Guidelines on the establishment and operation of venture capital guiding funds

In order to implement the State Council on the implementation of the national medium and long term Science and technology Development Plan (2006-2020), a number of supporting policies of the notice (National Hair (2006) 6th) spirit, in line with the "Venture capital Enterprise Management Interim measures" (Development and Reform Commission, such as the ten ministries to make the To promote the establishment and operation of the standard for venture capital Investment Guidance Fund (hereinafter referred to as guiding fund) and to support the development of venture capital enterprises, the following comments are made:

The nature and purpose of guiding fund

The guiding fund is a policy fund which is established by the Government and operates according to the market mode, mainly through supporting the development of venture capital enterprises and directing social funds into the field of venture investment. The Guide fund itself is not directly engaged in venture capital business.

The purpose of guiding fund is to exert the lever amplification effect of financial funds, to increase the supply of venture capital, and to overcome the market failure problem of simply allocating venture capital by market. In particular, by encouraging venture capital enterprises to invest in the early stage of seed, start-up period and other enterprises, make up for the general venture capital enterprises to invest in long-term, mature stage and the lack of rebuilding enterprises.

Ii. establishment and source of funds for the Guidance fund

The relevant departments of the people's Government at or above the municipal level may set up guidance funds according to the needs of the development of venture capital and financial situation. The establishment procedure is: the relevant departments and financial departments responsible for promoting the development of venture capital jointly propose a feasibility plan for setting up a guide fund, which is submitted to the people's Government after approval. All localities should formulate and continuously improve the management of the Guiding Fund in the light of local conditions, and the management measures should be jointly studied by the Finance Department and the relevant departments responsible for promoting the development of venture capital.

The Guiding fund shall be established in the form of an independent legal person, and the board appointed or dispatched by the relevant departments may exercise its decision-making and administrative responsibilities and exercise the rights and interests of the Fund and assume corresponding obligations and responsibilities.

The source of funds for guiding the Fund: the financial special funds supporting the development of venture capital enterprises, the investment income and guarantee income of the Guide fund, the interest income from the idle funds depositing the bank or buying the government bonds, and the funds donated by individuals, enterprises or social institutions.

Iii. guiding the operating principles and methods of the Fund

The guiding Fund shall operate in accordance with the principles of "Government guidance, market operation, scientific decision-making and risk prevention", and the supporting objects are all kinds of venture capital enterprises set up in China in accordance with the procedures stipulated in the interim measures for the administration of venture capital enterprises. In the process of supporting the establishment and development of venture capital enterprises, we should innovate the management mode, realize the effective combination of the government policy intention and the operation of the venture capital enterprises supported by the market principle, to explore and establish scientific and reasonable decision-making and assessment mechanism, to prevent risks effectively and to realize the sustainable development of the Fund Guide funds are not used in the market has been fully competitive areas, do not compete with the market for profit.

To guide the operation of the Fund: (a) equity participation. The guiding fund mainly through the participation method, attracts the social capital to initiate the establishment venture investment enterprise jointly. (ii) Financing guarantees. According to credit report provided by credit agencies, venture capital enterprises with good historical credit record can adopt financing guarantee method and support them to enhance their investment ability through creditor's rights financing. (c) Follow up investment or other means. Industry-oriented or regional-oriented strong guidance fund, can explore through the follow-up investment or other means, to support the development of venture capital enterprises and guide their investment direction. Which, follow up investment is limited to when the venture capital Enterprise invests in the early start-up enterprise or needs the government key support and the encouragement High-tech and so on industrial domain enterprise, the Guidance fund may invest in the enterprise according to the appropriate equity proportion, but may not take "the follow-up investment" the name, directly engages in the venture capital Operation Business The role of commercial venture capital enterprises in discovering investment projects, evaluating investment projects and implementing investment management should be played.

The venture capital enterprises which are supported by the Guide fund shall, in their Articles of association or Limited partnership agreement, stipulate that a certain proportion of funds should be invested in the start-up enterprises or the High-tech industries, such as high and new technology, which need the Government's key support and encouragement. The Guiding fund shall supervise the investment operation of the enterprises supported by the venture capital in accordance with the prescribed investment direction, but not interfere with the day-to-day management of the enterprises supported by the venture capital. The Guiding fund does not act as the trustee of the company-funded venture capital Enterprise or the general partner of the limited partnership venture capital Enterprise, and does not participate in the investment establishment of the venture Capital Management enterprise.

Iv. guiding the management of the Fund

The Guide fund shall establish a sound internal management system and an external supervision and supervision system, in accordance with the provisions of the relevant national budget and financial management system. The Guide fund may appoint a management body to guide the day-to-day management and operation of the Fund, or entrust a competent authority to guide the day-to-day management and operation of the Fund.

The entrusted management institution of the Guide Fund shall meet the following qualification conditions: (1) have independent legal personality; (2) Its management team has certain experience, has a high level of policy and management level; (3) Sustained and maintained good financial situation over the last 3 years (4) has not received the administrative authority or the judicial organ serious punishment bad record, (5) strictly according to the Entrust Agreement management directs the fund assets.

The Guide fund shall set up an independent assessment committee to conduct an independent review of the Guiding Fund support program, so as to ensure the democratic and scientific nature of guiding the Fund's decision-making. The members of the Review Committee shall comprise representatives from relevant government departments, the self-regulatory organizations of the venture capital industry and social experts, and the number of members should be singular. Among them, venture capital industry self-discipline organization's representative and social expert must not be less than half. The person who directs the fund to support the project unit shall not participate as a member of the evaluation Committee in the evaluation of the project to be supported. Guide the Fund Board to make decisions on the projects to be supported according to the evaluation results of the evaluation Committee.

The Guiding Fund shall establish the project publicity system, accept the supervision of the Social Guidance Fund and ensure the openness of the operation of the Fund.

V. Supervision and guidance of the Guiding fund

Guide funds into the public financial assessment system. The financial department and the relevant departments responsible for promoting the development of venture capital carry out supervision and guidance on the establishment of the guiding fund, according to the principle of publicity, establish an effective performance appraisal system for the Guiding Fund, and periodically evaluate the policy objectives, policy effects and assets of the Guiding Fund.

The Governing Council shall report regularly to the financial departments and relevant departments responsible for promoting the development of venture capital. Timely reporting of major events during operation.

Vi. risk control of the guiding fund

The rules of guiding fund should be formulated to guide the operation, decision-making and management of the Fund, as well as the relevant conditions for the support of the Guiding Fund. Venture capital enterprises that apply for guidance fund should establish sound performance incentive mechanism and risk restraint mechanism, and their senior managers or senior managers of their management advisory bodies should have achieved good management performance.

The regulations of the Guide fund shall specify the amount of support and risk control system for the individual venture capital enterprises. If a venture capital enterprise is initiated by means of equity participation, it may, subject to the provisions of relevant laws and regulations, guide the fund's priority distribution rights and priority liquidation rights in advance through the Articles of association or the Limited partnership agreement, in order to maximize the control of the asset risk of the guiding Fund. In order to provide financing guarantee and follow up investment to support venture capital enterprises, the guiding Fund should strengthen the supervision of the funds used by the supporting venture capital enterprises and prevent the financial risks.

The Guide fund shall not be used for investment in loans or stocks, futures, real estate, funds, corporate bonds, financial derivatives and other expenses such as sponsorship and donation. Idle money can only be deposited in banks or purchases of government bonds.

To guide the fund's idle funds and the various assets and interests formed in the investment shall be administered according to the relevant financial regulations of the State. To guide the investment of the Fund to form the exit of the equity, the exit mode and the exit price should be determined according to the principle of public finance and the operation requirement of guiding fund.

Vii. Organization and implementation of guidance

After the issuance of this guidance, the newly established Guidance fund shall be established and operated in accordance with this guidance, and the established guidance Fund shall be standardized and operated as per this guidance.