Investment funds in China are regulated by the China Securities Regulatory Commission (CSRC) and can be established by international entrepreneurs in this country. Paying attention to the general rules for opening a fund in China is highly important. Our company formation agents in China can also provide immediate assistance and support for opening an investment fund in China, whether you are a local or a foreign entrepreneur.
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Types of investment funds in China
Retail funds and non-retail funds can be established in China, under the supervision of the Securities Investment Funds Law of the People’s Republic of China. Open-ended and closed-ended funds are also available and at the disposal of international investors in China, however, foreign retail funds cannot be registered or marketed in China. In the case of retail funds, these can be divided into hybrid funds, equity funds debt funds, money market funds or qualified domestic institutional investor funds. There are several rules and regulations for opening a fund in China, but for more support and information, you can talk to our company formation specialists in China.
What is the regulatory framework for funds in China?
CSRC is the main regulatory body for funds in China and the institution that approves the registration of funds in this country. For instance, an investment fund is approved by CSRC if the senior officers of a Fund Management are appointed. The following set of regulations is part of the New Funds Law in China:
- Administrative Measures on the Qualification Requirements for Senior Officers of Securities Investment Funds Management Companies.
- Administrative Measures on the Information Disclosure of Securities Investment Funds.
- Administrative Measures on the Operation of Securities Investment Funds.
- Administrative Measures of Securities Investment Fund Management Companies.
- Administrative Measures on the Marketing Securities Investment Funds.
You should ask for the support of our consultants if you want to set up a fund in China, mentioning that you can benefit from the legal services of our local Chinese lawyers. They can also help you start a company in China.
Fund licenses in China
Closed-ended and open-ended funds established to register and offer retail funds must be approved by the CSRC if the contract is drafted, if an application letter is made and if the legal opinion is issued by the People’s Republic of China’s legal counsel. Also, the fund prospectus and the custodian agreement need to be drafted. Once the CSRC approves the above-mentioned documents, the fund manager can publish the prospectus and offer fund units to investors. Commercial banks, insurance institutions, securities investment consultancy agencies, and independent fund distribution institutions can promote retail funds in China, only if these are approved by CSRC.
How do I promote a fund in China?
The fund manager must provide information about the promotion materials to the local CSRC offices, with the mention that different restrictions are imposed. For example, it is forbidden to promote a fund by providing information about investment returns. The promotion of investment funds can be made in newspapers, on the internet or with the support of local media channels.
Would you like to open a Wholly Foreign-Owned Enterprise in China (WFOE)? You can address your inquiries to our company incorporation specialists in China.
Open-ended retail funds in China – main requirements
A fund management company acting as a manager of an open-ended retail fund must respect the provision of the New Funds Law and provide a minimum paid-up capital of RMN 10 million. The Articles of Association and proof that the shareholders of the fund have good business performances and experience in this field are mandatory documents. Equivalent qualifications of directors, managers, and supervisors engaged in a retail fund will be verified by the entitled authorities in China, particularly by CSRC. The manager of the retail fund in China must have at least 3 years of experience, must be acknowledged by the Funds Association in China and act in a good faith and with respect to the applicable laws.
Doing business in China is for many entrepreneurs an ideal opportunity. Below you can find interesting information about investment direction, economy, and business in China:
- China is the world’s second-largest FDI recipient after USA, as declared by UNCTAD’s though the “2019 World Investment Report”;
- there have been more than 60,000 companies registered in China last year;
- the FDI inward flow stood at around USD 139,043 in 2018;
- investors from abroad choose China for low-cost production and an advantageous tax structure among other things.
If you would like to set up a fund in China or if you are interested in company formation in China, feel free to contact our team of consultants.