Beijing Municipality Encourages FDI in Private Equity Fund Companies

Posted by Reading Time: < 1 minute

BEIJING, Feb. 2 – Local authorities have released a circular encouraging foreign investors to establish wholly foreign-owned private equity (PE) management companies or joint-venture private equity management companies with local companies in its Zhongguancun Independent Innovation Demonstration Zone.

The circular called “Tentative Measures for Establishing Foreign-Invested Private Equity Investment Fund Management Enterprises” clarifies the scope of foreign-invested PE management companies, “being commissioned to accept other PE investment funds and undertaking non-securities PE management and consulting,” and not engaged in other business activities.

The circular was launched on January 1, 2010 in the Zhongguancun Independent Innovation Demonstration Zone on a trial period of three years.

The zone is well-known as China’s version of Silicon Valley nurturing top Chinese technology companies like Stone Group, Founder Group, Baidu, SINA and Lenovo Group. Multinational companies like Google, Intel, AMD, Oracle Corporation, Motorola, Sony, and Ericsson have also established headquarters in the area.

A foreign-invested equity fund management company will need to meet the following criteria to participate:

-the company must be set up as a limited liability enterprise with the words “fund management”  in the name;

-the company must have a registered capital of at least US$2 million;

–company executives must have the following: a) more than two years experience in equity investment fund management operations or related business experience; b) must have no recorded violation or cases of economic disputes and lawsuits in the last 5 years as well as a good personal credit record

For more help in establishing companies in the capital city email beijing@dezshira.com.

Correction
An earlier version of this article stated that a foreign-invested equity fund management company will need to have a registered capital of at least US$200 million to participate, this figure has been corrected to US$2 million.