CHINA Law and Practice Contributed by: Alan Du and Yiwei Shi, King & Wood Mallesons
Other requirements include a minimum scale of assets under management, construction of information systems, and so on. After submission of the application documents, the CSRC may require the applicant to sup - plement the documents before it accepts the application. Once the application documents are accepted, the CSRC shall decide whether to issue the approval within 20 business days, which may be extended to 30 business days subject to the CSRC’s internal approval. For similar reasons, the actual time for obtaining the approval is uncertain. After the application is approved, the applicant must further prepare for public fund manage - ment business by satisfying various require - ments, such as setting up a specific department for fund business and the establishment of a fund investment decision-making process, to be inspected by the CSRC. The preparation period may last as long as six months or so. The public fund management company may only start pub - lic fund management business after passing the inspection by the CSRC. Fund registration with the CSRC A licensed public fund manager may market and raise public funds subject to the relevant require - ments. A prospective public fund must be registered with the CSRC before being marketed to the general public. In general, a public fund to be marketed should have a specific investment direction, and the name must indicate its type and features. The application documents for fund registration generally include:
• a draft custody contract; • a draft prospectus; and • a legal opinion issued by a PRC law firm. The CSRC may require the applicant to supple - ment the documents before it accepts the appli - cation for registration of a new public fund. Once the application documents are accepted, the CSRC shall decide whether the public fund can be registered for fundraising within six months. In practice, some public funds may complete registration within one month. Fundraising and filing with the CSRC The fundraising period must not exceed three months from the date of offering. Upon the expi - ry of the fundraising period, the manager must engage an accounting firm to conduct capital verification for the fund and file the public fund with the CSRC, which will grant a written confir - mation within three business days. 3.1.3 Limited Liability Regarding the debt of public funds, investors are protected by limited liability and only bear the risks to the extent of their investment in the fund. 3.1.4 Disclosure Requirements In general, public fund managers and custodians must disclose fund information to investors and publicise fund operation information via news - papers and websites recognised by the CSRC. Specifically, the following information must be disclosed: • the prospectus, the fund contract and the fund custody agreement; • the fundraising information; • the announcement on the listed fund units; • the net asset value of the fund and fund units; • the subscription and redemption prices;
• an application report; • a draft fund contract;
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