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Updates and Insights on Legal Issues Facing Fund Managers and Investors

Category Archives: China Funds

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Client Alert: The Second Circuit Raises the Bar for Insider Trading Convictions

Posted in Advisory, Broker-Dealers, China Funds, Investment Advisers, Private Equity, Private Funds, Registered Investment Companies, Uncategorized
By William M. Sullivan, Jr. and Jay B. Gould Under the Second Circuit’s new ruling, prosecutors have two large hurdles they must clear to convict under securities laws. First, they must prove that a defendant knew that the source of inside information disclosed tips in exchange for a personal benefit. Second, the definition of “personal… Continue Reading

China’s New Foreign Exchange Control Rule on Outbound and Round-Trip Investment

Posted in Advisory, China Funds, Guest Post
Replacing Circular 75, Circular 37 simplifies the SAFE registration process for Chinese residents seeking offshore investments and financings, and it liberalizes cross-border capital outflow by Chinese residents. In addition, Circular 37 also permits registration of equity incentive plans of non-listed Special Purpose Vehicles. In July 2014, the State Administration of Foreign Exchange (SAFE) of the… Continue Reading

Advisory Alert! – Repatriation of Funds Out of China

Posted in Advisory, China Funds, Guest Post, Investment Advisers
China imposes controls on the inflow and outflow of foreign exchange. Given the involvement of State Administration of Foreign Exchange and various other governmental agencies in the process, repatriating funds from China can be a trap for the unwary. Foreign investors should familiarize themselves with the approval requirements and procedures. Read more: Advisory – Aug… Continue Reading

LBO Firms in China Get a Boost from New Regulations

Posted in China Funds, Private Funds
Written by Michael Wu and Judy Deng Earlier this year, the People’s Bank of China (PBoC) issued its Administrative Measures over Pilot Projects on Settlement of Overseas Direct Investments in Renminbi (the “PBoC Measures”).  The PBoC Measures permit the PBoC, under a pilot project, to loan renminbi to Chinese investors to fund outbound acquisitions.  The PBoC Measures… Continue Reading

Pillsbury Conducts Survey of Mid-Market Chinese Companies

Posted in China Funds
Written by Michael Wu Pillsbury recently conducted a survey of nearly 200 individuals involved in operating and investing in mid-sized Chinese companies.  The results revealed that 55% expect to seek financing within the next 24 months and 43% expect to do so this year.  The survey also confirmed that Chinese executives believe that the U.S. still… Continue Reading

Shanghai Renminbi (RMB) Fund Regulation Creates Opportunities For Non-Chinese Fund Managers

Posted in China Funds, Private Funds
Posted by Michael Wu and Judy Deng On January 11, 2011, the Shanghai Municipal Government released its Implementation Measures on Trial Projects of Foreign-Invested Equity Investment Enterprises in Shanghai (the “Shanghai RMB Fund Regulation”), which will become effective on January 23, 2011. Prior to the release of this regulation, it was widely expected that the… Continue Reading

Currency Conversion Issues for Foreign-Invested Private Equity Fund of Funds

Posted in China Funds
Written by Michael Wu and Judy Deng Although fund managers may form private equity funds of funds in China that have non-Chinese investors (hereinafter referred to as “foreign-invested fund of funds” or “FIE FoFs”), they need to be aware of certain currency conversion issues that may apply based on how the FIE FoF operates.  Foreign-invested… Continue Reading

Offshore Private Equity Investment by Chinese Insurance Companies – A Review of Relevant Regulations

Posted in China Funds
Written by Michael Wu and Judy Deng Since 2007 there have been a number of circulars (i.e., ordinances issued by industrial regulators) and regulations pertaining to whether Chinese insurance companies are permitted to invest their assets in offshore (i.e., outside of China) private equity.  The following summarizes the relevant laws pertaining to this issue. In… Continue Reading

Understanding the Regulatory Environment for Foreign-Invested Fund Management Companies in China

Posted in China Funds
Written by Michael Wu and Judy Deng A Chinese foreign-invested fund management company (“FIE FMC”) is a fund management company formed in China with at least one non-Chinese owner.  FIE FMCs are generally formed to manage foreign-invested PE/VC funds located in China (“Foreign-Invested RMB Fund”), such as Foreign-Invested Venture Capital Enterprises (“FIVCEs”) and Foreign-Invested Equity… Continue Reading

Parallel Funds May Provide Increased Access to the Chinese Market

Posted in China Funds
Written by Michael Wu and Judy Deng Most of the “RMB fund” structures currently being used to enable non-Chinese investors to participate in private equity and venture capital investments in China are tax driven.  However, some fund managers are using a RMB fund structure that is not designed to address a particular tax issue, but instead is… Continue Reading

China Permits Insurance Companies to Invest in Private Equity

Posted in China Funds
Written by Judy Deng On September 5, 2010, the China Insurance Regulatory Commission (CIRC) issued a circular (“CIRC Circular 79”) to explicitly permit China’s insurance companies to invest their assets in private equity. Such investments may be either direct or indirect, making China’s insurance companies potential equity investors in onshore industrial companies as well as… Continue Reading