The county and district-level funds will no longer be approved, and there must be rules for performance bet agreements: 11 truly critical points in the new private equity regulations

On June 5th, the General Office of the State Council issued the "Guiding Opinions on Strengthening Supervision, Preventing Risks, and Promoting the High - quality Development of Private Equity Investment Funds" (Document No. 54 [2026] of the General Office of the State Council). The full text consists of 18 articles, covering the entire chain from entry to exit.

This is the top - level design document in the "1 + N + X" institutional system in the private equity fund field. From now on, how private equity funds enter, are managed, exit, and are liquidated will all follow this framework.

IT Juzi will take you through each article one by one, pick out the provisions with real operational guidance significance, and explain what they really mean.

I. The Door for County - level Funds is Basically Closed

Original Text (Article 1): Strictly control the establishment of new government - invested funds. In principle, counties and districts shall not establish new ones. If it is really necessary to establish a new one, it shall be reported to the superior people's government for approval.

In the past few years, government - invested funds at the county - district level have blossomed everywhere. Many counties and districts rushed to set up funds, compete for GPs, and compare scales. As a result, there was serious homogenization, scattered resources, and difficulties in exiting.

The new regulation basically closes the door for the establishment of new county - level funds. The four words "in principle, shall not" and the requirement that "if it is really necessary, it must be reported to the superior for approval" mean that the establishment of new government - invested funds at the county - district level requires the approval of the superior government.

Actual Impact:

• For county - district - level government - invested funds in preparation, the approval progress needs to be confirmed. Those that have not completed the process may need to be reported to the superior for supplementary approval.

• For county - district governments planning to establish new funds, they need to demonstrate the necessity of "insufficient similar funds" and then report to the superior for approval.

• Existing county - district - level funds will not be directly cut, but the pressure for future integration will increase (see Article 7).

II. Want to Be a Private Equity Fund? First Pass the "Consultation Barrier"

Original Text (Articles 2 and 3): Institutions intending to handle the registration and filing of private equity funds shall apply for the registration of the business entity after passing the comprehensive research and consultation... Without the consent of the dispatched institutions of the China Securities Regulatory Commission and the provincial financial management departments, the words related to private equity funds such as "private equity fund" and "venture capital fund" shall not be used in the business entity name and scope of business.

Previously, companies were registered first, and then the registration of private equity fund managers was applied for.

The new regulation adds a pre - condition - it is necessary to first pass the "comprehensive research and consultation" of the securities regulatory bureau and the provincial financial management department. Only after passing can a company with the words "private equity fund" be registered.

The consultation standards are uniformly formulated by the China Securities Regulatory Commission and implemented at the provincial level, and "delegation is strictly prohibited". It shall not be implemented by counties and districts on their own. This essentially raises the entry threshold for new private equity fund managers.

Actual Impact:

• The entry threshold for new private equity fund managers is substantially raised, and a pre - review link is added to the registration process.

• For institutions with "private equity fund" in their company names but have not handled registration and filing, they either need to complete the registration or change the name and scope of business. Those who refuse to cooperate, the market supervision department can legally replace the enterprise name with the unified social credit code, mark "not registered and filed for private equity funds" in the publicity system, and even revoke the business license (see Article 12).

• Registered managers are not directly affected for the time being, but whether the new rules apply when making changes and renewals needs to be concerned about the subsequent detailed rules.

III. Rules for "Valuation Adjustment Mechanism" Agreements are Finally to be Established

Original Text (Article 4): Promote the introduction of institutional arrangements to regulate the "valuation adjustment mechanism" agreements of private equity funds.

The "valuation adjustment mechanism" agreement is one of the most commonly used clauses in private equity investment. However, there has always been uncertainty in judicial practice - the validity of the agreement with the company, the calculation method of profit compensation, the execution path of equity repurchase, etc. The adjudication standards of local courts are not unified.

The new regulation proposes to "promote the introduction" of institutional arrangements to regulate the "valuation adjustment mechanism" agreements, which means that a clearer rule framework may be introduced in this field. Note that the wording is "promote the introduction", indicating that this is a directional requirement, and it still takes time for specific implementation.

Actual Impact:

• GPs who are working on transaction documents are advised to pay attention to the progress of the subsequent detailed rules for "valuation adjustment mechanism" agreements, which may affect the clause design.

• For projects with signed "valuation adjustment mechanism" agreements but the repurchase clause has not been triggered, the new rules may affect the execution path after their introduction.

• The standardization of "valuation adjustment mechanism" agreements helps to reduce post - investment disputes, which is a good thing for both GPs and the founding teams.

IV. Registered in a Preferential Area but Operating in Beijing, Shanghai, or Shenzhen? Take Note

Original Text (Article 5): Strengthen the supervision of private equity fund managers operating in different locations, and guide the unification of the registration place and the operating place.

Many private equity fund managers are registered in tax - preferential areas, but their actual teams are working in Beijing, Shanghai, or Shenzhen. The new regulation clearly states to "guide the unification" and strengthen supervision, which means that the compliance costs and inspection risks of operating in different locations will increase.

However, the original text uses the word "guide" rather than "compulsory". In the short term, it is more likely to be promoted through differentiated inspection intensity rather than a one - size - fits - all requirement for relocation.

Actual Impact:

• Managers enjoying tax preferences in different locations need to evaluate the tax costs of relocating the registration place and the regulatory risks of continuing to operate in different locations.

• Newly established managers are advised to choose the same place for registration and operation to reduce subsequent compliance pressure.

• Private equity fund managers operating in different locations may face more frequent on - site inspections and need to make preparations for cooperation in advance.

V. Similar Government Funds: No New Establishment, Need for Integration

Original Text (Article 7): The people's governments of provincial - level regions and cities specifically designated in the state plan shall strengthen the overall management of government - invested funds in their regions. In principle, new similar funds shall not be established, and the integration of existing similar funds shall be promoted. Local people's governments at or above the county level shall earnestly perform their management responsibilities in accordance with the principle of "who initiates, who approves, who is responsible" and supervise the standardized operation of government - invested funds.

Article 1 controls the "increment" (counties and districts cannot establish new funds), while Article 7 focuses on the "stock" - the integration of existing similar government - invested funds should be promoted.

"Integration" is not limited to mergers. It may include various methods such as coordinating investment directions, integrating management teams, and merging fund entities. Article 7 also clarifies the principle of "who initiates, who approves, who is responsible", strengthening the management responsibilities of local governments as investors.

Actual Impact:

• GPs managing multiple government - invested funds in the same region and the same track are advised to prepare integration plans in advance.

• GPs seeking investment from government - invested funds need to pay attention to whether there are already similar funds in the region. If so, the approval of newly established sub - funds may face obstacles.

• Fund integration involves practical difficulties such as the replacement of GPs, the adjustment of investment decision - making mechanisms, and the conversion of LP rights and interests. It is recommended to make plans as early as possible.

VI. State - owned Enterprise - affiliated Funds: Personnel, Assets, and Incentives Need to be Managed

Original Text (Article 8): Strictly select senior management personnel. Do not appoint personnel included in the blacklist of the private equity fund industry, and strictly implement the regulations on job avoidance. State - owned enterprises shall establish and improve a full - process information management system, strengthen the penetration management of underlying projects and assets, and standardize fund investment and exit management. Establish and improve an incentive and restraint system oriented towards long - term operating performance and functional role. Resolutely stop the excessive establishment of state - owned enterprise investment funds and promote the integration and reorganization of inefficiently operated funds.

This article is specifically targeted at state - owned enterprise investment funds and contains a lot of information.

The core requirements are concentrated in three aspects:

First, manage personnel - do not appoint blacklisted personnel and strictly implement job avoidance.

Second, manage assets - a full - process information system must be established to penetrate to the underlying projects and assets.

Third, manage incentives - be oriented towards "long - term operating performance and functional role" rather than short - term returns. At the same time, it is clearly stated to "resolutely stop the excessive establishment" and "promote the integration of inefficient funds".

Actual Impact:

• Managers of state - owned enterprise - affiliated funds need to pay attention to the subsequent implementation of the industry blacklist system (Article 15 proposes to "establish a blacklist system") and establish a pre - screening mechanism for personnel selection.

• The full - process information management system is a mandatory requirement for state - owned enterprises. Managers of state - owned enterprise investment funds need to cooperate in the construction to achieve the penetration management of underlying assets.

• The incentive mechanism needs to be adjusted from a short - term carry - oriented to a "long - term performance + functional role" orientation, which will have an impact on the team stability and assessment system of state - owned enterprise - affiliated GPs.

• "Resolutely stop the excessive establishment" means that the threshold for state - owned enterprises to establish new investment funds will be further raised.

VII. The Whistle - blower Channel is Here. Those with Weak Compliance Should Be Careful

Original Text (Article 9): Establish and improve the "whistle - blower" system for private equity funds, set up a reporting channel, improve supporting measures, strengthen the information protection of "whistle - blowers", and give play to the role of social supervision and early warning. When local regions and departments discover major problems such as violations of regulations, disciplines, and laws in private equity funds, they shall timely report to the China Securities Regulatory Commission or its dispatched institutions in accordance with the procedures. Rely on the social security comprehensive governance system, give play to the role of grid management, and carry out joint investigations.

There is a serious information asymmetry in the private equity industry, and it is difficult for external supervision to discover internal problems. The whistle - blower system means that there is an official channel and protection mechanism for insiders to report problems.

At the same time, the original text proposes to "rely on the social security comprehensive governance system and give play to the role of grid management", which is to incorporate the risk investigation of private equity funds into the information collection and risk discovery mechanism of grass - roots social governance, rather than direct law enforcement at the grass - roots level.

Actual Impact:

• For institutions with weak compliance, the probability of risk exposure may increase - former employees, cooperation partners, etc. may report problems through the reporting channel.

• Managers are advised to conduct self - inspections on core compliance weak links: the standardization of fund raising, the disclosure of related - party transactions, the management of investor suitability, etc.

• The key to the whistle - blower system lies in the implementation degree of the "information protection" supporting measures. The subsequent detailed rules are worthy of attention.

VIII. Proxy Holding and Channel Business: The Rectification Window is Open

Original Text (Article 5): Strengthen the standardization and guidance of private equity fund managers with situations such as illegal proxy holding and channelization, and promote active rectification.

Proxy holding and channel business are not uncommon in the private equity industry - some people use the shell of a manager to issue products, and some do channel business to collect management fees without making efforts.

The new regulation uses "promote active rectification" rather than "immediately ban", indicating that the regulatory authorities have left a window period, but the rectification direction is clear.

Actual Impact:

• Managers with proxy holding or channel business will face less serious consequences if they take the initiative to rectify than if they are investigated and punished passively.

• The rectification paths include: restoring the real equity structure, terminating the channel agreement, supplementing due diligence materials, etc.

• According to the relevant person in charge of the China Securities Regulatory Commission, a three - year action plan will be formulated to implement the new regulations in the future, and the specific rectification time limit may be clarified in this plan.

IX. Shell Managers: Cancel within a Time Limit, Revoke the License if Non - cooperative

Original Text (Articles 11 and 12): For private equity fund managers that cannot continuously meet the registration requirements due to abnormal business operations, non - substantial business operations, etc., or have been out of contact for a long time and have not rectified as required, they shall be cancelled within a time limit... For institutions that do not apply for cancellation or change the registration of the business entity in accordance with the regulations, the market supervision department shall legally replace the enterprise name with the unified social credit code, mark the business entity as "not registered and filed for private equity funds", "private equity fund manager cancelled", "private equity fund liquidated" in the National Enterprise Credit Information Publicity System, and revoke the business license to standardize and clean up.

From 2022 to 2025, the Asset Management Association of China has legally cancelled more than 7,400 private equity fund managers. The new regulation further clarifies the cancellation situations: major illegal and regulatory violations, abnormal business operations without substantial business development, long - term out of contact and no rectification.

Article 12 provides more powerful cleaning - up measures - if they do not take the initiative to cancel or change, the market supervision department can replace the enterprise name with the social credit code, make marks in the publicity system, and even revoke the business license.

Actual Impact:

• Those who hold multiple shell managers are advised to take the initiative to merge or cancel them to avoid being forcibly cleaned up.

• For companies whose private equity fund manager registration has been cancelled but the company entity still exists, they should change the name and scope of business as soon as possible, otherwise they may be marked or have their license revoked.

• The implementation of this article involves the cooperation of multiple departments such as the securities regulatory bureau, local financial management departments, and the market supervision bureau, and the implementation intensity is expected to be strong.

X. Don't Use Private Equity Funds as Debt - Resolution Tools

Original Text (Article 14): Do not use private equity funds to illegally raise debts for debt resolution or dispose of problem enterprises to prevent the formation of new risk points.

This article points clearly - private equity funds should not be used as tools for local governments to resolve debts. In the past, some localities raised funds for local platforms in disguise by setting up industrial funds, infrastructure funds, etc., and even used private equity funds to take over problem enterprises.

The new regulation directly blocks this path.

Actual Impact:

• For funds with local platform LPs' investment, if the actual flow of funds is to repay debts rather than for industrial investment, they need to be highly vigilant about compliance risks.

• When GPs cooperate with government LPs, they need to clarify the use of funds at the level of the fund contract and investment decision - making to avoid being involved in disguised debt - resolution arrangements.

• This article has a profound impact on the cooperation model of government - invested funds. In the future, the supervision of the use of funds of sub - funds invested by government LPs is expected to be more strict.

XI. Venture Capital Funds: A Rare Benefit in This Document

Original Text (Article 17): Broaden the sources of funds for private equity funds and venture capital funds through multiple channels, cultivate and develop patient capital from multiple dimensions, and promote the in - depth integration of patient capital and technological innovation. Further smooth the