A new private placement disclosure regulation is here! Clear benchmarks set—how big is the impact?

The China Securities Investment Fund Industry Association publicly solicited opinions from society on March 13 regarding the “Implementation Rules for Private Equity Fund Information Disclosure (Draft for Comments)” and the “Template for Important Content of Private Equity Fund Information Disclosure (Draft for Comments).”

The new regulations have sparked widespread industry discussion. Industry insiders, including custodians, auditors, private equity funds, and private securities funds, believe that the rules and templates will break down procedures into actionable specific standards, establish a unified disclosure framework, and clarify disclosure standards and requirements. This will effectively address existing issues in information disclosure, facilitate the industry’s shift toward “proactive transparency,” and lay a solid foundation for sustainable development.

Setting Clear Standards for Private Fund Disclosure Work

As an important part of the capital market, private equity funds (PE) have developed rapidly in China in recent years. However, due to their non-public and complex operations, information disclosure is particularly important in this field. Yet, some “selective disclosures” may prevent investors from fully understanding the true state of the funds, leading to trust issues.

Guotou Chuanghe Fund, a subsidiary of Guotou Group, believes that this new regulation further improves the self-regulatory framework for private investment funds, refines requirements, clarifies standards, and sets clear benchmarks for disclosure work. This will strengthen industry self-discipline management, better protect investors’ legal rights, and inject institutional momentum into the healthy regulation of the industry. Additionally, the requirements for periodic reports of private securities funds and private equity funds are separately detailed in two chapters. This targeted approach ensures effective information disclosure while avoiding unnecessary compliance costs from a “one-size-fits-all” method, providing guidance for fund managers to improve disclosure practices.

Renowned domestic PE firm Junlian Capital believes that the new regulation will establish a unified disclosure framework and clarify standards and requirements, effectively improving existing disclosure issues and laying a solid foundation for sustainable industry development. It also provides the “Important Content Template” for industry adoption, which will significantly enhance the efficiency and transparency of private equity information disclosure. Based on this template, investors and managers can agree on particularly important disclosure items, gradually improving disclosure effectiveness and promoting honest industry development.

With increasing global financial regulation, regulators worldwide are raising standards for private equity fund disclosures. For example, the EU’s Alternative Investment Fund Managers Directive (AIFMD) and the U.S. Dodd-Frank Act both require detailed reporting to regulators and investors. The China Securities Regulatory Commission recently issued the “Supervision and Administration Measures for Private Fund Information Disclosure.” Compliant disclosure is not only a legal obligation but also an important aspect of fund managers’ social responsibility.

Violet Capital, a venture capital firm, believes that the new regulation advances private fund supervision from “compliance disclosure” to a “fiduciary duty disclosure,” achieving a leap from version 1.0 to 2.0. It provides full-cycle protection—from management period (regular reports + temporary disclosures) to exit period (ongoing disclosures during liquidation + liquidation reports). It also clearly delineates the association’s layered self-regulatory authority over disclosure work (from reminders to deregistration), effectively safeguarding investors’ interests and equipping investors with comprehensive tools from information access to rights relief.

Further Refinement and Transparency in Disclosure

To address investment risks in specific areas such as liquidity, leverage ratios, and cross-border investments in private securities funds, the new regulation introduces special disclosures and external audits, further strengthening transparency, authenticity, and accuracy of relevant information.

Li Shuang, Managing Partner at Dacheng Law Firm, states that the “Implementation Rules for Disclosure” further detail the requirements of the “Private Fund Information Disclosure Measures.” The most notable feature of the draft for comments is its “refinement,” reflected in detailed disclosure requirements: for example, Article 29 requires disclosure of the top ten investments by size after “penetration” disclosure; Article 36 mandates that private equity funds exceeding 100 million yuan in size with more than 20 individual investors must have their annual financial reports audited by a CPA firm compliant with the Securities Law.

Guotai Haitong Securities (600837), a leading custodian in the private securities fund market, states that the new regulation further refines the rules and implementation arrangements for private fund disclosures, holding industry participants accountable and effectively enhancing the standardization and transparency of private fund disclosures. This aims to build a solid institutional foundation for high-quality industry development. As regulatory requirements and self-discipline rules improve, investors’ legal rights will be better protected, and the private fund industry will move toward a more regulated, transparent, and high-quality development phase.

Shanghai Chongyang Investment notes that the new regulation, for the first time, specifies disclosure requirements for high-concentration investments (e.g., single bond 10%, other single assets 25%), including “same asset name, type, code (if any), industry classification (if any), investment amount and proportion, subsequent handling methods,” closely aligning with the investment restrictions in the “Private Securities Investment Fund Operation Guidelines.” This forms a complete “pre-approval + post-disclosure” regulatory cycle, preventing liquidity and利益输送 risks associated with high concentration investments.

Additionally, the “Information Disclosure Rules” specify that when a fund’s holdings of illiquid assets and stocks on the New Third Board exceed 60% of net assets, the fund’s annual financial statements must be audited. Illiquid assets and New Third Board stocks often lack active market quotes, making valuation difficult and realization periods long. External professional audits ensure the authenticity and accuracy of fund financial data, preventing fund managers from manipulating net asset values through illiquid assets.

Fosun Water Fund believes that the changes in the disclosure template are significant, with many new content requirements. The regulation explicitly requires managers to disclose information to investors that meets or exceeds the template’s minimum standards. While the format can be tailored to product features, the disclosure bottom line must not be breached. The core purpose of this rule is to upgrade the transparency of private fund operations through standardized baseline disclosures. Allowing managers to customize formats based on product characteristics ensures core information remains standardized and readable while maintaining strategic flexibility. Embedding requirements such as penetration disclosure and risk warnings into the template compels managers to improve internal controls and compliance awareness, promoting a shift toward “proactive transparency” and ultimately creating a healthy ecosystem centered on investor protection.

Editor: Wang Lulu

Typesetting: Liu Junyu

Proofreading: Liu Xingying

(Responsible Editor: Guo Jiandong)