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 registered here.
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.
