CHINA Law and Practice Contributed by: Alan Du and Yiwei Shi, King & Wood Mallesons
3.3.4 Regulatory Approval Process See 3.1.2 Common Process for Setting Up Investment Funds . 3.3.5 Rules Concerning Pre-Marketing of Retail Funds Under PRC law, there is no clear definition of pre-marketing. With reference to the EU’s defini - tion, pre-marketing activities may be understood as including provision of information on invest - ment strategies or investment ideas on behalf of a public fund manager to investors, and test - ing investors’ interest in a public fund before the commencement of fundraising, but without providing such information as contained in the fund marketing documents (see 3.3.6 Rules Concerning Marketing of Retail Funds ). Currently, PRC law is silent on pre-marketing activities, but it is advisable to conduct the risk assessment and suitability-matching procedure (see 3.2.3 Restrictions on Investors ) before test - ing investors’ interest. 3.3.6 Rules Concerning Marketing of Retail Funds In the PRC, the rules applicable to the marketing of public funds include: • the Securities Investment Fund Law; • the Measures for the Operation and Adminis - tration of Public Funds; • the Measures for the Administration of Infor - mation Disclosure of Public Funds; and • the Appropriateness Measures. The main rules that apply to the marketing of public funds are as follows. Fund Registration With the CSRC As discussed in 3.1.2 Common Process for Set- ting Up Investment Funds , only public funds
that have been registered with the CSRC may be marketed to the general public. Fundraising Information Disclosures The above regulations provide detailed require - ments on the information that must be disclosed for fundraising of public funds. For example, the marketing document of a public fund must include the following information: • basic information on the fund manager and the fund custodian; • a summary of the contents of the fund con - tract and the fund custody agreement; • the price, cost and duration of the fund units; • the proportions of the remuneration and other related expenses of the fund managers and fund custodians; and • risk warnings. Risk Assessment and Matching Investors With Suitable Funds Under the Appropriateness Measures, fundrais - ers may not actively conduct marketing of a public fund to general investors whose tolerance is lower than the risk rating of the fund (see 3.2.3 Restrictions on Investors ). 3.3.7 Marketing of Retail Funds Upon registration of the public fund (see 3.1.2 Common Process for Setting Up Investment Funds ), public fund managers may conduct marketing towards the general public. 3.3.8 Marketing Authorisation/Notification Process As discussed in 3.1.2 Common Process for Set- ting Up Investment Funds , only public funds that have been registered with the CSRC may be marketed to the general public.
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