Enactment of preferential policies to encourage equity investment in Hengqin New Area
“Trial Measures to Encourage Equity Investment Fund Enterprises and to Promote the Development of Equity Funds Investment Management Enterprises” and “Opinion on the Implementation of Policies to Promote the Development of Equity Investment Funds in Hengqin New Area” were officially enacted on May 25 and May 30, respectively. These “Measures” are designed to encourage the development of the equity investment funds sector in the Hengqin New Area, by regulating the registration, setting-up, supervision, trusteeship, operation and supervision of equity funds, while the “Opinion” defines the support policies aimed to accelerate the development of equity investment funds in Hengqin New Area.
The above-mentioned “Measures” and “Opinion” are concrete manifestation of the new and innovative financial policies of Hengqin New Area. Respective enactment will bring about the following improvements:
I – Innovation of the services model
With the creation of several specialized services, it is now possible to provide a series of value-added one-stop services, namely, advising, appraisal, creation, projects matching and the setting-up of commercial offices.
II – Optimization of the registration threshold
The (subscribed) capital of equity funds shall not be less than CNY 50 Million and the first instalment shall be over CNY 10 Million. The initial paid-up capital shall not be less than MOP10 Million. The first instalment of paid-up capital for equity investment fund management enterprises shall not be less than CNY 1 Million.
III – Reinforcement of the company registration and supervision systems
The entities providing services to the funds shall articulate with the Finance Services Bureau for follow-up and supervisory works. Equity investment funds companies whose capital exceeds CNY 500 Million or equivalent in foreign currency shall be reported to the National Development and Reform Commission for filing purpose.
IV – Implementation of comparatively favourable fiscal policies
Taking as reference the procedures adopted by 10 other municipalities of the country, for the encouragement of the development of the equity funds, comparatively favourable policies were formulated for Hengqin New Area.
In order to implement the “Measures” and “Policies” efficiently, it is imperative to solve the following issues:
(1)Possibility of the companies to use the designations of “Fund” or “Investment Fund”.
(2)Accelerate the creation of specialized agencies to provide services to the funds.
(3)Coordinate with the departments for administration of commerce and industry to address the issue of liability of the “General Partner”, whether such liability should be borne by the company system, or by partnership system or by the State-owned enterprises.
(4)Coordinate in the resolution of the issue of business registration of foreign-invested equity investment funds established in China; address the issues related to the approval of foreign-invested companies and the administration of foreign exchange.
Progress has been made with regards to the registration of equity investment funds in Hengqin New Area.
1.At the initial stage, Hengqin looks towards attracting 100 equity investment funds. Given that the capital of each company would be around CNY 300 to CNY 500 Milllion, it is estimated that Hengqin New Area will able attract investments up to the extent to CNY 30 Billion.
2.Since May, dozens representatives of equity investment funds enterprises have travelled to Hengqin, for research and analysis and also for negotiations on cooperation. Up to early June, Hengqin New Area has already registered 40 equity investment funds.
3.In the future, Hengqin will continue to build up as an offshore RMB business centre and bring in innovative measures to reform equity investment.