CHINA Trends and Developments Contributed by: Ping Zhang, Xining Dai and Moxi Zhang, Zhong Lun Law Firm
into the Chinese market and the rapid increase in private wealth. During this period, several key laws and regulations were successively issued, including but not limited to: • the Regulations on Administration of Foreign- Invested Venture Capital Enterprises (issued in 2003, revised in 2015); • the Partnership Enterprise Law of the Peo - ple’s Republic of China (originally issued in 1997, revised in 2006); • the Securities Investment Fund Law of the People’s Republic of China (originally promul - gated in 2003, and revised in 2012 and 2015); and • the Notice on Promoting the Standardised Development of Equity Investment Enterprises (issued on 23 November 2011). This phase marked the emergence of the limited partnership structure in China, meeting the legal practical needs of forming investment funds. During this time, foreign funds also played a prominent role in the Chinese market. Enhanced regulation In 2013, the Chinese government designated the China Securities Regulatory Commission (CSRC) as the principal regulatory authority for the investment funds industry. The CSRC further delegated responsibilities to the Asset Manage - ment Association of China (AMAC), which is spe - cifically responsible for the registration of fund managers and the filing of investment funds, and which carries out self-regulatory duties for the investment funds industry. This ushered in a new era of regulatory oversight for investment funds. The AMAC has succes - sively implemented numerous self-regulatory rules covering all aspects throughout the life
cycle of investment funds, including (but not limited to): • manager registration; • fund filing; • capital raising; • information reporting and disclosure; • fund agreements; • abnormal fund operations; • changes to funds or managers; and • winding-up of funds and deregistration of managers. These rules establish a comprehensive regulato - ry system for the fundraising, investment, man - agement and exit stages of investment funds, with continuous strengthening of risk prompts and information disclosure to investors. In 2023, the promulgation of the Regulation on the Supervision and Administration of Privately Offered Investment Funds marked the issuance of the first administrative regulation for the pri - vate funds industry. This regulation established the highest regulatory framework for investment funds. The advent of the stringent regulatory measures mentioned above, the simultaneous entry of China’s first batch of investment funds into their exit and liquidation phases, and the recent eco - nomic stagnation in China have collectively led to a surge in disputes and potential legal issues between investment funds and investors, as well as between investment funds and portfolio com - panies. The number of related cases has risen annually over the past several years. This trend has drawn the attention of regulatory authorities, including the CSRC and the AMAC. There has been a notable increase in discipli - nary actions and public notices being issued
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