I. Drafting background

The Interim Measures for the Supervision and Management of Private Investment Funds (hereinafter referred to as the "Private Investment Measures") has played a very important role in promoting the healthy and standardized development of various private investment funds (hereinafter referred to as private investment funds) since its promulgation. According to Article 16 of the Measures for Private Placement, managers of private equity funds can sell private equity funds by themselves or entrust sales organizations to sell private equity funds. China Asset Management Association (hereinafter referred to as China Fund Industry Association) will formulate questionnaires on investors' risk identification ability and tolerance and the content and format of risk disclosure according to the characteristics of different types of private equity funds. Accordingly, in order to strengthen the protection of the legitimate rights and interests of private fund investors and further standardize the private fund raising market, China Fund Industry Association, on the basis of studying and summarizing various phenomena and problems in the process of private fund raising in recent years, formulated the Measures for the Administration of Private Fund Raising Behavior (hereinafter referred to as the Measures for Raising Behavior), which is now promulgated and implemented in the form of industry self-discipline rules.

(A) the status quo of private equity fund raising

The development of private equity fund industry is growing day by day, risks are accumulating and risk events emerge one after another. By the end of 2065438+February 2006, China Fund Association had handled 236 cases of suspected illegal private placement. The types of violations involved in the case mainly include public propaganda, false propaganda, capital preservation and income protection, fund-raising from unqualified investors, illegal fund-raising, illegal absorption of public deposits, etc., and most of them are problems in the process of fund-raising.

1, publicity or disguised publicity

In the process of handling self-discipline cases, complaints and reports, and administrative docking cases, the association found that some institutions publicized private placement products in public or in disguise, mainly through the company website, official WeChat account, and staff telephone.

2. False propaganda

The false propaganda in the publicity of private equity funds is mainly manifested in the following three aspects:

(1) Private fund-raising institutions confuse the roles of managers and investors.

Private fund managers entrust banks, securities companies and other institutions to raise funds for them, and use the customer resources of banks and securities companies to realize the rapid collection of fund products. Due to sales impulse or other reasons, the staff of fund sales organizations often do not disclose to investors the fact that there is no investment management relationship between fund sales organizations and fund products. Once there is a redemption crisis or other problems in private equity funds, investors who don't know the truth often go to the sales organization, which confuses the roles of fund managers and fund sales organizations.

(two) false publicity of important information

Some fund-raising institutions and their staff have false propaganda when promoting private equity funds, such as fictitious custody institutions, fictitious guarantee institutions, fictitious law firms and accounting firms. And use investors' trust in such institutions to achieve the purpose of raising funds quickly.

(3) luring investors with guaranteed returns.

When promoting private equity funds, fundraising institutions and their staff induce investors to invest by ensuring that the principal will not be lost and promising fixed income. The income distribution part of the fund contract is written with the words "expected income" and "expected income", which makes investors mistakenly think that the private equity fund they buy is a fixed-income product with capital preservation. At present, there are still many private investors in China who meet the financial requirements of qualified investors, but they lack legal and investment knowledge and cannot distinguish the false propaganda and temptation of recruiting relevant personnel. Once there are risks such as investment failure and redemption crisis in fund products, deceived investors can't accept the reality. Because the publicity statements of fund raisers are inconsistent with the contents of fund contracts and lack of evidence, it is difficult for such investors to safeguard their own rights and interests.

3. Raise funds from unqualified investors.

Individual fund-raising institutions raise funds irregularly, violating the relevant provisions of the Private Placement Measures, failing to examine whether investors meet the relevant conditions of qualified investors, failing to identify investors' risk identification ability and risk-taking ability, and failing to fulfill the obligation of investors' appropriateness review. The fund-raising institutions "only raise money without looking at people", sell private equity funds to investors who do not have the corresponding risk identification ability and risk-taking ability, and even raise funds from unqualified investors, which has unbearable consequences for investors and seriously endangers social stability and unity.

4. Some employees illegally sell "flying orders"

In the relevant links of private fund raising, there are some employees who engage in fundraising activities without formal authorization. Once the risks of such private equity funds are exposed, investors' rights protection will be hindered. Therefore, the illegal behavior of relevant personnel selling "flying orders" needs to be curbed urgently, and the fund-raising institutions that acquiesce in the illegal sale of "flying orders" by employees should bear corresponding responsibilities.

The statistical survey of industry self-discipline shows that the private equity fund industry lacks standardized guidance, and criminals have an opportunity to ignore laws and regulations and even illegally raise funds in the name of private equity. Illegal private placement is confusing people, which not only seriously damages the individual rights and interests of investors, but also brings negative effects to the whole industry and destroys the foundation for the growth of private placement industry.

(B) the main problems in the process of raising private equity funds

1, "Unclear power and responsibility of fund-raising management" gave birth to chaos in the industry.

In the private equity fund industry, there are many cases of disputes arising from the unclear rights and responsibilities of raising and management, and due to the inherent characteristics of the private equity fund industry, the unclear division of rights and responsibilities between "raising" and "management" will have an adverse impact on managers, raising institutions, investors and even the whole industry.

(1) "Unclear rights and responsibilities in the management of raised funds" has great moral hazard.

Private equity fund managers follow different investment ideas and adopt different investment methods, and the investment styles of private equity funds are diverse. Investors need to choose their own private fund managers, and private fund managers also need to choose qualified investors who match the product risks. However, some entrusted fund-raising institutions, induced by sales expenses, use information asymmetry to promote products to investors, but after the fund has investment risks, they do not assume the responsibility of raising and information disclosure on the grounds of non-fund contract parties, so that investors bear the ultimate moral hazard. Some institutions have reported that investors frequently question managers' investment decisions and ideas, and even complain directly to managers when the net value of products fluctuates, which makes it difficult to maintain cooperation between the two parties. The entrusted fund-raising institution is not responsible for controlling the risk identification ability of investors and promoting products.

(2) "Unclear power and responsibility of fund-raising management" damages the interests of fund-raising institutions.

In practice, there is a phenomenon that private fund managers increase their credit by entrusting banks, brokers and other institutions to sell private funds on a commission basis. The staff of the entrusted fund-raising institution failed to fulfill their due obligation of informing in the process of selling funds, and investors did not know that there was no legal relationship of investment management between the fund products they bought and the institutions where the sales staff worked. Once the above-mentioned private equity products have problems, investors will often ask the entrusted fund-raising institutions to pay, which will adversely affect the daily work and reputation of the fund-raising institutions.

(3) "Unclear power and responsibility of fundraising management" makes it difficult to effectively realize non-public fundraising.

Private equity funds must be raised and established in a private way. However, due to the unclear division of responsibilities and the unclear definition of legal relationship, it is difficult for the fundraising agency entrusted by the private equity fund manager to guarantee non-public fundraising when selling private equity products to customers in practice, which has considerable industry risks.

2. There are defects in the supervision of private equity funds.

Under the framework of the existing Fund Law and Private Placement Measures, private fund raising institutions need to fulfill the obligation of identifying and confirming qualified investors and a higher standard of good faith, so the regulatory requirements for private fund raising should be stricter than those for public funds. At present, the sales organization of publicly raised funds must be registered with the China Securities Regulatory Commission and its dispatched offices in order to obtain the qualification of fund sales, but there is no explicit provision on the qualification of private fund sales.

In reality, private fund raising is mainly done by managers or third-party institutions in the form of product sales. In the absence of relevant rules and penalties, the cost of institutional fundraising is low, which leads to the transfer and confusion of responsibilities such as fiduciary responsibility and investor suitability review that should be borne by managers in different forms. Not only that, the responsibilities of the fund-raising institutions have not been defined and fulfilled, and it is impossible to effectively prevent their illegal fund-raising behavior. After the violation or even infringement of investors' interests, there is no effective recovery and rescue mechanism.

(C) the main reasons for the existence of illegal private placement

At present, illegal private placement has been repeatedly banned. On the one hand, the rules system of private equity industry is not perfect, the supervision of private equity fund-raising behavior is lacking, and the cost of violating laws and regulations is low, which drives some private equity institutions to wander in the gray area and play the legal edge ball in the process of fund-raising; On the other hand, some private equity institutions do not fully understand the existing laws and regulations under the framework of the Fund Law and the Private Equity Measures, and cannot correctly understand the provisions of laws and regulations, and the private equity fund-raising behavior lacks relevant guidance; Finally, the education of investors is not in place, and the extreme information asymmetry between private equity institutions and investors is also an important reason why illegal private equity institutions can succeed repeatedly.

To achieve rapid development, the industry must take the road of standardization and compliance. Private equity funds have no administrative examination and approval, and the registration system is implemented, which means that the China Fund Industry Association is responsible for major supervision after the event.

In all aspects of fund raising, registration and investment operation of private equity funds, fund raising is an important link in initiating the establishment of private equity funds. The feeding code of conduct is the first line of defense against the risk of violation, and it is an important embodiment of supervision in the matter. The implementation of these measures can provide a basis for standardizing the private equity fund raising market, guide the legal and compliant operation of fundraising institutions and strengthen investor education.

Second, the main content

The Measures for Feeding Behavior is divided into seven chapters, with a total of 44 articles. Mainly from the scope of application of the Measures, the general provisions of private fund raising, the determination of specific targets, the promotion behavior, the confirmation of qualified investors, the signing of fund contracts and other aspects of self-discipline management, which embodies the self-discipline supervision framework of private fund raising activities. The main contents are as follows:

(a) the scope of application of the measures for raising funds

Articles 2 and 3 of the Measures for Raising Behavior stipulate that these Measures shall apply to raising funds from investors in a non-public way. Only private fund managers registered with China Fund Industry Association can raise their own private funds, and institutions registered with China Securities Regulatory Commission and becoming members of China Fund Industry Association (hereinafter referred to as fundraising institutions) and their employees can accept the entrustment of private fund managers to raise private funds. The above two types of institutions can promote private equity funds, sell fund shares (rights and interests), and handle fund share (rights and interests) subscription/subscription (subscription), redemption (withdrawal) and other fundraising businesses.

These Measures shall apply to the participation of fund outsourcing service institutions in private fund raising business. Outsourcing service institutions include institutions that provide fundraising services for private fund managers, are registered with China Securities Regulatory Commission and have obtained the qualification of fund sales business and become members of China Fund Industry Association (hereinafter referred to as fund sales institutions), and provide payment and settlement services, fund supervision and share registration and other services related to private fund raising for private fund raising institutions.

(2) General provisions on raising private equity funds

Chapter II of the Measures for Issuance Behavior stipulates the general provisions in the issuance process, mainly including the responsibility of the issuer, special provisions on entrusted issuance, fund sales agreement, prohibition of illegal split transfer, confidentiality obligation, investor's data preservation obligation, opening of special account for issuance and settlement funds, supervision and fund safety, etc.

Article 6 of the Measures for Feeding Behavior stipulates the responsibilities of feeding institutions. Private fund managers and entrusted fund sales organizations should be conscientious, honest and trustworthy, cautious and diligent, guard against conflicts of interest, fulfill obligations such as explanations, and undertake related responsibilities such as determining specific targets, reviewing the suitability of investors, promoting private funds, and confirming qualified investors. The above-mentioned fund-raising institutions and their employees shall not engage in illegal activities such as misappropriating fund property and client funds, and trading by using undisclosed information related to private equity funds.

Article 7 of the Measures for Raising Behavior stipulates the responsibility of private equity fund managers to entrust raising, with special emphasis on the fact that their responsibilities according to law are not exempted from entrusted raising. Article 8 Where it is agreed that a private fund manager entrusts a fund sales organization to raise private funds, a fund sales agreement shall be signed, and the division of rights and obligations between the private fund manager and the fund sales organization and other parts involving the interests of investors shall be taken as an annex to the fund contract. The fund sales agreement must clarify the rights and obligations of both the manager and the fundraising institution, which can not only clarify the responsibilities of both parties, but also protect the investor's right to know. This article also stipulates that if the fund sales agreement is inconsistent with the appendix of the fund contract, the appendix of the fund contract shall prevail.

In order to put an end to the chaos that some institutional investors in the private equity industry split the shares of private equity funds they bought and then resold them to unqualified investors, Article 9 of the Measures for Offering Behavior particularly emphasizes the prohibition of illegal split and transfer, and prohibits any institution or individual from raising financial products with private equity fund shares or their income rights as the investment target in order to avoid the standards of qualified investors, or illegally split and transfer private equity fund shares or their income rights, thus breaking through the standards of qualified investors in disguise. A fundraising institution shall ensure that investors know the conditions for the transfer of private equity funds. At the same time, investors should make a written commitment to buy private equity funds for themselves, and no institution or individual may buy private equity funds for the purpose of illegal split and transfer. By prohibiting buyers and sellers, we can put an end to industry chaos and prevent risks.

Articles 10 and 11 of the Measures for Issuance Behavior respectively stipulate the confidentiality obligations of issuers and the information preservation obligations of investors.

Articles 12 to 14 of the Measures for Raising Behavior stipulate the opening, supervision and capital safety of special accounts for raising and settlement funds. First, the fundraising institution or the responsible party agreed in the relevant contract should open a special account for the fundraising and settlement of private equity funds, which is used to uniformly collect the fundraising and settlement of private equity funds, distribute income to investors, pay redemption money and distribute the remaining fund property after fund liquidation, so as to ensure the original return of funds; Second, the fund-raising institution should sign an account supervision agreement with the regulatory agency, and clarify the control right, responsibility division and provisions to ensure the safety of fund transfer of the special account for private fund raising and settlement. Regulators must bear joint and several liability clauses to ensure the safety of investors' capital transfer. Commercial banks, securities companies and other financial institutions that have obtained the qualification of fund sales business can serve as both the raising institution and the supervision institution in the process of raising the same private equity fund, and are not required to sign an account supervision agreement; Third, Article 14 puts forward specific requirements for the security of fund transfer in the special account for raising and settlement funds.

Article 15 of the Measures for Raising Behavior is to outline the raising procedures of private equity funds, clarify the procedures of raising behavior, and facilitate the regulation of raising behavior of private equity funds.