Talent retention for China’s public fund management firms

In May 2013 the China Securities Regulatory Commission (CSRC) invited market participants and the public to submit written comments on proposed Administrative Measures for Public Securities Investment Fund Managers and the relevant Supporting Rules (available here). The deadline for comments is 15 June 2013.

Chinese fund management companies that manage public funds (Public Fund Managers) have been facing difficulties in retaining fund managers, who often defect to the private fund sector to become owners of private fund management firms. This has been attributed to the current regulatory regime which prohibits individuals from becoming shareholders of a Public Fund Manager.

To address this issue, the new proposals will allow individuals to own equity in a Public Fund Manager in China. This presents an opportunity for PRC fund management companies (including foreign/PRC JVs) to consider adopting an employee incentive scheme for the Public Fund Manager. For assistance with devising an employee incentive scheme, please contact us.