The Asset Management Association of China (AMAC) published a notice on matters relating to the registration and filing obligations of Chinese private fund managers (Notice, available here in Chinese). Together with the Notice, AMAC issued (i) revised checklists for the registration application of private fund managers and (ii) key points to note for filing of private funds in Mainland China. AMAC issued separate checklists and key points for (i) private securities fund houses and (ii) private equity and venture capitalist firms.
The revised checklists require information over nine areas including (i) basic information about the applicant, (ii) relevant mechanisms such as risk management, information disclosure and transaction records, (iii) licensing details of the applicant and information of affiliates, (iv) integrity information, (v) financial statements, (vi) information about funders, (vii) information about the largest shareholder and actual controlling person, (vii) information about senior management and (viii) a legal opinion. The revised checklists aim to improve the transparency of the AMAC application process and facilitate the preparation of application materials by private fund managers.
It is worth noting that, among other key points, AMAC specifically reminds managers of the naming rules for private funds. Similar requirements are in fact set out in the Private Investment Funds Naming Guidelines (available in Chinese here) issued by AMAC back in 2018. For private hedge funds:
1) the name of the fund should not include:
- misleading terms such as “safe”, “risk-aversion”, “principal-guaranteed”, and “sure-win”;
- terms inconsistent with the fund’s risk profile such as “high return” and “no risk”;
- terms exaggerating the performance of the fund such as “the best performance”, “the largest” and “leader”;
- terms that are easily confused with asset management products issued by financial institutions such as “asset management plan”, “trust plan”, “separately managed account”, “wealth management products”, etc.; or
- the names of well-known persons, well-known institutions or trade names (except with lawful authorisation);
2) the managers shall pay attention to:
- whether the name of the fund includes terms such as “equity investment”, “mixed investment”, and “fixed income investment” which supposedly reflect the specific investment area of the fund;
- whether the name of the fund includes the full name of the manager or an abbreviation that clearly represents the manager’s name;
- if the fund is a classification fund, whether the term “classified” or “structured” is included in the fund name; and
3) the managers shall also pay attention to whether the fund name contains words that violate laws, administrative regulations or relevant regulations of the China Securities Regulatory Commission, and whether it contains words that violate public order and good morals.
In Hong Kong, for an open-ended fund company (OFC), its name and any subsequent change to the name is subject to the review and approval by the Securities and Futures Commission (SFC). The Code on Open-Ended Fund Companies (OFC Code) provides, inter alia, that the name of an OFC must in the opinion of the SFC not be misleading or otherwise undesirable. The SFC may take into account whether the proposed name is inconsistent with the nature, investment objectives or policy of the OFC; whether it is substantially similar to the name of another OFC; whether it would give investors a sense of assurance or security not justified by the underlying features of the OFC; and whether it might lead investors into inferring or might otherwise create the impression that persons other than the directors and/or investment manager are responsible for the OFC. In our experience, the SFC will review the name of an OFC as well as the name of its sub-fund(s) in the case where the OFC is an umbrella fund, and by reference to relevant rules of the OFC Code, the SFC may require an explanation of the proposed name from the applicant in the process of incorporating an OFC.
For further information, please contact:
Fiona Fong, Partner, Deacons
fiona.fong@deacons.com
