China unveils first regulation on supervision, administration of PE funds

China's first regulation on the supervision and administration of private equity funds was announced on Sunday.

The regulation will take effect on Sept 1, according to a State Council decree issued on Sunday.

With 62 detailed measures, the new regulation has delineated the bottom line of supervision. It has clearly stated that the PE industry should serve the real economy and promote technology innovation.

The regulation has also set a special chapter for venture capital funds by defining their investment scope, investment term and contract strategies. The VC industry should implement differentiated supervision and self-discipline management. VCs are encouraged to invest in the smaller companies at an earlier stage with its investment focusing on technologies.

Serving as a fundamental regulation to complete the supervision over China's PE industry, the new regulation will facilitate the high-quality development of the industry, according to the explanation provided by China Securities Regulatory Commission on its official website on Sunday.

As of May 2023, there were 22,000 PE fund managers registered with the Asset Management Association of China, with 153,000 funds under management, totaling 21 trillion yuan ($2.9 trillion).

shijing@chinadaily.com.cn