Analysis of Zhuhai’s QFLP pilot programme

On 21 December 2018, Zhuhai Financial Bureau released the Interim Measures of Zhuhai Municipality for the Administration of the Pilot Programme for Foreign-invested Equity Investment Enterprises (QFLP [qualified foreign limited partner] pilot programme of Zhuhai) on its official website. This article provides a brief introduction to the highlights of Zhuhai’s QFLP pilot programme, with consideration to QFLP pilot programmes of other places.

Most of the QFLP funds are private equity (PE) funds with foreign investors as its limited partners. Generally, QFLP funds focus on investing in non-publicly traded company equities. Compared with other foreign-invested enterprises, QFLP funds benefit particularly from more efficient foreign exchange treatment, which is considered the main advantage at the policy level. Specifically, through the QFLP pilot programmes, capital in foreign currencies may be converted into renminbi up to the quota at the fund level, and therefore investments proceeds may be paid in renminbi.

A QFLP fund manager under the pilot programme measures of Zhuhai is an enterprise that is: (1) recognized by the pilot programme leadership team appointed under the pilot programme measures of Zhuhai; (2) established by foreign investors directly as shareholders; and (3) focused on the promotion, establishment or management of equity investment enterprises.

Chen Fang is a partner and Wen Limei is an associate at Zhong Lun Law Firm