New rules on reduction of venture capital fund shares

CSRC says special regulations to come into force at the end of this month

New rules on reduction of venture capital fund shares
Tang Jincao, managing partner of Tsing Ventures and chair of the Ministry of Technology's China Venture Capital Committee, speaks at the China Fund Partner Future Summit held in Beijing in April 2019. Photo: ImagineChina/ AFP

ATF – The China Securities Regulatory Commission (CSRC) has announced special regulations on the reduction of shares held by shareholders in Venture Capital funds of listed companies.

These will come into effect on March 31.

The main changes are:

  • simplifying the applicable standard of the reverse pegging policy;
  • abolishing the lock-up period restriction of the transferee under the block transaction mode;
  • abolishing the restriction on the reduction of venture capital funds with an investment period of more than five years;
  • rationally adjust the calculation method of the investment period;
  • allow private equity funds to refer to the application of reverse pegging policy and clarify the legal liability of fraudulent application policy.