Foreign Investors can Invest in Equity Investment in Hengqin

On December 29, A Guangdong-Macao in-depth cooperation zone in Hengqin (hereinafter referred to as the Cooperation Zone) Executive Committee issued the A Guangdong-Macao in-depth cooperation zone in Hengqin Foreign-invested Equity Investment Enterprise Pilot Measures (Interim)(hereinafter referred to as the Pilot Measures), Foreign investors, including Hong Kong, Macao, and Taiwan regions, can apply for foreign investment in equity investment enterprises in the cooperation zone through the "Pilot Measures" and carry out equity investment and other businesses in the country. This is an important measure for the cooperation zone to actively implement the Overall Plan for the Construction of the Guangdong-Macao in-depth cooperation zone in Hengqin, to innovate cross-border financial management, to further open up cross-border asset management channels, and to encourage social capital to set up multi-currency private equity in the cooperation zone. Equity funds and the use of foreign capital to support the construction of cooperation zones play a positive role in promoting.   

As an important system for the cooperation zone to support the development of the modern financial industry in Macao, the Pilot Measures established a joint consultation mechanism for pilot work, and clarified requirements for pilot conditions, pilot operations, pilot applications, and pilot management, and proposed the establishment of services The green channel mechanism of Macao enterprises provides a more convenient pilot environment for them.

The Pilot Measures issued by the cooperation zone this time have the characteristics of "zero thresholds, no restrictions, and wide investment". First, in terms of entry barriers, there are no mandatory requirements on the scale of foreign shareholders or partners' management assets, the scale of their own assets, and the holding of financial licenses. Second, in terms of registered capital contribution, there are no restrictions on the registered capital, initial capital contribution ratio, and capital contribution period of foreign investors. The third is in terms of investment business, including unlisted company equity, non-publicly issued or traded stocks of listed companies, convertible bonds, market-based and legalized debt-to-equity swaps, equity fund shares, and participation in allotments as original shareholders of listed companies, etc. In addition, pilot companies can also participate in investing in domestic private equity investment funds and venture capital funds.

The Pilot Measures stipulate those pilot companies should be private equity institutions, and they must go through the registration of private equity fund managers and private equity fund filing procedures with the Asset Management Association of China in accordance with relevant regulations. It is worth mentioning that the Pilot Measures implements non-discriminatory management of the domestic and foreign investment. In addition to the basic business model of "foreign manage foreign", "foreign manage domestic" and "domestic manage foreign" are allowed, that is, foreign investors are allowed to invest in equity investment management enterprises. Initiate the establishment or entrust the management of domestic private equity and venture capital funds; allow domestic private equity and venture capital fund managers in all regions of the country to establish or entrust foreign investment equity investment enterprises in the cooperation zone.

The Pilot Measures will be formally implemented on January 29, 2022, and strive to create a more convenient investment environment for overseas funds and provide strong institutional guarantees. At the same time, it will open up QFLP (Qualified Overseas Limited Partners) and QDLP (Qualified Domestic Limited Partners) cross-border two-way investment channels, attract domestic and foreign asset management institutions to develop business in the cooperation zone, and provide high-quality financial support for the construction of the cooperation zone.