset management center and a fintech c

149、enter.At the 3rd Shanghai Fintech International Forum&1st Yangtze River Delta Fintech Conference held on December 4,2021,a number of key initiatives were launched to shape Shanghai into an international financial center,including CSRCs announcement to pilot fintech innovation in Shanghais capital ma

150、rket;PBOCs publication of a group standard entitled Specification for Credit Integration Service of Yangtze River Delta Credit Chain;inauguration of the“Finance Technology”industrial zone centered on the Longyang Road;establishment of the Data Industrialization Special Committee of Shanghai Fintech

151、Industry Alliance;publication of the Blue Book on Financial Application of Privacy-Preserving Computation spearheaded by the Bank of Communications;and signing of agreement for Shanghai Financial Technology Equity Investment Fund(Limited Partnership).13|Why ShanghaShanghai Guidebook for Overseas Ass

152、et Manager 2022As of the end of June 2022,67 of the 153 public fund management firms in China was based in Shanghai35,among which are 24 wholly foreign-owned and joint venture fund companies.Over 50%of all joint venture and solely-owned fund companies in China had office locations in Shanghai.As of

153、the end of June 2022,Shanghai-based public fund managers managed 3,793 public fund products with a total AUM of RMB 9.83 trillion.Non-money market funds contributed RMB 6.45 trillion or 65.6%Chapter 4 Overview of the Fund Management Industry in Shanghai1.Public Fund Management Industryof this total,

154、higher than the industry average of 60.4%36.Over the past five years,the AUM of the funds managed by Shanghai-based public fund managers has seen steady growth particularly in their active management capability.As of the end of 2021,the AUM of the public funds,funds excluding money market fund(MMF),

155、and equity funds managed by Shanghai based companies accounted for 37%,40%,and 43%,respectively,of the national total36.Table 3:Public Fund AUM by City(by regulatory jurisdiction,as of June 30,2022)37CityAUM(tn)Public Fund ProductsShanghai9.833,793Shenzhen6.662,581Beijing5.532,269Guangdong2.93674Fig

156、ure 3:AUM of Public Funds Managed by Fund Companies in Shanghai and China over the Past Five Years(tn)35 Source:List of Public Fund Management Companies(June 2022),CSRC36 Source:SAMA37 Source:Data from Wind,prepared by Shanghai Asset Management Association2002020213.5211.604.2413.035.2114

157、.777.469.5619.8925.5637.51%37.40%35.27%32.54%30.34%ShanghaiChinaShareOverview of the Fund Management Industry in Shanghai|14 As of the end of June 2022,there were 4,462 PFMs registered in Shanghai.Together they manage 37,812 funds with a total AUM of RMB 5.07 trillion.These figures made Shanghai fir

158、st in China38.over the past five years,the number and AUM of 2.Private Fund Management IndustryFigure 4:AUM of Funds Excluding MMF Managed by Fund Companies in Shanghai and China over the Past Five Years(tn)38 Source:Monthly Reports on Registration of Private Fund Managers and Filing of Private Fund

159、 Products,AMACShanghaiChinaShare2002020211.974.862.185.423.137.655.026.4411.8416.0940.53%40.22%40.02%40.92%42.40%Figure 5:AUM of Equity Funds Managed by Fund Companies in Shanghai and China over the Past Five Years(tn)ShanghaiChinaShare2002020210.982.700.902.181.373.192.833.716

160、.428.6336.30%41.28%42.95%44.08%42.99%the funds managed by Shanghai-based PFMs have maintained growth along with the steady increase in the AUM of private funds nationwide,with each representing a considerable share of the national total.15|Overview of the Fund Management Industry in ShanghaiShanghai

161、 Guidebook for Overseas Asset Manager 2022Table 4:AUM of Private Funds by City(by registration,as of June 30,2022)CityManagersFundsAUM(tn)Shanghai4,46237,8125.07Beijing4,17921,1704.36Shenzhen4,13920,8472.29Shanghai provides a financial environment conducive to the development of private funds.In 201

162、9,around a quarter of large PFMs with an AUM of more than RMB 10 billion were registered in Shanghai.As of the end of May 2022,of the 110 PFMs with such AUM,45 or 41%were registered in Shanghai,ranking Shanghai first in China39.Figure 6:Number of Private Funds Managed by Fund Companies in Shanghai a

163、nd China over the Past Five YearsFigure 7:AUM of Private Funds Managed by Fund Companies in Shanghai and China over the Past Five Years(tn)200020202020296852843224902052419100ShanghaiChinaShareShanghaiChinaShare28.46%25.66%28.12%23.15%21.47%21.4

164、4%22.34%27.51%27.50%28.76%15.9819.7613.7412.7811.103.705.072.952.742.48Since the first intruction of QFLP pilot scheme in 3.International Asset Management Firms2011,the Shanghai Municipal Financial Regulatory Bureau,Shanghai Municipal Commission of Commerce,Shanghai Municipal Administration for Mark

165、et Regulation,and SAFE Shanghai Branch have established a working mechanism for the scheme.As of August 2021,the 79 participants of the QFLP pilot scheme had made an actual investment of RMB 42.3 billion in various projects,including 229 equity investment projects.These QFLP scheme participants focu

166、sed investment on strategic emerging fields and made nearly 60%of their investments in biopharmaceutical,infrastructure and environmental 39 Source:Wind,prepared by SAMAOverview of the Fund Management Industry in Shanghai|16 4.Shanghai Asset Management Association(SAMA)40 Source:Yicaiprotection,Inte

167、rnet and information technology,and high-end manufacturing sectors,playing a positive role in the development of innovative high-tech enterprises and the creation of a virtuous circle and interaction among the financial sector,the sci-tech sector and industries.In the past two years,as funds partici

168、pating in the scheme entered the exit period,a stream of them had made a successful exit through diverse methods,including but not limited to listing,equity transfer,repurchase,transfer by agreement,and M&A40.The QDLP pilot scheme was first introduced in Shanghai in 2013.As of the end of 2021,more t

169、han 50 globally renowned asset management firmsamong them BlackRock,Azimut,Baillie Gifford,Oaktree Capital,Barings,PIMCO,Credit Suissehad established their presence in Shanghai and are qualified for the pilot scheme.The QDLP pilot scheme enables overseas asset management firms to glean insight into

170、the Mainland China market,test their business models,and understand Mainland investors before expanding their business in China.As overseas asset management firms gain more business development experience in the Mainland,it has become an obvious trend for many overseas asset management firms that ha

171、ve set up an enterprise for participating in the QDLP pilot scheme to engage more deeply in the Mainland market by including but not limited to establishing PFMs,preparing to set up public fund management companies,or funding wealth management subsidiaries of Sino-foreign joint venture banks.In 2016

172、,overseas financial institutions were allowed to set up private securities funds through WFOEs.Wholly foreign-owned private fund managers or WFOE PFMs are entities established in China by overseas asset management firms to provide private securities investment services.As of the end of 2021,29 of th

173、e 33 WFOE PFMs operating in China were based in Shanghai.Shanghai Asset Management Association(“SAMA”)was established on November 18,2010.Being rated as a 5A social organization,it is a non-profit social organization legal person voluntarily sponsored and formed by relevant enterprises in the fund i

174、ndustry in Shanghai.Under the supervision of the Shanghai Securities Regulatory Bureau,SAMA complies with national laws,regulations and policies,protects the legitimate rights and interests of its members,and acts as a bridge between the Shanghai fund industry and the government.It also organizes a

175、wide range of specialized trainings and workshops and provides a platform for exchange and communication to promote the high-quality development of the fund industry in Shanghai.As of the end of June 2022,SAMA had 285 members,including 67 public fund companies,127 PFMs(including 23 WFOE PFMs),37 cli

176、ent-specific asset managers,22 Shanghai branches of non-Shanghai-based fund companies,and 32 independent fund distribution institutions.The AUM of the public fund management company members totaled RMB 12.22 trillion,accounting for nearly 40%of the national total,while that of the PFM members amount

177、ed to around RMB 1.79 trillion,accounting for 35%of the total AUM of PFMs in Shanghai.In 2022,SAMA was awarded the title“National Outstanding Social Organization”by the Ministry of Civil Affairs,which is one of the most authoritative honors for social organizations in China.17|Overview of the Fund M

178、anagement Industry in ShanghaiShanghai Guidebook for Overseas Asset Manager 2022Laws,Regulations,and Regulatory Policies|18 The legal cornerstone of Chinas public fund industry is the Securities Investment Fund Law of the Peoples Republic of China(“Fund Law”),which was promulgated in 2004 and revise

179、d twice in 2012 and 2015.The Fund Law,as the fundamental law of Chinas fund industry,sets a framework for the operation of fund managers and funds.In addition,relevant investment activities are also governed by the Securities Law and other relevant laws and regulations.According to the provisions of

180、 the Fund Law,CSRC will supervise and manage the activities of securities funds in accordance with the law,and its local branches will perform their duties in accordance with authorization;AMAC is a self-regulatory organization of the securities fund industry,which is subject to the instruction,supe

181、rvision and management of CSRC.As the regulator,CSRC has formulated a number of regulatory provisions within the framework of the Fund Law,the most important of which include:(1)the Measures for the Supervision and Administration of Managers of Publicly Offered Securities Investment Funds,which regu

182、lates the establishment,change and operation and management of public fund managers;(2)the Administrative Measures on Securities Investment Fund Custody Business,which regulate the fund custody;(3)the Administrative Measures on the Operation of Publicly-Offered Securities Investment Funds,which regu

183、late the investment restrictions and operation of funds;(4)the Chapter 5 Laws,Regulations,and Regulatory Policies1.Public FundsMeasures for the Supervision and Administration of Distributors of Publicly-Offered Securities Investment Funds,which regulate the distribution of securities funds;(5)the Ad

184、ministrative Measures on Information Disclosure of Publicly-Offered Investment Funds,which regulate the information disclosure of funds;and(6)the Measures for the Supervision and Administration of Directors,Supervisors,Senior Management Personnel and Other Practitioners of Securities and Fund Instit

185、utions,which stipulate the qualifications and code of conduct for directors,supervisors,senior management personnel and other practitioners of public fund managers.In addition,CSRC has formulated a large number of regulatory documents to regulate the development of the fund industry.Moreover,since A

186、pril 2018,the Guiding Opinions on Regulating the Asset Management Business of Financial Institutions and its supplementary notices have been issued in succession to guide wealth management products in transforming towards being based on net asset value,no guarantee of rigid payment,transparency in a

187、nd standardization of invested assets,etc.The public fund sector has set a benchmark for the asset management industry through its complete implementation of trust relationships,thorough protection of investors rights and interests,and standardized and transparent product operation.As a self-regulat

188、ory organization,AMAC formulates self-regulatory rules according to the authorization of law and the instruction of CSRC.The self-regulatory rules provide important guidance on the operation 19|Laws,Regulations,and Regulatory Policies2.Private Asset Management Business of Securities and Futures Inst

189、itutionsBoth the Administrative Measures on Private Asset Management of Securities and Futures Institutions and the Administrative Provisions on the Operation of Private Asset Management Schemes of Securities and Futures Institutions,the two major regulatory documents issued by the CSRC regarding pr

190、ivate asset management products,refer to the Fund Law as their superior law.Therefore,the Fund Law is also the fundamental law for private asset management products.CSRC and AMAC have issued,respectively,as the regulatory body and the self-regulatory organization,a large number of regulatory provisi

191、ons and self-regulatory rules applicable to private asset management products,covering broad areas such as product fundraising,investment,operation,and compliance for private asset management products.The Fund Law revised in 2012 was promulgated and came into force on June 1,2013.One of the highligh

192、ts of this revision is to subject the private securities funds(“private funds”)to the Fund Law,which marks the official initiation of PFMs that can independently issue and manage funds.The Fund Law is also the fundamental law for private funds.In addition,relevant investment activities are also gove

193、rned by the Securities Law and other relevant laws and regulations.According to the Fund Law,CSRC is the regulator of the fund industry.Within the framework of the Fund Law,CSRC has formulated the Interim Measures on the Regulation of Private Investment Funds and Certain Provisions on Strengthening

194、the Regulation of Privately Offered Investment Funds.In addition,the regulatory documents formulated by CSRC for certain fields(e.g.,the Administrative Measures on the Suitability of Securities and Futures 3.Private FundsFigure 8:Legislative Framework for Public FundsNPC Standing CommitteeSecurities

195、 Law,Fund LawSelf-disciplinary rulesGuidelines,Notices and Other Normative DocumentsRules for Fund Companies,Fund Custody,Fund Operation,Fund Sales,Information Disclosure,and AppointmentCSRCAMACand practice of the fund industry,covering company regulation,practitioner management,fund custody,fund di

196、stribution,fund investment,trading,fund information disclosure,fund accounting,taxation and dividends,and information technology.Fund managers are required by law to join AMAC as AMAC members and be bound by its articles of association.Shanghai Guidebook for Overseas Asset Manager 2022Laws,Regulatio

197、ns,and Regulatory Policies|20 Investors)also apply to private investment funds.According to the provisions of the Fund Law,AMAC is the self-regulatory organization of the fund industry and is subject to the instruction and supervision of CSRC.According to the Fund Law,fund managers and fund custodia

198、ns are required to join AMAC and fund service providers are allowed to join AMAC.Similar to the practice in the public fund sector,AMAC,as a self-regulatory organization,formulates,updates,and implements self-regulatory rules on private investment funds in accordance with the authorization of law an

199、d CSRC and in light of market conditions.However,different from the practice in the public fund sector,according to the Fund Law,AMAC is also responsible for the registration of private investment fund managers and filing of private investment funds according to the law.In other words,AMACs self-reg

200、ulatory management of private funds is more comprehensive.In this regard,AMAC has formulated and issued many self-regulatory rules on fundraising,fund service and information disclosure,etc.,of private investment funds,including but not limited to the Guidelines on the Internal Control of Private In

201、vestment Fund Managers,the Guidelines on Private Investment Fund Contracts,the Administrative Measures on the Offering of Private Investment Funds,the Administrative Measures on the Activities of Information Disclosure of Private Investment Funds,the Implementing Guidelines on the Investor Suitabili

202、ty Management of Fundraising Institutions(For Trial Implementation),and the Measures for the Administration of Business of Private Investment Fund Services(For Trial Implementation).At present,all public funds in China are contractual(i.e.,unit trust)funds based on the legal relationship of trust,un

203、der which the fund manager and the fund custodian jointly act as the trustee,and the fund unitholder is both the principal and the beneficiary.Chapter 6 Fund Types and Legal Framework1.Public FundsThe dual-trustee legal structure consisting of the fund manager and the fund custodian is unique to Chi

204、nese funds and rarely seen in most of other countries and regions.Under this structure:1)The functions and powers of the fund manager are as follows:raising funds and handling the issuance and registration of fund units according to the lawApreparing interim and annual fund reportsFhandling the fund

205、 filing proceduresBseparately managing and keeping accounts of different fund assets under management,and investing in securitiesCdetermining the fund dividend distribution plan according to the fund contracts,and making dividend distribution to fund unitholders in a timely mannerDcarrying out fund

206、accounting and preparing fund financial accounting reportsEcalculating and announcing the net asset value of funds,and determining the subscription and redemption prices of fund unitsGhandling information disclosure matters relating to fund assets management activitiesHconvening the fund unitholders

207、 meeting in accordance with relevant provisionsIother duties prescribed by the securities regulatory authority under the State CouncilLmaintaining records,books,statements,and other relevant materials of fund assets management activitiesJexercising litigation rights or taking other legal actions for

208、 the benefit of fund unitholders in the name of fund manager;andK21|Fund Types and Legal FrameworkShanghai Guidebook for Overseas Asset Manager 2022Fund Types and Legal Framework|22 2)The functions and powers of the fund custodian are as follows:undertaking safekeeping of fund assetsAopening fund ac

209、counts and securities accounts of fund assets in accordance with relevant provisionBsetting up separate accounts for different fund assets under custody to ensure the integrity and independence of fund assetsCmaintaining records,books,statements,and other relevant materials of fund custody activitie

210、sDhandling settlement and clearing matters timely in accordance with the fund contracts and the investment instructions of the fund managerEhandling information disclosure matters relating to fund custody activitiesFissuing opinions on the funds financial and accounting reports,interim and annual fu

211、nd reportsGreviewing and examining the net asset value of the fund assets and the subscription and redemption prices of fund units calculated by the fund managerHconvening the fund unitholders meeting in accordance with relevant provisionsIsupervising the investment operation of the fund managers ac

212、cording to relevant provisions;andJother duties prescribed by the securities regulatory authority under the State CouncilK3)Each fund unit has equal rights.The fund unitholders exercise their rights through the“unitholders meeting”.The fund unitholders meeting has the right to replace the manager/cu

213、stodian,to adjust the remuneration of the manager and the custodian,to change the fund operating model,investment strategy or distribution mechanism,to decide on the termination and liquidation of the fund,etc.Public funds must be issued and managed by public fund managers and be under the custody o

214、f fund custodians.According to the data released by CSRC,as of the end of June 2022,there were 58 fund custodians in total in China41,among them are 27 securities companies,China Securities Depository and Clearing Corporation Limited(CSDC),China Securities Finance Corporation Limited,and 29 commerci

215、al banks.Under the Fund Law,the fund manager may appoint a fund service providers to handle the units registration,accounting,valuation,investment adviser and other matters for the fund,and the fund custodian may appoint fund service providers to handle the accounting,valuation,review and other matt

216、ers for the fund;however,the liabilities of the fund manager and the fund custodian under the law will not be exempted due to such appointment.41 Appendix 4 List of Securities Investment Fund CustodiansMost of the private asset management products issued by public fund management companies,securitie

217、s companies,futures companies are contractual products based on a legal relationship of trust,under which the manager and the custodian of the private asset management product jointly act as the trustee,and the unitholder is both the principal and the beneficiary.Under this structure:1)The core func

218、tions and powers of the manager upon entrustment are:to undertake investment management,to conduct valuation and accounting as the party responsible for accounting matters,to handle unit registration,and to exercise rights of action or take other legal actions on behalf of investors.2.Private Asset

219、Management Business of Securities and Futures Institutions23|Fund Types and Legal Framework2)The core functions and powers of the custodian upon entrustment are:to preserve the assets of the private asset management product,to carry out clearing and settlement according to the managers investment in

220、structions,to supervise the investment operation of the manager,and to disclose information related to the custody.Different from public funds,a single asset management scheme(i.e.,a private asset management product that is issued for a specific single investor)may,according to the asset management

221、contract,choose not to engage a custodian for custody,if it has set out measures for the safety of its assets and dispute resolution mechanisms in the assets management contract.3)The units of the asset management scheme at the same level share the same rights and risks.The unitholders of private as

222、set management products will exercise their rights in accordance with laws,regulations,and relevant asset management contracts.Slightly different from public funds,private asset management products may or may not set up the unitholders meeting mechanism.The unitholders of private asset management pr

223、oducts without unitholders meeting mechanism may exercise their rights in accordance with laws,regulations,and relevant asset management contracts.As with pubic funds,the manager or the custodian of private asset management products may appoint service providers for the asset management product,prov

224、ided that the fiduciary duties of the custodian cannot be outsourced,and the liabilities of the manager and the custodian under the law will not be exempted due to such appointment.3.Private Funds3.1 Types of FundsIn the Mainland China market,private funds can be classified by different sets of crit

225、eria.A common classification is by the type of target investment 3.2 Legal StructureThe legal structures of private funds vary depending on their form of organization.Specifically:(1)Contractual fundsAll types of private funds can be structured as contractual or unit trust funds.In practice,the cont

226、ractual structure is commonly seen in private securities funds,but seldom in private equity funds.Like public funds,contractual private securities funds are all based on the legal relationship of trust,under which the fund manager and the fund custodian jointly act as the trustee,and the fund unitho

227、lder is both the principal and beneficiary.Under this structure:1)The core functions and powers of the fund manager upon entrustment are:undertaking investment management,conducting valuation and accounting as the party responsible for accounting matters,handling unit registration,exercising shareho

228、lders rights on behalf of the fund,and supervising the fund custodian.2)The core functions and powers of the fund custodian upon entrustment are:preserving the fund assets,carrying out the managers investment and market,by which private funds are divided into private securities funds and private equ

229、ity funds.A third type is private asset allocation funds,which permit investment across different asset classes.However,this third type is rare and the requirements are also higher for both the registration of the managers and the filing of the products.For instance,the initial assets raised by a pr

230、ivate asset allocation fund should not be less than RMB 50 million.By the form of organization,private funds can be divided into contractual private funds,corporate private funds,and partnership private funds.By investment approach,private funds can be categorized into direct investment funds,which

231、invest directly in the target companies,and indirect investment funds(or FOFs),which invest in other private funds.Shanghai Guidebook for Overseas Asset Manager 2022Fund Types and Legal Framework|24 instructions,conducting compliance review of the investment instructions,handling funds transfers,rev

232、iewing valuation and information disclosure,and supervising the fund manager.3)Each fund unit has equal rights.The fund unitholders exercise their rights through the“fund unitholders meeting”.The fund unitholders meeting has the right to replace the manager/custodian,to adjust the remuneration of th

233、e manager and the custodian,to change the fund operating model,investment strategy or distribution mechanism,and to decide on the termination and liquidation of the fund.As with public funds,the fund manager and the fund custodian of private securities funds may appoint service providers for the fun

234、d,provided that the fiduciary duties of the custodian cannot be outsourced,and the liabilities of the manager and the custodian under the law will not be exempted due to such appointment.(2)Partnership fundsAll types of private funds can be structured as partnership funds.Different from the contract

235、ual structure,the partnership structure(mostly the limited partnership structure)is the usual choice for private equity funds,but less so for private securities funds.A partnership fund may be managed by its general partner or a manager hired by the general partner.For this latter option,the manager

236、 needs to be a related party of the general partner.The responsibilities of the manager include looking for potential investees,conducting due diligence investigations,developing investment strategies,making investment decisions,and performing post-investment management.In addition to investment-rel

237、ated responsibilities,the manager performs other responsibilities,including but not limited to raising funds and submitting quarterly,annual and major event reports to AMAC.The partnership structure has tax advantages as income tax is levied on the taxable income allocated to each partner,not on the

238、 income of the partnership fund before that allocation.(3)Corporate fundsA corporate fund is an independent legal entity established with capital contributed by investors,who will exercise rights and assume obligations and responsibilities as its shareholders in accordance with its articles of assoc

239、iation.A corporate fund may be managed by itself or by any other private fund manager engaged by it.Corporate funds are governed by the Company Law of the Peoples Republic of China in their management structure.This type of fund is rare in practice for the consideration of tax because corporate inco

240、me tax applies at the fund level.25|Application and Approval of Products and Institutions Chapter 7 Application and Approval of Products and Institutions 1.Public Funds1.1 Establishment of Public Fund Management CompaniesPublic fund management companies that are established upon approval by CSRC may

241、 raise funds and manage public funds.In accordance with the provisions of the Fund Law,the fund assets shall be used for the following investments:(1)listed stocks and bonds;and(2)other securities and derivatives thereof prescribed by CSRC.Please see Section 1.3 of this Chapter for other asset manag

242、ement businesses public fund management companies may conduct.The following conditions shall be met to establish a public fund management company:1)Shareholders.The Fund Law and CSRC impose relatively complicated requirements on the qualifications of each type of shareholder of public fund managemen

243、t companies.In short,shareholders of public fund management companies can be divided into three types:major shareholder(s)(i.e.,shareholders holding 25%or more of equity,or the largest shareholder holding 5%or more of equity if there are no shareholders holding 25%or more of equity),non-major shareh

244、older(s)holding 5%or more of equity,and non-major shareholder(s)holding less than 5%of equity.Furthermore,after a public fund management company is established,in case of any change in shareholders representing 5%or more of equity,including the appearance of shareholders holding 5%or more of equity

245、through transfer of 5%or more of equity or subscription of 5%or more of(i)It and its controlled entities have good credit and compliance records,good asset quality and financial position,sound corporate governance,well-established internal control system,effective risk control,and the ability to sup

246、port the WFOE FMC in improving the latters comprehensive competitive edge;(ii)It is an institution that engages in the financial business or manages financial institutions according to law;it has good management performance,social reputation,and net assets of not less than RMB 200 million or its equ

247、ivalent in a freely convertible currency in the last year;it has been continuously profitable during the last three years;its participation in the WFOE FMC is in line with its long-term strategy and in the increased registered capital,the qualifications of the new shareholder(s)are also subject to C

248、SRCs prior review and approval.The requirements on the qualifications of the sole shareholder of a wholly foreign-owned public fund management company(“WFOE FMC”),which basically combine the requirements on major shareholders,overseas shareholders and actual controllers as prescribed in the Measures

249、 for the Supervision and Administration of Managers of Publicly Offered Securities Investment Funds,are as follows:a)The major shareholder of the WFOE FMC shall meet the following requirements:Shanghai Guidebook for Overseas Asset Manager 2022Application and Approval of Products and Institutions|26

250、b)The overseas shareholder of the WFOE FMC shall meet the following requirements in addition to those set out in a):(i)It is a financial institution with experience in financial asset management or an institution which manages financial institutions,which is duly incorporated and lawfully exists und

251、er the laws of the country or region where it is incorporated;it has a sound internal control mechanism;it has complied with the legal provisions and regulatory requirements of jurisdiction of its incorporation regarding major regulatory indicators during the last three years;(ii)Its domicile countr

252、y or region has well-established securities laws and regulatory system,whose securities regulatory authority shall have entered into a memorandum of understanding on the cooperation in securities regulation and maintain effective regulation cooperation with CSRC or such other institutions as recogni

253、zed by CSRC;(iii)It has good international reputation and operating performance;it has been internationally leading in terms of financial assets under interest of its main business(if it is an institution that manages financial institutions,at least one of the financial institutions under its manage

254、ment shall satisfy the requirements of this(ii)and relevant requirements of CSRC);(iii)It has a practicable plan to improve the WFOE FMCs corporate governance and promote the WFOE FMCs long-term development and possesses the capital replenishment capacity commensurate with the WFOE FMCs business ope

255、ration;(iv)It has a clear self-restraint mechanism to maintain the independent operation and management of the WFOE FMC and to prevent transmission of risks and improper benefits;(v)It has in place a reasonable and effective risk resolution plan to address potential risks that may disrupt the busine

256、ss operation of the WFOE FMC;(vi)It has no record of material violations of laws and regulations or of material dishonesty in in the last three years;it has not been imposed with criminal penalties for intentional criminal offenses,or if so,it has completed such criminal penalties for no less than 3

257、 years;it is not under investigation or rectification for major violations of laws and regulations;(vii)It is not involved in any circumstance that prevents it from exercising rights or performing obligations as the shareholder,such as failure to conduct business operation for a long time,suspension

258、 of business,bankruptcy and liquidation,defective corporate governance,and dysfunctional internal control;and it is not involved in guarantee,litigation,arbitration or other major events that may adversely affect its sustained operation;(viii)It has a clear equity structure at each level tracing bac

259、k to the ultimate beneficial owner;its equity structure does not involve any asset management product unless otherwise approved by CSRC;and(ix)It has neither been subject to substantial public skepticism for any dishonesty or non-compliance,nor through such dishonesty or non-compliance,caused a seri

260、ous negative social impact yet to be eliminated;no less than 3 years have passed since it was held principally liable for the operational failure of its investee;and it has not committed any act that damages the interests of clients,such as misappropriation of clients assets.management,revenue,profi

261、t,and market share during the last three years;it has maintained a high credit standing for a long time during the last three years;(iv)Its cumulative shareholdings or proportion of equity holdings(including direct or indirect equity holdings)comply with Chinas policy on the opening-up of the securi

262、ties industry;and(v)Other requirements prescribed under laws,administrative regulations,and by CSRC upon approval of the State Council.c)The actual controller of the WFOE FMC shall meet the following requirements.(i)Its net assets account for not less than 50%of its paid-in capital;(ii)Its contingen

263、t liabilities account for less than 50%of its net assets;(iii)It is not involved in any circumstance where it cannot pay any due debts;and(iv)The requirements as set out in(iii)through(ix)under a)above.2)Capital.Public fund management companies must be established in the form of company(instead of p

264、artnerships or any other form)with a registered capital of not less than RMB 100 million which shall be actually paid with cash from legitimate sources.Overseas shareholders shall make capital contributions in a convertible currency.3)Personnel.Public fund management companies are required to have t

265、he general manager,chief compliance officer,deputy general managers as necessary,and other senior management personnel.The number of such senior management personnel,together with the personnel engaging in research,investment,operation,sales,compliance,and other businesses,shall be not less than 30,

266、and all of them must have obtained the fund practitioner qualification.4)Software and hardware facilities.Public fund management companies must have premises and IT systems that are sufficient to support their operation,which generally cover the aspects of investment management,registration,accounti

267、ng,etc.5)Application procedures.The application procedures consist of two phases establishment application and on-site inspection.Currently,a public fund management company is established under the“approval first,preparation later”mode.Under this mode,relevant parties shall first apply to CSRC for e

268、stablishing the public fund management company,during which period they will go through the steps of acceptance of application,review of shareholders qualifications and feedback of CSRC.During the preparation phase,which commences upon CSRCs approval of the establishment of the public fund managemen

269、t company,the applicant shall complete the work required for carrying out public fund management business,including staffing,technology systems,business premises and facilities.After the preparations have been completed and approved by CSRC upon on-site inspection,CSRC will issue a business permit t

270、o the established public fund management company,after which the company may carry out relevant businesses.Time required for the above procedures varies depending on such factors as the number of shareholders,the complexity of shareholders backgrounds,and the work progress of the companys preparatio

271、n team.At present,CSRC requires that public fund management companies complete the preparation work within six months after obtaining the approval for their establishment.27|Application and Approval of Products and Institutions Shanghai Guidebook for Overseas Asset Manager 2022Figure 9 Application P

272、rocedures for Establishment of Public Fund Management Companies Supplementation at CSRCs request(if any)Application submission CSRC acceptance CSRC approval Onsite inspection Launch of the first public fund5 working days6 months(may be longer in practice)Generally 6 months6 months CSRC feedback Comp

273、any registration CSRC licensing1.2 Registration of FundsIn accordance with the Fund Law,funds in China are subject to registration.According to the requirements of CSRC,public fund management companies are required to submit the fund contract,custody agreement,prospectus,legal opinion,and other regi

274、stration application materials.The fund registration documents include:1)The fund contract,which is a fundamental legal document entered into by the manager,the custodian,and the fund unitholder.It is a trust contract setting out the rights and obligations of the fund manager,the custodian,and the f

275、und unitholders.The fund contract generally includes the basic information of the fund,the filing of the fund contract,the effectiveness of the fund contract,the investment,subscription,redemption,and valuation of the fund,the distribution of income of the fund,modification/termination of the fund c

276、ontract,liquidation of assets of the fund,rules of procedure of the unitholders meeting,and other aspects.2)The custody agreement,which is a bilateral agreement between the manager and the custodian setting forth such matters as mutual supervision,carrying out investment instructions,and clearing an

277、d settlement.3)The prospectus,which is an invitation for offer independently prepared by the manager.It sets out the funds basic information,distribution channel,and a summary of the fund contract and the custody agreement,through which investors may have a clear view of the elements and purchase me

278、thod of each fund.According to relevant laws and regulations,CSRC shall make the decision on whether to approve the registration of the fund within six months after accepting the application,or for public funds to which streamlined procedures may apply,generally within twenty working days after acce

279、pting the application.The fund manager shall make an offering within six months after receiving the document on registration approval.Application and Approval of Products and Institutions|28 1.3 Licenses for Public Fund Management CompaniestPublic fund management companies,upon being duly establishe

280、d,are automatically licensed for public fund management and may concurrently 29|Application and Approval of Products and Institutionsapply for the license for private asset management business.In addition,where the requirements of relevant regulations on net assets,AUM,investment performance and sta

281、ffing are satisfied,public fund management companies may further apply for the licenses for QDII,basic pension investment management,enterprise annuity investment management,social security fund investment management and other businesses,or issue single asset management schemes for insurance funds.1

282、)License for the Private Asset Management BusinessAt present,except for a few newly-established companies,other public fund management companies have the license for private asset management business.Failing to apply for the license for private asset management business during the phase of establish

283、ment application,public fund management company must apply to CSRC separately after establishment.2)License for QDIIWith the QDII license,the public fund management company is entitled to raise funds within the foreign exchange quota granted by the foreign exchange administrative authority and inves

284、t in offshore markets.The QDII license is subject to the approval by CSRC.3)License for Enterprise Annuity Investment ManagersEntrusted by enterprise annuity trustees(e.g.,the pension company and enterprise annuity council),an enterprise annuity investment manager is to provide investment management

285、 services for enterprise annuity.This license is granted by the Ministry of Human Resources and Social Security of China after review by a panel.4)License for Social Security Fund Investment ManagersA social security fund investment manager,as a professional investment management institution,is to o

286、perate and manage Chinas social security funds pursuant to the contract.This license is granted by the National Council for Social Security Fund(“Social Security Fund Council”or“SSFC”).The SSFC reviews the qualification of investment managers in a prudent and strict manner.5)License for Basic Pensio

287、n Investment ManagersBasic pension,including the pension for enterprise employees,staff of government departments and civic institutions,and urban and rural residents,is the most important part of Chinas pension security.In accordance with the Announcement on Assessment of Securities Investment Mana

288、gement Institutions for Basic Pension Insurance Funds issued by the Social Security Fund Council on October 26,2016,the basic pension investment manager shall have experience in managing domestic securities investments for national social security funds or managing investments for enterprise annuity

289、 funds.Upon review by the expert assessment committee organized by SSFC,this license is granted by the SSFC.6)Issuance of Single Asset Management Schemes for Insurance Funds Insurance funds refer to the capital,capital surplus,undistributed profits,various reserves and other funds,denominated in RMB

290、 and foreign currencies,of insurance group(holding)companies and insurance companies.According to the Notice of the CBIRC on the Investment of Insurance Funds in Financial Products issued by the CBIRC in April 2022,an eligible public fund management company may,by virtue of its license for private a

291、sset management business,issue a single asset management scheme for insurance funds of insurance group(holding)companies and insurance companies.7)Subsidiaries of Public Fund Management Companies for Engaging in Specified BusinessesThe subsidiaries of public fund management companies may engage in b

292、usinesses related to asset management,including:private equity fund management,investment advisory,financial services for pension funds,distribution of financial products,unit registration,valuation and accounting,and Shanghai Guidebook for Overseas Asset Manager 2022Application and Approval of Prod

293、ucts and Institutions|30 other businesses recognized by CSRC.The public funds managed by them include index funds,FOFs,pension investment products,and REITs,among others.In principle,such subsidiary shall be wholly owned by a public fund management company and be strictly and effectively segregated

294、from the parent company in the line of business.It should be noted that the subsidiary of a public fund management company must meet the requirements for a new fund management company before engaging in the public fund management business,i.e.,if the public fund management company intends to establi

295、sh a subsidiary for the public fund management business,the company must meet the requirements for major shareholders of a fund management company,and the subsidiary must meet the requirements for the personnel,hardware,policies,and other aspects of a fund management company.8)License for the Fund I

296、nvestment Adviser BusinessIn October 2019,CSRC started the pilot scheme of fund investment adviser business based on the principle of“pilot scheme before steady expansion”.Pilot institutions,including fund management companies and their distribution subsidiaries,may engage in fund investment advisor

297、y business by accepting the appointment of clients to provide advice on fund investment strategies of investment portfolio and receiving direct or indirect economic.2.Private Asset Management Business of Public Fund Management Companies2.1 Application for the License for Private Asset Management Bus

298、inessPublic fund management companies may apply for the license for private asset management business during the phase of establishment application,or apply to CSRC separately after establishment.Please see Section 1 of this Chapter for the establishment of public fund management companies.Public fu

299、nd management companies shall obtain approval from CSRC to engage in the private asset management business.The private asset management products issued and managed by public fund management companies(excluding their subsidiaries)may invest in:1)bank deposits,inter-bank deposits,and standardized cred

300、it assets conforming to relevant requirements,including but not limited to bonds,central bank bills,asset-backed securities,debt financing instruments for non-financial enterprises and other credit assets that are traded on the stock exchange,interbank market or other trading venues established upon

301、 approval by the State Council,can be divided into equal shares,and have reasonable fair value and well-established liquidity mechanism;2)listed companies stocks,depository receipts,and other standardized equity assets recognized by CSRC;3)futures,options contracts,and other standardized commodity a

302、nd financial derivative assets that are traded and cleared in a centralized manner in the securities and futures exchange or other trading venues established upon approval by the State Council;4)public funds and asset management products administered mutatis mutandis to public funds recognized by CS

303、RC;5)asset management products issued by institutions regulated by the financial regulatory authority under the State Council other than those set out in Paragraph 4);and6)other assets recognized by CSRC.In order to engage in the private asset management business,a public fund management company sha

304、ll meet the following conditions:1)complying with relevant laws,administrative regulations and rules of CSRC in terms of net assets,net capital,and other financial and risk control indicators;31|Application and Approval of Products and Institutions2.2 Filing of Private Asset Management ProductsPubli

305、c fund management companies shall,within five working days after the establishment of a 2)having good corporate governance structure and sound internal control,compliance management and risk management policies;3)having qualified senior management personnel and three or more investment managers;4)ha

306、ving an investment research department with at least three full-time personnel engaging in investment research;5)having business premises,security facilities and IT systems that comply with relevant requirements;6)not having been subject to any administrative penalty or criminal penalty due to mater

307、ial violation of the laws and regulations in the last two years,not having been subject to any administrative supervision measures by the regulatory authority due to material violation of the laws and regulations in the past one year,nor being subject to investigation by the regulatory authority or

308、competent authority due to suspected material violation of the laws and regulations;and7)other conditions prescribed by CSRC based on the principle of prudent regulation.3.Private FundsPrivate investment fund managers may offer and manage private investment funds.According to the Fund Law,private se

309、curities funds may trade a company limited by shares public stocks,bonds,and fund units,as well as other securities and derivatives thereof prescribed by the CSRC.Private equity funds may invest in the equity of unlisted enterprises,the non-publicly offered or traded shares(including shares from pri

310、vate placement,block trade,or transfer by agreement)and convertible bonds of listed companies,market-based and legalized debt-to-equity swaps,units of equity funds,and other assets approved by CSRC.In addition,qualified PFMs may provide investment advisory services for asset management products as a

311、 third party,see section 4.A duly incorporated company may issue private investment funds only after being registered as a 3.1 Registration as PFMstApplying for account name&password via the via AMBERS of AMACPreparing applications and retaining PRC counsel to issue the legal opinionCompleting regis

312、tration within 20 working days(excluding the time for preparing supplementation or making adjustments based on AMAC feedback)Online submission of the application via AMBERSReceiving AMAC feedback(if any)Responding to AMAC feedbackLaunching the first private fund within 12 monthsFigure 10:Application

313、 Procedures for Registration of PFMsprivate asset management product,submit the asset management contract,list of investors and their subscription amount,capital verification report or asset payment certificate and other materials to AMAC for filing,with a copy to the relevant of CSRC local branches

314、.Shanghai Guidebook for Overseas Asset Manager 2022Application and Approval of Products and Institutions|32 3.1.1 General Conditions for Fund Manager RegistrationIn accordance with the Fund Law,the Interim Measures on the Regulation of Private Investment Funds,the Measures for the Registration of Pr

315、ivate Investment Fund Manager and the Filing of Funds(For Trial Implementation)and other laws and regulations,AMAC is in charge of the PFM registration and sets out various requirements for private securities fund manager registration through relevant self-regulatory rules and operational guidelines

316、,which mainly include:1)SpecializationPFMs shall observe the principles of specialization by establishing clear primary businesses and not concurrently engage in any business(e.g.,private lending,guarantee,factoring,pawning,finance lease,online lending information intermediary,crowdfunding,shadow ma

317、rgin financing,private financing,micro wealth management,microloan,P2P/P2B,real estate development,and trading platform)that may conflict with the businesses of the private funds they manage,any business that conflicts with the buy-side businesses of their investment management activities,nor any ot

318、her non-financial businesses.Another example of the principles of specialization is that when applying for registration,a PFM shall choose only one registration category such as“private securities fund manager”or“private equity or venture capital fund managers”and only one of the business types asso

319、ciated with such registration category.A PFM may complete filing only for private funds that are consistent with its registered business type and shall not manage private funds that are not consistent with its registered business type.A PFM may not concurrently manage multiple types of private funds

320、.Application requirements also differ for different registration categories.To enforce the specialization requirements,PFMs must include the words“private fund”,“private fund management”,or“venture capital”in their name and the words which reflect the features of the private funds they manage,such a

321、s“private investment funds management”,“private securities funds management”,“private equity fund management”,or“venture capital fund management”in their business scope.2)Internal ControlThe institution planning to apply for PFM registration shall establish a sound internal control mechanism,specify

322、 the duties of the internal control function,optimize its internal control measures,enhance the safeguarding measures for carrying out internal control duties,and carry out ongoing evaluation and supervision on internal control.3)CapitalAn applicant shall,based on its operation conditions and busine

323、ss development plan,make sure that it has sufficient capital to guarantee effective operation of the institution.AMAC generally requires that the capital of the applicant shall be sufficient to cover its daily operational expenses,including reasonable employee remuneration and rent,to ensure its nor

324、mal operations for a reasonable period after registration approval.4)PersonnelSenior management personnel of a PFM include the legal representative/representative appointed by the executive partner,general manager,deputy general manager(if any),chief compliance/risk control officer and other positio

325、ns,among which the legal representative/executive partner(appointed representative)and chief compliance/risk control officer are must-have senior management personnel.An applicant shall not have less than five employees in total.Relevant staff of the applicant who engage in private fund management b

326、usiness shall have professional ethics and competence suitable to the requirements PFM with AMAC.A legal opinion issued by a Chinese law firm is required in applying for registration with AMAC.AMAC will publicize the registration results on its official website after the application is approved upon

327、 its review.33|Application and Approval of Products and InstitutionsIn accordance with the Fund Law,the Interim Measures on the Regulation of Private Investment Funds,Certain Provisions on Strengthening the Regulation of Privately Offered Investment Funds and other laws and regulations,AMAC is in ch

328、arge of the filing of private funds and sets out various requirements for the filing of private funds through relevant self-regulatory rules and operational guidelines,such as the Instructions for the Filing of Private Investment Funds,FAQs for Registration and Filing of Private Funds,and Guidelines

329、 for the Naming of Private Investment Funds.In addition,AMAC issued the Key Considerations for the Filing 3.2 Filing of Private Funds3.1.2 Foreign-Invested PFMsof their positions.Depending on the type of the PFM in question,the requirements on staffs professional competence and experience also diffe

330、r.Practitioners shall observe the non-compete principle,be dedicated to their duties,exercise due diligence,and refrain from concurrently engaging in any activity that may conflict with the private fund business.Senior management personnel of a PFM shall have more than three years of work experience

331、 in securities,fund,futures,finance,law,and accounting,and other areas related to their positions,and management experience and operation management capability suitable to the requirements of their positions;senior management personnel in charge of investment shall have more than three years of work

332、 experience in securities,fund,futures investment management,and other areas,and provide evidence,which is traceable for more than two years,for his/her investment performance in securities and futures products as a portfolio fund manager or investment decision-maker,with the net AUM of a single pro

333、duct in principle not being less than RMB 10 million(based on the average AUM of products if jointly managed by multiple portfolio managers).Senior management personnel of a private equity fund manager or a venture capital fund manager shall have more than three years of work experience in equity investment,venture capital investment,investment banking,asset management,accounting,law,and economic