Preface

According to the Securities Times, as of May 31, 2022, the Shanghai Private Equity and Venture Capital Share Transfer Platform (hereinafter referred to as the "Shanghai S Fund Trading Platform") under the Shanghai Equity Depository Trading Center (hereinafter referred to as the "Shanghai Stock Exchange Center") is also the second S Fund Trading Platform in China. Since its trial operation on December 2, 2021, 8 funds have been listed in half a year, and 5 have been closed, The total transaction amount is about 840 million yuan. At the same time, policies related to S fund transactions have also been intensively introduced recently. For example, the Standing Committee of Shanghai Municipal People's Congress issued the Several Provisions on the Development of Green Finance in Pudong New Area of Shanghai on June 22, 2022, which stipulates that Shanghai S fund trading platform can carry out S fund share custody, pledge and other businesses; Another example is the Guidelines on the Evaluation and Management of Private Equity and Venture Capital Fund Shares of State owned Enterprises in Shanghai, officially issued by the Shanghai Municipal SASAC on June 28, 2022, which covers all aspects of the provisions on the evaluation of private equity/venture capital fund shares of State owned enterprises, including evaluation filing, evaluation report, expert review, etc.

As we all know, the exit of private equity and venture capital has been puzzling many institutional investors (because institutional investors often have large investment, they also bear a large investment risk), and the relevant judicial data also verified the problem of "difficult exit". The Shanghai Financial Court, in its recently released Notice on the Trial Work of the Shanghai Financial Court (2018-2021), said that in recent years, private equity cases mostly occurred in the exit link. The data of private equity cases accepted by the Court reflected that the private equity market supervision lacked regulation on the liquidation and exit of private equity funds, as well as supporting private equity evaluation norms and exit market platforms, The industry operation in the exit liquidation link is not standardized. Therefore, it is "just in need" to expand the exit channels of private equity/venture fund investors (such as the S Fund trading platform) as soon as possible, and to issue relevant policies for private asset evaluation (such as the work guidelines of Shanghai SASAC). This article is intended to introduce the relevant business guidelines of the Shanghai S Fund Trading Platform, which has been in trial operation for more than half a year, in the form of questions and answers, with a view to providing beneficial reference to the institutional investors of the vast number of private equity/venture capital funds (i.e., the subjects who plan to participate in the transfer/transfer of S Fund shares).

Question 1: What can Shanghai S Fund Trading Platform do?

Answer: As shown in Figure 1 below (real-time screenshot of the home page of Shanghai S Fund Trading Platform), the services provided by Shanghai S Fund Trading Platform include four categories: trading services, investor services, intermediary services and valuation services (trial operation). Among them, transaction services refer to various transaction related services provided by Shanghai Stock Exchange Center for the subject to transfer private equity and venture capital fund shares (hereinafter referred to as "S Fund shares"); Investor services refer to the relevant services (including account opening services, investor education, etc.) provided by Shanghai Stock Exchange Center for investors who intend to transfer S fund shares; Intermediary services refer to the qualification examination and approval conducted by Shanghai Stock Exchange Center for the intermediary institutions (i.e. the intermediary institutions shown in Figure 2) that are intended to provide various professional services for the transfer of S Fund shares; The valuation service refers to the calculation formula for the valuation of S fund shares set by Shanghai Stock Exchange Center in reference to the valuation principles and valuation methods specified in the Guidelines for the Valuation of Non listed Equity Investment in Private Investment Funds (Trial), and based on the relevant information about the target fund shares entered by the system users, it will automatically calculate through the system, supplemented by certain rationality analysis, and generate the valuation reference opinions for the target fund shares.

Question 2: How do investors open accounts on the Shanghai S Fund Trading Platform?

Answer: According to the List of Account Opening Materials of Shanghai S Fund Trading Platform, if an investor is a general legal person institution, it is necessary to submit: the original and duplicate of the business license/public institution legal person certificate/social organization legal person registration certificate and the copy affixed with the official seal; The copy of the identity certificate of the legal representative affixed with the official seal; Power of Attorney (to be provided by persons other than the legal representative); The original of the identity certificate of the handler and the copy with the official seal affixed; The audit report (statement) of the previous year or the balance sheet of the first half year shall be affixed with the official seal (the net assets shall not be less than 10 million yuan); Letter of Commitment on the Authenticity of Financial Statements (affixed with official seal); Account Opening Application Form (Institution); Securities Transfer Service Agreement; Investor Risk Disclosure Statement; Tripartite Agreement on Depository Service of Transaction Settlement Funds of Investors Transferring Shares of Non listed Companies (if any); Joint vouchers 1 and 2 (the commitment letter of the account holder, in duplicate, with Shanghai Stock Exchange Center and the account holder holding one copy respectively); Questionnaire on Risks of Private Investment Fund Investors (Institutions); Risk Mismatch Warning Letter and Investor Confirmation, and other materials required by Shanghai Stock Exchange Center. Templates are available for download on the Shanghai S Fund trading platform, except for the institution's main body qualification certificate, legal representative/agent information, audit report (statement), and the Tripartite Agreement on Depository Service of Transaction Settlement Funds for Investors Transferring Shares of Non listed Companies.

If the investor is a special institution (limited partnership, etc.), when opening an account, in addition to the materials to be submitted for opening an account by a general legal person institution, it is also required to submit: a copy of the partnership agreement, etc. filed by the industry and commerce department, with the official seal affixed; Supporting documents filed in the fund industry association (if not filed in the fund industry association, the final holder shall provide the certificate of qualified investor); Letter of Commitment for Opening Accounts with Special Institutions (with template).

Question 3: What application documents should be provided for the listing and transfer of S Fund?

Answer: According to the List of Application Documents for Listing and Transfer of Private Equity and Venture Capital Units (Trial Version) on the Shanghai Fund Trading Platform, the application documents required by unit holders for listing and transfer of S Fund on the platform include: Application for Listing and Transfer; Listing transfer instructions; Recommend listing transfer agreement (if involved); Documents certifying the valid subject qualification of unit holders; Business license of the fund to which the unit belongs; The valid partnership agreement, articles of association or other relevant documents certifying that the unit holder holds fund units; Audit report of the latest year of the fund to which the unit belongs; Annual report of the latest year of the fund to which the unit belongs; Fund share evaluation or valuation report (if any); Documents certifying that the transfer is in compliance with laws and regulations, the partnership agreement and the articles of association; Commitment on clear, clean and transferable ownership of fund units; Decision approval documents of the state-owned assets supervision and administration department or other competent authorities (if involved); Documentary evidence of the Fund's filing with the Fund Industry Association; Documents certifying the registration of the fund manager in the fund industry association; Other materials required by Shanghai Stock Exchange Center.

Question 4: What are the trading methods of S Fund's listing and transfer?

A: At present, Shanghai Stock Exchange Center provides two online trading methods for S fund share transfer. One is one-way bidding. During trading, the intended transferee will make a real-time bid. At the end of trading time, the higher price will be obtained. The other is agreement transfer, which can be an inquiry transaction or a price negotiated by both parties. After clicking the trading service on the home page of S Fund Trading Platform of Shanghai Stock Exchange Center, you will see the interface shown in Figure 3. The user can choose between two trading methods, namely, "one-way bidding" or "agreement transfer", after logging into S Fund Trading Platform of Shanghai Stock Exchange Center.

Question 5: How to charge for the listing and transfer of S Fund units?

Answer: According to Shanghai Stock Exchange Center's Details of Fees for Private Equity and Venture Capital Share Transfer Business and Notice on Implementing Preferential Transaction Fees for Private Equity and Venture Capital Share Agreements, the fees payable by each entity participating in the listing and transfer of S Fund shares include:

1. Unit holders:

(1) Examination fee for listing of fund units: 5000 yuan;

(2) Fund share display review fee: 5000 yuan;

(3) Non public agreement transfer review fee: 5000 yuan;

(4) Transaction service fee (unilateral bidding): calculated according to the descending cumulative method, 0.3% of the transaction amount is for the part below 10 million yuan (inclusive); 0.2% of the transaction amount for the part between 10 million yuan and 100 million yuan (inclusive); 0.1% of the transaction amount for the part between 100 million yuan and 500 million yuan (inclusive); 0.05% of the transaction amount for the part between more than 500 million yuan and less than 1 billion yuan (inclusive); 0.02% of the transaction amount for the part of more than 1 billion yuan; The minimum transaction service fee for unilateral bidding is 15000 yuan;

(5) Transaction service fee (negotiated transfer); 0.1% of the transaction amount for the part between 10 million yuan and 100 million yuan (inclusive); 0.05% of the transaction amount for the part between 100 million yuan and 500 million yuan (inclusive); 0.03% of the transaction amount for the part above 500 million yuan and below 1 billion yuan (inclusive); 0.01% of the transaction amount for the part above 1 billion yuan; In case of transfer by other means of agreement, the transaction service fee shall be charged at 1.5 ‰ of the transaction amount; The minimum transaction service fee for agreement transfer is 15000 yuan;

(6) Service charge of share transfer service agency: determined by the parties through consultation.

2. Fund Manager: Fund display review fee of 5000 yuan.

3. Investors:

(1) Account management fee: 500 yuan; Loss reporting and account transfer fee 500 yuan/time; No account transfer fee for loss reporting: 10 yuan/time; Account cancellation fee 10 yuan; The fee for changing account information is 500 yuan/time; Account fee of consolidated investors: 20 yuan/time;

(2) Transaction service fee (unilateral bidding): the same share holder;

(3) Transaction service fee (agreement transfer): the same share holder;

(4) Service charge of share transfer service agency: determined by the parties through consultation.

In addition, if the transaction price is lower than 1 yuan/share, the pricing reason shall be submitted. If there is no reasonable reason, the transaction price shall be calculated as 1 yuan/share. The transaction service fee shall be calculated separately for the unpaid shares, and the above terms shall not apply to the calculation method. In any case, the unilateral transaction service fee shall not be less than 15000 yuan.