Domestic information

1. The China Securities Regulatory Commission plans to revise the regulatory measures for private equity funds to increase the threshold for investors

On December 8th, the China Securities Regulatory Commission publicly solicited opinions on the revised Measures for the Supervision and Administration of Private Investment Funds (Draft for Comments), and the deadline for feedback was January 8th, 2024. The draft for soliciting opinions includes 10 chapters and 82 articles, clarifying the scope of application, improving full chain supervision, refining classification supervision, improving qualified investor standards, strengthening supervision of the fundraising process, clarifying investment operation requirements, improving information disclosure and reporting requirements, and increasing the cost of illegal activities. Among them, the draft for soliciting opinions maintains the requirement of the original Private Equity Measures that the actual paid up amount of a single private securities investment fund should not be less than 1 million yuan, increases the actual paid up amount of a single private equity and venture capital fund from 1 million yuan to 3 million yuan, and requires the actual paid up amount to not be less than 5 million yuan for private equity funds invested in non custodial, consignment and other special situations, among which the actual paid up amount of a single natural person invested in a single investment target should not be less than 10 million yuan. (Source: Official website of China Securities Regulatory Commission)

Lawyer's recommendation: This draft for soliciting opinions fully absorbs the legislative achievements of the Private Equity Regulations of the upper level law, continues some of the current provisions in the Registration and Filing Measures for Private Investment Funds. Overall, the China Securities Regulatory Commission has strengthened the supervision of private fund managers and private funds, continued to implement the principle of supporting the good and limiting the bad, conducted differentiated supervision on different types of private funds, and strengthened investor protection.

2. The revised draft for soliciting opinions on the implementation rules of "Cross border Wealth Management Connect" is being released, aiming to lower the entry threshold for investors

On December 1st, the Guangdong Provincial Branch of the People's Bank of China, the Shenzhen Branch of the People's Bank of China, the Guangdong and Shenzhen Regulatory Bureaus of the State Administration of Financial Regulation, the Guangdong Regulatory Bureaus of the China Securities Regulatory Commission, and the Shenzhen Regulatory Bureaus jointly issued the "Implementation Rules for the Pilot Implementation of the" Cross border Wealth Management Connect "Business in the Guangdong Hong Kong Macao Greater Bay Area (Revised Draft for Comments)". This revision has lowered the entry threshold for investors. Specifically, the participation threshold for mainland investors in the "Southbound" business has been lowered from "continuous payment of social security or personal income tax for at least 5 years" to "at least 2 years". At the same time, adding "my average annual income in the past three years shall not be less than 400000 yuan" as one of the alternative conditions for family financial asset access. (Source: Website of the Guangdong Provincial Branch of the People's Bank of China)

Lawyer's recommendation: Compared to the existing version of the "Cross border Wealth Management Connect" in the Guangdong Hong Kong Macao Greater Bay Area, the long-awaited "Cross border Wealth Management Connect 2.0 version (revised draft)" has been optimized and upgraded in terms of investor admission conditions, participating institutions, qualified investment products, and individual investor quotas, actively responding to market demand, which is conducive to further enhancing the investment enthusiasm of the "Cross border Wealth Management Connect" and promoting the interconnection of financial markets in Guangdong, Hong Kong, and Macao.

3. The Supreme People's Court issues judicial interpretations of the applicable law on foreign-related civil relations (II)

On December 1st, the Supreme People's Court issued Interpretation (II) on Several Issues Concerning the Application of the Law of the People's Republic of China on the Application of Law in Foreign Related Civil Relations, which will officially come into effect on January 1st, 2024. Interpretation (II) clearly states that the people's court has the responsibility to ascertain foreign laws, and when the parties choose to apply foreign laws, they have the obligation to provide foreign laws; When the parties have not chosen to apply foreign laws, it does not exclude that the people's court may still request the parties to assist in providing foreign laws; If the people's court requests the parties to assist in providing foreign laws, it shall not assume that foreign laws cannot be clarified solely on the grounds that the parties have not provided assistance. Therefore, a clear and complete rule of clarification shall be formed, with court clarification as the main method and party provision as the auxiliary. In addition, Interpretation (II) also stipulates seven ways for people's courts to ascertain foreign laws, and systematically improves the procedure and cost burden for the determination of foreign laws. (Source: Official website of the Supreme People's Court)

Lawyer's recommendation: Foreign legal investigation is an important link in the correct trial of foreign-related civil and commercial cases, and it is also a major challenge that has long constrained the quality and effectiveness of foreign-related civil and commercial trials in people's courts. The Interpretation (II) systematically regulates the key and difficult issues that have long restricted the ascertainment of foreign laws, such as unclear responsibility for ascertaining, single way of ascertaining, non-standard ascertaining procedures, and inconsistent identification standards, in judicial practice, which is conducive to improving the quality and efficiency of China's foreign-related civil and commercial trials, so as to better serve the high-level opening up, ensure high-quality co construction of the "the Belt and Road", and create a market-oriented, legalized, international and first-class business environment, which is of great significance for improving the international credibility and influence of China's judiciary.

4. The first tax related case collegial panel was unveiled and established in Xiamen

On November 28th, the People's Court of Siming District, Xiamen City established the first collegial panel for tax related cases. From now on, the first instance tax related criminal cases, civil cases, and administrative cases under the jurisdiction of grassroots courts in Xiamen will undergo centralized jurisdiction and trial here. (Source: China Tax Report)

Lawyer's recommendation: Tax related cases have the characteristics of crossing multiple fields such as finance, accounting, and law, requiring judges and jurors to also be proficient in relevant tax related knowledge. Integrating tax related criminal, civil, and administrative cases into one trial, with relatively fixed judicial personnel handling tax related cases, unifying the standards of tax related judicial adjudication, enhancing the professional level and judicial credibility of tax related trials, is more conducive to protecting the legal rights and interests of private enterprises and their owners.

5. Pilot implementation of digital electric tickets to achieve full coverage in 36 provinces and cities across the country

In the past two years, the digital invoice pilot has been expanding. On November 29, 2023, the Taxation Bureau of the State Administration of Taxation in Xizang Autonomous Region issued the Announcement on the Pilot Work of Fully Digitized Electronic Invoice. In order to further implement the Opinions of the Central Office and the State Office on Further Deepening the Reform of Tax Collection and Management, and increase the promotion of the use of fully digitized electronic invoices (hereinafter referred to as "digital invoices"), the State Administration of Taxation, with the consent of the State Administration of Taxation, decided to carry out the digital invoice pilot work in Xizang Autonomous Region. (Source: Official website of the State Administration of Taxation)

Lawyer's recommendation: Xizang announced the launch of digital ticketing pilot, which ushered in a milestone in the development of digital ticketing in China: 36 provinces and cities (including cities specifically designated in the plan) across the country officially achieved full coverage of digital ticketing pilot! Digital bills have broken through the limitations of time and space, bringing great convenience to enterprises and institutions, while also making tax issues more easily exposed. Enterprises and high net worth individuals urgently need to do a good job in controlling tax risks.

Overseas information

1. The US Corporate Transparency Act (CTA) is about to take effect

On January 1, 2024, the Corporate Transparency Act (CTA) was officially implemented, which requires institutions within and outside the United States that meet reporting requirements to report their Beneficial Owner Information (BOI) to the Financial Crime Enforcement Network (FinCEN) of the US Department of the Treasury. (Source: natlawreview)

Lawyer's recommendation: Private clients and family offices usually create legal entities, such as limited liability companies and limited partnerships, to achieve investment, asset management, tax planning, and other purposes. Such planning will be influenced by the Company Transparency Act, and private clients and family offices must prepare in advance.

2. Updating registration of Guernsey entities

In order to ensure that Guernsey continues to comply with international standards, a series of legislation in the last quarter of 2023 updated the powers and responsibilities of the Guernsey Registry. (Source: ogier)

Lawyer's recommendation: The Guernsey Island Registry is responsible for the registration of Guernsey Island companies, limited partnerships, and foundations. Administrators, managers, and owners of registered entities must be aware of relevant changes and ensure compliance.