Original Title: Notice of the Ma'anshan Municipal People's Government on Issuing the Implementation Opinions on Supporting the High-Quality Development of Venture Capital and Private Equity in Ma'anshan

These Opinions are formulated to implement the “Notice of the People’s Government of Anhui Province on Issuing Several Measures to Support the High-Quality Development of Venture Capital and Private Equity” (Wan Zheng Mi [2022] No. 241), further attract more social capital to engage in venture capital and private equity activities in our city, promote the vigorous development of innovation and entrepreneurship capital, advance the deep integration of innovation chains, industrial chains, capital chains, and talent chains, and drive the transformation and commercialization of scientific and technological achievements.

I. Cultivating Diversified Market Entities in the Venture Capital and Private Equity Sectors

(1) Actively Attracting Venture Capital and Private Equity Institutions.For newly established or relocated venture capital and private equity institutions with paid-in registered capital of no less than 10 million yuan that invest in enterprises within Ma’anshan City and fulfill their commitment obligations during their term of operation, the finance department of the institution’s registered location shall grant a reward equivalent to 2‰ of the actual funds received (calculated as the actual amount received after deducting contributions from provincial and municipal governments at all levels, as well as contributions from state-owned enterprises and state-owned platform companies under the jurisdiction of the city, counties, and districts).(Responsible Units: All counties, districts, and development zones; Cooperating Units: Municipal Local Financial Regulatory Bureau, Municipal Investment Promotion Center)

(2) Cultivating Local Venture Capital Institutions. Support high-quality enterprises in the industry, startup incubators, industrial (technological) innovation centers, universities, research institutes, and other institutions rich in innovation and entrepreneurship resources to initiate or participate in the establishment of venture capital institutions in Ma’anshan.[Responsible Unit: Municipal Local Financial Regulatory Bureau; Cooperating Units: All counties, districts, and development zones; Municipal Development and Reform Commission, Municipal Science and Technology Bureau, Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission)] Encourage leading enterprises in various industries to establish angel funds, venture capital funds, and merger and acquisition funds targeting upstream and downstream segments of their industrial chains. Support counties (districts) and development zones in promoting models such as “base + fund” and “industry + fund” to establish venture capital funds focused on emerging industries, competitive industries, and pillar industries designated for priority development.(Responsible Units: All counties, districts, and development zones; Cooperating Units: Municipal Local Financial Regulatory Bureau)

(3) Encourage state-owned enterprises to participate in the establishment of venture capital and private equity institutions. Support state-owned enterprises in establishing new funds for emerging industries, industrial transformation and upgrading, smart manufacturing, and new business models and formats, thereby guiding more innovation and entrepreneurship capital to our city. Support state-owned venture capital and private equity institutions in establishing equity ownership for core teams, individual performance-based distribution, and compensation incentive mechanisms.Launch pilot programs for co-investment by state-owned enterprises and explore co-investment mechanisms for management teams, with the total co-investment amount by all participants not exceeding 5% of the state-owned investment. [Responsible Unit: Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission); Cooperating Unit: Municipal Local Financial Regulatory Bureau]

(4) Guide venture capital and private equity institutions to invest early, in small-scale enterprises, and in technology.For venture capital and private equity institutions that invest no less than 10 million yuan in our city’s early-stage technology-based enterprises (excluding contributions from provincial-level and lower government equity investment funds, as well as government equity investments in their sub-funds) and maintain the investment for a full two years, a reward of 10% of the actual disbursed investment amount will be granted, with a maximum reward of 1 million yuan per investment project. Enterprises with affiliated relationships are only permitted to apply for the reward once.[Responsible Units: Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission), all counties, districts, and development zones; Cooperating Unit: Municipal Science and Technology Bureau] If a venture capital or private equity firm incurs actual losses within five years after holding an investment in a single enterprise for at least one year, a subsidy of 20% of the actual loss amount from the firm’s first-round investment in that project will be provided, with a maximum risk subsidy of 2 million yuan per investment project.[Responsible Units: Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission), all counties, districts, and development zones; Cooperating Unit: Municipal Local Financial Regulatory Bureau]

II. Supporting the Integrated Development of Venture Capital and Private Equity in Fundraising, Investment, Management, and Exit

(5) Expand fundraising channels for venture capital and private equity. Support the participation of government-guided funds or fund-of-funds in establishing venture capital and private equity funds. For government-backed equity investment funds, the proportion of funds invested in local enterprises through equity participation or partnership in sub-funds shall be no less than 1.2 times the capital contribution of the government-backed equity investment fund; for angel-type sub-funds, this proportion shall be no less than 1 times.(Responsible Units: All counties, districts, and development zones; Jiangdong Holding Group; Cooperating Unit: Municipal Local Financial Regulatory Bureau) Even if a fund has not made direct investments, high-quality projects and major manufacturing projects it has attracted shall be deemed as reinvestment upon verification by the host entity and approval by the municipal competent authority. (Responsible Units: All counties, districts, and development zones; Cooperating Unit: Municipal Investment Promotion Center) Support venture capital and private equity institutions in collaborating with various financial institutions and issuing bonds to broaden financing channels.Actively encourage venture capital and private equity institutions to secure investment from national and provincial-level funds. (Responsible Units: All counties, districts, and development zones; Municipal Local Financial Regulatory Bureau; Cooperating Unit: Municipal Science and Technology Bureau)

(6) Improve the city-county coordinated investment promotion mechanism. Establish a coordinated mechanism for city-county collaboration and interdepartmental cooperation. For major industrial funds and key high-quality projects that our city prioritizes for introduction and that serve strategic development, actively create favorable conditions and provide effective matchmaking services between government departments and venture capital and private equity firms, as well as innovative projects. Support the task force of the “Dual Recruitment and Dual Attraction” Promotion Group for our city’s Ten Major Emerging Industries in collaborating with venture capital and private equity institutions to regularly share high-quality project resources.Support counties, districts, and development zones in formulating distinctive policy measures that complement municipal-level policy advantages to increase the intensity of support. (Responsible Units: Municipal Investment Promotion Center, all counties, districts, and development zones; Cooperating Unit: Office of the Task Force for the “Dual Recruitment and Attraction” of the City’s Ten Emerging Industries)

(7) Facilitate venture capital investment channels. Establish a cooperation and matching mechanism between universities, research institutes, and venture capital firms to tap into the market value of scientific research achievements, promote the effective commercialization of scientific and technological innovations, and achieve synergistic interaction between capital and innovation and entrepreneurship.(Responsible Unit: Municipal Science and Technology Bureau; Cooperating Units: All counties, districts, and development zones; Municipal Investment Promotion Center) Establish a two-way referral mechanism between enterprises in the city’s IPO pipeline and venture capital and private equity firms to guide these firms in investing in such enterprises. Support listed companies in utilizing venture capital and private equity to carry out horizontal mergers, vertical integration acquisitions, and industrial chain consolidation across the upstream and downstream sectors of their industrial chains.(Responsible Unit: Municipal Local Financial Regulatory Bureau; Cooperating Units: All counties, districts, and development zones)

(8) Enhance the market-oriented nature of government funds. Optimize the investment decision-making mechanism for government-backed equity investment funds. For sub-funds in which the government-guided fund or fund of funds holds a stake of 30% or less, provided there is legal authorization and agreed-upon returns, it is permissible not to appoint directors or establish veto rights, thereby enabling fund management institutions to operate in a market-oriented and professional manner.[Responsible Units: Municipal Finance Bureau (Municipal SASAC), all counties, districts, and development zones; Cooperating Units: Municipal Local Financial Regulatory Bureau, Municipal Audit Bureau] Optimize the selection mechanism for sub-fund managers of government equity investment funds. Through methods such as open bidding, invited bidding, competitive negotiation, and commercial negotiation, select management institutions by comprehensively evaluating their capital-raising capabilities, fundraising and investment capabilities, industrial investment experience, and operational management capabilities.[Responsible Units: Office of the Task Force for the Promotion of "Dual Recruitment and Dual Attraction" for the City’s Ten Major Emerging Industries, Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission); Cooperating Units: All counties, districts, and development zones; Municipal Local Financial Regulatory Bureau]

(9) Establish a Profit-Sharing Incentive Mechanism.Establish a moderate profit-sharing incentive mechanism for government-guided funds. For venture capital funds that receive equity investments from government-guided funds, if the proportion of reinvestment in our city reaches 1.5 times (inclusive) or more of the government-guided fund’s actual investment in that fund, upon the fund’s exit or liquidation, and provided that an annualized return of 6.5% (simple interest) is met, up to 50% of the excess returns attributable to fiscal funds within the government-guided fund shall be used to reward the fund management institution(The determination of reinvestment shall be based on the criteria specified in the cooperation agreement). [Responsible Units: All counties, districts, and development zones; Municipal Local Financial Regulatory Bureau; Cooperating Units: Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission), Municipal Audit Bureau]

(10) Establish a mechanism for error tolerance and exemption from liability. Reasonably set the investment risk tolerance for venture capital and innovation venture sub-funds in which government equity investment funds hold stakes. Performance evaluations and audit assessments of the fund’s overall returns shall be conducted in accordance with the maximum allowable investment loss rates of 20%, 40%, and 80% for industrial investment funds, venture capital funds, and angel investment funds, respectively. Adhere to market principles, reasonably tolerate normal investment risks, and do not use normal investment risks as grounds for penalties.Where actions are implemented in accordance with relevant decisions and regulations of the Municipal Party Committee and Municipal Government, comply with national laws and regulations as well as Party rules and discipline, and fall within the scope of error tolerance and exemption provisions for leading officials at the central, provincial, and municipal levels, no negative evaluation shall be given during fund performance evaluations, audits, or operational supervision assessments by financial, state-owned assets, and other relevant authorities. For cases where major losses to the fund result from dereliction of duty, malfeasance, or the transfer of benefits, such cases shall be handled in accordance with relevant laws and regulations.[Responsible Units: Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission); Cooperating Units: Municipal Audit Bureau, Municipal Local Financial Regulatory Bureau]

(11) Diversify exit channels for venture capital and private equity investments. Encourage venture capital and private equity institutions to broaden their exit channels through means such as the listing or trading of portfolio companies, mergers and acquisitions, and negotiated transfers.Support eligible industrial groups in our city to collaborate with venture capital and private equity institutions to establish channels for the commercialization of innovation outcomes along the industrial chain. Enterprises invested in by venture capital and private equity institutions that meet the criteria shall be included in our city’s pool of prospective listed companies for cultivation. Guide social capital to establish merger and acquisition funds and private equity secondary market investment funds (S-funds), and support venture capital and private equity funds in exiting through methods such as the transfer of investment shares in portfolio companies, mergers and acquisitions, and the distribution of physical shares via non-trading transfers.[Responsible Units: Municipal Task Force for Promoting Investment and Talent Attraction in the Ten Major Emerging Industries, Jiangdong Holding Group; Cooperating Units: Municipal Development and Reform Commission, Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission), Municipal Market Regulation Bureau, Municipal Local Financial Regulatory Bureau]

III. Creating a High-Quality Business Environment for Venture Capital

(12) Optimize market access for the venture capital and private equity industry. Streamline business registration procedures, implement a comprehensive assessment mechanism for private equity funds, and, provided risks are controllable, facilitate channels for venture capital and private equity firms to establish operations in the city, while providing convenience for the filing of such institutions. (Responsible Units: Municipal Market Regulation Bureau, Municipal Local Financial Regulatory Bureau; Cooperating Unit: Municipal Development and Reform Commission)

(13) Establish a Matchmaking and Exchange Platform for Venture Capital and Private Equity. Leverage the role of financial industry associations as bridges and links to build a service platform connecting investors with project needs, thereby broadening the sources of funding for venture capital and private equity projects. Encourage and support venture capital and private equity institutions, as well as industry associations and chambers of commerce, to organize specialized events in the equity investment sector within our city, and establish a capital matchmaking and interaction platform involving multiple stakeholders, including local governments, entrepreneurs, investment institutions, business associations, and industrial alliances.[Responsible Units: Municipal Local Financial Regulatory Bureau, Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission), Ma’anshan Branch of the People’s Bank of China, Ma’anshan Regulatory Sub-bureau of the National Financial Regulatory Administration; Cooperating Units: All counties, districts, and development zones; Jiangdong Holding Group]

(14) Foster a sound capital culture. Where venture capital and private equity institutions and fund management entities meet the criteria of our city’s policies on talent cultivation, recruitment, and services, the relevant policy-implementing departments shall apply for and disburse the corresponding talent benefits. (Responsible Unit: Municipal Human Resources and Social Security Bureau) Conduct specialized training on venture capital and private equity to enhance the awareness and capabilities of entrepreneurs and Party and government leaders in understanding and utilizing capital.(Responsible Unit: Municipal Local Financial Regulatory Bureau; Cooperating Units: All counties, districts, and development zones; Jiangdong Holding Group) Explore the establishment of a state-owned venture capital management system that aligns with the characteristics and development patterns of the industry, and improve supervision and evaluation mechanisms, incentive and constraint mechanisms, and equity transfer methods. [Responsible Unit: Municipal Finance Bureau (Municipal State-owned Assets Supervision and Administration Commission); Cooperating Unit: Municipal Local Financial Regulatory Bureau]

IV. Other Provisions

(15) The scope of application of these guidelines covers private equity investment enterprises and private equity investment management enterprises that are registered in Ma’anshan City, have their tax administration and statistical relationships in Ma’anshan City, and have completed registration with the China Securities Investment Fund Association.

Venture capital and private equity institutions specifically include venture capital management enterprises, (private) equity investment management enterprises, venture capital enterprises, and (private) equity investment enterprises. Among these: venture capital management enterprises and (private) equity investment management enterprises refer to enterprises entrusted by venture capital enterprises or (private) equity investment enterprises to conduct equity investment and venture capital management as their primary business operations. Venture capital enterprises and equity investment enterprises refer to enterprises established in accordance with the law that conduct venture capital and equity investment as their primary business operations.

(16) The criteria for start-up technology-based enterprises referred to in Article 4 shall be based on the provisions regarding the recognition of start-up technology-based enterprises in the “Notice on Tax Policies Concerning Venture Capital Enterprises and Angel Investors” (Cai Shui [2018] No. 55) and the “Notice on Implementing Inclusive Tax Reduction and Exemption Policies for Small and Micro Enterprises” (Cai Shui [2019] No. 13) issued by the Ministry of Finance and the State Taxation Administration.

(17) If a venture capital or private equity firm receiving incentives under this policy fails to fulfill its obligations or is found to have engaged in fraudulent activities, it must return the relevant incentive funds in accordance with regulations. The relevant departments, counties, districts, and development zones shall be specifically responsible for the recovery of such funds.

(18) The funds for the incentives and subsidies under this policy shall, in principle, be shared between the municipal government and the counties, districts, and development zones in accordance with the current fiscal system. No institution may receive duplicate incentives or subsidies for the same matter, and the annual disbursement amount for a single institution shall not exceed 5 million yuan. Incentive payments shall be disbursed in a centralized manner every six months.

(19) These guidelines shall take effect upon issuance and remain valid for five years. The Municipal Local Financial Regulatory Bureau shall be responsible for interpreting any specific issues arising during implementation. In the event of any inconsistency between previously issued relevant policy provisions and these guidelines, these guidelines shall prevail.