On June 23, Beijing Equity Trading Center and Beijing Fund Town together with Beijing Blossom & Credit Law Firm held the eighth online sharing session on secondary funds with the theme of “Legal and Practical Probe of Pledge over Private Fund Share and Equity”, attracting more than 100 participants of representatives from professional investment and research institutions.

JIAO Wei

Ms. JIAO Wei, senior partner of Beijing Blossom & Credit Law Firm, first introduced the detailed concept of privately-offered fund shares in light of the Securities Investment Fund Law and the Interim Measures for the Supervision and Administration of Privately Offered Investment Funds, shared the legal provisions on private fund share pledge in the Civil Code and the Partnership Law, etc., and elaborated the definition of fund share pledge from security interest and pledge right. Ms. JIAO provided detailed explanations on issues such as the rights of the pledgor, the scope of security, the loss of collateral, the liquid clause, the method of pledge realization, and the registration of fund share pledge. Meanwhile, she also shared her opinions on issues of concern in the pledge practice of state-owned and contract-based fund shares.

WANG Lu

Ms. WANG Lu, lawyer of Beijing Blossom & Credit Law Firm, analyzed common practical issues such as the pledgeability of, and the form of creating pledge over, private equity fund shares, the identification of registration authorities, and legal effects based on the judicial demonstration of privately-offered fund share pledge dispute cases. In addition, Ms. WANG also provided suggestions on the operation of pledging private fund shares based on her own practical experience.

JIA Xichun

Ms. JIA Xichun, lawyer of Beijing Blossom & Credit Law Firm, shared her opinions on the pledge of corporate funds. By introducing the definition and operational characteristics of corporate funds, Ms. JIA opined that the pledge over equity in corporate funds was supported by mature legal systems and clear pledge institutions, but also carried certain risks associated with the effectiveness of equity pledge. Moreover, Ms. JIA also presented detailed legal provisions for determining the effectiveness of equity pledge contracts along with relevant precedents.

Ms. DUAN Bei, Head of the Registration and Settlement Department of Beijing Equity Trading Center, shared the situation of the Center’s fund share pledge platform. Starting from relevant laws and regulations on the pledge over partnership private fund shares, Ms. DUAN explained the necessity and difficulties of the partnership private fund share pledge registration, while sharing the practical cases on the registration of property shares in limited partnership enterprises accepted by the Center.

After the session, the three lawyers and Ms. DUAN provided detailed answers to the questions raised by the institutions regarding “effectiveness of regional equity market fund share registration”, “practical operation and difficulties of private equity fund pledge”, and “whether platform pledge is interconnected with industrial and commercial registration information”, which were highly appraised by the attending institutions for the fruitful gain, all of whom expressed their hope to participate in more similar sharing sessions in the future.