The China Securities Regulatory Commission published a State Council-approved policy opinion setting a broader framework to strengthen supervision of private investment funds, contain risk and support more standardized sector development. The measures respond to weaknesses in market entry, ongoing supervision, institutional arrangements and central-local coordination, and target misuse of private funds for illegal lending, debt-like equity structures, hidden corruption and other unlawful activity. The framework tightens controls from market entry through ongoing supervision and enforcement. It calls for stricter private fund registration and filing rules so that ineligible institutions and products cannot register as private funds, and requires institutions seeking private fund registration or filing to first pass a joint assessment process involving provincial authorities and China Securities Regulatory Commission local offices. Use of terms such as private fund and venture capital fund in a business name or scope would require approval from the relevant authorities. Supervision would become more risk-based, with differentiated oversight of managers, stronger inspections for key managers, closer scrutiny of cross-regional operations, enhanced monitoring of private securities funds and a new centralized risk monitoring platform using data from managers, custodians, service providers, business registration and litigation records. The opinion also calls for revisions to the Securities Investment Fund Law, judicial documents for private fund-related crimes, and new rules on manager supervision, disclosure, fundraising, mandatory custody and valuation adjustment mechanisms. For government investment funds and state-owned enterprise investment funds, the measures tighten sponsor accountability, limit unnecessary new fund creation and push consolidation of overlapping or inefficient vehicles. County and district governments would in principle be barred from setting up new government investment funds unless approved by a higher-level government. The framework also provides for cancellation of managers involved in major violations, cleanup of entities using private fund labels without registration, a whistleblower mechanism, stronger coordination with public security authorities and locally led risk disposal arrangements. Alongside the enforcement push, it supports private equity and venture capital funds that invest early, in smaller companies, for the long term and in hard technology, while calling for broader funding sources, more exit channels and differentiated regulation for venture capital funds.
China Securities Regulatory Commission2026-06-05
China Securities Regulatory Commission outlines State Council-backed measures to tighten private fund supervision and restrict new local government funds
The China Securities Regulatory Commission published State Council-backed guidance to tighten regulation of private investment funds across registration, supervision, enforcement and risk resolution. The framework restricts new local government funds, expands risk-based oversight and data-driven monitoring, and sets stronger cleanup and cancellation mechanisms for noncompliant managers and unregistered entities. It also preserves policy support for venture capital and private equity funds focused on early-stage, long-term and hard-technology investment.