Wu Bangguo (C), chairman of the National People's Congress (NPC) Standing Committee, presides over the first plenary meeting of the 29th session of the 11th NPC at the Great Hall of the People in Beijing, capital of China, Oct. 23, 2012. (Xinhua/Fan Rujun)
BEIJING, Oct. 23 (Xinhua) -- China's top legislature has reviewed a draft amendment to the Law on Securities Investment Funds that would impose new regulations on privately offered funds.
The amendment, which was reviewed on Tuesday, is aimed at protecting investors' interests and reducing financial risks.
The draft, which was published to get public opinion feedback and improved accordingly, was tabled for a second reading at the opening session of the bimonthly meeting of the National People's Congress Standing Committee. First deliberations were in June.
The draft specifies regulations on private equity, including its contracts, the funds' property investment scope and fund managers.
The revision is aimed at preventing illegal fundraising and insider trading by fund managers.
Funds law went into effect in June 2004, but did not bring China's emerging privately offered funds under supervision. This resulted in increasing risks to the country's financial system and social stability.
Official statistics show that 69 fund management firms in China managed total fund assets with a net value of 2.2 trillion yuan (352.1 billion U.S. dollars) as of the end of 2011. This was 8.5 times the net value of fund assets in 2003.
The market price of securities investment funds accounted for 7.7 percent of negotiable market value of the Shanghai and Shenzhen bourses as of the end of 2011. This made it the most important institutional investor in China's security market, statistics show.