How Can Foreign Private Equity Funds Be Established In China?

Overview of QFLP and QDLP

The Qualified Foreign Limited Partnership (QFLP) program is a pilot initiative launched by various local governments in China, designed to provide a key avenue for foreign investors to access China's financial markets. Through this framework, foreign investors may participate in setting up either a foreign-invested equity investment management entity (QFLP Manager) or a foreign-invested equity investment fund (QFLP Fund)—together referred to as QFLP Enterprises.

One of the standout benefits of the QFLP structure is that it allows foreign currency contributions to be converted into RMB at the fund level in advance, enabling RMB-denominated equity investments. This means that foreign exchange settlement is pre-approved upon the establishment of the QFLP entity, rather than being deferred to the capital call stage

QDLP stands for Qualified Domestic Limited Partner. It is a pilot program launched by Chinese regulators to allow domestic (onshore) institutional investors in China to legally invest in overseas alternative assets (such as hedge funds, private equity, and other offshore products), via a quota-based system.

The purpose of QDLP is to provide legal channel for wealthy Chinese institutions (and sometimes HNWIs) to invest offshore; Help international asset managers raise RMB capital from China and deploy it into global markets;

Case Studies: How Industry Players Use QFLP and QDLP to Unlock Opportunities?

Case 1: Silicon Valley VC Cracks China's FX Barrier via QFLP

A prominent venture capital firm based in Silicon Valley wanted to invest in China's booming new energy vehicle (NEV) sector. However, China's strict foreign exchange controls posed a significant hurdle. To solve this, the firm applied for QFLP status in Shanghai. With approval, it was able to convert USD 1 billion into RMB under the QFLP program and set up an RMB-denominated fund. The capital was then used to make a major investment in a rising Chinese EV startup.

Case 2: Zhejiang Investor Taps into Global ESG Growth via QDLP

A high-net-worth investor from Zhejiang wanted to gain exposure to overseas ESG opportunities, particularly in carbon neutrality-themed ETFs. Instead of facing China's personal foreign exchange limit, the investor subscribed to a QDLP fund with a USD 5 million ticket size. This allowed them to legally invest offshore and benefit from the long-term growth of the global green energy sector—all while staying compliant with local capital controls.

Taking Shanghai as an Example: Procedures for Establishing a Private Fund Management Company

1. Preliminary Approvals

1. District Financial Bureau Preliminary Review:

Industry departments and investment promotion centers within the district submit the enterprise's application materials to the district financial bureau. The district financial bureau conducts a preliminary review according to regulations, evaluating shareholders, senior management qualifications, registered capital, business scope, etc. Qualified enterprises are reported to the Municipal Financial Bureau.

2. 2.Municipal Financial Bureau Review:

The Municipal Financial Bureau and the Shanghai CSRC jointly review the materials. Upon approval, the district government issues a formal letter requesting support for establishment from the Municipal Financial Bureau. The Municipal Financial Bureau then issues an approval letter for the company's establishment, and a copy is sent to the Municipal Administration for Market Regulation.

2. Business Registration

1. Pre-approval of Name:

Submit the name pre-approval application via the official website of the Shanghai Administration for Market Regulation. The company name should clearly include terms such as "Private Fund," "Private Fund Management," or "Venture Capital." It is recommended to select names that highlight investment features and prepare 3–5 alternatives to increase approval success.

2. Preparation of Registration Materials:

These include:

• Copies of all investors' ID cards
• Proof of registered capital (no need for capital verification report under subscribed capital system, but both registered and paid-in capital must remain above RMB 10 million)

• Proof of registered office (e.g., lease agreement, property ownership certificate)
• Articles of association
• Qualification documents of senior executives

3. Online Submission of Application

Register through the "One-Stop Online Service" platform or the Market Regulation Bureau's website. Accurately fill in all required fields, especially senior management qualifications.

4. Review and Business License Issuance:

The Market Regulation Bureau reviews the submitted materials. Upon approval, a notice of establishment will be issued. With this notice, applicants may collect the business license in person or opt for postal delivery.

3. Tax Registration
4. 1. Seal Carving:

   With the business license, proceed to a designated public security location to carve the company's official seal, financial seal, legal representative seal, etc.

   2. Bank Account Opening:

   Choose a commercial bank to open a basic corporate account for handling daily transactions.

   3. Tax Registration:

   Register with the local tax bureau, determine applicable tax categories, and obtain the tax registration certificate for future tax declarations and payments.

4. AMAC (Asset Management Association of China) Filing

1. Prepare Required Materials:

According to the Measures for the Registration and Filing of Private Investment Funds and relevant guidelines, prepare the necessary materials. A law firm must be commissioned to conduct due diligence and issue a legal opinion letter.

2. Account Registration:

• Log in to the AMBERS System (https://ambers.amac.org.cn) for fund manager registration.
• Log in to the Employee Management Platform (https://human.amac.org.cn) to register all staff. Upon successful AMBERS registration, the contact email will receive login credentials for the employee system.

3. Submission of Materials:

• Fill in employee details on the employee platform. Employees log in with their individual accounts, submit qualification applications, and fill in personal details. The institutional admin verifies and then submits to AMAC for review. Once approved, data syncs to the AMBERS system.

• Fill in institution details in AMBERS, including 9 sections such as basic information, internal policies, etc. Employee-related data must be first completed in the employee system.

4. Association Processing:

• Submit Application: Once the institution confirms all AMBERS information is accurate and complete, the fund manager registration application can be submitted.
• AMAC Review: Incomplete applications will be returned within 5 business days. If complete, AMAC will verify all information within 20 business days (excluding supplementary time).
• Result Notification: Approval results will be sent via email. Once approved, the manager's information will be publicly displayed the following day on the AMAC website. If rejected, reasons will be provided via AMBERS.

5. Checklist for Registration Application Materials

1. Business License:

Submit a copy of the unified business license (after "three-in-one" reform), stamped with the company seal.

2. Articles of Association / Partnership Agreement:

Submit the most updated version. If modified, attach amendments or the revised version. All pages must be stamped with the company seal and use page-seals.

3. Proof of Paid-in Capital:

Submit capital verification reports or bank slips. Names of contributors, committed and paid-in capital must match company registry. If changes occurred post-contribution, include transfer agreements and bank receipts or re-issue capital verification. Bank receipts must be stamped by the bank; capital reports must be sealed by a CPA firm.

4. Employee-Related Documents:

• Minimum of 5 full-time employees
• Submit resumes, social security contribution records (showing company name), labor or service contracts
• For new joiners without contribution history, submit social security enrollment proof
• If using a third-party for social security, provide tripartite agreement, qualifications, and contribution records
• Stamped by the company and relevant departments

5. Office Premises Proof:

Must comply with regulations. Submit property certificate or lease agreement (minimum remaining term of 12 months). For sub-leases, provide original lease, sublease agreement, and landlord/management consent. If rent-free by related parties, provide consent documents. If registered and operating addresses differ under different CSRC jurisdictions, submit justification. Stamp all copies with company seal and page-seals.

6. Business Plan:

Must be feasible and aligned with the firm's direction and staffing. Detail future operations, team background, fundraising plan, investment areas, etc. Avoid templates. Stamp with company seal and use page-seals.

7. Group-Affiliated Applications:

If the same controller owns multiple private fund managers, provide justification and compliance documentation. Describe the group's fund operations, compliance systems, and internal controls. Signed or sealed by the ultimate controller with page-seals.

8. Commitment Letters:

• Download and fill in the latest version from AMBERS
• Include all relevant signatories: company, controlling shareholder, legal rep, compliance/risk officer, etc.
• Use company stamp and page-seals
• If engaging in bond investments or with past bond-related experience, also submit a letter committing not to engage in prohibited structured bond issuance.

9. Change of Registration Information:

For existing fund managers, submit necessary materials when updating information. If controllers or key stakeholders change, submit a special legal opinion and related supporting documents. All stamped.

10. Government-Related Documents:

If supported by government (e.g., subsidies, tenders, fund allocation), submit relevant documents. For private equity/venture funds with signed investment agreements or selected by government guidance funds, submit project agreements or letters of intent. Stamp all non-government docs with company seal.

11. Internal Policies:

Submit systems aligned with the proposed business:

• Internal control & compliance
• Fund operation policies
• Emergency response plans
• Topics should include risk control, information disclosure, insider trading prevention, marketing control, etc. All documents must be stamped.

12. Conflicted Business Approval:

Disclose any branches, subsidiaries, or related parties engaging in conflicting businesses (e.g., microfinance, leasing). Provide regulatory approvals stamped by relevant authorities.

13. Integrity Records:

Declare whether any controlling shareholders, executives, or the company itself have any negative records. If so, submit relevant judicial, administrative, or self-regulatory documents, and explain accountability.

14. Other Documents:

• If controlling shareholders are individuals, disclose debt status
• If legal reps or executives invest via SPVs, submit SPV capital verification or bank slips
• Ensure actual paid-in capital (after look-through) meets compliance thresholds

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.