On September 4, 2026, the China Securities Regulatory Commission (CSRC) issued the Administrative Measures for Fundraising by Private Investment Funds (Consultation Draft) (the “Consultation Draft”) for public comment. The Consultation Draft consists of 45 articles across seven chapters. Compared with the existing regulatory framework, which has relied primarily on industry self-disciplinary rules, the Consultation Draft refines the fundamental principles for fundraising, the eligibility criteria for qualified investors, regulatory framework for fundraising processes, safeguarding mechanisms for raised funds, regulatory oversights and legal liabilities. It also further clarifies and strengthens the suitability obligations of private fund managers, private fund distributors and other parties in the fund-raising process. This briefing provides an analysis of the key provisions of the Consultation Draft.
I. Elevating the Legal Hierarchy of the Rules
Currently, private fund-raising activities are primarily governed by the self-disciplinary rules issued by the Asset Management Association of China (AMAC), including the Measures for the Administration of Private Investment Fund Raising Activities (the “AMAC Measures”). The issuance of the Consultation Draft by the CSRC elevates these rules to a higher level in the legal hierarchy. Its superior legal basis has also shifted from the Interim Measures for the Supervision and Administration of Private Investment Funds to the Regulation on the Supervision and Administration of Private Investment Funds. This means that the regulatory requirements governing private fundraising will be shifted from industry self-regulation to administrative regulation, with stronger regulatory enforcement.
II. Clarifying Prohibited Activities
The Consultation Draft prohibits the following:
(1) directly or indirectly raising funds from, or transferring private fund units to, unspecified investors by way of public offerings or disguised public offerings;
(2) raising funds from, or transferring private fund units to, investors who hold such shares on behalf of others;
(3) directly or indirectly providing investors with any undertaking to guarantee the principal or returns, and using words including but not limited to “safe”, “principal-guaranteed”, “high return” or “expected rate of return”, or by undertaking that the investment principal will not incur any loss, or by undertaking a minimum return or maximum loss;
(4) conducting marketing or promotional activities in the name of the private fund’s custodian;
(5) making false statements, misleading representations or material omissions;
(6) using, or undertaking to use, private fund assets or private fundraising activities to transfer or exchange improper benefits;
(7) the private fund manager establishing, or establishing in a disguised form, subsidiaries or branches for the purpose of conducting fundraising activities; and
(8) any other activities prohibited by the laws, administrative regulations or the CSRC.
The Consultation Draft also provides that shareholders, partners, de facto controllers and other related-parties of a private fund manager shall not engage in any prohibited behavior described above, either directly or in a disguised manner. The CSRC and its dispatched offices may conduct regulatory inspections and investigations into these related-parties of the private fund manager. If a violation is identified, the CSRC and its dispatched offices may take administrative regulatory measures in accordance with the applicable regulations. Where a private fund manager entrusts a distributor affiliated with the manager, its shareholders, partners or de facto controllers to raise funds, the manager shall establish segregation mechanisms for conflicts of interest and provide investors with special risk disclosures.
The Consultation Draft further provides that a private fund manager shall not entrust any institution or individual that is not qualified to conduct private fund distribution business to raise funds, whether directly or indirectly, through intermediary contracts or other similar arrangements. It may not, either directly or indirectly, provide prospectuses or other fund-raising documents to any third party with which it has no entrustment relationship. This means that private fundraising activities must be conducted by qualified institutions, either independently or through the entrustment of duly licensed institutions. While the market practice of using third-party intermediaries for investor referrals is not prohibited per se, any such intermediary conducting activities that constitute disguised fundraising is strictly prohibited.
III. Refining the Eligibility Criteria for Qualified Investors
The Consultation Draft makes material adjustments to the eligibility criteria for qualified investors.
1. Refining the Criteria for Individual Qualified Investors
Under the Consultation Draft, an individual may be recognized as a qualified investor if the following requirements are satisfied:
(1) the individual has at least two years of investment experience in securities, funds, futures, equity or other investments, or serves as a senior management officer of a securities company or its subsidiary, a fund management company or its subsidiary, a futures company or its subsidiary, a wealth management company, an insurance company, an insurance asset management company, a financial asset investment company or a trust company (collectively, “Specified Institutions”);
(2) the individual’s household has financial assets of no less than RMB 5 million or net financial assets of no less than RMB 3 million, or the individual has had an average annual income of no less than RMB 500,000 during the preceding three years;
(3) the individual invests no less than RMB 1 million in a single private fund, with an initial paid-in investment amount of no less than RMB 1 million; and
(4) the individual possesses the corresponding risk identification capability and risk tolerance.
Firstly, the Consultation Draft introduces an investment experience requirement for individual qualified investors. To qualify as a qualified investor, individuals must have at least two years of investment experience in securities, funds, futures, equity or other investments, or they must serve as senior management officers of Specified Institutions. Please note that Specified Institutions are limited to licensed financial institutions and do not include private fund managers. Senior management officers of private fund managers will not automatically satisfy the above investment experience requirement.
Secondly, the Consultation Draft further refines the financial asset thresholds. While the AMAC Measures only require “financial assets of no less than RMB 3 million”, the Consultation Draft introduces thresholds of “household financial assets of no less than RMB 5 million” or “household net financial assets of no less than RMB 3 million”, reflecting an increase from the existing standard. “Household financial assets” herein refer to all financial assets of all family members, including bank deposits, stocks, bonds, fund units, futures and derivatives, asset management products, etc. “Household net financial assets” refer to household financial assets minus all liabilities of all family members.
The Consultation Draft sets out higher qualified investor standards for individuals investing in private funds whose investment targets are primarily in higher-risk assets such as equity interests in real estate project companies, single underlying assets, offshore underlying assets or OTC derivatives (the “High-risk Fund Investors”): (a) Individuals shall have at least four years of investment experience in securities, funds, futures, equity or other investments; and (b) the applicable financial asset thresholds are also increased to household financial assets of no less than RMB 10 million or household net financial assets of no less than RMB 6 million.
Finally, the Consultation Draft reiterates the mandatory requirement that the initial paid-in investment amount shall be no less than RMB 1 million and provides that private fund managers and private fund distributors shall not circumvent such capital contribution requirement by means such as permitting investors to redeem all or part of their investment shortly after the fund has completed its AMAC filing.
2. Refining the Criteria for Special Qualified Investors
Under the Consultation Draft, the following investors may be recognized as special qualified investors:
(1) Specified Institutions and their lawfully issued asset management products;
(2) private fund managers registered with AMAC and private funds filed with AMAC;
(3) pension funds such as social security funds, basic pension insurance funds and supplementary pension funds, as well as social welfare funds such as charitable funds;
(4) qualified foreign investors including Qualified Foreign Institutional Investors (QFIIs) and Renminbi Qualified Foreign Institutional Investors (RQFIIs); and
(5) other investors specified by the CSRC.
Notably, the Consultation Draft no longer restricts the category of “special qualified investors” to private fund managers who invest in private funds under their own management. Instead, all private fund managers registered with AMAC are recognized as special qualified investors. However, employees of private fund managers who participate in co-investments are excluded within the special qualified investors category. The Consultation Draft provides that a private fund manager may establish an employee co-investment policy for the private funds under its management and may set the investment amount at their own discretion, based on factors such as the type of private fund and the relevant employees. Co-investing employees shall be full-time practitioners engaged in investment, research, trading, or risk management at the private fund manager, and their household net financial assets shall be no less than RMB 1 million.
3. Refining Look-through Regulatory Requirements
The Consultation Draft further refines the requirements for look-through supervision. It expressly provides that where funds from multiple investors are pooled through structures such as contractual arrangements or special legal persons, and are invested directly or indirectly in a private fund, the private fund manager and private fund distributor shall conduct look-through verification to determine whether the ultimate investors are qualified investors. The number of investors shall also be calculated on an aggregated basis based on the ultimate investors identified through such look-through verification.
The Consultation Draft adopts a differentiated approach to special qualified investors. Private fund managers and private fund distributors are not required to conduct look-through verification to determine whether the ultimate investors are qualified investors, nor to aggregate the number of ultimate investors. However, with regard to asset management products and private funds, private fund managers and private fund distributors are still required to take reasonable and necessary measures to identify the actual investors and the ultimate source of funds.
IV. Enhancing Investor Suitability Assessment
1. Frequency and Validity Period of Suitability Assessments
The Consultation Draft provides that before marketing a private fund to an investor, the private fund manager or private fund distributor shall first assess the investor’s ability to identify risks and their risk tolerance through reasonable means such as questionnaires and investment knowledge tests. Such assessments shall cover the investor’s source of funds, assets-liabilities situation, investment knowledge, investment experience, risk preferences and integrity record. The Consultation Draft provides that for the same investor, an assessment shall not be conducted more than twice in a single day.
This requirement partially aligns with the Measures for the Administration of Product Suitability by Financial Institutions issued by the National Financial Regulatory Administration (NFRA). However, the Consultation Draft does not specify whether private fund-raising institutions will be subject to the NFRA requirement that “assessments shall not be conducted more than eight times in aggregate within a 12-month period”. Nor does it impose any restrictions on repeated assessments conducted across different days. These details remain to be further clarified by the regulatory authorities.
2. Strengthening the Obligation of Qualified Investor Verification
The Consultation Draft provides that prior to executing a fund contract, the private fund manager or private fund distributor shall strictly perform its investor suitability obligations and gain a comprehensive understanding of the investor’s assets, income, source of funds and other circumstances. This can be achieved by verifying documents such as bank transaction records, proof of assets, tax records, social security records, credit reports or audit reports as reasonably necessary, so as to confirm whether the investor satisfies the criteria for a qualified investor. If an investor refuses or fails to provide materials as requested by the private fund manager or private fund distributor, such that its qualified investor status cannot be confirmed, the private fund manager or private fund distributor shall not raise funds from, or provide services to, said investor.
This provision further clarifies the responsibilities of private fund-raising institutions. Where a private fund manager or private fund distributor is unable to determine whether an investor satisfies the qualified investor criteria, they shall not raise funds from or provide services to that investor. Otherwise, the private fundraising institution may be found to be in violation of the applicable regulations and subject to legal liabilities.
V. Strengthening Safeguarding Mechanisms for Raised Funds
1. Narrowing the Scope of Eligible Supervisory Institutions for Fund-Raising Accounts
Unlike the AMAC Measures, the Consultation Draft limits the institutions eligible to supervise fundraising settlement proceeds to commercial banks and securities companies qualified to conduct fund distribution business. Consequently, other types of financial institutions will no longer be eligible to conduct such business.
2. Strengthening Audio and Video Recording Requirements for Private Fund Raising
The Consultation Draft provides that where a private fund manager or private fund distributor raises funds from individuals, they shall: (a) establish and maintain corresponding record-keeping arrangements for the fundraising process, including making audio and video recordings of the procedures such as risk disclosure and the execution of fund contracts; and (b) establish mechanisms for follow-up confirmation and investment cooling-off periods. However, in respect to High-risk Fund Investors referred to above, a private fund manager or private fund distributor may waive these audio or video recordings and follow-up confirmation and cooling-off period arrangements, provided that special risk disclosures have been made and acknowledged in writing by such investors.
Currently, the Measures for the Administration of the Suitability of Securities and Futures Investors only require audio and video recordings in dealings with ordinary investors. Under the Consultation Draft, however, except for High-risk Fund Investors, individuals who are classified as professional investors would also be subject to the audio or video recording requirements.
The Consultation Draft provides that where a private fund manager or private fund distributor conducts fund-raising through their own internet platform, they shall establish and maintain a record-keeping mechanism for the fundraising processes and adopt technical measures to record and retain a full audit trail of the fund-raising activities. These activities cover procedures such as confirmation of the specified investors, suitability management, marketing and promotion, risk disclosure and the execution of fund contracts. This ensures that these activities can be subsequently traced and reviewed.
VI. Strengthening Internal Governance and Record-Keeping Requirements
The Consultation Draft provides that a private fund manager shall establish and maintain policies for compliance, risk management and financial management for private fundraising, covering investor due diligence, the retention of investor identification information, transaction records and fund transfers. The private fund manager shall also designate a senior management officer who is specifically responsible for this, as well as allocating practitioners who possess the necessary professional knowledge and skills. To regulate their performance, private fund managers shall establish internal policies covering training and assessment, record retention, periodic inspections, supervision, accountability and complaint handling. Investor complaints, mis-selling and other violations shall be treated as key performance assessment indicators while sales performance shall not be used as the sole criterion for assessment and reward.
In terms of compliance and risk management, the Consultation Draft requires a private fund manager to designate dedicated compliance and risk management personnel to: (a) review, supervise and inspect its private fund-raising activities; (b) conduct compliance reviews of internal policies, procedures, promotional materials and fundraising documents such as branding and marketing materials; and (c) issue written compliance review opinions and retain them on file for future inspection.
The Consultation Draft strengthens the requirements for record-retention. Private fund managers and private fund distributors are required, in accordance with their agreed responsibilities and division of duties, to prepare and properly retain materials relating to investor due diligence, investor identification information and transaction records. These materials shall be retained for no less than 20 years from the date on which the liquidation of the private fund is completed.
We will continue to monitor the formal promulgation of the Consultation Draft and share further developments with our clients.
