NDRC lays down standards for the fund-raising and operations of private equity enterprises

On 31 January, the Office of the National Development and Reform Commission (NDRC) issued the Further Standardizing the Work of Developing and Filing Equity Investment Enterprises in Pilot Areas Notice (Fa Gai Ban Cai Jin [2011] 253). The Notice is applicable to equity investment enterprises (EIEs) in the pilot areas of Beijing, Shanghai and Tianjin municipalities and Jiangsu, Zhejiang and Hubei provinces.

Mandatory filing and exceptions

The Notice stipulates that EIEs mainly engaged in the business of non-publicly traded equity investment, as well as EIEs that invest in other EIEs (known as funds of funds), which are registered with the administrations of industry and commerce in the pilot areas mentioned above should file with the NDRC and accept its file management. However, in the following three cases they may be exempted from filing obligations:

• where they have already filed as venture capital enterprises in accordance with the Management of Venture Capital Enterprises Interim Measures;
• where the amount of capital (including funds actually invested as well as funds committed) is less than RMB500 million (US$76.4 million) or the equivalent in foreign currency; or
• where they have been wholly funded and established by a single institution or a single natural person, or, if they have been funded and established by two or more investors, where those investors are all wholly owned subsidiaries of one institution.

Business Law Digest is compiled with the assistance of Haiwen & Partners. The authors can be emailed at baochen@haiwen-law.com. Readers should not act on this information without seeking professional legal advice.