环球律师事务所-2023年私募股权趋势与发展之中国篇（英）

CHAMBERS

GLOBAL

PRACTICE

GUIDESPrivate

Equity2023Definitiveglobal

law

guides

offeringcomparativeanalysisfromtop-rankedlawyersChina:

Trends

&

DevelopmentsSteven

Yu

andJiaGuoGlobal

Law

OfficeCHINA

TrendsanddevelopmenTsTrends

andDevelopmentsContributedby:StevenYu

andJiaGuoGlobalLawOfficeGlobal

Law

Office

(GLO)

dates

back

to

1979,

have

vast

experience

in

representing

investors,when

it

became

the

first

law

firm

in

the

People’s

but

it

has

also

extensively

represented

financ-Republic

of

China

(PRC)

to

have

an

international

ing

enterprises

and

founders.

With

a

deep

un-perspective,

fully

embracing

the

outside

world.

derstanding

of

the

best

legal

practices

and

de-With

more

than

500

lawyers

practising

in

its

velopment

trends

of

each

investment

term,

theBeijing,

Shanghai,

Shenzhen

and

Chengdu

of-

team

at

GLO

knows

how

to

find

the

most

effec-fices,

GLO

is

today

known

as

a

leading

Chinese

tive

balance

of

interests

in

terms

of

negotiationlaw

firm

and

continues

to

set

the

pace

as

one

so

as

to

realise

all-win

results.

Vastpractical

ex-of

the

PRC’s

most

innovative

and

progressive

perience

and

industrial

background

knowledgelegal

practitioners,

including

in

the

private

eq-

enable

GLO

to

enhance

value

in

every

processuity

and

venture

capital

sector.

Not

only

does

it

oftheclientinvestmentcycle.AuthorsStevenYu

isapartnerofGlobalLawOfficebasedinShanghai.JiaGuoisapartnerofGlobalLawOfficebasedinBeijing.JiaHehaslongfocusedhispracticespecialisesinprivateequityandontheareasofprivateequityventurecapital,M&A,capitalandventurecapital,M&A,fundmarkets,assetmanagementandformationandcapitalmarketgeneralcorporatepracticetransactionsacrossawidespectrumofindustries,includingthemanufacturing,automobile,chemical,logistics,TMT,

fintech,consumerstaples,environmentservices,pharmaceuticals/healthcare,cleanenergy,areas.Industrieswithwhichhehasbeeninvolvedincludeenergyandresources,realestate,infrastructure,education,advertisingandmedia,telecoms,hi-tech,internet,financialservices,bigdata,entertainment,andcommercialproperty,

entertainment,education

pharmaceuticalandmedicalservices.Intheandtourismsectors.Thelegalservicesrenderedbyhimtypicallyincludeadvisingonstructuretransactions,conductingduediligence,drafting,reviewingandnegotiatingdocuments,renderinglegaloradvisoryopinionsaswellasassistingwithclosingmattersandcompletionofgovernmentapprovalprocedures.M&A,privateequityandventurecapitalareas,Jiahasadvisedonmorethan80cases,representingbothfinancialandindustrialinvestorsandfundraisingcompanies.Incapitalmarkets,hispracticeexperiencealsoincludesHongKonglistings,USlistings,A-sharelistings,NEEQlistingsanddebtofferings.2CHAMBERS.COMCHINA

TrendsanddevelopmenTsContributedby:StevenYu

andJiaGuo,GlobalLawOfficeGlobalLawOffice15&20/FTower

1ChinaCentralPlaceNo81JianguoRoadChaoyangDistrictBeijing100025ChinaTel:

+861065846688Fax:+861065846666Email:global@Web:

US-ChinaTensions

WillReshapetheUSOutboundInvestmentRegimetioned

persons

and

countries,

to

the

area

of

out-bound

investment

by

US

persons

into

countriesOn

9

August

2023,

President

Biden

issued

an

of

concern,

mostly

notably,

China.

Since

thisExecutive

Order

(EO)

to

address

US

invest-

is

similar

to

the

current

Committee

on

Foreignment

in

certain

national

security

technologies

Investment

in

the

United

States

(CFIUS)

reviewand

products

in

the

PRC

including

Hong

Kong

regime

aiming

at

protecting

national

security,

butSAR

and

Macau

SAR.

The

EO

requires

the

US

in

an

opposite

direction,

it

is

therefore

colloqui-Department

of

Treasury

to

work

with

the

US

ally

known

as

“Reverse

CFIUS”.

Such

“ReverseDepartment

of

Commerce

and

other

agencies

to

CFIUS”

can

be

dated

back

to

6

June

2022,

whenput

into

place

an

array

of

implementation

regula-

seven

US

Congress

members

led

bipartisantionstoestablishamechanismthatcouldiden-

effort

to

propose

an

amendment

to

the

Inno-tify

and

differentiate

“notifiable”

vs

“prohibited”

vation

Act

aimed

at

reviewing

and

limiting

USoutbound

transactions

in

terms

of

extent

of

the

investment

into

countries

of

concern

or

thosethreat

that

may

be

posed

to

the

country’s

nation-

considered

“foreign

adversaries”

like

China

inal

security.

The

EO

will

come

into

effect

follow-

certain

industries

on

national

security

grounds.ing

the

issuance

of

implementing

regulations

by

This

was

followed

by

the

release

of

a

new

draftthe

US

Department

of

Treasury

and

does

not

set

oftheNationalCriticalCapabilitiesDefenseActa

deadline

for

these

regulations

to

be

issued.

on

13

June

2022,

a

revised

version

of

the

origi-Giventhe45-daycommentperiodandthetime

nallyproposedlegislationthatwascirculatedinit

will

take

to

develop

implementing

regulations,

2021,

aiming

to

address

national

security

risk

bythe

new

outbound

investment

regime

will

likely

establishing

an

expansive

outbound

investmentnotcomeintoeffectuntil2024.review

regime.

The

EO

was

issued

after

the

USSenate

approved

adding

a

measure

to

the

2024The

EO

echoed

the

long-anticipated

moves

National

Defense

Authorization

Act

in

July

2023expanding

the

current

US

governmental

control

that

would

require

mandatory

notifications

offrom

the

areas

of

inbound

investment

into

the

US

certain

investments

in

China,

Russia,

Iran

andand

technology

and

commodity

export

to

sanc-

NorthKorea.3CHAMBERS.COMCHINA

TrendsanddevelopmenTsContributedby:StevenYu

andJiaGuo,GlobalLawOfficeThe

EO

targets

the

following

three

categories

ment

events

in

the

three

areas,

accounting

forof

“covered

national

security

technologies

and

62.4%.products”:

(1)

semiconductors

and

microelec-tronics,

(2)

quantum

information

technologies

Regardless

of

what

the

regulations

issued

by

USand

(3)

artificial

intelligence.

The

EO

is

antici-

Department

of

Treasury

will

ultimately

look

like,patedtotarget

onlycertaintypesofinvestment

the

“Reverse

CFIUS”

is

on

the

way.

In

antici-transactions

such

as

equity

transactions

(eg,

pation

of

these

regulations,

US

persons

shouldvia

mergers

and

acquisitions,

private

equity,

carefully

evaluate

their

investment

strategies

inventure

capital

and

other

arrangements),

green-

foreign

countries,

especially

China.

From

China’sfield

investments,

joint

ventures

and

certain

perspective,

a

continuous

and

stable

utilisationdebt

financing

transactions

that

are

convertible

of

foreign

capital

in

innovative

and

high-end

techto

equity,

however,

target

transactions

entered

areas

could

face

some

challenges

to

be

over-into

to

evade

the

prohibitions

under

the

EO

are

comeinthenextdecade.also

regulated.

For

example,

a

US

person

willnot

be

able

to

knowingly

invest

in

a

third-country

MeasuresforRegistrationandFilingofentitythatwillusetheinvestmenttoparticipate

PrivateFundsSubstantiallyRaisedthein

a

transaction

with

a

covered

foreign

person

in

ThresholdfortheRegistrationofFundacountryofconcern.ManagersIn

mainland

China,

fund

managers

are

requiredThe

above-described

US

regulatory

develop-

to

complete

registration

procedures,

which

doment

occurring

more

than

a

year

ago

appears

not

amount

to

a

permission

or

approval

fromto

have

had

a

significant

impact

on

the

Chinese

a

legal

perspective,

in

the

Asset

Managementprivate

equity

and

venture

capital

market,

both

Association

of

China

(AMAC)

before

raising

afor

fundraising

and

for

investment.

According

to

private

fund.

On

1

May

1

2023,

the

Measuresstatistics

released

by

Zero2IPO

Research,

RMB

for

Registration

and

Filing

of

Private

Funds

(theinvestment

is

still

the

dominant

force

in

the

mar-

“Registration

Measures”)

promulgated

by

AMACket

in

the

first

half

of

2023

and

the

concentration

came

into

effect.

The

Registration

Measureshas

further

increased.

Specifically,

the

number

raise

the

threshold

for

the

registration

of

fundof

RMB

investment

cases

and

the

investment

managers

and

introduce

a

strengthened

supervi-amount

were

3,320

and

RMB234.071

billion,

sion

by

the

AMAC

compared

with

the

previousrespectively,

reflecting

a

year-on-year

drop

of

rules.35.6%

and

39.9%.

At

the

same

time,

the

numberof

foreign

currency

(primarily

USD)

investment

The

Registration

Measures

impose

higher

stand-cases

totaled

155,

reflecting

a

year-on-year

drop

ards

for

the

required

experience

and

profes-of

76.2%,

and

the

disclosed

investment

amount

sional

ability

of

senior

management

personnelwas

CNY58.894

billion,

reflecting

a

year-on-year

of

fund

managers

and

also

require

applicantsdrop

of

49%,

which

was

2.1

times

and

1.2

times

to

provide

evidence

of

their

experience

in

theof

the

decline

rate

of

RMB

investment

respec-

submitted

materials.

Meanwhile,

the

controllingtively.The

focused

industry

areasof

investment

shareholder,actualcontrollerorgeneralpartnerin

the

first

half

of

2023

include

semiconductor

of

fund

managers

(if

any)

are

required

to

haveand

electronic

equipment,

biotechnology/medi-

more

than

five

years

of

relevant

practice

experi-cal

and

IT

industries,

with

a

total

of

2,271

invest-

ence

in

the

fund

management

or

related

area.4CHAMBERS.COMCHINA

TrendsanddevelopmenTsContributedby:StevenYu

andJiaGuo,GlobalLawOfficeAll

the

requirements

mentioned

above

and

other

tion,

futures

company

or

any

other

institutionrelated

restrictions

in

the

Registration

Measures

or

functionary

of

a

state

body,

who

have

beenare

meant

to

exclude

applicants

without

suffi-

discharged

due

to

any

violation

of

laws

are

notcient

experience

in

equity

investment

and

pri-

allowed

to

serve

as

senior

management

person-vate

fund

management

from

entering

into

the

nelinafundmanagerafterthedischarge.businessofprivatefundsmanagement.The

Private

Funds

Regulations

also

set

up

aIn

response

to

the

licence-selling

behavior

of

series

of

administrative

penalties

for

the

illegalfund

managers

found

in

the

past,

AMAC

has

behavior

of

fund

managers

and

responsiblealso

taken

new

precautionary

measures

which

personnel.

In

the

event

that

a

private

fund

man-require

that

the

change

of

control

of

a

fund

man-

ager

fails

to

fulfill

the

investigation

obligation

ofager

shall

not

be

done

within

three

years

after

qualified

investors,

fails

to

complete

record-filingtheregistration,whilethemanagementscaleof

formalities

for

a

privately-offered

fund,

engag-the

target

fund

manager

in

the

last

year

shall

not

es

in

illegal

related-party

transactions

withoutbelessthanRMB30million.disclosure

in

accordance

with

applicable

lawand

regulations,

the

China

Securities

Regula-tory

Commission

(CSRC)

is

entitled

to

imposea

warning,

notification

and

criticism

as

well

asfines

upon

such

fund

managers

and/or

directlyresponsible

supervisors

and

personnel.

UnderRegulationsontheSupervisionandManagementofPrivateInvestmentFundsFurtherStrengthenedPrivateFundSupervisionOn9July92023,theStateCouncilofthePeo-

the

Private

Funds

Regulations,

the

fine

imposedple’s

Republic

of

China

promulgated

the

Regu-

by

the

CSRC

could

be

up

to

five

times

the

illegallations

on

the

Supervision

and

Management

of

income.

If

thereis

no

illegal

income

or

if

the

ille-Private

Investment

Funds

(the

“Private

Funds

galincomeislessthanRMB1million,themaxi-Regulations”).

The

Private

Funds

Regulations,

mumfinewouldbeRMB1million.which

came

into

force

on

1

September

2023,are

the

first

administrative

regulations

in

the

TheRegistration-basedIPOSystem,Revisedfield

of

private

investment

funds.

Its

promulga-

IssuanceConditionsandRegistrationtion

marks

a

further

improvement

of

the

private

ProceduresFurtherFacilitatedandExpandedfundsregulatorysystem.InvestmentExitChannelsforInvestorsIn

November

2018,

the

Science

and

TechnologyThe

Private

Funds

Regulations

strengthen

the

Innovation

Board

Market

(STAR)was

initiated

insupervision

of

fund

managers.

Under

the

Private

the

Shanghai

Stock

Exchange

and

piloted

theFunds

Regulations,

the

qualification

of

a

fund

registration-basedIPOsystem.InAugust2020,manager

would

be

canceled

by

the

AMAC

if

a

the

Growth

Enterprise

Market

(GEM)

of

thefund

manager

has

been

found

conducting

illegal

Shenzhen

Stock

Exchange

piloted

the

registra-fundraising

for

illegal

business

operations.

The

tion-based

IPO

system.

In

November

2021,

theregulations

also

strengthen

the

penalties

for

sen-

Beijing

Stock

Exchange

was

set

up

and

imple-ior

management

personnel

of

fund

managers.

mentedtheregistration-basedIPOsystem.TheEmployees

of

a

fund

manager,

fund

custodian,

registration-based

IPO

system

has

empoweredsecurities

or

futures

exchange,

securities

com-

financeandthedevelopmentoftherealecono-pany,

securities

depository

and

clearing

institu-5CHAMBERS.COMCHINA

TrendsanddevelopmenTsContributedby:StevenYu

andJiaGuo,GlobalLawOfficemy,

especially

for

technology-based

and

innova-

the

limitation

on

the

ratio

of

intangible

assetstiveenterprises.to

net

assets.

The

revised

issuance

conditionsprovide

new

options

for

applicants

and

aim

toIn

February

2023,

the

registration-based

IPO

sys-

support

the

issuance

and

listing

of

high-qualitytem

for

stock

issuance

was

formally

expanded

to

enterprises

with

mature

business

models,

sta-thewholecapitalmarket.TheCSRCissuedthe

ble

operating

performances

and

large

businessAdministrative

Measures

for

the

Registration

of

scales.Initial

Public

Offerings

of

Stocks

and

other

relat-edimplementationrules.Thestockexchanges,

In

terms

of

registration

procedures,

according

toNational

Equities

Exchange

and

Quotations

Lim-

the

Administrative

Measures

for

the

Registrationited

Liability

Company,

China

Securities

Deposi-

of

Initial

Public

Offerings

of

Stocks,

the

stocktory

and

Clearing

Limited

Liability

Company,

exchange

will

review

the

registration

documentsChina

Securities

Finance

Corporation

Limited

and

forward

the

application

to

the

CSRC

for

reg-and

the

China

Securities

Association

also

issued

istration.

The

Issue

Review

and

Approval

Com-andimplementedrelatedrules,involvingatotal

mittee

of

CSRC

is

formally

cancelled

after

theof

165

rules,

which

marks

a

significant

devel-

full

implementation

of

the

registration-based

IPOopment

of

the

regulatory

system

for

the

capital

system.

Upon

receipt

of

the

stock

exchange’smarketofmainlandChina.review

comments

and

relevant

registrationdocuments,

the

CSRC

will

proceed

registrationIn

terms

of

issuance

conditions,

a

new

market

procedures

and

issue

the

decision

on

whethervalue

indicator

is

introduced

according

to

the

list-

to

register

within

20

working

days.

Under

theing

rules

of

the

Shenzhen

Stock

Exchange

and

registration-based

IPO

system,

the

time

neededthe

Shanghai

Stock

Exchange.

For

applicants,

from

application

to

listing

has

been

greatly

short-they

need

to

comply

with

all

of

the

following

con-

enedforapplicants.ditions

including,

(a)

the

estimated

market

valueis

not

less

than

RMB5

billion,

(b)

the

net

profit

Under

the

full

implementation

of

the

registration-for

the

most

recent

year

is

positive,

(c)

the

busi-

based

IPO

system,

the

issuance

conditions

andness

revenue

for

the

most

recent

year

is

not

less

review

procedures

have

been

optimised,

whichthanRMB600millionand(d)thecumulativenet

further

facilitates

the

listing

for

issuers

andcash

flow

generated

from

the

operating

activities

expandstheexitchannelsforinvestors.for

the

most

recent

three

years

is

not

less

thanRMB150

million,

or,

alternatively,

all

of

the

fol-

Trial

AdministrativeMeasuresofOverseaslowing

conditions

must

be

met,

(a)

the

estimated

SecuritiesOfferingandListingbyDomesticmarket

value

is

not

less

than

RMB8

billion,

(b)

CompaniesReshapedtheRegulatorythe

net

profit

for

the

most

recent

year

is

positive

FrameworkforOverseasListingofDomesticand

(c)

the

operating

income

for

the

most

recent

Enterprisesyear

is

not

less

than

RMB800

million.

Compared

On

17

February

2023,

the

CSRC

issued

the

Trialwith

the

previous

Administrative

Measures

for

Administrative

Measures

of

Overseas

Securi-Initial

Public

Offerings

and

Listings

(expired),

the

ties

Offering

and

Listing

by

Domestic

Compa-new

rules

have

removed

the

restrictive

condi-

nies

(the

“Trial

Administrative

Measures”),

whichtions

such

as

the

absence

of

uncompensated

came

into

force

on

1

March

1

2023.

The

Triallossesattheendofthemostrecentperiodand

Administrative

Measures

substantially

changed6CHAMBERS.COMCHINA

TrendsanddevelopmenTsContributedby:StevenYu

andJiaGuo,GlobalLawOfficetheregulatoryframeworkfortheoffshorelisting

ture

of

overseas

listing

required

no

approval

orofdomesticcompanies.registration

with

the

CSRC,

which

worked

foralmost

20

years.

After

the

implementation

of

theOffshore

listing

of

domestic

enterprises

is

an

Trial

Administrative

Measures,

the

regulation

ofimportant

way

to

exit

for

investors,

especially

for

above-mentioned

structures

has

changed

fun-offshore

investors.

Traditionally,

there

are

three

damentally,

as

CSRC

filings

are

required

undertypes

of

offshore

listing

structures

for

domestic

allthreestructures.enterprises:

H-share

structure,

grand

red-chipstructure

and

small

red-chip

structure.

The

small

Article

2

of

the

Trial

Administrative

Measuresred-chip

structure

could

be

further

divided

into

explicitly

provides

that

“indirect

overseas

issu-equity

control

structure

and

variable

interest

ance

and

listing

of

domestic

enterprises

refers

toentity

(VIE)

structure.

H-share

structure,

which

the

issuance

and

listing

of

securities

by

an

enter-can

be

understood

to

be

a

company

incorpo-

prise

with

its

main

business

activities

in

the

terri-rated

in

the

PRC

directly

applying

for

listing

tory,

under

the

name

of

the

enterprise

registeredand

fundraising

at

offshore

stock

exchanges,

abroad,

overseas

issuance

and

listing

basedrequires

the

approval

of

the

CSRC.

The

grand

on

the

equity,

assets,

income

or

other

similarred-chip

structure

could

be

understood

to

be

an

rights

and

interests

of

domestic

enterprises.”offshoreholdingentityorentitieswithdomestic

While

under

Article

15

of

the

TrialAdministrativeassets

or

interests

as

the

listing

applicant

which

Measures,

if

a

target

company

fulfill

the

condi-is

ultimately

controlled

by

a

PRC

incorporated

tions

that

the

operating

revenue,

total

profit,

totalenterprise.

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the

implementation

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the

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assets

or

net

assets

of

the

domestic

enterpriseAdministrative

Measures,

the

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of

the

State

in

the

latest

fiscal

year

account

for

more

thanCouncil

on

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auditedconsolidatedfinan-tration

of

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and

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cial

statements

for

the

same

period,

as

well

asthe

“1997

Red-Chip

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(expired)

was

the

that

the

major

parts

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the

operating

activities

areapplicable

regulation.

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regulation

required

carried

out

in

the

PRC

territory

or

the

main

prem-the

approval

of

the

CSRC

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of

the

provincial

ises

are

located

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thegovernment

for

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grand

red-

majority

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in

charge

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structure

companies.

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the

small

red-chip

the

operation

and

management

are

Chinese

citi-structure,

it

can

be

understood

as

a

domestic

zens

or

the

place

of

habitual

residence

is

locatednatural

person

holding

interests

in

a

domestic

in

the

PRC

territory,

it

will

be

recognized

as

ancompany

through

offshore

companies

and,

as

indirect

overseas

listing

of

a

domestic

enterprisesuch,

a

round-trip

investment

into

China.

The

andsubjecttothefilingrequirementsundertheoffshore

company,

usually

a

Cayman

company,

Trial

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used

as

the

listing

company

for

the

financingpurpose

under

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small

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the

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the

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abolition

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the

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system

trative

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no

filing

or

registration

to

theas

stipulated

in

the

Circular

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China

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CSRC

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required

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a

proposed

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company

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the

small

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andStock

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of

its

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could

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be

completed

within

sixOverseas

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which

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Domes-

to

twelve

months.

After

the

implementation

oftic

Equity

in

2003,

the

small

red-chip

struc-

the

Trial

Administrative

Measures,

it

will

take7CHAMBERS.COMCHINA

TrendsanddevelopmenTsContributedby:StevenYu

andJiaGuo,GlobalLawOfficemore

time

due

to

the

filing

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ment

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provide

more

flexibility

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applicant

should

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with

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the

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and

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disclosure

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inregulatory

regime,

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listed

companies

accordance

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relevant

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tions

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avoid

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According

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in-kind

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PE

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the

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to

ed

partners,

as

appl