The first major new regulation of the Year of the Horse venture capital has arrived! Differentiated disclosure arrangements implemented with several new disclosure items

The first week of the Year of the Horse marks a major new regulation in the venture capital industry.

On February 27, the China Securities Regulatory Commission issued the “Measures for the Supervision and Administration of Private Fund Information Disclosure” (hereinafter referred to as the “Measures”), which will take effect from September 1, 2026. A review by Securities Times reporters shows that the “Measures” make differentiated information disclosure arrangements for private securities, equity, and venture capital funds, with many new disclosure requirements compared to previous rules.

Industry insiders interviewed by reporters stated that this new regulation elevates industry self-discipline rules to administrative regulations, further clarifying the scope and depth of information disclosure. It signifies that the private fund industry is officially moving from a “self-regulation” phase to a “regulation by others” phase. As regulatory constraints become more rigid and industry compliance costs rise, the industry will accelerate the process of elimination of weaker players. Only by maintaining transparency can funds continue to gain LP support and trust.

Implementation of Differentiated Disclosure Arrangements with Several New Content Items

Considering the significant differences in operation models, investment cycles, and risk characteristics among private securities investment funds, private equity funds, and venture capital funds, the “Measures” incorporate feedback from public consultations to set tailored disclosure requirements, specifying content, frequency, and legal principles for different fund types.

According to Securities Times reporters’ analysis, the main changes for private equity and venture capital funds include:

1. Timing and frequency of disclosures: Previous opinions suggested removing the mandatory quarterly reporting requirement for private equity funds. The “Measures” adopt this suggestion, changing the periodic report frequency for private equity funds from quarterly to semi-annual. For venture capital funds, the disclosure frequency is set to once a year.

Thus, the disclosure rhythm for private equity and venture capital funds is more flexible than before. However, industry sources, especially state-owned LPs, tend to require higher disclosure frequency. Tian Chen, Director of Shengshi Investment and General Manager of Shengshi Capital, pointed out that in practice, especially with state-owned capital becoming the main LPs, disclosures are generally still conducted quarterly to meet regulatory and audit needs. Future adjustments will depend on LP requirements and the implementation of the “Measures.” At the annual report level, the disclosure deadline is extended to six months, which is more friendly to parent funds and S funds, as their sub-funds typically have longer disclosure cycles, and the extended period provides more room.

2. Content requirements for disclosures: There were suggestions to further clarify the standards for disclosing underlying asset information of private funds. The “Measures” incorporate this feedback, explicitly requiring private equity funds to disclose the names of investment targets, investment amounts and proportions, investment structures, and ownership confirmations.

Regarding the “ownership confirmation” disclosure, Tian Chen noted that the new regulation emphasizes the importance of confirming ownership rights, requiring timely disclosure of the completion of rights registration for investments. This area, previously less emphasized, has become a key focus in recent years.

Additionally, Article 22 specifies detailed requirements for semi-annual reports, including explanations of investment strategies, valuation methods, decision-making procedures, potential risks, and mitigation measures. Wang Gongbin, Founding Partner of Changshi Capital, considers this an important change, indicating that regulatory focus has shifted from “results” to “process”: not only the conclusions but also the underlying logic and risk control mechanisms.

Tian Chen believes this also raises higher standards for valuation systems (including logic and methods), especially for S transactions, where valuation and pricing confirmation may face future approval challenges.

3. Legal requirements for private fund disclosures: Some opinions suggested adding provisions to private equity and venture capital fund disclosures stating that “if the fund contract has other provisions regarding the disclosure requirements in this chapter, those provisions shall prevail.” However, considering that the “Measures” set the minimum disclosure standards, they do not exclude the possibility of disclosing more information through fund contracts but do not allow deviations from the basic legal requirements. This suggestion was not adopted.

Hu Yan, Vice Chairman of Ausun Capital, pointed out that this clause clarifies that disclosure is a legal obligation, not merely contractual. Even if the fund contract does not specify, the minimum requirements must be followed. This signifies direct regulatory intervention in GP and LP relationships, marking a new phase of “strict regulation and high transparency.”

Nested investments and major event disclosure requirements attract attention

In addition to clarifying the timing and content of disclosures for private equity and venture capital funds, the “Measures” also apply the same “general” rules to all private funds, including equity investment funds. Reporter analysis shows:

First, Article 24 states that private equity funds’ annual financial reports must be audited by certified public accounting firms. For larger funds with many individual investors or other circumstances specified by the CSRC, the reports must be audited by firms compliant with the Securities Law.

Wang Shu, Legal Director of Zijin Capital, said this poses a significant challenge for the industry, especially for small and medium GP funds, as annual audits are costly. Larger funds with many individual investors also require higher audit standards, needing firms qualified under the Securities Law.

Second, the regulation on major event reporting has attracted industry attention. The clause lists 11 types of major events requiring disclosure within five working days. Hu Yan pointed out two particularly noteworthy points:

First, the occurrence of major adverse conditions in key investments—how to define “major adverse”? Is it a failure of performance targets? Founders fleeing? or a sharp decline in valuation? Previously, GPs tended to handle issues internally and only disclose to LPs when unavoidable. The new regulation requires timely disclosure and risk warnings, which will test GPs’ transparency.

Second, changes in management: changes in controlling shareholders or actual controllers must be disclosed. For GPs relying on “star founders,” such changes could trigger disclosure obligations and potentially lead to LP redemption or exit pressures.

Furthermore, the “Measures” include provisions on liquidation reports and extension mechanisms, which also concern investors. Article 29 states that if liquidation is delayed due to liquidity constraints, investors must be informed promptly. Hu Yan noted this addresses current exit difficulties and DIP (deferred investment period) issues in the primary market. Previously, GPs could unilaterally decide to extend or be vague; now, extensions must be accompanied by detailed explanations, safeguarding LPs’ right to information and oversight.

Finally, in the practical operation of private equity funds, nested investments are common, leading to complex disclosure layers and high costs, making it difficult to ensure investor awareness. To address this, the “Measures” specify in Article 13:

When private funds invest in other private funds, legally issued asset management products (excluding publicly offered securities funds), or through special purpose vehicles, the fund manager must provide transparent disclosures according to these regulations, and the invested funds, products, or vehicles must cooperate accordingly.

Hu Yan said this means that parent fund managers (e.g., state-guided funds) must also have the ability to penetrate through to the ultimate project data for reporting to LPs, which places high demands on sub-fund cooperation. In practice, sub-funds (especially star funds) are often reluctant to disclose detailed information to parent funds. After the new regulation, this could become a mandatory contractual requirement, or else the parent fund cannot operate compliantly, extending transparency down the chain.

Tian Chen believes that under the background of increasing institutional LPs, especially state-owned LPs, the regulation will promote standardization of LP relationships and market practices. For funds engaged in S and parent fund businesses, the increased transparency requirements due to nested structures will significantly deepen disclosure obligations, especially with many underlying assets, leading to higher compliance standards. However, the rules for penetrating disclosures of parent funds or S funds are not yet clearly defined and remain to be clarified in practice.

The industry may see three major trends toward standardization

According to data released by the Asset Management Association of China on February 28, as of the end of January 2026, there were 139,153 active private funds with a total size of 22.44 trillion yuan. Among them, 29,862 private equity funds with a size of 11.15 trillion yuan, and 27,729 venture capital funds with a size of 3.74 trillion yuan.

As for private fund managers, by the end of January 2026, there were 19,163 active managers overseeing 139,200 funds with a total of 22.44 trillion yuan. Among these, 11,488 manage private equity and venture capital funds.

Industry insiders generally agree that the new regulation will have a significant impact on GP firms. Previously, some GPs selectively disclosed information or concealed issues through information asymmetry. Now, compliance capability has become a key competitive advantage.

Wang Gongbin said that elevating the “Measures” from self-discipline rules to administrative regulations, and clarifying the scope and depth of disclosures, marks a formal shift from “self-regulation” to “regulation by others,” which is positive for industry development. The strict regulatory constraints will accelerate industry淘汰, and those relying on opacity will find it hard to survive.

Yuan Bing, Chairman of TCL Venture Capital, believes this regulation reflects increased regulatory attention to information disclosure. The regulatory authority for disclosures has shifted from the industry association to the CSRC, further clarifying the responsibilities of managers and custodians. The “Measures” require managers to designate dedicated disclosure departments and senior personnel, extending disclosure obligations to shareholders, partners, and actual controllers, emphasizing transparency and risk management. This will promote legal and compliant operation of fund managers. Yuan Bing also mentioned that on the day of the regulation’s release, the company organized internal training, and the “Measures” will be officially implemented on September 1, with preparations underway.

Regarding the impact on industry structure, Hu Yan identified three major trends:

First, the concentration of leading firms will intensify. Rising compliance costs will eliminate many small, poorly managed, and non-compliant GP firms. Leading institutions with robust IT systems, strong post-investment teams, and legal compliance support will more easily gain trust from social security funds, insurance funds, and other institutional LPs, further consolidating industry capital.

Second, LP structures will evolve. Increased transparency will make private equity funds more attractive to institutional LPs. Standardized disclosures will facilitate performance attribution and risk monitoring, accelerating the institutionalization of LPs in primary markets.

Third, fund contracts will need to be revised. All existing and upcoming funds must review and possibly amend their contracts. The new regulation allows contractual provisions above legal standards but not below. Many older funds may need to sign supplementary agreements to meet new audit, reporting, and disclosure requirements.