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Trust Companies

(1)Proprietary Capital of Trust Companies

According to the Administrative Measures for Trust Companies, the scope of proprietary trading business of a trust company is limited to equity investments in financial companies, investments in financial products and investments in fixed assets for self-use.  Therefore, as a kind of financial product, private securities investment funds fall within the investment scope of proprietary capital of trust companies.

(2)Trust Schemes Offered by Trust Companies

The investment scope of trust schemes is very wide.  According to the Administrative Measures for Trust Companies, in relation to the use and disposal of trust properties, arrangements including investment, sale, due from other trust companies, purchase and resale, leasing and loan may be adopted pursuant to the trust documents; thus, private funds fall within the investment scope of trust schemes (including collective investment trusts and trusts with signal investor).

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Futures Companies and Their Asset Management Subsidiaries

(1)Proprietary Capital of Futures Companies

According to the Administrative Measures for Futures Companies, futures companies may utilize proprietary capital to invest in stocks, investment funds, bonds and other such financial assets pursuant to the relevant provisions.  Hence, the proprietary capital of futures companies can be invested in such financial assets as private securities investment funds.

(2)Asset Management Products Offered by Futures Companies or Their Asset Management Subsidiaries

Pursuant to the Administrative Measures for Futures Companies, the Administrative Rules for Asset Management Business of Futures Companies (Trial) and other laws and regulations, futures companies and their subsidiaries specialized in conducting asset management business shall not concurrently operate asset management business, the investment scope of the asset management products offered by futures companies and their asset management subsidiaries (including “one-to-one” and “one-to-many” products) include securities investment funds, but there is no further clarification on whether securities investment funds include private securities investment funds.  According to our understanding, there are already many existing futures asset management schemes in the market that do invest in private securities investment funds.

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Pension Funds Such as Social Security Funds and Enterprise Annuities, and Social Welfare Funds Such as Charity Funds

Despite the fact that, pursuant to the Interim Measures for Supervision and Administration of Private Securities Funds, pension funds such as social security funds and enterprise annuities, and social welfare funds such as charity funds are certainly qualified investors of private funds, it does not necessarily mean that such funds must be capable of investing in private funds.

(1)National Social Security Fund

According to the Interim Administrative Measures for Investment of National Social Security Fund issued in 2001, the investment scope of national social security fund covers securities investment funds listed and traded in Stock Exchanges.  Currently, only retail funds can apply to be listed and traded on the Stock Exchanges.  Therefore, securities investment funds listed and traded on the Stock Exchanges cannot include private funds.  On the other hand, the Regulation on the National Social Security Fund issued by the State Council in 2016 only requires in principle that investments and operation of the national social security fund should be conducted regarding the principles of safety, profitability and long-term development, and that assets should be allocated rationally among assets approved by the State Council such as fixed-income assets, equity assets and unlisted equity assets and within the approved proportion and scale of such assets.  Notwithstanding that, according to our understanding, the National Council for Social Security Fund is of the view that the national social security fund currently cannot invest in private securities investment funds.

(2)Basic Pension Funds

According to the Administrative Measures for Investment of Basic Pension Funds issued in 2015, the investment scope of basic pension funds covers securities investment funds listed and traded on the Stock Exchanges.  However, currently, only retail funds can apply to be listed and traded on the Stock Exchanges.  Unless a more flexible understanding is adopted, securities investment funds listed and traded on the Stock Exchanges do not include private funds.

(3)Enterprise Annuities

Pursuant to the Administrative Measures for Enterprise Annuity Funds released in 2011, the investment scope of enterprise annuities covers securities investment funds.  However, having regard to the fact that private securities investment funds were only included under the regulation of the PRC Funds Law since its 2013 amendment came into force, and considering the inquiry results we obtained from the Ministry of Human Resources and Social Security, we are of the view that, currently, enterprise annuities cannot invest in private securities investment funds.

(4)Charity Funds and Other Social Welfare Funds

The Regulation on the Administration of Foundations, Provisions on Regulating Behaviors of Foundations (Trial) and other such provisions all merely require in principle that foundations shall realize value maintenance and increase in value in accordance with the principles of legality, safety and effectiveness.  Therefore, private funds fall within the investment scope of foundations.  In practice, out of concerns regarding the safety of properties, investments of foundations are usually relatively prudent, but some foundations do opt for high-risk investments.

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Other Private Fund Managers Registered with AMAC

(1)Proprietary Capital of Private Fund Managers

No provision regarding the utilization of proprietary capital by private fund managers is found in the relevant laws and regulations.  For this reason, private fund managers may in principle use their own capital to invest in private funds offered by other private fund managers. 

(2)Private Funds Issued by Private Fund Managers 

According to the relevant registration rules by AMAC, private securities investment funds offered by private fund managers registered as “private securities investment fund managers” whose registered business type(s) includes “private securities investment FOF” can invest in the private securities investment funds offered by other private fund managers, including private securities investment funds offered by WFOE PFMs.