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Asset Management Association of China Gives Guidance on Private Funds Amid Coronavirus

March 02, 2020

The Asset Management Association of China encourages new private equity funds to invest in medical enterprises related to epidemic prevention and control, and has extended certain reporting deadlines.

In order to minimize the impact on China financial service sectors amid the 2019 Novel Coronavirus (COVID-19) outbreak, Chinese financial regulators have published a series of measures to streamline the operation of financial institutions in China. Among these, the Asset Management Association of China (AMAC) released a notice on February 1 regarding the registration of new private investment funds that will make investments in epidemic prevention and control–related medical enterprises on an expedited basis. The notice provides that new private funds managers are permitted to complete the registration of their first private funds within 12 months as opposed to six months, as originally required. Other main points of the notice follow.

Epidemic Prevention and Control Investments

Private fund managers are encouraged to invest in (1) medical device enterprises in relation to epidemic prevention and control, and (2) pharmaceutical companies engaging in research and development (R&D) and manufacturing of vaccines. To facilitate such investments, AMAC will establish a "green channel" for the filing of private equity funds and venture capital funds that invest in the above-mentioned sectors, and the registration timeline for such funds will be significantly shortened.

Adjusted Timeline

The notice adjusted the timelines for the filing of first private funds and for information reporting by fund managers.

Effective from February 1, 2020, the deadline for new fund managers to file their first private fund products with AMAC has been extended to 12 months. This new timeline will apply to fund managers that are registered after February 1, 2020, and fund managers that were registered before February 1, 2020, but have not completed the filing of their first products yet.

Before the notice was issued, all new fund managers were required to launch and complete the filing of their first private fund products within six months; otherwise, their private fund manager licenses would be revoked. Most new fund managers, especially foreign invested fund managers, found it challenging to launch a fund and complete the filing with AMAC within this six-month time period. The timeline extension should help new fund managers avoid the worst-case scenario in which their private fund manager (PFM) license is revoked due to the failure to launch their first PFM products in time.

There is no doubt the extension will be an interim arrangement, but it is unclear at this stage how long it will last. As such, foreign fund managers that have long been interested in entering the China market should consider taking this opportunity to obtain the PFM license and launch the first PFM product while the extended timeline still applies.

Extended Deadlines

The upcoming deadlines for information reporting and disclosure by fund managers have also been extended as follows:

  • PFMs are permitted to submit their annual audited reports for 2019 by June 30, 2020.
  • Private fund quarterly reports for the fourth quarter of 2019 on the Asset Management Business Electronic Registration System must be submitted by March 31, 2020.
  • For private securities funds, the deadline to submit information disclosure reports for the fourth quarter of 2019 on the Private Fund Information Disclosure Backup Platform has been extended to March 31, 2020, and annual information disclosure reports for 2019 must be submitted by June 30, 2020.
  • For private securities funds with more than RMB 50 million (approximately $7.15 million) under management, the deadline to submit monthly reports for January 2020 on the Private Fund Information Disclosure Backup Platform was extended to February 29, 2020.

Contact

The Morgan Lewis team in Asia team has experience providing legal advice regarding private fund investments in China. If you have any questions or would like more information on the issues discussed in this LawFlash, please contact Morgan Lewis.