AMAC Issues Private Investment Fund Disclosure Rules

On 4 February 2016, the Asset Management Association of China (“AMAC”) (中国证券投资基金业协会) issued the Measures on the Administration of Private Investment Fund Information Disclosure (私募投资基金信息披露管理办法), which took effect immediately. AMAC is the industry association for securities investment funds authorised by the China Securities Regulatory Commission (“CSRC”).

The measures require “information disclosure obligees”, that is, private investment fund managers, fund custodians and other legal persons and organisations designated by the CSRC or AMAC, to disclose a broad range of information to investors, including the following information related to a fund:

  • constitutional documents such as the fund contract, partnership agreement and articles of association;
  • promotional documents such as the prospectus;
  • sales agreement (if any);
  • investment situation;
  • assets and liabilities;
  • allocation of investment income;
  • costs and performance fees;
  • potential conflicts of interest;
  • significant disputes; or
  • other information that can significantly affect investors’ lawful rights and interests as determined by the CSRC or AMAC.

Information may be disclosed by letter, fax, email, website or third party, and it must be disclosed through AMAC’s online platform. The platform is currently under construction, but it is intended to provide search functionality for investors.

The measures also prohibit information disclosure obligees from disclosing:

  • false or misleading information such as predictive claims, inaccurate comparisons, puffery and so on;
  • information in promotional materials (such as the prospectus) that is inconsistent with information in a fund’s constitutional documents; or
  • confidential information such as trade secrets or personal information.

Market Reaction

Natasha Xie, Partner, JunHe LLP, Shanghai

“AMAC’s new rules on information disclosure are designed to further regulate private fund managers and protect the rights and interests of fund investors. The supervision and regulation of private funds has moved to a new stage where private funds and fund managers are required to be more transparent and violations of information disclosure obligations will lead to various self-disciplinary sanctions.”

Action Items

General Counsel for private funds and fund managers should closely study the new disclosure rules and work with AMAC to ensure compliance in relation to their clients’ constitutional, promotional documents and so on, as well as compliance with the periodic disclosure requirements.