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Southern Finance Omnimedia reporter Pang Cheng and Weng Rongtao reported from Guangzhou

On July 22, the Guangdong Regulatory Bureau of the China Securities Regulatory Commission (hereinafter referred to as the "Guangdong Securities Regulatory Bureau") issued the "Notice on Organizing Self-Inspection of Private Investment Funds in the Jurisdiction in 2024" (hereinafter referred to as the "Notice").

The Notice states that in order to strengthen the daily supervision and risk prevention of private equity funds in Guangdong (excluding Shenzhen), the Guangdong Securities Regulatory Bureau has decided to organize a self-examination of private equity funds in 2024 in accordance with relevant regulations. The self-examination will be carried out from the date of issuance of the Notice to August 31, 2024; the self-examination targets are private equity fund management institutions registered in Guangdong Province (excluding Shenzhen) and registered with the Asset Management Association of China as of June 30, 2024.

Specifically, the "Notice" requires private equity fund management institutions to conduct self-examinations focusing on the following: whether private equity fund management institutions comply with regulations in business links such as publicity and promotion, fund raising, and investment operations; whether registration and filing, information reporting, and information disclosure are true, accurate, complete, and timely; whether internal management and risk control are sound; whether there are any overdue fund products; whether quantitative trading is carried out; whether there are any off-site operations; whether there are any circumstances that fail to continuously meet registration and filing conditions; whether they are engaged in businesses that conflict with or are unrelated to private equity fund management; etc.

It is worth noting that the "Private Investment Fund Registration and Filing Measures" officially came into effect on May 1, 2023. This new regulation clarifies the registration and filing principles and the standards for manager registration, requires private equity managers to have paid-in capital of no less than 10 million yuan, and imposes strict requirements on private equity fund executives and shareholders.

In this regard, the above-mentioned "Notice" requires that as of March 31, 2024, private equity fund management institutions that have been registered for more than 12 months but have an existing managed fund size of less than 10 million yuan should verify whether their employees, business premises, capital, etc. can continue to meet the registration and filing conditions in accordance with the requirements of the "Private Investment Fund Registration and Filing Measures" and form a special verification report.

The Guangdong Securities Regulatory Bureau stated that it will conduct random inspections on the self-inspection and rectification of private equity fund management institutions, depending on the situation. For those who fail to conduct self-inspection as required, fail to submit materials on time, fail to rectify, falsify data, deliberately conceal risks, and do not pay attention to risk mitigation, on-site inspections will be strengthened; those who violate laws and regulations and damage the legitimate rights and interests of investors will be severely dealt with in accordance with laws and regulations.

Southern Finance Omnimedia reporters noticed that in recent years, the Guangdong Securities Regulatory Bureau has organized private equity investment funds under its jurisdiction to conduct self-inspections on many occasions. The self-inspections covered all business links of "fund raising, investment, management and exit" and areas where risks may exist.

In April 2023, the Guangdong Securities Regulatory Bureau organized the 2023 private equity fund manager self-inspection work, covering self-inspection and self-correction of compliance issues, risky business investigation, etc.

In the self-examination work in 2022, the Guangdong Securities Regulatory Bureau requires that the self-examination of private investment funds under its jurisdiction covers 7 modules and 61 self-examination points, including basic requirements, publicity and promotion, fund raising, investment operation, internal control and risk management, information disclosure and reporting, and investor suitability. It also pays attention to whether private equity conducts quantitative trading, involves real estate-related industries, and whether it engages in businesses that conflict with or are unrelated to private equity fund management. In addition, private equity institutions with a management scale of 200 million yuan (inclusive) or more are required to submit self-examination materials through the China Securities Regulatory Commission's online service platform (trial operation).

The latest data from the Asset Management Association of China shows that as of May this year, there were 1,646 private equity fund managers in Guangdong Province (excluding Shenzhen), managing 12,507 funds with a total size of 1.2537 trillion yuan.