By Zhang Yi, Alan Du and Hu Xia King & Wood Mallesons’ Securities Group Shanghai Office

In the April, 2012, it was reported by various media sources that the National Development Reform Commission (NDRC) had issued certain policies requiring that an RMB fund (the “FIE GP Fund”) with a foreign invested enterprise (FIE) acting as the general partner (the “FIE GP“) and domestic investors (exclusive of FIEs established in China) acting as limited partners be regarded as a foreign investor. Being defined as a foreign investor means that the portfolio investments of such a FIE GP Fund shall be subject to foreign investment approvals, which are read by the public as referring to approvals from the Ministry of Commerce or its local counterparts(MOFCOM).
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By: Yi Zhang,  King & Wood’s  Securities & Capital Markets Group 

Introduction

Legislative research on industrial investment funds started in early 2000. Since the official administrative regulations regarding such funds have not yet been publicly released, the government has been concurrently implementing pilot projects and draft administrative regulations on the subject.

During the pilot period, the National Development and Reform Commission (NDRC) drafted the Administrative Regulations on Industrial Investment Funds, later changing the name to the Administrative Regulations on Private Equity Funds in order to make them applicable to the entire private equity fund industry.


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By John Lo, Partner, Corporate, King & Wood–Hong Kong

Nurturing the growth of a science and technology focused sector became a significant part of the government policies of the first post-1997 administration. Under the guidance of the late Professor Tien Chang-lin, former chancellor of University of California, Berkeley, the government issued a technology blueprint for Hong Kong shortly after the changeover, which led to a new period of innovation and growth in the tech sector.


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By John Lo, Partner, Corporate, King & Wood–Hong Kong

To a large extent, angel investment in Hong Kong has so far revolved around individual investors rather than institutions. It is useful to examine local angel financing activities by looking at the angel profiles.To date, no systematic research has been conducted regarding the number or makeup of business angels in Hong Kong. General observations indicate that the following groups, not in any order, have been spearheading the efforts: (a) former VC practitioners; (b) individuals who have made money from entrepreneurial activities or as angels; (c) second generation of the leading business families; (d) professionals such as lawyers, doctors and accountants; (e) tech executives and professionals; (f) well-to-do manufacturers who made their initial fortunes with investments in China; and (g) returnees or overseas Chinese with exposure to angel investment elsewhere.
 


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By John Lo, Partner, Corporate, King & Wood–Hong Kong

Hong Kong has perhaps one of the most heterogeneous and interesting mix of startups in the world in terms of founder makeup, location of operational base and target markets.  Founders of a Hong Kong startup, for example, could be made up of individuals from a wide variety of personal backgrounds, including locals, returnees mostly from North America, foreign expats, and PRC residents and returnees, especially those hailing from the Pearl River Delta. While a “Hong Kong startup” may be taken to mean the use of a Hong Kong incorporated operating or holding company, depending on the background or special strength of its founders, its actual seat of management or key operational base could be in Hong Kong, in China, or sometimes even the U.S. The initial targeted market of startups could also vary widely from the local market, to China, Southeast Asian region or other overseas markets.
 


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By Xu Ping & Mark Schaub   King & Wood’s Foreign Direct Investment Practice

China’s Ministry of Commerce (MOFCOM) has recently issued a number of notices delegating approval competency to lower governmental levels. This delegation of approval competency to local authorities will greatly accelerate the approval process for foreign invested projects. Two prominent areas in this general policy of devolution are delegation of approval authority over (i) foreign invested holding companies and (ii) foreign invested venture capital enterprises (“FIVCEs”) as well as foreign invested venture capital management enterprises (“FIVCE Management Firm”).


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