Analysing new rules for managing private investment funds

By Jenny Gu and Zoey Peng, Brightstone Lawyers

The new Regulations on the Supervision and Administration of Private Investment Funds come into force on 1 September. This article analyses the significance and main provisions of the regulations.

China’s private fund industry has developed relatively quickly in recent years, playing a positive role in serving the real economy and supporting entrepreneurship and innovation.

As of the end of July 2023, there were 21,996 private fund managers and 152,878 active private funds managing funds totalling RMB20.82 trillion (USD2.85 trillion).

Jenny Gu
Jenny Gu
Senior Partner
Brightstone Lawyers
Tel: +86 189 3064 1138

Prior to promulgation of the new regulations, although the private fund industry was developing rapidly, its regulatory system still needed to be improved.

The Securities Investment Fund Law, formulated by the Standing Committee of the National People’s Congress, held the status of a law but its regulatory focus was primarily on public funds, and only a small part of chapter 10 makes principle provisions for private securities funds. There was no upper-tier law directly governing private equity funds.

The Interim Measures for the Supervision and Administration of Private Investment Funds, subsequently issued by the China Securities Regulatory Commission (CSRC), provided for the relevant requirements of private funds in a more comprehensive manner, but its legal level as a departmental regulation was low.

In addition, the Asset Management Association of China (AMAC) issued a series of self-regulatory rules, but they were cumbersome and disorganised.

The new regulations, as the first administrative regulation of the private fund industry, solve the problem of no upper-tier law governing private equity funds. They mark enhancement of regulatory standards, ushering in a new phase of high-quality development for the industry and carrying profound significance for its future growth.

Follow-up work

Follow-up work after release of the regulations includes:

Zoey Peng
Zoey Peng
Brightstone Lawyers
Tel: +86 153 0093 9826

(1) Improving departmental regulations, normative documents and self-regulatory rules. It is necessary to: revise the interim measures in accordance with the regulations; further refine the relevant requirements; gradually improve the relevant systems of fund-raising, investment operation and information disclosure; and implement differentiated supervision and improve the legal rule system according to the business type of private funds, scale of assets under management, continuous compliance situation, risk control situation, and ability to serve investors.

Meanwhile, the AMAC should be guided to improve self-regulatory rules such as registration and filing, contract guidelines and information reporting in accordance with the regulations and the administrative and regulatory rules of the CSRC.

(2) Comprehensively publicise, interpret and implement the regulations, carry out training for private fund managers, custodians, service institutions and practitioners, and guide all parties to accurately and fully learn and understand the key points of the regulations to improve the level of standardised operation.

(3) Further promote optimising the development environment of the private fund industry, smoothing out the various aspects of fundraising, investing, managing and exiting, and pushing forward high-quality development of the private fund industry to a new level.

Main provisions

The regulations comprise a total of seven chapters and 62 articles. These chapters cover a range of important aspects including the general provisions, private fund managers and custodians, fundraising and investment operations, special provisions on venture capital funds, supervision and administration, legal liabilities and miscellaneous provisions. The regulations insist on strengthening the control of risk at source, delineating the regulatory bottom line, and promoting the standardised operation of private funds in the whole process.

Main contents include the following aspects.

Strengthening regulatory requirements. The regulations strengthen supervision of private fund managers, reinforce professionalism requirements for executives, and mandate that private fund managers register with the AMAC, ensuring they meet ongoing operational requirements and possess the necessary capabilities for private fund management. Private fund custodians are required to fulfil their duties in accordance with the law.

Standardising fundraising and filing requirements. The regulations stick to the bottom line of non-public and qualified investors in fundraising activities and specify that private funds must be filed with the AMAC after completion of the fundraising.

Standardising investment activities. While clarifying the investment scope and negative list of private fund properties, the regulations reserve space for orderly innovation of private fund products. Institutional arrangements should be made for specialised management and management of related-party transactions, and a sound monitoring mechanism for private funds should be established.

Providing market-oriented exit. To build an industry ecology of orderly entry and exit. In cases where a private fund manager needs to exit the industry, the regulations provide that the AMAC should promptly cancel the registration of the private fund manager and make it public. In situations where private funds cannot operate or need to terminate, professional institutions are granted the authority to change the private fund manager, amend or prematurely terminate fund contracts, and organise fund liquidation.

Toughening supervision and punishment. The regulations make it clear that the CSRC may take measures such as on-site inspection, investigation and evidence collection, account inquiry, and access, copying and sealing of case-related information. Measures may extend to ordering temporary business suspension, personnel changes, mandatory auditing and takeover, in accordance with the law, if a private fund manager is found to have violated laws and regulations.

Jenny Gu is a senior partner at Brightstone Lawyers. She can be reached by phone at +86 189 3064 1138 and by e-mail at

Zoey Peng is an associate at Brightstone Lawyers. She can be reached by phone at +86 153 0093 9826 and by e-mail at