Shanghai Pudong New Area May Launch PE Pilot Program Involving Qualified Foreign Limited Partners

On March 15, 2010, Shanghai Municipal Government approved a pilot program in which foreign investors may become qualified foreign limited partners ("QFLP") of private equity investment funds ("Pilot Program") on its executive meeting. The Pilot Program, which is subject to confirmation and approval of the State Administration of Foreign Exchange ("SAFE") and other relevant authorities, is expected to be officially announced soon.

To test the water, Shanghai will first implement the Pilot Program among the private equity investment funds ("PE funds") registered in Pudong New Area of Shanghai. One of the highlights of the Pilot Program is the introduction of QFLP into the current foreign exchange administration system to encourage foreign investment in China-based PE funds.