国务院: Strictly Prohibits Private Equity Funds from Engaging in Lending, "Disguised Debt Financing" and Other Irregular Activities

Odaily Planet Daily News The General Office of the State Council has issued guidelines on strengthening supervision, preventing risks, and promoting the high-quality development of private equity investment funds. The guidelines state that, adhering to goal and problem orientation, and targeting issues such as the imperfect access mechanism, inadequate supervision, unsound systems, insufficient inter-ministerial and central-local coordination, incomplete fulfillment of investor responsibilities by some government and state-owned enterprise investment funds, and the exploitation of some private equity funds as tools for illegal activities, new forms of corruption, and hidden corruption, the aim is to build an institutional system and long-term mechanism to strengthen supervision and prevent risks, driving the industry to develop within regulatory frameworks and improve through growth.

It is necessary to uphold functional positioning, coordinate the overall layout, optimize increments and revitalize stock, support the strong and eliminate the weak, improve quality and efficiency, and strictly prohibit private equity funds from illegally engaging in lending, "disguised debt financing," and other such activities. Adhere to categorized supervision, implementing a "one-category, one-policy" approach based on different dimensions such as the investor entity and product type. Persist in supervising both legitimate and illegitimate activities equally, strictly regulating legitimate institutions, resolutely shutting down illegal ones, and severely cracking down on illegal acts.