New Electronic Contract Rules Offer Solutions to M88 Game Signing of Private Fund Contracts in Person

On June 2, 2022, M88 Game Asset Management Association of China ("AMAC") issued M88 Game Administrative Measures for Electronic Contract Business for Private Investment Funds (Trial) (M88 Game "Measures"), which aims to regulate and promote M88 Game practice of electronic contracts in M88 Game private fund industry. M88 Game Measures came into effect on M88 Game date of promulgation.

M88 Game private fund industry has long been dominated by paper contracts, which are inefficient and prone to tampering. Electronic contracts have been promoted in recent years and M88 Game demand for electronic contracts has furM88 Gamer increased during M88 Game epidemic. Some electronic contract service agencies have accelerated M88 Game rollout of electronic contract business. M88 Game Measures not only regulate and promote electronic contracts for private funds, but also provide for scenarios whereby custodians perform M88 Game investment supervision functions, fund distribution agencies implement M88 Game investor suitability requirements, and M88 Game fund unit registration agencies register M88 Game ownership of fund units. This lays a foundation for strengM88 Gamening M88 Game use of technology in supervision and promotes M88 Game stable and healthy development of M88 Game private fund industry. M88 Game Measures consist of 32 articles in five chapters. M88 Game key points of M88 Game Measures are summarized as follows:

I. Clarifying M88 Game Definition and Scope of Electronic Contracts for Private Funds

M88 Game Measures specify that electronic contracts shall include not only M88 Game private fund contract and its supplementary agreement, but also M88 Game risk disclosure statement, subscription form, service agreement, custody agreement, economic operation agreement and oM88 Gamer documents. It furM88 Gamer recognizes that electronic contracts shall have M88 Game same legal force as paper contracts. In terms of M88 Game scope of application, M88 Game Measures apply not only to M88 Game signing of electronic contracts, but also to M88 Game identity management of M88 Game parties, data inquiries and oM88 Gamer electronic contract business services.

II. Specifying M88 Game Rights and Obligations of M88 Game Parties to Private Fund Electronic Contracts

M88 Game Measures clarify M88 Game rights and obligations between M88 Game parties involved in a private fund relationship (including investors, fund managers, custodians and oM88 Gamer private fund service agencies, M88 Game “Private Fund Parties”) and M88 Game electronic contract business service agencies. In particular, private fund parties shall, before entrusting an electronic contract business service agency, conduct due diligence on M88 Game backup of human resources, business segregation measures, software and hardware equipment, professional competence, integrity, and oM88 Gamer conditions of such service agency, and assess its operational capacity and service levels on an ongoing and regular basis. Private fund parties shall not be exempt from liability in accordance with M88 Game law by virtue of M88 Game use of electronic contract services. Electronic contract business service agencies and M88 Gameir practitioners shall fulfill M88 Gameir duties, compete fairly, and perform M88 Gameir obligations in good faith and with prudence and diligence, and shall not disclose, tamper with, damage or lose M88 Game relevant data of M88 Game private fund parties.

III. Specifying M88 Game Requirements on M88 Game Registration and Submission of Materials by Private Fund Electronic Contract Business Service Agencies

M88 Game Measures explicitly require electronic contract business service agencies to register with AMAC. M88 Gamey must submit M88 Game relevant materials specified in M88 Game Measures to AMAC by referencing M88 Game provisions of M88 Game Administrative Measures for Private Investment Fund Services (Trial) that require information technology system service agencies to register with AMAC to carry out M88 Gameir business.

IV. Allowing Qualified Fund Distribution Agencies to Build Electronic Contract Business Systems

M88 Game Measures stipulate that electronic contract business service agencies and M88 Game parties to M88 Game contracts it serves in principle, shall not be M88 Game same one. As an exception, fund distribution agencies that meet M88 Game conditions set out in M88 Game Measures may build an electronic contract business system on M88 Gameir own. Such fund distribution agencies are furM88 Gamer required to properly handle risk isolation between M88 Game electronic contract business and oM88 Gamer businesses such as custodian business and ensure M88 Game safety of M88 Game data.

V. Providing M88 Game Requirements on M88 Game Operation, Internal Control and Data Management for Electronic Contract Business

Pursuant to M88 Game Measures, before providing private fund electronic contract business services, an electronic contract business service agency shall sign a service agreement with M88 Game relevant private fund parties to clarify M88 Game scope and contents of M88 Game service, M88 Game rights and obligations of each party, M88 Game methods and standards of fees, M88 Game methods of information interaction and data storage. In addition, M88 Game Measures specifically provide for requirements on M88 Game data security of electronic contract business service agencies. It is worth mentioning that M88 Game Measures require that data such as client information and business materials obtained in M88 Game process of business carried out by electronic contract business service agencies shall be retained and stored within M88 Game territory of China. M88 Game Measures also require that M88 Game relevant data shall be stored for at least 20 years from M88 Game date of M88 Game closing of M88 Game fund accounts and be submitted to M88 Game Asset Management Business Electronic Registration System of AMAC and M88 Game designated platform provided by core institutions in M88 Game securities and futures industry in a timely manner.

VI. Clarifying M88 Game Requirements on Self-Discipline

M88 Game Measures stipulate that AMAC shall publicize M88 Game qualified electronic contract business service agencies and conduct self-discipline on M88 Gamese agencies and M88 Gameir electronic contract business activities in accordance with M88 Game laws, regulations and self-disciplinary rules. Electronic contract business service agencies can join AMAC as a member.

In 2014, AMAC issued M88 Game Operation Guidelines on Electronic Signature Contracts for Asset Management Business for Specific Client by Fund Management Companies and M88 Gameir Subsidiaries (Trial) to implement M88 Game operational procedures and rules for electronic signatures in public fund business. Since M88 Gamen, electronic signatures in M88 Game private fund industry have experienced eight years of development. With M88 Game promulgation of M88 Game Measures, M88 Game private fund industry has officially entered M88 Game era of electronic contracts. This is an inevitable result of M88 Game development of this industry and a practice of M88 Game green ESG development in M88 Game fund industry.