Recently, several friends have consulted me about the matters needing attention and how to start preparations if they want to establish a private equity fund company. To set up a new private equity fund company, in addition to paying attention to the equity structure of the proposed company, the composition of shareholders and their capital contribution capacity, and the reserve of proposed investment projects, I personally think it is also necessary to focus on the proposed senior management personnel of the fund company and their ability to perform their duties.

I. Scope of Identification of Senior Management Personnel

In accordance with the relevant regulations of the Asset Management Association of China (AMAC), the caliber of "senior management personnel" identified in the filing of private equity fund managers is inconsistent with that identified in the Company Law.

According to the requirements of AMAC, the senior management personnel identified in private equity fund managers include:

• Legal Representative/Executive Partner (Authorized Representative)
• Chairman of the Board/Executive Director
• General Manager
• Deputy General Manager
• Compliance/Risk Control Director

In addition, the Association requires that a private equity fund manager must have at least 2 senior management personnel, one of whom is the Compliance/Risk Control Director, and the other is the Investment Director, who can be concurrently held by one of the legal representative, chairman of the board, executive director, or general manager.

II. Requirements for Proving the Ability to Perform Duties

According to the recent feedback from the Association, investment personnel engaged in private fund management business shall have professional ethics and professional competence commensurate with the job requirements, and the applicant institution is required to explain the past investment experience of its senior management personnel and relevant investment personnel. To prove their ability to perform their duties, for different positions, evidence can be provided from the following aspects:

(I) Investment-related Positions

1. The senior management personnel can prove that they have more than three years of working experience in equity investment and venture capital by providing materials such as employment certificates, labor contracts, social security payment records and salary payment flow;

2. The senior management personnel can prove that they have once led or participated in part or all of the whole process of fundraising, investment, management and exit of investment projects by providing fully signed and sealed materials such as project initiation meeting resolutions, due diligence reports, investment decision-making committee resolutions, and investment agreements; if there are no such direct supporting materials, indirect proof can also be provided by materials such as OA approval forms, expense reimbursement forms, contract approval forms, and certification documents issued by the invested company.

(II) Compliance/Risk Control Director

As the senior management personnel responsible for compliance and risk control functions, the Association requires that the compliance and risk control director shall have three years of working experience related to compliance and risk control, and have strong professional ability and practical experience in compliance and risk control, including:

1. Having held positions in compliance, risk control and legal affairs in the private fund industry, participated in the establishment, investment, management and exit of private funds, and be familiar with the whole-process risk control of private funds;

2. Having held positions in compliance, risk control and legal affairs in financial institutions such as banks, insurance companies, trusts, securities companies and funds, and participated in the risk control of business links such as bank credit, asset management products, direct investment and securities investment;

3. Having held positions in risk control and legal affairs in the investment department of an investment company or a general company (investment with own funds), participated in the due diligence, contract review, post-investment management and project exit of investment projects (equity investment or securities investment), and be familiar with the risk control of pre-investment, investment and post-investment links;

4. Having practicing experience as an accountant, auditor or lawyer, holding a practicing qualification as an accountant or lawyer, and having engaged in accounting or legal business related to equity investment or securities investment.

III. Other Prohibitive Requirements

In addition to the above direct proof requirements, the AMAC also imposes prohibitive requirements on the senior management personnel of private equity fund managers, such as no engagement in conflicting businesses in the recent five years and no major dishonest records.

Conclusion

Therefore, to ensure the smooth approval of the filing and registration of private equity fund managers, in the preliminary preparation stage, special attention must be paid to the qualifications and ability to perform duties of the proposed senior management personnel. It is best to select personnel with corresponding investment capabilities or risk control capabilities to hold the corresponding positions to ensure the professional competence of the team.