CHINA Law and Practice Contributed by: Zhen Chen, Candy Tang, Flora Qian and Yan Zhao, Fangda Partners
their winding-up and deregistration processes in suc - cession. Overall, the number of private fund managers has declined, while the numbers of funds products and aggregate assets under management remain sta - ble, perhaps with a slight decrease in numbers. As a result of a top-level design shift and redirection away from “profit capital” to what has been called “long-term patient capital”, it is possible to predict that the private fund market in China will continue to mature and become more dynamic with the participa - tion of national social security funds, insurance capi - tal, government-guided funds, and other professional institutional investors making up “long-term patient capital.” 1.2 Key Trends The State Council promulgated the first administra - tion regulation in the private funds sector of China in July 2023. This regulation outlines qualification requirements and major duties of fund managers and custodians, principles for fundraising and invest - ment operation, special treatments for venture capital funds, supervision by the CSRC and consequences for violating the applicable compliance requirements. Following this, at the end of 2023, the CSRC released for public consultation the draft Administrative Meas - ures on Supervision and Administration of Private Investment Funds. The draft proposed tighter require - ments on fund managers, custodians, fund service providers, private fund products, and qualified inves - tors (QIs), rules on fundraising and funds’ ongoing compliance, etc. The draft Administrative Measures have not yet been finalised or promulgated. National-level relevant authorities are drafting regula - tions on the QFLP and QDLP with the purpose of uni - fying local QFLP and QDLP pilot programmes. These regulations have not yet been promulgated. AMAC periodically issues “self-regulatory” rules, guidelines, checklists and penalty cases, in order to guide those in the sector on how best to govern themselves, further conveying and emphasising more detailed regulatory requirements and practice in the private funds sector.
Although not aimed specifically at private fund man - agers or funds, the amended PRC Company Law and the AMR’s beneficial owner disclosure requirements do have impacts on the structuring and operation of funds and private fund managers. Further to the above-mentioned national-level legal and regulatory developments, a number of CSRC local counterparts requested all private fund man - agers within their jurisdictions to conduct special self-inspections and conducted follow-up onsite inspections in the spring of 2025. Again, this shows the continued strengthening of administration over China’s private fund sector. 2. Funds 2.1 Types of Alternative Funds and Structures AMAC categorises private funds into eight types, including private securities funds, venture capital funds, private equity funds, and their respective fund of funds (FOF), as well as private asset allocation funds (ie, funds primarily adopting an FOF approach and investing across different asset types such as securities and equities) and other types of funds (other types of funds were previously used to cover funds investing in commodities and other special sectors but have been discarded by AMAC). Alternative funds mainly fall under the categories of private equity and venture capital. PE funds can be further subcategorised by investment focus into buy - out funds, growth capital funds, real estate funds, infrastructure funds, funds investing in private place - ments of listed companies, distressed funds and other funds. Certain real estate funds may be qualified as pilot real estate private funds, a special type adopt - ed under the pilot rules for real estate private funds issued in spring 2023. In terms of legal structures, private funds can be in the forms of contractual funds, partnerships or corpora - tions. Of these, private securities investment funds (PSIFs) are usually in the form of contractual funds as they are typically open-ended and contractual funds are not subject to AMR’s requirements of entity regis - trations. Private equity and venture capital funds are
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