Finance & Capital Markets

A private fund manager must register with the Asset Management Association of China, and each fund must be filed after fundraising is completed. The Regulations on the Supervision and Administration of Private Investment Funds, effective 1 September 2023, set rules on manager qualifications, qualified investors, fundraising and disclosure. Review shareholding, related parties and executive qualifications before establishment.

It usually begins with legal due diligence and remediation covering clear equity and corporate history, capital contributions and nominee holdings, related-party transactions and competition, asset title, labour and social insurance, environmental and industry licences, and material litigation. Counsel prepares a remediation list, supports the joint-stock conversion, and works with the sponsor and auditors on filing documents.

Interest, compound interest, default interest, liquidated damages and fees under a loan agreement with a licensed financial institution are reviewed under the contract and financial regulations. Where the borrower shows the total is clearly excessive, the court may adjust it. Check each clause, the calculation base and the amount actually disbursed.

A company guarantee must be approved by the board or shareholders' meeting as the articles require, and a guarantee for a shareholder or controller requires a shareholders' resolution. Creditors should review these resolutions, otherwise the guarantee may not bind the company. Where the guarantee type is unspecified it is a general guarantee, and where the guarantee period is unspecified it runs six months from the maturity of the main debt.