13 April, 2020
Following the promulgation of the checklist of application materials needed for private fund manager registration (“PFM Registration Checklist”) on February 28, 2020, the Asset Management Association of China (AMAC) published the private fund filing checklists (collectively, the “Fund Filing Checklists”) on its website on March 20, 2020 in the Circular on Publishing the Checklist of Application Materials for Private Investment Fund Filing (”Circular”), which includes three checklists setting out the list of materials needed for the filing for (i) a securities-type and non-securities type private fund; (ii) a material change to private fund filing; and (iii) liquidation of a private fund. In line with the PFM Registration Checklist, the items on the Fund Filing Checklists are not new requirements, but are categorized and organized based on the existing requirements as set forth in current laws, regulations, self-regulatory rules and the 2019 Guidance for Filing of Private Investment Funds (“Guidance”) as well as the previous filing practices, and is intended to assist the private fund managers preparing fund filing materials.
We have prepared below a summary of the Fund Filing Checklists for your reference.
1. Checklist for Fund Filing
1.1 Letter of undertaking for filing: The AMAC provided a template for this document and requires it to be affixed with the company seal of the private fund manager and signed by the legal representative/executive partner (authorized representative) and the chief compliance officer.
1.2 Prospectus/Fundraising and Promotional Materials
(1) Fundraising and promotional materials like the prospectus disclosed to investors shall cover key terms for establishing a private fund to the fund investors, such as basic information of the private fund manager, custody arrangement (if any), fee rates, calculation basis and methods of accrual of performance fee, term of duration, structured arrangement (if any), main investment area, investment strategy, investment methods.
(2) Fundraising and promotional materials shall disclose the information in detail like primary business, valuation and calculation, utilization purposes of investment capital and proposed exit mechanism of the major investment projects (if any).
(3) The contents of the fundraising and promotional materials shall be substantially consistent with the fund contract. The fundraising and promotional materials shall be affixed with the company seal of the fund manager.
1.3 Distribution Agreement (If Any)
1.4 Fund Contract/Partnership Agreement (Both Original and Word Versions)
(1) Fund contract/partnership agreement executed in accordance with the Guidance for Private Investment Fund Contract No.1 to 3 and the Guidance by all the parties to the fund contract/partnership agreement.
(2) The contents of the word version shall be consistent with the executed version, and the word version shall be a clean version.
(3) The fund contract/partnership agreement shall specify the emergency disposal plans and dispute resolution mechanisms for safeguarding the fund property, maintaining the fund operation or liquidating the fund in the event that the fund manager objectively loses its capacity to continue managing the private fund.
(4) The fund contract/partnership agreement shall specify the arrangement of the termination, cancellation of the fund contract and fund liquidation.
(5) For a partnership-type fund with no custodians, the partnership agreement shall specify policies and measures for safeguarding the fund assets and dispute resolution mechanisms, and the fund account information shall be disclosed to the investors.
(6) If the investment of a fund involves related-party transactions, the fund contract/partnership agreement shall specify a mechanism to control the risks concerning related-party transactions effectively.
(7) If a fund invests in real estate, the fund contract/partnership agreement shall specify that the relevant provisions of the Administrative Standards for the Filing of the Asset Management Plans of the Securities and Futures Operation Institutions No.4 (for an asset management plan investing in real estate development enterprises, projects) shall apply (applicable to non-securities-type investment funds only).
1.5 Custody Agreement (Partnership-Type Agreement)
(1) The custody agreement shall specify the rights, obligations and duties of the fund custodian in accordance with the laws and regulations like the Securities Investment Fund Law, the Interim Measures for Supervision and Administration for the Private Investment Funds.
(2) The custody agreement shall specify the rights, obligations and duties of the fund custodian, including but not limited to:
(a) When the fund manager encounters an abnormality and is unable to perform management duties, the fund custodian shall perform custodian duties pursuant to laws and regulations and the contractual agreement, and safeguard legitimate rights and interests of the investor.
(b) When a fund custodian, in the course of supervising the investment operation of a manager, finds out that an investment or settlement instruction of the fund manager violates law, regulation, self-regulatory rule or contract, it shall refuse to execute such instruction, and report it to the China Securities Regulatory Commission and the AMAC.
1.6 Risk Disclosure Letter
The AMAC provides a template for the risk disclosure letter, the content of which shall include:
(1) Various types of investment risks such as the risks associated with or arising from liquidity of capital, fund structure, investment structure, underlying assets and dispute resolution mechanism, all of which shall be fully disclosed in the risk disclosure letter.
(2) The special risks or business arrangement such as relevant affiliation between the fundraising institutions and the fund manager, related-party transactions, single investment target, investing underlying assets via a special purpose vehicle, holding of equity on behalf of contractual-type private investment fund manager, all of which shall be disclosed in detail, completely and explicitly in the "special risk disclosure" section of the risk disclosure letter.
Fund managers shall update and upload the risk disclosure statement signed by all investors in a timely manner when filing quarterly updates of the fund through the AMBERS system.
1.7 Product Structure Chart (Applicable to Non-Securities-Type Funds Only)
The chart should refer to the product structure chart included in the risk disclosure letter. It shall include information such as the investors (look-through up to the ultimate investors), the fund manager, the GP (if any), the fund custodian (if any) and investment targets (look-through down to the underlying assets) and the counterparties from which the fund acquires the investment targets (if any), and shall specify the information such as investment amount of each layer, investment methods (including but not limited to investing in equity, debt and convertible bonds) and investment ratios.
1.8 Certificates of Paid-In Capital and the Fund Launch Date
(1) Certificate of Paid-In Capital
(a) If there is a custodian: the notification on the receipt of investment capital affixed with the company seal of the fund custodian.
(b) If there is no custodian: Certificates issued by third parties such as a capital verification report issued by the accounting firm, a bank receipt issued by the deposit bank of the fund account that the fund investor transfers its investment capital to. If the certificate is a bank receipt, such bank receipt shall be affixed with the company seal of the bank, the name of the bank account shall be the same as the name of the fund and the name of the payer’s account shall be consistent with the investor’s information, otherwise, the fund manager shall issue a statement to explain the reason for the discrepancy.
(c) In case of a transfer of fund units that occurs before filing of the fund: fund units transfer agreement executed by the relevant parties to such transfer.
(2) Certificate of the Fund Launch Date
(a) For a contractual-type fund: A notification on the receipt of investment capital issued by the fund custodian.
(b) For a partnership-type fund: The execution date of the fund contract or the time when the investor’s first installment of investment capital is received.
1.9 Electronic Contract Service Agreement (If Electronic Contract is Adopted)
1.10 Risk Questionnaire for the Fund Investors
1.11 Screenshot of the Fund’s Company Registration Information (Not Applicable to Contractual-Type Funds)
(1) For the establishment or change of a partnership-type fund, it shall apply to the company registration authority to register for establishment or to register for the change according to the procedures and time limits stipulated in the Partnership Enterprise Law.
– If the company registration has been completed: Screenshot of updated company registration information affixed with the company seal of the fund manager.
– If the company registration has not been completed: Receipt issued by the company registration authority that includes the changed information, or if there is no such receipt, a letter of undertaking for the change of company registration.
(2) The screenshot of the company registration information shall include information such as the name of the enterprise, the unified social credit code, the executive partner, duration of the partnership enterprise, major business premise or domicile, business scope and information of all the partners, among which, the information of the partners shall be consistent with the investors’ details or the information included in the partnership agreement.
1.12 Entrustment Management Agreement (For a Partnership-Type Fund whose GP and Fund Manager are Separate Entities)
1.13 Account supervision agreement for the capital collection account for fundraising and settlement capital or related supporting documents (only applicable to the funds who raised their funds after July 15, 2016)
(1) In terms of the requirements for the account supervision agreement for the capital collection account for fundraising and settlement capital or related supporting documents, please refer to Article 13 of the Administrative Measures for the Fundraising Activities of Private Investment Funds.
(2) If the fundraising institution and the account supervision institution are two separate entities: the account supervision agreement for the capital collection account for fundraising and settlement capital;
(3) If the fundraising institution and the account supervision institution is the same entity: the firewall policy and the interest conflict prevention policy.
1.14 Certificates Of The Fund Manager’s Employees (If Employees are Investors of the Fund)
(1) Labor contracts of all the employees investing in the fund executed by the fund manager and the employees, and the social insurance payment certificates issued by the social insurance bureau where the fund manager is registered, such certificates shall be affixed with the seal of the social insurance authority.
(2) If the employee’s social insurance is paid by a third party, the employee’s labor contract, social insurance payment records and the entrustment agreement for social insurance payments entered into with such third party shall be submitted. Meanwhile, such third party shall be an institution with the qualification to provide human resource service.
1.15 The filing sheet of trust plans or the notification of the completion of initial registration with the trust registration system of China Trust Registration Co., Ltd. (if the fund manager acts as the investment advisor of a trust plan) affixed with the company seal of the trust company.
1.16 Outsourcing Service Agreement (If Any)
The outsourcing service agreement shall fulfill the relevant requirements stipulated in the Administrative Measures for the Servicing Business of Private Investment Funds.
1.17 Investment Advisory Agreement (If Any, Applicable to Securities-Type Funds Only)
1.18 Cross-Border Investment Permit Certificate (If the Fund is Involved in Cross-Border Investment)
The cross-border investment permit certificate includes documents like executed QDII agreement, cross-border investment permission granted by the Ministry of Commerce or the State Administration of Foreign Exchange, and approval letter issued by the financial services office.
1.19 The Proof of Relevant Affiliation between the GP and Fund Manager (Applicable to a Partnership-Type Fund whose GP and Fund Manager are Two Separate Entities)
The fund manager shall be an affiliate of the GP. Relevant affiliation refer to the Accounting Standards of Enterprise No.36——Disclosure of Related Parties, i.e., if a party controls, jointly controls or exercises significant influence over another party, or if two or more parties are subject to control, joint control or significant influence from a same party, such parties shall constitute relevant parties. Meanwhile, if the GP is contributed by the senior management team of the fund manager or other personnel holding key positions, the GP and the fund manager shall be determined as having relevant affiliation as well.
1.20 Approval Letters for Government Venture Capital Funds (Only Applicable to Government Venture Capital Funds)
Approval letters for government venture capital funds refer to the approving documents submitted by the department of finance alone or jointly with the competent authority of the relevant industry to the competent government for approval, which are available for public access. Such approval letters shall include the related information of the government venture capital funds and the fund manager.
1.21 Other Supporting Documents
(1) The Letter of Undertaking by an Investor for its Source of Investment Funds and Funding Capacity Certificates (If Any)
(a) Such certificates need be provided only when the AMAC suspects the source of an investor’s investment funds or that the investment amount and the funding capacity of the investor does not match.
(b) The funding capacity certificates shall be the supporting documents such as the proofs of the investor’s financial assets or future income, and the sum of the estimated cash realizable value of the financial assets and estimated future income shall cover the accumulative paid-in capital contributed by the investor to the fund.
(c) For a natural person investor: His/her funding capacity certificates include but are not limited to financial assets such as his/her rights and interest in bank deposits, stocks, bonds, fund units, asset management plans, bank wealth management products, trust plans, insurance products and futures, non-financial assets such as investment-type immovable property/special movable property, company equity, salary and income statement, dividends statement, proof of investment proceeds and tax clearance certificates within a certain time period and other documents.
(d) For a non-natural person investor: Its funding capacity certificates shall include documentation such as a capital verification report, an audit report of the latest year.
(2) Statement of the P2P Affiliate (If the Fund Manager is an Affiliate of a P2P)
(a) The statement on relevant affiliation between the fund manager and the P2P platform and a self-inspection on the risks.
(b) The statement of the compliance of the P2P platform’s business and self-inspection on the risks.
(c) he disposal plan made by the fund manager and its de facto controller for the potential risks derived from the involved P2P business.
(d) The risk disclosure letter shall disclosure the impacts caused by the relevant affiliation between the fund manager and its P2P related party and the risks of the P2P.
(3) Statement Explaining the Business Status in Relation to All Funds Under Its Management (If Any, Only Required Under Special Circumstances)
The statement shall include but is not limited to the details of the information like major business of the underlying assets, investment methods, investment amount, post-investment valuation, the status of title confirmation registration, proposed exit mechanisms and related-party transactions of the funds managed by the fund.
The Fund Filing Checklists also specify the requirements on the relevant proofs for (i) funds that are subject to special policies such as listed companies’ merger and acquisition funds (including bail-out funds), anti-epidemic funds, poverty alleviation funds, (ii) quasi-REITS funds; or (iii) funds that intend to invest in PPP projects.
2. Checklist for Material Change
2.1 For a change in fund manager
(1) A newly-signed letter of undertaking for filing;
(2) A newly-executed fund contract;
(3) Resolution approving the change executed by all the fund investors;
(4) A statement explaining the reason and reasonableness for change of fund manager.
(5) Where the change of fund manager involves a transfer of fund units between the new and old fund managers:
(a) For a contractual-type fund: A fund unit transfer agreement between the new and old fund managers;
(b) For a partnership-type fund: A fund unit transfer agreement between new and old GPs and the latest Company registration information screenshot of the fund.
(6) For change of the GP of a partnership-type fund that is not the fund manager:
(a) A newly executed partnership agreement, company registration information screenshot, resolution approving the change.
(b) Documents proving the relevant affiliation between the fund manager and the GP as well as the management entrustment agreement, if the GP and the fund manager are two separate entities upon completion of change of the fund manager.
(7) If a partnership-type fund involves an increase or decrease of fund investors, increase or reduction of fund capital or transfer of fund units between fund investors:
(a) A newly-executed partnership agreement or resolution for the change;
(b) Certificate of paid-in capital;
(c) Company registration information screenshot;
(d) Fund units transfer agreement (if any).
The fund manager shall update the relevant filing information on the AMBERS system according to the resolution approving the change.
2.2 For change in name of the fund
(1) A newly-executed letter of undertaking for filing;
(2) A newly-executed fund contract;
(3) Company registration information screenshot (not applicable to contractual-type funds
(4) An announcement for the change (if any);
(5) Information disclosure document (if any); and
(6) Resolution approving the change.
2.3 For change of registered address of a partnership-type fund
(1) A newly-executed partnership agreement;
(2) Company registration information screenshot; and
(3) Resolution approving the change.
2.4 For an extension of term of duration
(1) A newly-executed fund contract and a resolution approving the change.
(2) The company registration information screenshot, if it is a partnership-type fund whose extension of term involves the change of the termination date registered with the company registration authority.
2.5 For change of fund custodian
(1) For change of or adding fund custodian: A newly-executed custody agreement or fund contract and a resolution approving the change.
(2) For termination of custody: policies or measures to safeguard the fund property, an agreement for dispute resolution mechanism, and a resolution approving the change.
2.6 For change in outsourcing institution
(1) For change of or adding outsourcing institution: A newly-executed outsourcing service agreement and a resolution approving the change.
(2) For termination of outsourcing service: A resolution approving the change.
2.7 For change in investment advisor
(1) For changing of or adding investment advisor: A newly-executed investment advisory agreement and a resolution approving the change.
(2) For termination of the investment advisory agreement: A resolution approving the change.
2.8 For change in account supervision institution
(1) For change of or adding account supervision institution: A newly-executed supervision agreement for the capital collection account for fundraising and settlement capital, resolution for the change.
(2) For termination of account supervision: A resolution approving the change.
2.9 For change in investment manager: Resolution for the change of investment manager or investment decision maker.
2.10 Change in terms of the fund contract, such as terms relating to investment scope, fee calculation and accrual and subscription and redemption: Newly-executed fund contract and resolution for such change and etc.
3. Checklist for Fund Liquidation
3.1 Upon start of liquidation: A letter of undertaking for fund liquidation and an announcement for fund liquidation.
3.2 Upon completion of liquidation: A liquidation report signed by the fund manager, fund custodian and fund investors. The liquidation report shall explain the details on allocation of fund property.
3.3 For termination of investment advisory relationship (if any): Documents relating to termination of investment advisory relationship.
Please note, the Circular specifies that the AMAC will implement a pre-check function on the AMBER system, which means that a fund filing will be formally processed only when all filing materials have been filed in accordance with the Fund Filing Checklists. We recommend the fund managers to prepare the fund filing application materials completely and accurately according to the applicable requirement for each fund type so as to improve the efficiency of fund filing.
We will continue to monitor the situation and keep our clients apprised of any important developments.
