In an effort to encourage foreign private equity and venture capital firms to set up shops in Shanghai, the local government of Pudong District, Shanghai promulgated the Trial Measures on the Establishment of Foreignfunded Equity Investment Management Enterprises in Pudong New District (the “Foreign-funded EIMEs Trial Measures”) on June 2, 2009. The Foreignfunded EIMEs Trial Measures are scheduled to expire on June 30, 2010.

Pursuant to the Foreign-funded EIMEs Trial Measures, a foreign-funded equity investment management enterprise (a “Foreign-funded EIME”) should be incorporated as a limited liability company, in the form of either a Chinese-foreign equity joint venture enterprise, a Chinese-foreign cooperative joint venture enterprise or a wholly foreign owned enterprise. The name of a foreign-funded EIME may include “equity investment management” and its permitted business scope is “investment management and relevant consulting services, as entrusted by equity investment enterprises.”

The following requirements should be satisfied for the establishment of a foreign-funded EIME:

  • There should be at least one investor which, or an affiliated entity of which, engages in equity investment or equity investment management business;
  • There should be at least two senior managers who have at least two years of experience (1) in the equity investment or in equity investment management business and (2) working as senior manager; and
  • Its registered capital should not be lower than USD two million. Twenty percent of the registered capital should be paid within three months upon the issuance of its business license, and the balance should be paid within two years of the issuance of its business license.

The Foreign-funded EIMEs Trial Measures also indicate that the incentive policies provided in the Implementing Measures of Promoting the Development of Equity Investment Enterprises and Equity Investment Management Enterprises in Pudong New District (released earlier this year) are fully applicable to Foreign-funded EIMEs registered in Pudong New District. Such incentives include a lump-sum award of up to RMB 15 million and a series of subsidies and rewards with respect to compensation of senior management personnel and rent of office premises.

  • Trial Measures on the Establishment of Foreign Funded Equity Investment Management Enterprises in Pudong New District
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  • Issuing Authority: Local Government of Pudong New District, Shanghai
  • Date of Issuance: June 2, 2009 / Effective Date: June 2, 2009