The applicable legislation in China
offers to foreign investors the possibility to open various types of investment vehicles
. Amongst these, foreign businessmen can create a closed-ended investment fund
with the purpose of investing its capital. Some of the main aspects defining a closed-ended structure in China
are that the fund’s capital
is fixed, as well as the total number of shares it can issue on the exchange market
. Our team of lawyers in China
can offer assistance on the registration procedure and can provide more details on the taxation system or the advantages of the investors.
Short history on the investment funds in China
Investors who want to start a business in China
as an investment fund
or an investment company
should know that the Chinese market
is relatively young, as the first investment fund
was incorporated here in 1991. The market developed over the years and thus, investors could set up funds
in the securities market
, equity investment
or real estate investments
. Our lawyers in China
can advise businessmen with more details on the current investment market
In 1997, the Chinese authorities
created the China Securities Regulatory Commission
, an official institution regulating the investment market
. The legislation referring to the ways in which the capital can be raised in China
, as well as many other rules referring to the investment funds
, were prescribed in the Interim Regulation on the Securities Investment Funds
One year later, following the regulations of the above mentioned law, the businessmen were able to invest on the public Chinese market, thus creating the securities investment funds, also referred to as closed-ended funds.
Regulatory framework for Chinese closed-ended funds
The main rule of law which is applicable at the moment for the incorporation and activity of a closed-ended fund in China
is the New Funds Law
, which is also applicable for the open-ended funds
Businessmen who want to register an investment fund
must receive approval from the China Insurance Regulatory Commission
. In order to market a fund in China,
it is necessary to register the vehicle
in this country, as foreign funds
can’t be traded on the local market.
The managers of a closed-ended fund are required to provide daily reports on the fund’s net value asset.
In terms of taxation, the Chinese legislation distinguishes between local and foreign investors and it is important to know that foreigners can invest here only in certain conditions.