Regulator raises the qualification bar for Chinese GPs

New rules that take effect on May 1 impose a minimum paid-up capital requirement of CNY 10m (USD 1.44m) for private equity firms, with fund management executives expected to contribute at least 20%. Paid-up capital for VC firms should be at least CNY 5m, according to a statement from the Asset Management Association of China (AMAC).

Qualification requirements have also been introduced for senior executives. Those involved in investment decision-making must have at least five years of relevant experience. The threshold has been set at three years for those in charge of compliance and risk controls.

In addition, AMAC has indicated that private equity funds should have lifespans of no less than five years. It recommends durations of at least seven years.

The rules appeared in a draft document published at the end of last year. Items that didn't make it to the final version include requirements that private equity investment professionals must have led at least two deals in the past decade worth a combined CNY 30m and secured at least one exit through IPO, M&A, or equity transfer.

At the end of last year, China's domestic private equity landscape was populated by 145,048 funds managed by 23,685 GPs with more than CNY 20trn in assets.

Traditionally, the industry has been subject to a more relaxed regulatory regime than public market investors and wealth managers because access is restricted to qualified investors. Previously, registration with AMAC was the only requirement imposed on managers.

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• Topics
• Greater China
• GPs
• Regulation
• Renminbi fund
• China
• regulation