Zhiheng News | Zhiheng Securities and capital markets Legal Affairs Department successfully held an internal training session on issues related to Private Offering Fund managers

As regulatory oversight in the private equity industry becomes increasingly stringent and the market environment continues to evolve, the deep accumulation and continuous updating of specialized knowledge have become key competitive advantages for legal service professionals. Recently, the Securities and Capital Markets Practice Group of

successfully held an internal training session on issues related to private fund managers.

This meeting focused on the industry’s most pressing issues and challenges. Led by internal trainer Yang ZhanCheng, a lawyer, and with the active participation of numerous professionals, including Han Fei, Director of the Securities and Capital Markets Law Department, the event provided team members with a knowledge-rich and highly professional seminar.

Yang Zhancheng, Secretary-General of the Securities and Capital Markets Legal Affairs Department at

At the meeting, Attorney Yang Zhancheng provided a comprehensive interpretation of the key requirements for private fund managers. In terms of personnel composition and qualifications, it is explicitly stated that the key internal departments of a fund manager comprise the general manager, the chief risk officer, the chief investment officer/fund manager, as well as administrative and finance staff. Moreover, there are significant differences in certification requirements for personnel across different types of fund managers.

For example, in the securities fund management sector, it has traditionally been required that all staff hold relevant certifications; in the private equity sector, at least three individuals must be certified, and the relevant personnel are expected to possess extensive investment experience. Moreover, the professional competence of the chief investment officer or fund manager plays a decisive role in the registration process for private fund managers.

Regarding the number of private fund management companies established under the same de facto controller, Attorney Yang Zhancheng provided a detailed explanation of the regulatory changes. Under the previous registration rules, in general, the same de facto controller is permitted to establish only one private equity fund manager and one securities fund manager. However, under the new registration and filing measures, while fully taking into account the need to ensure both reasonableness and necessity, facilitate effective business operations, and rigorously establish risk isolation mechanisms and comply with fund inspections, differentiated regulatory requirements have been introduced for special cases involving asset allocation managers, private equity managers, and private securities managers under the same de facto control. Relevant rules were also thoroughly explained to the attendees.

When discussing the qualifications for investment managers, Attorney Yang Zhancheng emphasized their stringent standards. Senior executives of equity fund managers responsible for investment management must have, within the past 10 years, led at least two investment projects in unlisted equity, with a combined investment amount of no less than RMB 30 million, and at least one of these projects must have successfully exited through an initial public offering, equity merger and acquisition, or equity transfer. For securities investment managers, they are required to provide investment performance records spanning at least 24 consecutive months within the past 10 years; furthermore, performance from discretionary asset management and simulated trading is explicitly excluded from being recognized.

Conference venue

The new regulations that took effect on May 1, 2023 impose stricter requirements on private fund managers, covering several key areas including the firm’s name, business scope, actual capital contributions, senior management, and shareholders. Attorney Yang Zhancheng, drawing on real-world cases, conducted a detailed analysis of the response strategies that administrators who were already registered prior to the new regulations’ implementation should adopt when facing registration changes or significant alterations to key matters, thereby providing clear guidance for attendees in their day-to-day business operations.

As a crucial document in private equity fund operations, the legal opinion plays a pivotal role, and its drafting standards and quality are of paramount importance. Taking a particular project involving a change in the controlling shareholder as an example, the meeting conducted an in-depth analysis of the issues existing in the legal opinion, such as unclear descriptions of the verification process, insufficient justification for certain matters, uncertainties regarding the valuation of the new shareholder and the payment of the equity transfer consideration, the need to adhere to specific rules in identifying related parties, and the one-sided nature of the search methods employed.

It is emphasized that, when drafting legal opinions, the verification process, facts, and conclusions must be clearly articulated to ensure the content is rigorous and accurate.

Han Fei, Director of the Securities and Capital Markets Law Department at

During the meeting, Attorney Han Fei emphasized the crucial role of working papers in legal practice. A complete and properly prepared working paper not only serves as strong evidence of the facts of the matter but also constitutes an important safeguard for the law firm in mitigating risks. He emphasized that, throughout the project implementation process, utmost importance must be given to the preparation of working papers. A detailed working-paper checklist should be established, and all items must be rigorously reviewed to firmly prevent any potential risks arising from missing or non-compliant working papers.

Silhouettes of the attendees

Looking ahead, the Securities and Capital Markets Practice Group of

has formulated a series of forward-looking work plans. We plan to hold a core-team discussion to further clarify the legal basis and standard procedures for core operations; integrate the project experience of team members to establish a comprehensive, systematic case library for the Business Department, thereby facilitating resource sharing and efficient delivery; and continue to organize knowledge-sharing sessions covering popular specialized areas such as equity incentive plans and disputes over liability for false statements in securities, continuously enhancing the team’s overall professional competence and business capabilities.

The successful convening of this internal training session fully demonstrates the Securities and Capital Markets Practice Group of

’s unwavering commitment to professional expertise and its stringent quality control over its practice. Against the backdrop of the private equity industry’s ongoing evolution and transformation, this department will leverage its deep professional expertise, extensive practical experience, and strong team collaboration to provide clients with higher-quality, more specialized legal services, thereby contributing to the industry’s healthy and stable development.