Jurisdiction - China
Investment Funds
China- Securities Regulatory Commission Issues Rules For Subsidiaries Of Securities Investment Fund Management Companies.

20 December, 2012


On October 31, 2012, the China Securities Regulatory Commission (“CSRC“) issued a press release to officially publish the Interim Provisions on the Administration of Subsidiaries of Securities Investment Fund Management Companies (the “Interim Provisions“), which entered into force on November 1, 2012.



The Interim Provisions address the definition of subsidiaries of securities investment fund management companies (“Subsidiaries“), the establishment of such Subsidiaries, and their governance, operation, day-to-day supervision and administration.



The Interim Provisions emphasize the corporate governance and internal control systems of Subsidiaries, address strengthening the management of personnel in Subsidiaries, and underline fund management companies’ control of their Subsidiaries.


The Interim Provisions require fund management companies to reasonably determine the development and business plans of their Subsidiaries according to their own development strategy, and to enhance business coordination and resource sharing between fund management companies and their Subsidiaries.



In terms of risk control management, the Interim Provisions require fund management companies to establish risk isolation systems and related party transaction management systems between parent companies and Subsidiaries. In addition, in order to effectively prevent conflicts of interests, timely disclosure must be made where there are any related party transactions or where employees of fund management companies hold equity in Subsidiaries, or concurrently occupy positions in Subsidiaries or receive salaries from Subsidiaries. The Interim Provisions also specify corresponding administrative measures and sanctions.



The full Chinese text of the Interim Provisions is available here



For further information, please contact:


Elizabeth Cole, Partner, Orrick

Seung Chong, Partner, Orrick


Veronica Lockyer, Orrick

Yan Zeng, Orrick



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