CHINA Law and Practice Contributed by: Alan Du and Yiwei Shi, King & Wood Mallesons
fair value of net assets in a timely manner, accu - rately and in accordance with statutory account - ing rules, using valuation techniques supported by sufficient available data and other informa - tion. Other pricing guidelines are also provided with respect to specific businesses. 3.5 Fund Finance Public funds are permitted to make borrowings for making an investment. Under the Guiding Opinions, the total assets of an open-ended public fund must not exceed 140% of its net assets, which means the borrowing must not exceed 40% of the capital, and the total assets of a closed-ended public fund must not exceed 200% of its net assets. In the PRC, public fund managers may conduct margin trading by borrowing funds from secu - rities companies approved by the CSRC. The securities company will require the borrower to provide the security at a certain percentage of the margin (which may be in the form of securi - ties), and assets bought on margin in the bor - rower’s account will also be a collateral for the margin trade. 3.6 Tax Regime The applicable taxes mainly include stamp duty, EIT and IIT. Tax for Funds A stamp duty of 0.1% of the share price shall apply to the selling of shares by public funds. Gains of trading price difference of shares and bonds, as well as dividends from shares and interest from bonds, are exempted from the EIT. Tax for Investors Individual investors of public funds are exempt - ed from the IIT on gain of redemption price over
the subscription price, and dividends paid by the fund. However, institutional investors are not exempted from the 25% EIT on the gain of redemption price over the subscription price. 4. Legal, Regulatory or Tax Changes 4.1 Recent Developments and Proposals for Reform New Rule Issued by the AMAC Regarding Private Securities Investment Funds On 30 April 2024, the AMAC promulgated the Guideline for Operation of Private Securities Investment Funds (effective on 1 August 2024 (the “Guideline”)). The Guideline raises the oper - ational requirements for private securities invest - ment funds, such as: • clarifying that the minimum size for the exist - ence of private securities investment funds is CNY5 million; • clarifying the specific requirements for the fre - quency of redemption and the lock-up period; • imposing stricter requirements regarding the information disclosure and the performance presentation; and • a single private securities investment fund’s investment in the same asset shall not exceed 25% of the fund’s net assets, and the total investment in the same asset by all private securities investment funds managed by the same private fund manager shall not exceed 25% of the asset’s total value. The Guideline aims to further regulate private securities investment funds and better protect investors.
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