Practice of Legal Opinions on Registration of Private Equity Fund Managers (1)

1. Core Regulations

1.1. An announcement:

"Announcement on Further Regulating the Registration of Private Equity Fund Managers";

1.2. Three methods:

"Interim Measures for the Supervision and Administration of Private Investment Funds",

"Administrative Measures for Information Disclosure of Private Investment Funds",

"Registration of Private Equity Investment Fund Managers and Fund Filing Measures (Trial)";

1.3. Four guidelines:

"Guidelines on Legal Opinions for the Registration of Private Equity Fund Managers", "Guidelines for the Internal Control of Private Equity Investment Fund Managers", "Guidelines for the Registration of Private Equity Fund Managers (December 2018)", Shanghai Lawyers Association "Lawyers Handling Private Investment Fund Legal Business Operations" Guidelines (2020).

1.4. Fifteen explanations:

"Answers to Questions Related to the Registration and Filing of Private Equity Funds (4), (6), (8) to (15)".

2. Verification method

2.1. Review written materials, on-site inspections, personnel interviews, Internet and database searches, external interviews, and inquiries from administrative and judicial agencies, organizations with public affairs functions, and accounting firms, etc. Law firms and their lawyers shall prepare and keep relevant due diligence work records and work papers.

3. Circumstances of Issuing Legal Opinions

3.1. The first registration of private equity fund managers;

3.2. When major matters change, major matters changes include: if the registered private equity fund manager applies to change the controlling shareholder, change the actual controller, change the legal representative executive partner and other major matters, or the China Fund Association prudently recognized Other important matters.

4. The content and practice of the legal opinion

4.1. Establishment and existence

4.1.1. Attorneys need to check: the legality and compliance of the applicant institution’s history, and whether there is any dissolution. If it is a foreign-invested enterprise, it must also meet the requirements of the "Questions and Answers on Private Equity Registration and Filing (10)". Major matters need to be completed first. Only fund filings can handle major changes.

4.1.2. Concluding observations to be issued by the lawyer: The applicant institution has been established in China in accordance with the law and exists effectively.

4.1.3. Legal basis:

Article 4 (1) of the "Guidelines for the Registration of Legal Opinions of Private Equity Fund Managers", whether the applicant institution has been established in China in accordance with the law and exists effectively.

"Answers to Related Questions about Private Equity Fund Registration (10)" Requirements for wholly foreign-owned and joint venture private equity fund management institutions to apply for registration as a private equity fund manager:

1. The private equity fund management institution is a company established in China;

2. The foreign shareholder of the private equity fund management institution is a financial institution approved or licensed by the financial regulatory authority of the country or region where the foreign shareholder is located, and the securities regulatory authority of the country or region where the foreign shareholder is located has already cooperated with the China Securities Regulatory Commission or other institutions recognized by the China Securities Regulatory Commission Sign a memorandum of understanding on securities regulatory cooperation;

3. The private equity fund management institution and its foreign shareholders have not been subject to major penalties by regulatory agencies and judicial institutions in the past three years. For private equity fund management institutions that have an overseas actual controller, the overseas actual controller shall also meet the above-mentioned conditions 2 and 3.

Wholly foreign-owned and joint-venture private equity fund management institutions conducting private equity investment fund business shall comply with the Securities Investment Fund Law, the Interim Measures for the Supervision and Administration of Private Equity Investment Funds, and the Regulations on Registration of Private Equity Investment Fund Managers and Fund Filing (for Trial Implementation) In addition to the provisions of other laws and regulations, the following regulations shall be observed: 1. The use of capital and the RMB funds obtained from foreign exchange settlement shall comply with the relevant regulations of the state foreign exchange administration;

4.2. Name, business scope

4.2.1. Lawyers need to check: whether the business scope recorded in the business registration documents of the applicant organization meets the relevant national laws and regulations. Whether the name and business scope of the applicant institution should include words such as "fund management", "investment management", "asset management", "equity investment", "venture investment" and other words closely related to the business attributes of the private equity fund manager; and private equity funds Whether the name of the manager contains the words "private placement". The name of the applicant institution shall not exist in the following circumstances:

The applicant institution does not highlight the main business of private equity fund management, and the name is the same or similar to that of a well-known institution, and the name contains words such as "group" or "financial control" that mislead investors.

Applicants that concurrently operate private lending, private financing, financial leasing, fund allocation business, micro-finance, micro-lending, P2P/P2B, crowdfunding, factoring, guarantee, real estate development, trading platform and other businesses. The attributes of private equity funds conflict. In order to prevent risks, the association will not register institutions engaged in conflicting businesses.

4.2.2. Concluding opinions to be issued by the lawyer: the name of the applicant institution and its business scope meet the requirements of the China Fund Industry Association, and there is no prohibition.

4.2.3. Legal basis:

Article 4 of the "Guidelines for Legal Opinions on the Registration of Private Equity Fund Managers" (2) Whether the business scope recorded in the business registration documents of the applicant institution complies with the relevant national laws and regulations. Whether the name and business scope of the applicant institution should include words such as "fund management", "investment management", "asset management", "equity investment", "venture investment" and other words closely related to the business attributes of the private equity fund manager; and private equity funds Whether the name of the manager contains the words "private placement".

"Guidelines for the Registration of Private Equity Fund Managers (December 2018)" IV. (1) [Business Scope] According to the "Answers to Questions Concerning the Registration and Filing of Private Equity Funds (7)", in order to implement the "Interim Measures for the Supervision and Administration of Private Equity Investment Funds" on private equity The professional management requirements of fund managers, the name and business scope of private equity fund managers should include "fund management", "investment management", "asset management", "equity investment", "venture investment" and other related words.

Article 90 of the "Securities Investment Fund Law", without registration, no unit or individual may use the words "fund" or "fund management" or similar names to conduct securities investment activities, except as otherwise provided by laws and administrative regulations.

The "Registration Notice for Private Equity Fund Managers (December 2018)" stipulates as follows:

4. (1) [Scope of business] According to the "Answers to Questions about Private Equity Fund Registration (7)", in order to implement the "Interim Measures for the Supervision and Administration of Private Equity Funds" on the professional management requirements of private equity fund managers, private equity fund managers' The name and scope of business shall include relevant words such as "fund management", "investment management", "asset management", "equity investment", and "venture investment".

4. (2) [Conflict Business] In order to implement the requirements of the Interim Measures for the Supervision and Administration of Private Equity Investment Funds on the prevention of conflicts of interest for private equity fund managers, it is necessary for concurrent private lending, private financing, financial leasing, capital allocation business, and small wealth management , Micro-lending, P2P/P2B, crowdfunding, factoring, guarantee, real estate development, trading platform and other business applicants, because the above business conflicts with the attributes of private equity funds, in order to prevent risks, the association will Not to register.

8. Suspension of processing: If the applicant institution has two or more of the following circumstances, the Association will suspend the application for registration of private equity fund managers of such institutions for 6 months: Institutions with the same or similar names, with names such as "Group" and "Financial Control" that mislead investors.

4.3. Professional operation

4.3.1. Lawyers need to check: whether the applicant organization complies with the professional operation principle of Article 22 of the "Interim Measures for the Supervision and Administration of Private Investment Funds", stating whether the main business of the applicant organization is the management of private equity funds; According to Article 22 of the Measures, the same private equity fund manager shall adhere to the principle of professional management when managing different types of private equity funds; for managing different private equity funds that may lead to interest transfer or conflict of interest, a mechanism to prevent interest transfer and conflict of interest shall be established. And whether the applicant institution has a complete internal control system, especially the mechanism to prevent the transmission of interests and conflicts of interest.

4.3.2. Concluding opinions to be issued by the lawyer: the main business of the applicant institution is private equity (equity/securities) fund management business, and if there is no management of different private equity funds that may lead to the transfer of interests or conflicts of interest, the establishment of prevention of transfer of interests and interests The mechanism of conflict.

4.3.3. Legal basis:

"Guidelines for the Registration of Private Equity Fund Managers" IV. (3), whether the applicant organization complies with the professional operation principle of Article 22 of the "Interim Measures for the Supervision and Administration of Private Equity Investment Funds", and indicates whether the applicant organization's main business is private equity fund management business ; According to Article 22 of the "Interim Measures for the Supervision and Administration of Private Investment Funds," the same private fund manager who manages different types of private funds should adhere to the principle of professional management; if the management of different private funds that may lead to the transfer of interests or conflicts of interest, it should establish A mechanism to prevent the transfer of interests and conflicts of interest.

Article 22 of the "Interim Measures for the Supervision and Administration of Private Investment Funds", the same private fund manager who manages different types of private funds shall adhere to the principle of professional management; if the management of different private funds that may lead to the transfer of interests or conflicts of interest, it shall establish A mechanism to prevent the transfer of interests and conflicts of interest.

Article 8 of the "Guidelines for Internal Control of Private Equity Investment Fund Managers", private equity fund managers shall follow the principle of professional operation, have clear main business, and shall not concurrently engage in other businesses that are irrelevant to the management of private equity funds or have conflicts of interest.

"Questions and Answers about Private Fund Registration and Filing (13)" Q: How should private fund managers implement the principles of professional management when applying for registration and filing of private funds?

Answer: In accordance with Article 22 of the "Interim Measures for the Supervision and Management of Private Equity Investment Funds" and relevant self-discipline rules such as the "Guidelines for the Internal Control of Private Equity Investment Fund Managers" of the Securities Investment Fund Association of China, in order to further implement the professional management of private equity fund managers Principles, effectively establish an effective mechanism to prevent possible interest transfer and conflict of interest, and improve the internal control level of industry institutions. When applying for registration, private equity fund managers should report on “private securities investment fund managers”, “private equity, venture capital Only one type of institution type and business type are selected for registration among the types of institutions such as "fund managers" and the corresponding business types associated with the institution types; private equity fund managers can only record private equity funds that match the registered business types of the institution. It is not allowed to manage private equity funds that do not match the type of business registered by this institution; the same private equity fund manager cannot concurrently engage in multiple types of private equity fund management businesses.

If a private equity fund management institution does have actual and long-term business needs for operating multiple types of private equity fund management businesses, it can set up independent business entities that meet the requirements of professional management in terms of personnel teams, business systems, internal control systems, etc., and apply for registration as different types. Of private equity fund managers.

"Questions and Answers about Private Equity Fund Registration (14)" Q: What are the circumstances in which the China Securities Investment Fund Association handles the registration of private equity fund managers that are not registered? How will the China Securities Investment Fund Association deal with this?

3. The applicant organization is also engaged in private lending, private financing, fund allocation business, microfinance, microfinance, P2P/P2B, crowdfunding, factoring, guarantee, real estate development, trading platform, etc. "Private fund registration and filing related questions answers (7) Business that conflicts with the private equity fund business as stipulated in the "".

"Guidelines for the Registration of Private Equity Fund Managers (December 2018)" IV. (3) [Professional Operation] According to the "Guidelines for the Internal Control of Private Equity Investment Fund Managers" and "Answers to Questions Related to the Registration and Filing of Private Equity Funds (13)", Private equity fund managers shall follow the principle of professional operation, have clear main business, and shall not concurrently engage in other businesses that are irrelevant to the management of private equity funds or have conflicts of interest.

2. (5) [Existing business situation] If the applicant organization has actually started business before submitting the private equity fund manager registration application, it shall explain the specific situation of the business, and make a special explanation on the risks that may affect future business development. If there is already an investment using its own funds, the independent operation between the private equity fund property and the private equity fund manager’s own property shall be ensured, and separate accounting shall be made.

8. Suspension of processing: If the applicant organization has two or more of the following situations, the Association will suspend the application for registration of private equity fund managers of such organizations for 6 months: (3) The application organization's business development plan is not feasible; (4) The applicant institution does not meet the requirements of professional operation and deviates from the main business of private equity funds.

4.4. Ownership structure

4.4.1. The lawyer needs to check the content: the equity structure of the shareholders of the applicant organization. Whether the applicant institution has foreign shareholders who directly or indirectly control or participate in shares, if so, please indicate whether its foreign shareholders meet the requirements of current laws and regulations and the requirements of the China Fund Industry Association after the penetration.

4.4.2. Concluding opinions to be issued by the lawyer: Generally, the applicant institution does not have any foreign shareholders who directly or indirectly control or participate in shares. If there is an explanation of the foreign capital situation and legal compliance.

4.4.3. Legal basis:

"Guidelines on Legal Opinions for the Registration of Private Equity Fund Managers" IV, (4), it is necessary to review the equity structure of the shareholders of the applicant institution. Whether the applicant institution has foreign shareholders who directly or indirectly control or participate in shares, if so, please indicate whether its foreign shareholders meet the requirements of current laws and regulations and the requirements of the China Fund Industry Association after the penetration.

"Guidelines for the Registration of Private Equity Fund Managers (December 2018)" 8. Suspension of processing: If the applicant institution encounters two or more of the following situations, the Association will suspend the application for registration of private equity fund managers of such institutions for 6 months: (VI ) The applicant institution’s equity holding or the equity structure is not clear.

5. Relevant requirements for institutional investors and actual controllers:

(1) [It is strictly forbidden to hold stock rights on behalf of others] The investor of the applicant institution shall make capital contributions in monetary property. The investor shall ensure that the source of funds is true and legal and is not controlled by any third party. The applicant institution should ensure that the equity structure is clear, and there should be no proxy holding of equity. The investor shall have the ability to contribute capital that matches the amount of capital it has subscribed to, and provide corresponding supporting materials.

(2) [Requirements on shareholding structure] The applicant institution shall ensure that the shareholding structure is concise and clear, and there should be no excessive levels of shareholding structure, revolving capital contribution, cross-shareholding, etc. The association will intensify the verification of equity penetration and focus on its legal compliance.

(3) [Requirements on Equity Stability] The applicant institution shall focus on its main business to ensure the stability of equity. For changes in equity within one year prior to the application for registration, the applicant institution shall explain in detail the reasons for the change. If the applicant institution has a special equity design to circumvent the relevant provisions of the investor, the association shall conduct careful inspection based on the principle of substance over form. The investor or actual controller of the applicant institution shall not be an asset management product.

"Answers to Related Questions about Private Equity Fund Registration (14)" Q: Can a private equity fund manager who has not completed the filing of the first private equity fund handle major changes to the legal representative, actual controller or controlling shareholder?

Answer: According to the "Interim Measures for the Supervision and Administration of Private Equity Investment Funds", the "Guidelines for the Internal Control of Private Equity Investment Fund Managers", and the "Guidelines on Private Equity Investment Fund Contracts" and other relevant requirements

Requirement, in order to ensure the stability of the newly registered private equity fund manager’s corporate governance, organizational structure and management team, and to ensure that the private equity fund manager continues to effectively implement the business operation plan and internal control system proposed in the registration application, the private equity fund is registered From the date of publication of the answers to questions related to the filing, the institution applying for the registration of private equity fund managers shall promise in writing: the institution applying for registration shall guarantee the stability of its organizational structure and management team, and shall not hold the legal representative until the first fund product has been filed. , Changes in major issues of the controlling shareholder or actual controller; do not arbitrarily replace the general manager, the person in charge of compliance risk control and other senior management personnel. Except as otherwise provided by laws and regulations or where force majeure occurs.

The China Securities Investment Fund Industry Association reiterated that when a private equity fund manager with a scale of management handles a major change application for the legal representative, actual controller or controlling shareholder, in addition to submitting a special legal opinion as required, it should also provide Relevant certification materials, fully explaining the reason and rationality of the changes; have performed the relevant voting procedures of the fund unit holders meeting, shareholders meeting or partner meeting in accordance with the relevant provisions of the fund contract, the fund company’s articles of association or the partnership agreement; have followed the " The relevant provisions of the “Administrative Measures for Information Disclosure of Private Investment Funds” and the relevant provisions of the fund contract, the articles of association of the fund company or the partnership agreement provided timely, accurate and complete information disclosure to private equity fund investors on the major issues involved.

4.5. Actual controller

4.5.1. The lawyer needs to check the content: whether the applicant organization has an actual controller; if so, please indicate the identity of the actual controller or business registration information, as well as the control relationship between the actual controller and the applicant organization, and explain that the actual controller can The actual governing role played by institutions.

4.5.2. Concluding opinions to be issued by the lawyer: Generally, the applicant organization has an actual controller and can actually control the applicant organization.

4.5.3. Legal basis:

"Guidelines for the Registration of Private Equity Fund Managers" IV and (5), it is necessary to examine whether the applicant institution has an actual controller; if so, please indicate the identity of the actual controller or business registration information, as well as the actual controller and the applicant institution Control relationship, and explain the actual controlling role that the actual controller can play over the organization.

"Answers to Related Questions about the Registration and Filing of Private Equity Funds (15)" 1. Requirements of the actual controller:

1. At least one of the institutions controlled by the same actual controller has become an ordinary member of the China Securities Investment Fund Industry Association (hereinafter referred to as the "Association"); or 2. At least one of the institutions controlled by the same actual controller is registered with the association A private equity fund manager with more than three years, the manager has an average annual private equity fund management scale of not less than 500 million yuan in the last three years, and has become an observing member of the association. 3. "One control" requirement. The same actual controller can only control or control one private equity asset allocation fund manager.

The "Guidelines for the Registration of Private Equity Fund Managers (December 2018)" stipulate the following: 5. Relevant requirements for institutional investors and actual controllers

(1) [It is strictly forbidden to hold stock rights on behalf of others] The investor of the applicant institution shall make capital contributions in monetary property. The investor shall ensure that the source of funds is true and legal and is not controlled by any third party. The applicant institution should ensure that the equity structure is clear, and there should be no proxy holding of equity. The investor shall have the ability to contribute capital that matches the amount of capital it has subscribed to, and provide corresponding supporting materials.

(2) [Requirements on shareholding structure] The applicant institution shall ensure that the shareholding structure is concise and clear, and there should be no excessive levels of shareholding structure, revolving capital contribution, cross-shareholding, etc. The association will intensify the verification of equity penetration and focus on its legal compliance.

(3) [Requirements on Equity Stability] The applicant institution shall focus on its main business to ensure the stability of equity. For changes in equity within one year prior to the application for registration, the applicant institution shall explain in detail the reasons for the change. If the applicant institution has a special equity design to circumvent the relevant provisions of the investor, the association shall conduct careful inspection based on the principle of substance over form. The investor or actual controller of the applicant institution shall not be an asset management product.

(4) [Definition of actual control] The actual controller shall be consistently traced back to the last natural person, state-owned holding company or collective enterprise, listed company, and an overseas institution under the supervision of foreign financial regulatory authorities. In the absence of an actual controller, its largest shareholder shall bear the corresponding responsibilities of the actual controller.

8. Suspension of processing: If the applicant institution encounters two or more of the following circumstances, the Association will suspend the application for registration of private equity fund managers of such institutions for 6 months: (7) The actual control relationship of the applicant is unstable; (8) Application Institutions circumvent the requirements of related parties or actual controllers through structural arrangements.

"Answers to Related Questions about Private Equity Fund Registration (14)" Q: Can a private equity fund manager who has not completed the filing of the first private equity fund handle major changes to the legal representative, actual controller or controlling shareholder?

Answer: According to the "Interim Measures for the Supervision and Management of Private Equity Investment Funds", "Guidelines for the Internal Control of Private Equity Investment Fund Managers", "Private Investment Fund Contract Guidelines" and other relevant requirements, to ensure the corporate governance, organizational structure and structure of newly registered private equity fund managers. The stability of the management team ensures that the private equity fund manager continues to effectively implement the business operation plan and internal control system proposed during the registration application. From the release date of the private equity fund registration and filing related questions and answers, the organization that applies for the private equity fund manager registration A written commitment should be made: the application registration agency guarantees the stability of its organizational structure and management team, and will not make major changes to the legal representative, controlling shareholder or actual controller before completing the filing of the first fund product; it will not change the general manager at will , Senior management personnel such as the person in charge of compliance and risk control. Except as otherwise provided by laws and regulations or where force majeure occurs.

The China Securities Investment Fund Industry Association reiterated that when a private equity fund manager with a scale of management handles a major change application for the legal representative, actual controller or controlling shareholder, in addition to submitting a special legal opinion as required, it should also provide Relevant certification materials, fully explaining the reason and rationality of the changes; have performed the relevant voting procedures of the fund unit holders meeting, shareholders meeting or partner meeting in accordance with the relevant provisions of the fund contract, the fund company’s articles of association or the partnership agreement; have followed the " The relevant provisions of the "Administrative Measures for Information Disclosure of Private Investment Funds" and the relevant provisions of the fund contract, the articles of association of the fund company or the partnership agreement provided timely, accurate and complete information disclosure to private equity fund investors on the major issues involved.