Shanghai QFLP private equity fund rules released at last - 17 January 2011

One of the main restrictions on private equity in China is being removed in Shanghai. Foreign private equity investors will be able to form limited partnership RMB funds, and qualified foreign limited partners ("QFLP") will be able to invest with RMB converted from foreign currency.

The Implementing Measures on Pilot Program of Foreign-invested Equity Investment Enterprises (the "2011 Measures"), formulated by three branches of the Shanghai government and effective from 23 January 2011, are summarised and discussed below.

Previously, foreign investment has been forced into partnering with a domestic joint-venture partner because SAFE will not approve conversion of foreign currency into RMB for investment purposes (except for investment companies or FIVCEs).