This article examines the regulatory framework outlined in the “Regulations on the Supervision and Administration of Privately-Offered Investment Funds” in China. It provides an overview of the new regulations and their implications for privately-offered fund managers, custodians, and service agencies. Understanding and complying with these regulations is essential for stakeholders in the Chinese investment fund industry.Continue Reading Regulatory Framework for Privately-Offered Investment Funds in China: Implications and Compliance

The State Administration of Foreign Exchange (“SAFE”) issued a Notice on Foreign Exchange Administration Issues concerning Investment in the Interbank Bond Market by Foreign Institutional Investors (the “Notice”) on May 27, 2016, which further clarifies the supervision and administration of the investment in the interbank bond market by foreign institutional investors.
Continue Reading New Regulations on the Investment in the Interbank Bond Market by Foreign Institutional Investors

On August 20, 2013, the China State Council approved the application from the People’s Bank of China (Central Bank) to launch a new financial coordination mechanism led by the Central Bank to reinforce regulation in the financial sector, but without altering the existing functions of industry regulators.

The new system will be led by the central bank and will involve the chairmen of the CBRC (China Banking Regulatory Commission), CSRC (China Securities Regulatory Commission), CIRC (China Insurance Regulatory Commission) and SAFE (State Administration of Foreign Exchange). If necessary, the NDRC (National Development and Reform Commission), the country’s top economic planner, and the MOFCOM (Ministry of Finance and Commerce) will also be invited to take part in the meetings.Continue Reading China State Council launched new financial coordination mechanism

The long fight between China’s regulatory agencies for the private equity (PE) and venture capital (VC) industry has finally been concluded. By a notice on Division of Duties in Private Equity Fund Administration promulgated by the State Commission Office for Public Sector Reform (“SCOPSR”) on June 27, 2013 (“Notice”), the China Securities Regulatory Commission (“CSRC”) is designated as the sole regulator of China’s PE and VC industry.
Continue Reading CSRC Became Sole Regulator of PE Industry

In a number of incremental steps, the PRC government has been easing restrictions on the cross-border movement of RMB. The latest step for the private equity industry is the Renminbi Qualified Foreign Limited Partner Program (“RQFLP”), which permits offshore-raised RMB to be invested in PRC companies by PRC private equity funds and managers.
Continue Reading Renminbi Qualified Foreign Limited Partner: an incremental step toward RMB internationalization in the private equity industry

The first batch of cross-border RMB loan agreements were signed on January 28, 2013. A total of 15 lenders, including HSBC Holding Plc and Industrial & Commercial Banks of China (Asia) Ltd., will provide about RMB 2 billion ($321 million) of cross-border RMB loans to companies in Qianhai (前海 in Chinese, a financial pilot zone in Shenzhen, Guangdong Province, China).
Continue Reading Pilot Development of Cross-border RMB Loans in Qianhai District

By Xizhen Wang 

On August 3, 2012, the National Association of Financial Market Institutional Investors (the “NAFMII”) issued the Guidelines on Asset-backed Notes for Non-financial Enterprises on the Interbank Bond Market (“银行间债券市场非金融企业资产支持票据指引”, the “Guidelines”), which creates a new channel for non-financial enterprises to secure financing or finance their operations.Continue Reading Asset-backed Note: A Brand New Financing Instrument for Non-Financial Enterprises in China

By Amin Amirkia

Earlier this month, China’s Ministry of Finance, State Administration for Industry and Commerce, Ministry of Commerce, State Administration of Foreign Exchange, and China Securities Regulatory Commission issued the Notice on Issuing the Scheme on the Localized Restructuring of Sino-Foreign Cooperative Accounting Firms (“Notice”), requiring the Big Four to “localize” their operations in China. The Notice became effective on May 10, 2012.Continue Reading Big Four to Localize in China

By Amin Amirkia

The China Securities Regulatory Commission (“CSRC”), China’s securities regulator, recently unveiled new guidelines (“Guidelines”) for China’s initial public offering (“IPO”) system. The guidelines were issued pursuant to feedback that was gathered from the public earlier in April.

The Guidelines present increased efforts by the CSRC to administer China’s securities market and to help restore investor confidence in what remains an uncertain economic climate. The Guidelines aim to better protect the interests of investors through greater transparency and financial integrity.Continue Reading New IPO Guidelines

By Amin Amirkia

The “Big Four”, which dominate the Chinese market, are facing regulatory changes that could mean that only accountants with Chinese qualifications can be partners in their China-based audit practices.

At the time of China’s accession to the World Trade Organization in 2001, the Big Four successfully lobbied to have an exception to China’s requirement that only Chinese certified accountants could own Chinese accounting firms. As a result, the Big Four were allowed to maintain their foreign ownership in their existing joint ventures. However, the exception only applied to the Big Four’s existing joint ventures, which have 20 year terms. As a result, the joint venture agreements signed by KPMG, Deloitte & Touche, and Ernst & Young will expire later this year, with PricewaterhouseCoopers’ to expire in 2017.Continue Reading Regulatory Challenges for the “Big Four”

Many U.S. listed Chinese companies have their eye on going private, with a growing number of such transactions having recently closed. This is the combined result of the current weakness of the U.S. capital markets, significant losses in the value of many U.S. listed Chinese companies, and pessimistic market forecasts that have resulted in trading at values below what controlling shareholders, management or private equity firms may think certain companies are worth.Continue Reading Going Private: U.S. Listed Chinese Companies