On 20 June 2012, China Securities Regulatory Commission (CSRC) amended the Measures for the Administration of Securities Investment Fund Operations (证券投资基金运作管理办法) (the Measures) by:

  • removing the requirement that a fund manager has to wait for at least six months before applying for approval of a new fund if its prior fund launch failed to attract a sufficient amount of interest; and
  • allowing a fund manager to supplement third party funds raised, with internally generated funds, to encourage the launch of smaller, fund manager sponsored funds, where interests are aligned,

    (the Amendments).

The Amendments primarily involve Article 6 and Article 12 of the Measures.

Article 6

The Amendments remove the restriction on the making of an application to the CSRC for the launch of a new securities investment fund within six months of a fund manager having to return capital to investors in respect of a 'failed' fund launch (as a result of not reaching the minimum fund raise requirement of RMB 200 million with a minimum of 200 investors).

Coupled with Circular No. 6 "Circular on Certain Issues on on Further Streamlining the Categorisation of Funds for Review and Approval", issued on 2 March 2012, which permits a fund manager to submit applications for up to three new investment funds at the same time, irrespective of their investment objective and strategy, it is clear that the CSRC wishes to facilitate the development of collective investment schemes, and the choices, for PRC investors.

Article 12

The Amendments allow a fund manager to satisfy the minimum fund raise requirement with capital contributions from its own resources, including those of its shareholders or senior management, in an aggregate amount of at least RMB 10 million locked up for three years, as long as at least RMB 50 million is also raised from a minimum of 200 third party investors.

This amendment is considered by the industry as the foundation for launching Sponsor Person invested securities investment funds in the PRC in the future, where the interests of the fund manager, its shareholders and management personnel are more closely aligned those of investors in the fund.

Administration of Securities Investment Fund Management Companies Procedures

On 20 June 2012, the CSRC issued a consultation paper with respect to proposed amendments to the Administration of Securities Investment Fund Management Companies Procedures.

The proposed amendments include:

  • changes to lower qualification requirements on shareholders of fund management companies
  • the removal of the percentage cap on the "major" shareholder's equity holding in a fund management company
  • permitting fund management companies to establish specialised subsidiaries to focus on different types of fund products or investor clients
  • permitting fund management companies to outsource fund administration and other functions to service providers
  • expanding the eligibility requirements for foreign shareholders of fund manager beyond those with experience in managing mutual funds
  • permitting the management of pension funds, charity funds and endowments


These various developments have the potential of increasing fundraising flexibility for fund mangers, improving access to the fund management industry by private capital, and broadening the business scope and activities of the fund managers.