In September 2017, two wholly foreign-owned enterprises (WFOEs) – Man Investment Management (Shanghai) Co., Ltd and Fullerton Investment Management (Shanghai) Co., Ltd – successfully registered as private fund managers (PFMs) with the Asset Management Association of China (AMAC).

In contrast to UBS’s case (discussed below), the Man group set up a new WFOE in May 2017 to apply for AMAC registration, even though it has had a Qualified Domestic Limited Partnership (QDLP) WFOE since September 2013. It appears that the registration with AMAC took four months.

As for the Fullerton group, its PFM WFOE was converted from an existing consulting WFOE which was set up in December 2013. The consulting WFOE first underwent a change of name (to include the description of “Investment Management”) and a change of business scope (from providing consulting services to providing investment management services) with the Administration for Industry and Commerce (AIC, China’s company registry) in June 2017, and then obtained the AMAC registration after three months.

From these two recent cases, it does not look like setting up a new WFOE will have any time advantage over converting an existing WFOE.

These two registrations came after UBS Asset Management (Shanghai) Limited’s successful registration as thesecond PFM WFOE in July 2017. The entity was formed initially as a QDLP WFOE, which obtained a QDLP licence and a US$100 million quota in 2015. The QDLP scheme was launched by the Shanghai government in 2013, allowing foreign managers to raise money from PRC investors and invest in overseas securities, subject to a quota limit, whilst for PFM WFOEs, both fund-raising activities and investment activities should remain within the PRC.

UBS’s successful registration with AMAC suggests that, at least from AMAC’s perspective, a foreign manager may use the same WFOE to apply for a QDLP licence and a PFM licence, and carry out two distinct lines of business despite the Shanghai Financial Office taking a different approach. It requires that a QDLP WFOE shall be a separate legal entity from a PFM WFOE. The CSRC (China Securities Regulatory Commission) and AMAC, through verbal guidance, require a foreign manager that conducts onshore business (via PFM WFOE licence) and cross-border business (via QDLP WFOE licence) to set up Chinese Walls to segregate its offshore business and onshore business, and to take appropriate measures to avoid or mitigate conflicts of interests.

So far, four WFOEs have successfully registered with AMAC, meaning that they have completed the necessary formalities to launch their onshore private securities investment funds in Mainland China. Fidelity (FIL Investment Management (Shanghai) Company Limited) was the first foreign manager to score a PFM WFOE registration in January 2017, and it launched its first onshore private fund in March 2017.