Recordal of private funds: Common issues and responses

By Chen Min and Lu Xili, Boss & Young

The Methods for the Registration of Private Investment Fund Managers and the Recordal of Funds issued by the Asset Management Association of China (AMAC) specify that a private investment fund is required to make a record through the Private Fund Registration and Recordal System or the Comprehensive Asset Management Business Submission Platform, which came online on 6 September 2016, within 20 working days after completion of an offering. The authors propose to collate and analyze issues commonly seen in the records of private fund products from their cumulative experience in the private fund sector in recent years.

Chen Min Partner Boss & Young
Chen Min
Boss & Young


The materials submitted by a manager are required to be accurate and complete, failing which the recordal application will be returned. When preparing these materials, the manager needs to examine whether the documentation to be submitted is consistent with the objective facts, whether it is consistent with the publicly registered information and whether it is consistent with other materials that are uploaded. For example: (1) all the recorded materials need to be signed and the signatures/seals and signature dates of all of the investors must be in order; and (2) the information in the recorded materials is required to be consistent with the information registered with the administration for industry and commerce (AIC).

Inconsistencies commonly seen in practice include: an inconsistency between the date of establishment of a fund constituted in the form of a partnership and the establishment date registered on the business licence of the partnership that serves as the medium for the fund; an inconsistency between the information on the partners of the fund and the information on the partners registered with the AIC by the partnership that serves as the medium for the fund; and the partnership agreement for the fund being the AIC version of a partnership agreement, which fails to reflect the relevant information required by the AMAC guideline version.


In the course of making a record of a private fund product today, clarifying the investment orientation and digging down to the underlying assets are issues that the reviewers pay close attention to. Accordingly, when writing up the recordal application materials, it is necessary to clearly state the investment method (e.g., direct investment, investment through a certain fund or asset management plan, investment through a partnership, etc.); and specify the investment targets (e.g., equity of unlisted companies, entrusted loans, rights to returns, etc.). Based on recent practice, recording a private fund product of a fund of funds that lacks a clear orientation is very difficult.

Lu Xili Partner Boss & Young
Lu Xili
Boss & Young

Affected by the Administrative Rules for the Recordal of Private Asset Management Plans of Securities and Futures Business Firms, No. 4: Investment in Real Estate Development Enterprises and Projects by Private Asset Management Plans, the requirements in respect of the clarity of the investment orientation for the recording of a real estate private fund product are currently very stringent, usually requiring disclosure of the ultimate investment orientation of the fund, the purpose of the proceeds and specific investment projects, and the uploading of the underlying investment contract.

For example, when recording a contract on a fund of funds that invests in the real estate industry, not only is it necessary to disclose the sub-fund partnership agreements as direct investment documents of the fund of funds, but it is also necessary to disclose whether the funds of the fund of funds are ultimately to be used for the project monies, fitting out monies or other purpose, and may even require the uploading to the recordal system or asset management platform of such transaction documents as the capital increase contract or entrusted loan contract for the underlying assets in which a sub-fund is investing.


The documents attesting to the scale of an offering by a private fund currently accepted by the AMAC must be issued by a third party, with such documents usually including: (1) proof of the funds being credited to the account issued by the custodian; if the private fund has a custodian, submission of the proof of the funds having been credited to the account issued by the custodian will be required; (2) the capital verification certificate issued by an accounting firm; (3) industry and commerce file search materials bearing the file stamp of the AIC; and (4) bank slip (each instalment of the investment is required to have a corresponding slip bearing the official seal of the bank). If the manager submits bank slips as proof of the scale of the offering, they must be uploaded in the sequence of the list of investors and state the payer, the payee and the amount. Particular attention needs to be paid to the fact that the AMAC expressly prohibits the payment of fund investment monies on the behalf of another, accordingly, the information on the investor must be consistent with that indicated on the bank slip.

When a transfer of fund units occurs, it is generally necessary to upload the fund unit transfer agreement and proof of the bank remittance. In practice, this recordal operation further requires that cash may not be used for the transaction in the course of the transfer, and the transaction may not be carried out for zero consideration.

As the recordal of a private fund product requires a relatively large quantity of documentation, there is a relatively large difference between the requirements of the recordal system and the asset management system. For example, the asset management platform has added to the product recordal system several requirements, such as the provision of detailed information on the structure and leverage of the product (i.e., a division into different types of units), article-by-article confirmation of whether the partnership agreement or fund contract complies with the relevant AMAC guidelines, provision of detailed information on the investment adviser or financial adviser, a more detailed categorization of investors and the filling in of several items on the investment manager or investment decision maker. In addition, the rapid development of the private fund industry in recent years has resulted in insufficient experience among the employees in the industry.

These are the reasons why the return of applications for the recordal of private fund products occurs from time to time. In sharing this column, I welcome exploration and exchange with others in the industry.

Chen Min and Lu Xili are partners of Boss & Young in Shanghai


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