The CSRC promulgated the Measures for the Supervision and Administration of Directors, Supervisors, Senior Managers and Practitioners of Securities Fund Operating Institutions (hereinafter referred to as the Measures) on February 18, 2022. The Administrative Measures will come into effect on April 1, 2022, and will give a one-year transition period to those who do not meet the corresponding job and employment conditions. The main contents of the Management Measures include:

（1） Optimize personnel employment management according to the classification principle. According to the new Securities Law and other laws and regulations, the pre-examination and approval of directors, supervisors and senior executives are adjusted to post-filing management, and the basic qualifications of directors, supervisors, senior executives and employees are detailed in terms of personal conduct, job experience, business management ability, professional ability, etc. The dispatched office of the CSRC shall check the conditions of the employee after the event, and if the conditions are not met, the operating agency shall replace it. Distinguish the positions and responsibilities of personnel, and carry out classified management on the directors, supervisors and senior executives, branch heads and general practitioners.

（2） We will strengthen practice norms and implement the requirement of "zero tolerance". Define the basic principles that industry personnel should follow in performing their duties, such as diligence, fair competition, customer protection, integrity and self-discipline, and list the bottom line requirements and prohibited behaviors. Detailed institutional arrangements for taking administrative supervision measures and administrative penalties against business institutions and personnel in violation of laws and regulations. We will improve the regulatory data and information sharing mechanism of regulators and industry associations, as well as the disclosure system of employees' basic employment information and integrity records, and strengthen reputation constraints.

（3） Compacting the main responsibility of the business organization and consolidating the foundation of industry development. Establish the main responsibility of personnel management of operating institutions from three aspects: post inspection, duty performance supervision, assessment and accountability. Establish and improve the internal control mechanism of personnel appointment and practice management, strengthen compliance and risk management, build a long-term and reasonable salary management system, improve investment behavior management, conflict of interest management and honest employment system, and strengthen the endogenous restraint mechanism. Continuously improve the moral standards, professional competence, compliance risk awareness and integrity of employees, and cultivate a compliant, honest, professional and stable industry culture. At the same time, relevant senior executives and practitioners engaged in securities fund business of subsidiaries of operating institutions and securities fund service institutions will be included in the supervision to achieve full coverage of supervision.

2. Announcement on Matters Related to Overseas Fund Professionals Applying for Fund Practicing Qualifications

On February 18, 2022, the Association issued the Announcement on Matters Related to the Application of Overseas Fund Professionals for Fund Practicing Qualifications, clarifying the procedural arrangements for the employment of overseas fund professionals. Overseas professionals who have been employed by fund managers, fund custodians or fund service institutions in Beijing, Shanghai, Hainan, Chongqing, Hangzhou, Guangzhou and Shenzhen, and who are engaged in fund business activities in the above-mentioned areas, and have acquired relevant professional qualifications for overseas funds, do not need to take the professional knowledge examination, but only need to pass the "Fund Laws and Regulations, Professional Ethics and Business Code" examination organized by the Association in China, You can apply for the registered fund qualification. In addition, the Announcement specifies the conditions and procedures for overseas fund professionals to apply for fund qualification.

3. Announcement on Expanding the Implementation Scope of Overseas Fund Professionals' Application for Fund Practicing Qualification Recognition

On August 26, 2022, the Association issued the Announcement on Expanding the Implementation Scope of Overseas Fund Professionals' Application for Fund Practicing Qualification Approval, which said that the implementation scope of overseas fund professionals' application for fund Practicing Qualification Approval was based on Beijing, Shanghai, Hainan, Chongqing, Hangzhou, Guangzhou and Shenzhen, with the addition of China (Tianjin) Pilot Free Trade Zone, China (Jiangsu) Pilot Free Trade Zone China (Shandong) Pilot Free Trade Zone, Chengdu-Chongqing Shuangcheng Economic Circle, China (Yunnan) Pilot Free Trade Zone (hereinafter referred to as the "Implementation Area"). For the application conditions and application procedures for the qualification of overseas fund professionals, please refer to the Announcement on Matters Related to the Application of Overseas Fund Professionals for Fund Practicing Qualifications (CJJF [2022] No. 3) issued by the Association in February 2022.

4. Management Rules for Fund Practitioners

The Association issued the Management Rules for Fund Practitioners ("the Management Rules") and the Provisions on the Implementation of the Management Rules for Fund Practitioners on May 10, 2022, and implemented them on the same day. The Management Rules include six chapters, including general provisions, obtaining of professional qualifications, management responsibilities of fund industry institutions, code of practice, self-discipline management and supplementary provisions, totaling 42 articles. To be specific, this rule clarifies the specific scope of qualification management and realizes the full coverage of operating institutions engaged in fund business activities; It stipulates the registration conditions for obtaining the qualification, including the conditions of morality, qualification examination (some subjects can be exempted if certain conditions are met, in addition, the qualification examination will be deemed to have been passed within two years after passing the special training of the association and being recognized as qualified), institutional employment, and other aspects, as well as the absence of illegal crimes in recent years, the revocation/cancellation of the fund qualification, the adoption of prohibited measures and the unexpired; Sorting out the contents of professional qualification management (including professional qualification registration/information change, follow-up vocational training management, integrity information management and professional qualification cancellation, etc.), and urging the institution to perform the main responsibilities of professional qualification management; Emphasize the code of practice that practitioners should abide by, and practitioners should adhere to the obligations of loyalty, prudence, law-abiding and compliance, conflict of interest management, information disclosure, appropriateness, fair competition and confidentiality; To implement the self-discipline management responsibilities of the Association, the "Management Rules" also stipulates the function of the Association to inspect the implementation of the management of professional qualifications of institutions and practitioners. If institutions and practitioners are investigated or inspected by relevant institutions for suspected violations of laws and disciplines, the Association can suspend the acceptance of matters related to their professional qualifications management. If institutions and practitioners violate the rules, the Association can take disciplinary actions against institutions and practitioners.

The Provisions on the Implementation of the Regulations on the Management of Fund Practitioners stipulates which subjects practitioners of different types of private fund management business should pass. For private funds, practitioners engaged in private asset management (excluding equity) of securities and futures operating institutions, securities private fund management, fund custody, and various securities fund service businesses should pass the examination of "Fund Laws and Regulations, Professional Ethics and Business Specifications" and "Basic Knowledge of Securities Investment Fund". The practitioners engaged in the management of various non-security private equity funds should pass the "Fund Laws and Regulations, Professional Ethics and Business Specifications" and "Basic Knowledge of Securities Investment Funds" or "Fund Laws and Regulations, Professional Ethics and Business Specifications" and "Basic Knowledge of Private Equity Investment Funds". Those who have passed the examination of "Fund Laws and Regulations, Professional Ethics and Business Standards" and meet certain conditions can be deemed to meet the registration requirements for fund professional qualification. In addition, the Association recognized the examination results of the subjects of "Securities Investment Fund", "Basic Knowledge of Securities Market", "Basic Knowledge of Securities Investment Fund Sales" and "Securities Issuance and Underwriting" (only for senior executives of private equity investment and venture capital fund managers) organized by the China Securities Association, For the first time to apply to the Association for the registration of fund professional qualification (including fund sales business qualification) through the examination of these relevant subjects, no less than 30 hours of follow-up vocational training shall be completed within two years before the registration or the qualification examination shall be passed again.

03 Registration cases and typical arbitration cases

1. Publicity of Private Fund Manager Registration Cases (Issue 1 of 2022)

On April 15, 2022, the Association issued the Notice on Publicizing the Registration Cases of Private Fund Managers, saying that in order to guide private fund managers to regulate the registration, the Association sorted out some cases that did not meet the registration requirements of managers and reported them, and will update these typical cases in due time. The administrator registration cases publicized this time are divided into two cases: suspension of registration and non-registration, totaling six cases. According to the provisions of the Registration Instructions for Private Fund Managers ("Registration Instructions"), if the applicant institution has two or more circumstances listed in Article 8 of the Registration Instructions, the Association will suspend the application for registration of private fund managers of such institutions for six months. The violations involved in the case publicity are mainly concentrated in items (6) (7) (8) (9) and (11) of Article 8 of the Registration Instructions, including: the equity holding or equity structure of the applicant institution is unclear; The actual control relationship of the applicant institution is unstable; The applicant institution circumvents the requirements of related parties or actual controllers through structural arrangements; The employees and senior managers of the applicant institution are affiliated or have insufficient professional competence; The application institution failed to submit the required materials or information according to the registration materials list for the second time. The violations of the non-registration involved in this case publicity are mainly concentrated in Item (2) of Article 9 of the Registration Instructions, that is, the applicant institution provides or conspires with law firms, accounting firms and other third-party intermediaries to provide false registration information or materials; There are misleading statements and major omissions in the registration information or materials provided.

Based on the case of this publicity, we understand that the Association attaches great importance to the "five characteristics" of the applicant institution, namely, the authenticity of the exhibition demand, the adequacy of the exhibition conditions, and the authenticity, accuracy and completeness of the submitted information. In addition, for the review of the actual controller and related parties of the applicant institution, the Association mainly judges the compliance from the following aspects: whether the equity structure is clear, whether the actual controller has the actual control power, and whether there is any arrangement to avoid the identification of related parties through equity holding, concerted action agreement, etc.

2. Publicity of Private Equity Fund Filing Cases (the first and second issues in 2022)

On April 18, 2022, the Association issued the Notice on the Publicity of Private Equity Fund Filing Cases, which said that the Association had recently summarized and sorted out the contents of the second batch of private equity fund filing cases in combination with the new situation and new problems arising from private equity fund filing. The second batch of cases includes six cases, including providing "page extraction" filing materials, filing "shell fund", non-compliance of the raising supervision agreement, weak relationship between the general partner and the manager, mismatching of the duration of the fund investment, and the manager's transfer of investment decision-making power as a "channel". Specifically:

(1) Providing "page extraction" filing materials: A few managers provide false page extraction materials during the filing process, and modify the partnership agreement without informing the investors and obtaining their consent, which violates the provision that "the private placement fund filing materials should be true, accurate and complete, without any false records and misleading statements".

(2) Filing "shell fund": Some securities fund managers have the act of filing "shell fund", that is, the managers submit a lot of fund filing applications with the same investor and very low paid-in amount at the same time. The investor redeems the fund share in a short time after the fund filing is passed, and then the managers start to raise funds from real investors. In accordance with the provisions of the Instructions for Filing Private Investment Funds ("the Instructions for Filing"), the manager shall apply for fund filing after the completion of the raising and sign the filing commitment letter to promise that the raising has been completed. Therefore, the filing of "shell funds" violates the requirements of the Instructions for Filing.

(3) Non-compliance of the raising supervision agreement: Manager A submitted the filing application for Fund B, and the manager and the raising supervision institution signed a tripartite supervision agreement for raising funds and made it clear that the manager and the raising supervision institution should jointly abide by relevant laws and regulations, but did not mention the Administrative Measures for the Raising of Private Investment Funds (the "Raising Measures"). In addition, the agreement stipulates that the raising supervision institution shall only undertake the obligations of formal review, issuing statement of account, notification and cooperation in the investigation clearly agreed under the agreement. According to the provisions of the Raising Measures, the raising supervision agreement shall specify the control right and responsibility division of the special account for raised settlement funds and the provisions for ensuring the safety of fund transfer. The raising supervision institution shall effectively supervise the special account for raised settlement funds according to law and as agreed, and bear the joint and several liabilities for ensuring the safety of fund raised settlement funds transfer.

(4) The relationship between GP and the manager is weak: the manager A submits the filing application for fund B, the fund GP is C, and the contributor (controlling shareholder) of C, Ms. D, is the head of the liquidation department of A. According to the requirements of the Association, if the partnership private equity fund GP is separated from the manager, there should be an association relationship. Related relationship here refers to that one party controls, jointly controls or exerts significant influence on the other party, and that two or more parties are under the control, joint control or significant influence of the same party. In addition, if the manager's senior management team/actual controller/legal representative is the contributor of GP, it can also be determined that GP has an association relationship with the manager.

(5) Mismatch of the duration of fund investment: Manager A submits the application for filing of Fund B, and the maturity date of the fund is March 2030. One of the investors of Fund B is the registered Fund C. The maturity date of Fund C is December 2024, which is earlier than the maturity date of Fund B. According to the provisions of the Instructions for Filing, the administrator shall not have any violations such as time mismatch. Therefore, when private equity/venture capital funds invest in other closed-end asset management products (including private equity funds), they should adhere to the principle of matching funds and investors, and pay attention to whether the duration of the fund covers the duration of the products they invest in.

(6) The transfer of investment decision-making power by the manager becomes a "channel": the manager A submits the filing application for fund B, and the fund has a dual executive partner structure, which is A and unregistered institution C. According to the division of responsibilities in the partnership agreement, C is responsible for appointing members of the Investment Committee, formulating the rules of procedure of the Investment Committee, screening investment projects and conducting post-investment management, and C also collects part of the fund management fee. According to the relevant provisions of the Several Provisions on Strengthening the Supervision of Private Equity Investment Funds and the Instructions for Filing, no unit without registration shall conduct private equity fund business activities, and the manager shall not delegate the entrusted responsibilities that should be performed. In this case, C is not a registered manager, but the partnership agreement stipulates that C "actually controls" the fund investment committee, which is equivalent to "managing" the fund in a "substantial" way, while A sub-entrusts the entrusted responsibility that should be performed, and becomes the "channel" for unregistered institutions to carry out private placement business, which violates the requirements of the preceding provisions. In addition, according to the regulations, other executive partners other than the manager shall not charge relevant fees in the name of "fund management fee".

3. Publicity of Private Fund Filing Cases (Issue 2 of 2022)

On September 16, 2022, the Association released the second issue of this year's Publicity of Private Equity Fund Filing Cases, which is the third batch of public cases released by the Association since the establishment of the private equity investment fund filing case publicity mechanism in September 2021 and the release of the first batch of private equity fund filing cases. There are three types of cases released this time, involving four situations:

The first type of case involves that the investors do not have the ability to make paid-in capital contribution, that is, the collective fund trust plan as an investor has the situation of "preparing before raising", and the association has returned the request to the private fund manager for rectification, and its investor trust plan will submit the private fund filing application after it has completed the collection and has the ability to make paid-in capital contribution;

The second category of cases involves regulatory arbitrage through "private placement funds", that is, the asset management plan of securities companies uses private placement funds as "channels" to invest 100% in restricted snowball structured products, and the Association has not filed the private placement funds;

The third category of cases involves private fund managers and "black intermediaries" jointly carrying out illegal business, and there are two cases:

(1) The first case is that the fund manager illegally entrusts a "black intermediary" to issue a "shell" fund, that is, to meet the requirements of filing the first private fund within a time limit after registration, the fund manager fully entrusts an intermediary to provide the first private fund filing "shell" service, and the intermediary raises, operates and manages the first private fund in the name of the fund manager, And use the account number and password provided by the fund manager to submit the fund filing application. The Association has taken self-discipline measures against the fund manager involved, suspended the filing business, and transferred its violation clues to the regulatory authority;

(2) The second situation is that the fund manager uses the "black intermediary" to make false capital contributions and "occupy the pit", that is, the fund manager uses the false capital contributions of the related parties of the intermediary to subscribe for the fund in order to save the time of raising, and then transfers its subscribed shares to the real investors after the filing, in violation of the requirements of the Instructions for the Filing of Private Investment Funds, the Association has taken self-discipline measures against the involved fund managers and transferred the relevant clues of violation to the regulatory authority.

4. Typical Cases of Fund Arbitration

In May 2022, the Association issued six "Typical Cases of Fund Arbitration" and said that the Association and the arbitration institutions jointly selected a number of arbitration cases with typical significance and reference value, and guided the industry to abide by laws and regulations, adhere to the bottom line of faith, prompt investors to protect their rights rationally according to law, effectively safeguard the legitimate rights and interests of investors, and continue to promote the high-quality development of the fund industry. Specifically, the arbitration awards of the six typical cases involved: the failure of private fund managers to invest in accordance with the agreed investment scope may constitute a fundamental breach of contract; The determination of the effectiveness of the promotion materials for private fund raising and the treatment of the conflict of interest of the fund manager; Investors provide false asset certificates on their own, and should not claim that the manager fails to perform the obligation of appropriateness; If the private placement fund fails to collect all the funds due, the fund manager will only distribute the funds to some investors of the same fund, which constitutes a breach of contract; The change of the investment object is a major matter that should be disclosed by the fund manager; And in the case that the executive partner is slow to file an arbitration with the debtor of the partnership, the non-executive partner has the right to file a derivative action in his own name.

Private Fund Investor Protection Q&A Manual

On November 11, 2022, the Shanghai Regulatory Bureau of the China Securities Regulatory Commission ("the Shanghai Securities Regulatory Bureau") issued the "Question and Answer Manual for the Protection of Private Fund Investors" to remind investors of how to obtain private fund manager information, how to distinguish true and false private placement, risk private placement and how to protect their rights. Information about private fund managers can be found in the "Private Fund Managers Classified Query Publicity" of the "Information Publicity Column - Institutional Publicity" on the website of the Fund Industry Association. As for the quality of private equity funds, investors should focus on the information of institutions and personnel, integrity status and whether there is any abnormality from the information publicity of the Fund Industry Association, China Executive Information Disclosure Network and other channels. In addition, private equity funds should pay attention to the media channels and promotion behavior when recommending, and perform specific procedures for specific objects by means of questionnaires and other methods, and fulfill the obligation of investors' appropriateness. In addition, the fund contract shall provide investors with an investment cooldown period of not less than 24 hours, during which investors shall not be actively contacted. During the operation of the private placement fund, the information disclosure obligor shall also disclose the net value of the fund, main financial indicators and portfolio information to investors within 10 working days from the end of each quarter. If the management scale of a single private fund reaches more than 50 million yuan, it shall continue to disclose the net value of the fund to investors within five working days from the end of each month. At the same time, the Shanghai Securities Regulatory Bureau also issued the "Equity Fund Investment Manual" (before investment, during investment and in holding).

05 Other important reports and rules

1. Administrative Measures for Private Investment Fund Electronic Contract Business (Trial)

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

(1) General rules: stipulate the definition and connotation of electronic contracts, the applicable objects of the measures, the due diligence of private equity fund parties on electronic contract business service institutions, and the publicity and membership of electronic contract business service institutions;

(2) Registration of electronic contract business service institutions: specifies the registration requirements (i.e., the required conditions) of electronic contract service institutions and the relevant registration materials to be submitted, including the paid-in capital, corporate governance, legal compliance, organizational structure, service experience, senior management qualification, network security, system connection, and fault response;

(3) Business specifications: stipulate the contents of electronic contract business and the necessary terms of the service agreement of electronic contract business, The obligations to be performed by the electronic contract business service institution (including carrying out the identification of investors, carefully selecting and regularly evaluating the electronic authentication service provider, storing the key data in ciphertext, using the cryptographic algorithm approved by the national cryptographic authority, using the time stamp approved by the national time grant center, conducting the annual overall evaluation, submitting and storing the information to the association, and conducting the annual audit, 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 the electronic contract business service institutions will be subject to in violation of the Measures.

2. Implementation Measures for Self-discipline Management and Disciplinary Measures of China Securities Investment Fund Association

The Association issued the Measures for the Implementation of Self-discipline Management and Disciplinary Measures of the China Securities Investment Fund Association on December 30, 2022. The implementation measures are divided into seven chapters and 49 articles, including general provisions, type of measures, discretionary factors, implementation procedures, review of disciplinary actions, service, withdrawal and publicity, and supplementary provisions. It is worth mentioning that nearly half of the provisions (22 articles in total from Article 17 to Article 38) of the implementation measures focus on the implementation procedures. Specifically, the implementation procedure is divided into three sections: filing and inspection, implementation procedure of self-discipline management measures and implementation procedure of disciplinary measures. In the section of filing and inspection, the sources of violation clues, filing conditions, handling results, and situations where filing procedures are not applicable are specified. The implementation procedure section of self-regulatory management measures introduces several self-regulatory management measures, including: talk reminding, written warning, requiring correction within a time limit, increasing the number of internal compliance inspections, and requiring compliance education. The implementation procedure of disciplinary measures defines the main contents that should be stated in the notice of disciplinary action in advance, the right to relief of the self-discipline management object (the right to defend, the right to hold a hearing, and the hearing procedure), and the main contents that should be stated in the decision of disciplinary action.

3. Fund Manager's Self-Assessment Report on Green Investment (2021)

On March 18, 2022, the Association released the Self-Assessment Report on Green Investment of Fund Managers (2021). The report is based on the analysis of the results of the third self-assessment survey conducted by the Association for asset management member institutions in August 2021, mainly from three aspects: the construction of the green investment system of public fund management companies, the construction of the green investment system of private equity investment fund managers and the construction of the green investment system of private equity venture capital fund managers. The report points out that most private equity investment fund managers are still in the exploration stage of green investment research in the construction of green investment system, and a few institutions have carried out positive practices, with a growth trend compared with 2020. The managers of private equity venture capital funds show similar characteristics, but the number of institutions carrying out practice has increased significantly compared with 2020, and they have outstanding performance in taking active measures to promote the green performance of the invested enterprises. About half of the green investment products will actively participate in the invested enterprises after investment to help the green transformation.

4. Fund Manager's Self-Assessment Report on Green Investment (2022)

The Association issued the Self-Assessment Report on Green Investment of Fund Managers (2022) on December 13, 2022, saying that in July 2021, according to the requirements of the Green Investment Guidelines (for Trial Implementation), the Association conducted the fourth self-assessment survey for asset management member institutions. A total of 712 valid samples were obtained in this self-assessment survey. Among them, 320 valid questionnaires for private equity fund managers and 327 valid questionnaires for private equity fund managers were received. As for private equity fund managers, in terms of green investment strategy management, 55 institutions have explicitly included "green investment" into the company's strategy, and 31 of them have disclosed the green investment strategy to investors; In terms of the construction of green investment system, 23 institutions said that they had the capacity of green investment research, green performance evaluation and environmental risk monitoring and disposal at the same time; In terms of the operation of green investment products, 10 institutions issued a total of 10 products targeted at green investment. As for private equity venture capital fund managers, in terms of green investment strategy management, 90 private equity institutions have explicitly included "green investment" into the company's strategy, of which 65 institutions have disclosed to investors; In terms of green investment system construction, 214 private equity institutions have carried out green investment research, and 55, 36 and 22 have established positive, negative and "positive+negative" green performance evaluation methods, and 65, 70 and 39 have established environmental risk monitoring mechanism, emergency response mechanism and "monitoring+emergency response" mechanism respectively; In the operation of green investment products, 44 private equity institutions have issued a total of 70 products targeted at green investment.

1. Guidelines for the Evaluation and Management of Private Equity and Venture Capital Fund Shares of State-owned Enterprises in Shanghai (for Trial Implementation)

In order to strengthen the supervision of state-owned assets evaluation and standardize 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 Guidelines for the Evaluation and Management of Private Equity and Venture Capital Fund Shares of State-owned Enterprises in Shanghai (for Trial Implementation) on June 28, 2022 (the "Guidelines"), which will be implemented on a trial basis from July 1, 2022.

The full text of the work guide includes 18 articles, including the scope of application, the filing process of the state-owned fund share evaluation project, the attachment of the state-owned fund share evaluation report, the key points of the review of the state-owned fund share evaluation report, the expert review mechanism of the state-owned fund share evaluation project, the publicity before the filing of the state-owned fund share evaluation project, and the handling methods of the relevant subjects in violation of the work guide. This work guide fills the policy gap in the assessment and management of state-owned assets funds and helps state-owned assets funds exit through share transfer.

2. Interim Measures of Hainan Province on Domestic Equity Investment by Qualified Foreign Limited Partners (QFLP)

On October 27, 2022, the local financial supervision and administration of Hainan Province issued a notice stating that according to the relevant provisions of the Interim Measures of Hainan Province on Carrying out Domestic Equity Investment by Qualified Foreign Limited Partners (QFLP) (QJJH [2020] No. 186), the province has no mandatory requirements for the filing of foreign-invested equity investment enterprises established in Hainan Province that only involve raising funds overseas. Banks can support such enterprises to carry out cross-border capital settlement and other businesses, and do a good job of follow-up capital supervision. Other requirements remain unchanged according to the current system.