Source: Lawbridge Law Service Team

Yang Chunbao Sun Zhen

Legal service dynamics of Yang Chunbao's lawyer team

01

Lawyer Yang Chunbao cooperated with Jiji to launch

Online Private Equity Course

Recently, Lawyer Yang Chunbao cooperated with the well-known private equity one-stop service platform Jimou to hold the online private equity course "Private Equity Investment Exit". The course is divided into 11 lectures, which introduce in detail the active exit methods from IPO exit, M&A exit, MBO exit, etc. to passive exit methods such as gambling exit, joint sale exit, forced sale exit, liquidation exit, etc. The way the fund is withdrawn from the sub-fund. It is well received by the majority of private equity practitioners.

02

Attorney Yang Chunbao was invited by the Fudan University Legal Alumni Association to give a special lecture

On June 25th, the Fudan University Legal Alumni Association, the Fudan University PE/VC Alumni Association and the Fudan Alumni Innovation and Entrepreneurship Club jointly held a monthly sharing session. Attorney Yang Chunbao was invited to bring the theme of "Comprehensive, Comprehensive, The special lecture on "In-depth Analysis" was warmly responded and actively interacted by the alumni.

Various announcements of the Fund Industry Association

The Asset Management Association of China (hereinafter referred to as the "Association") issued the "Announcement on Cancellation of the Registration of the 29th Batch of Lost Private Equity Fund Managers whose Publicity Period Expired for Three Months and Did Not Actively Contact the Association" on June 2, 2022 ” said that the existing 38 institutions including Beijing Zhengfang Global Investment Management Co., Ltd. have reached the cancellation conditions of the three-month public announcement period and did not take the initiative to contact the association and provide valid certification materials. The association will cancel the registration of private equity fund managers of the 38 institutions in accordance with the "Announcement on Optimizing the Self-discipline Mechanism of Disconnected Institutions and Publicizing the Eleventh Batch of Disconnected Private Equity Institutions" (Zhongji Xie Zi [2017] No. 8). The above situation shall be entered into the capital market integrity file database.

On June 24, 2022, the association issued the "Announcement on Cancelling the Registration of Beijing Jinyao Capital Management Co., Ltd. and other 30 Private Fund Managers that have not submitted special legal opinions after the expiration of the period", stating that the existing Beijing Jinyao Capital Management Co., Ltd. If 30 private equity fund managers have abnormal business conditions and fail to submit a special legal opinion that meets the requirements within 3 months after the written notice is issued, the association will cancel the private equity fund manager registration of the 30 institutions, and will The above circumstances are entered into the capital market integrity file database.

Association's self-regulatory document

1. "Administrative Measures for the Electronic Contract Business of Private Investment Funds (for Trial Implementation)"

On June 2, 2022, the Association issued the "Administrative Measures for the Electronic Contract Business of Private Investment Funds (Trial)" ("Administrative Measures for Electronic Contracts"). The measures have a total of 36 articles in five chapters, including general provisions, registration of electronic contract business service institutions, business norms, self-discipline management and supplementary provisions. in particular:

(1) General Provisions: It specifies the definition and connotation of electronic contracts, the applicable objects of the measures, the due diligence of private fund parties on electronic contract business service agencies, and the publicity and membership of electronic contract business service agencies;

(2) Registration of electronic contract business service institutions: It specifies the registration requirements of electronic contract service institutions (that is, the conditions that must be met) and the relevant registration materials to be submitted. These requirements include paid-in capital, corporate governance, legal compliance , organizational structure, service experience, executive qualifications, network security, system connection, and fault response;

(3) Business Specifications: It specifies the content of electronic contract business, the necessary terms of the electronic contract business service agreement, and the obligations that electronic contract business service institutions should perform (including conducting investor identification, prudent selection and regular evaluation of electronic certification services). Providers use ciphertext storage for key data, use cryptographic algorithms approved by the national cryptography authority, use timestamps approved by the National Timing Center, conduct annual overall evaluations, report and store information to the association, conduct annual audits, etc.) ;

(4) Self-discipline management: including the self-discipline inspection and continuous evaluation of the Association, as well as the self-discipline measures and various penalties that electronic contract business service agencies will receive if they violate the Measures.

2. "Notice on Matters Related to the Registration and Filing of Private Fund Managers"

The Association issued the "Notice on Matters Related to the Registration and Filing of Private Fund Managers" (Zhongji Xie Zi [2022] No. 203) on June 2, 2022, stating that in order to guide the standardized development of the industry and facilitate private fund managers and applicants For the registration and filing business, the Association has updated the "List of Application Materials for Private Fund Manager Registration" ("New List"), and issued the "Key Points of Private Investment Fund Filing." In addition, within a week after the announcement of the notice, the association also held a number of online trainings on the new version of the list and the key points of private fund filing.

Compared with the old version of the list, the new version of the list integrates multiple letters of commitment, clarifies the work experience that different executives should have, refines the requirements for investment ability materials, and strengthens the reporting of integrity information. Regarding the key points of private equity fund filing, the Association issued two issues of "Private Fund Filing Case Publicity", compared with the existing laws and regulations, self-discipline rules and the relevant requirements of private fund operation, combined with the prominent problems exposed by major violations of laws and regulations in the industry in recent years, Refined the core elements of products in various links such as fundraising, investment, and management, and clarified and refined the contents of private equity fund filing.

On the basis of in-depth study of the new version of the list and the key points of private equity fund filing, Yang Chunbao's team of lawyers participated in the relevant online training held by the association throughout the process.

3. "Private Fund Manager Registration and Private Investment Fund Filing Business Guidelines"

On June 24, 2022, the Association issued the "Guidelines for Private Fund Manager Registration and Private Investment Fund Filing Business", covering the registration of private fund managers, major changes in private fund managers, private fund managers' application for active cancellation of registration, Private equity fund filing, major changes to private equity funds, private equity fund liquidation, private equity fund reverse-linked policy application, etc., and "Annex" were prepared for the aforementioned registration and filing matters. Taking the registration of private fund managers as an example, the annexes to the business guidelines for private fund manager registration include "Guidelines for Legal Opinions on Manager Registration", "Registration and Filing Commitment Letter Template", "List of Manager Registration Materials", and "Management of the Comprehensive Submission Platform for Asset Management Business". The four materials of "Guidelines for the Operation of Person Registration Business" cover the core norms and documents required for the initial registration of private fund managers. Therefore, this guideline provides clear self-discipline guidelines for the registration and filing of private equity fund managers and private equity funds.

Typical case

1. If an investor anonymously holds the shares of the company to be listed through an asset management institution, the relevant entrusted holding agreement (including but not limited to the "Entrusted Investment Management Agreement", etc.) The equity structure must be clear) and is deemed invalid, and the income obtained by the asset management institution due to the entrusted holding of shares shall be based on the principle of consistency between the income and the risk, and the income shall be mainly distributed to the party that bears the investment risk (ie the investor)

Case

Beijing Yifuhai Asset Management Co., Ltd. and other contract disputes [(2021) Jingminzhong No. 931]

Main facts

In July 2011, Jia Hong signed the "Entrusted Investment Management Agreement" with Tianjin Yifuhai Partnership ("Tianjin Yifuhai") and agreed that: Jia Hong provided 5 million yuan of funds to entrust Tianjin Yifuhai to invest in the company to be listed in its name—— The equity of Jiejia Flextronics; if Jiejia Flextronics is reformed and successfully listed, Tianjin Yifuhai informs Jia Hong of the number of shares and share ratio of Jiejia Flextronics at the time of the public offering and listing of the entrusted investment funds ( "Holding shares on behalf of others"); after the expiry of the lock-up period for the shares of Jiejia Flextronics held by Tianjin Yifuhai (including the shares held on behalf of others), Jia Hong notified Tianjin Yifuhai at the current market price (or a certain amount that can be reduced) within a certain time. Holding price) to reduce the entrusted shares; Tianjin Yifuhai pays the funds to Jia Hong within 3 working days after the funds for reducing the entrusted shares are received. After the "Entrusted Investment Management Agreement" was signed, Jia Hong (including its authorized subject) remitted 5 million yuan to Tianjin Yifuhai. After the successful share reform and listing of Jiejia Flextronics, Jia Hong notified Tianjin Yifuhai to reduce its entrusted shares after the expiry of the lock-up period of its entrusted shares, but Tianjin Yifuhai did not report to Jia as agreed after reducing its entrusted shares. Red pays the proceeds from the reduction of the shareholding. Jia Hongsui sued and demanded that Tianjin Yifuhai pay the income tax and interest after reducing the shares held by Jiejia Flextronics, as well as Jia Hong's rights protection costs.

Referee's point of view

The court of first instance held that the "Entrusted Investment Management Agreement" signed by Jia Hong and Tianjin Yifuhai was implemented by the actual investor Jia Hong who contributed and enjoyed the investment rights, and the nominal investor Tianjin Yifuhai was the nominal shareholder. The act of disposal, that is, the act of holding shares on behalf of others. The "Securities Law" requires companies to be listed to have a clear shareholding, and restricts listed companies from holding shares anonymously. This is a basic requirement for the supervision of listed companies. For example, if the real shareholders of listed companies are not clear, other listed companies have a series of information disclosure requirements and related transactions. Regulatory measures such as censorship and executive avoidance will fail, and will inevitably damage the legitimate rights and interests of non-specific investors, thereby undermining the basic transaction order and basic transaction security in the capital market, and causing damage to social and public interests. In this case, Tianjin Yifuhai participated in the listing and issuance of Jiejia Flextronics in its own name, ranking among the top ten shareholders of Jiejia Flextronics, but concealed the identity of the actual investor Jia Hong, so Tianjin Yifuhai, Jia Hong The behavior of the two parties constituted the issuer's anonymous holding of shares. The "Entrusted Investment Management Agreement" violated a series of regulatory requirements for the company's listing, violated the public order of the securities market, and damaged the public interests of the securities market. Therefore, the court of first instance held that the Entrusted Investment Management Agreement was invalid. After the contract is invalid, the property acquired due to the contract shall be returned; if it cannot be returned or it is unnecessary to return, it shall be compensated at a reduced price. The party at fault shall be responsible for compensating for the losses suffered by the other party, and if both parties are at fault, they shall each bear corresponding responsibilities. As for the stock investment in this case, the purpose is to obtain stock returns and it is accompanied by investment risks. When applying the principle of fairness to determine the responsibilities of both parties to the contract, the following two factors should be considered. First, the investment income The degree of contribution and consideration of who actually bears the opportunity cost and capital cost during the investment period, according to the principle of "whoever invests, whoever gains", the income is mainly distributed to the party who bears the investment cost, and the second is the transaction arrangement and consideration of investment risks. Who will actually bear the unfavorable consequences of investment losses, in accordance with the principle of consistency between income and risk, will mainly distribute the income to the party who bears the investment risk. Based on this, the court of first instance comprehensively considered the contribution of Jia Hong and Tianjin Yifuhai Partnership to the investment income and the investment arrangements, and determined that Jia Hong should receive 70% of the investment income, and Tianjin Yifuhai Partnership should receive 70% of the investment income. 30%. Tianjin Yifuhai appealed against it, and the court of second instance finally rejected its appeal and upheld the original judgment.

Judicial Opinions and Local New Regulations

1. "Several Opinions on Providing Judicial Guarantee for Deepening the Reform of the New Third Board and Establishing the Beijing Stock Exchange"

On June 24, 2022, the Supreme People's Court issued the "Several Opinions on Providing Judicial Guarantee for Deepening the Reform of the New Third Board and Establishing the Beijing Stock Exchange" ("Guarantee Opinions"). One of them deserves the special attention of private equity fund practitioners participating in the private placement of listed companies. Article 9 of the safeguard opinion stipulates that in the process of refinancing such as private placement of listed companies, investors will take advantage of their dominant position to communicate with listed companies and their holding companies. The "fixed increase and guaranteed minimum" nature clause entered into by shareholders, actual controllers or major shareholders, because it gives investors special rights to guarantee income superior to other shareholders of the same type, which disguisedly increases the financing cost of small and medium-sized enterprises and violates the fairness of the Securities Law. Principles and relevant regulatory provisions, the people's court shall find the clause invalid in accordance with the law. In the past, investors who participated in the private placement of listed companies required the major shareholders or actual controllers of the listed company to sign a “guaranteed principal and income guarantee” agreement (commonly known in the industry as a “fixed increase guarantee agreement”), because it did not harm the listed company and its shareholders. and/or the interests of creditors, without undermining the stability of the securities market or increasing market risks, etc., will be deemed valid by judicial authorities in most cases. Although the safeguard opinion is only applicable to the New Third Board and the Beijing Stock Exchange, we believe that Article 9 of the safeguard opinion will also apply to the Shanghai and Shenzhen Stock Exchanges in the future. Therefore, the promulgation of the guarantee opinions can increase investment risks for private equity funds that participate in the fixed increase of listed companies. For private equity funds that do not have sufficient investment capacity, whether to continue to participate in the private equity increase of listed companies can be a result of "thinking twice" Then go."

2. "Shanghai State-owned Enterprise Private Equity and Venture Capital Fund Share Evaluation Management Guidelines (Trial)"

In order to strengthen the evaluation and supervision of state-owned assets and regulate the evaluation and management of private equity and venture capital fund shares of state-owned enterprises in Shanghai, the Shanghai State-owned Assets Supervision and Administration Commission issued the "Shanghai State-owned Enterprise Private Equity and Venture Capital Fund Share Evaluation Management" on June 28, 2022. Work Guidelines (Trial)” (“Work Guidelines”), which will be implemented on a trial basis from July 1, 2022.

There are 18 full texts of the work guidelines, covering the scope of application, the filing process of the state-owned fund share evaluation project, the appendix of the state-owned fund share evaluation report, the review key points of the state-owned fund share evaluation report, the expert evaluation mechanism of the state-owned fund share evaluation project, and the evaluation of the state-owned fund share project. The announcement before filing, and the handling methods of relevant entities violating the work guidelines, etc. The working guidelines fill the policy gap in the assessment and management of state-owned funds, and help state-owned funds exit through share transfer.