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Building the New Highland for Finance Opening-up The QFLP Pilot Regulations isofficiallyEstablished in Dalian Free Trade Area

Recently,the Management Committee of China (Liaoning) Pilot Free Trade Zone Dalian Area,Dalian Municipal Bureau of Commerce and Dalian Financial Development Bureauhave jointly printed and issued the Pilot Regulations for Enterprises withForeign Investment and Equity Investment in China (Liaoning) Pilot Free TradeZone Dalian Area (hereinafter referred to as Pilot Regulations), which marksthat the QFLP pilot system has officially established in Dalian Free TradeArea, and will attract the enterprises with foreign investment and equity investmentto settle down in Dalian for further development. 

                There are total six chapters in thePilot Regulations, which mainly defines the pilot conditions, joint reviewmechanism, investment fields of the enterprises with foreign investment andequity investment as well as equity investment management enterprises. And 22management regulations are set out in terms of the management of pilot enterprises,the mechanism for supervision during and after the event, financial risksprevention and control perfection, etc.

Accordingto the Pilot Regulations, the foreign investment and equity investmentmanagement enterprises can sponsor to set up an enterprise with foreign investmentor equipment investment,domestic private fund and venture capital fund ormanage them under entrustment; domestic private fund and venture capital fundmanagers can also sponsor to set up an enterprise with foreign investment orequipment investment, or manage it under entrustment.

The pilotfund investment range as stipulated in the Pilot Regulations includes theequities of non-listed companies, common shares of listed companies that are issuedand traded in a non-public manner (including new shares by private placement,block trade, transfer via agreement, etc.) , preferred shares or convertiblebonds thatcan be converted into common shares, etc., participation in shareplacement as original shareholders of listed companies, management consultationfor the invested enterprises as well as other business as permitted by ChinaSecurities Regulatory Commission or the Asset Management Association of China.        

QFLP,i.e. the QualifiedForeign Limited Partnership, refers to an enterprise that isinvested and set up by foreign enterprise or individuals in a non-public mannerwith the funds being raised from foreign investors and invested in domesticequitiesthat are traded in a non-public manner. On basis of the present direct foreign investmentmode, QFLP pilot has provided a new investment channel for foreign capital andboasts an important exploration for the foreign investment policy under thecapital item.

The establishmentof the QFLP pilot system in Dalian Free Trade Area will realize the opening-upof the equity investment market in Dalian, improve the financialopening-uplevel, be helpful for the setup of the new financial opening system that isoriented to the RCEP and serves “One Belt One Road” in Dalian, open new passageto attract foreign investment in a large scale next, provide new vigor forimportant industries in Dalian and Liaoning, and create a new situation for theutilization of foreign investment in a high-quality way.