（1） Subject qualification

According to the Interim Measures for Insurance Fund Investment in Equity (hereinafter referred to as "Document No. 79"), the main qualification requirements for fund managers of insurance companies investing in equity investment funds are: the manager is an institution registered and engaged in equity investment management within the territory of China in accordance with the law. According to the Measures for the Registration and Filing of Private Equity Fund Managers (Trial), private equity fund managers shall complete the registration procedures for fund managers with the China Securities Investment Fund Industry Association (hereinafter referred to as the "Fund Industry Association").

Therefore, the manager of the target fund should be established and legally existing in accordance with the law, without any circumstances that require termination as stipulated by relevant laws and regulations, company articles of association, or partnership agreements, and has been registered as a private equity fund manager with the fund industry association.

（2） Governance system

According to the relevant provisions of Document No. 79 and the Notice on Issues Related to Insurance Fund Investment in Equity and Real Estate (hereinafter referred to as Document No. 59), when an insurance company invests in equity investment funds, the manager of the target fund should be legally established and have a sound corporate governance, management system, decision-making process, and internal control mechanism.

Therefore, in terms of corporate governance, managers should establish a scientific and reasonable organizational structure (such as the governance mechanism of the shareholders' meeting, board of directors, and board of supervisors), and establish a functional division of labor and authorization mechanism that coordinates and restricts each relevant business department; In terms of management system, the manager should have a full investment management system that runs through fund raising, due diligence on investment projects, investment business process management, investor appropriateness management and information disclosure; In terms of investment decision-making, managers should establish sound rules of procedure and decision-making mechanisms around information collection, evaluation, review, and decision-making of investment projects; In terms of internal control mechanisms, managers should have sound mechanisms for business isolation, risk monitoring, and accountability.

（3） Company capital

According to the relevant provisions of Documents 79 and 59, when an insurance company invests in equity investment funds, the registered capital or subscribed capital of the target fund manager should not be less than 100 million yuan and a risk reserve system has been established.

Therefore, fund managers should ensure that their registered capital or subscribed capital is not lower than the lower limit of the registered capital or subscribed capital specified in documents 79 and 59, and should have a sound risk reserve system, which should include the extraction, use, management, and payment of risk reserves.

（1） Applicable laws for investment management

（2） Investment performance and goodwill

According to Article 79, insurance companies investing in equity investment funds require fund managers to have rich experience in equity investment, a balance of assets under management of no less than 3 billion yuan, excellent historical performance, and good commercial reputation. According to the Notice of the China Insurance Regulatory Commission on Matters Related to Insurance Fund Investment in Venture Capital Funds (hereinafter referred to as "Document 101"), the requirements for the performance and goodwill of fund managers when investing in venture capital funds by insurance companies are: having at least 5 years of experience in venture capital management, excellent historical performance, and a cumulative managed venture capital asset size of no less than 1 billion yuan.

Therefore, in terms of investment experience, fund managers should have long-term professional experience in equity investment/venture capital, and have excellent historical performance in equity investment/venture capital, such as covering key industries with invested projects, good investment returns and distribution of exiting projects, good operating conditions of exiting projects, and no significant risks that may affect the expected returns of the fund. In investment services, industry research Establishing close cooperative relationships with intermediary institutions such as securities companies, law firms, and accounting firms in various aspects such as recommendation for listing and post listing capital operation; The balance of assets under management of fund managers of equity investment funds should not be less than the lower limit specified in Document 79, and the cumulative scale of venture capital assets managed by fund managers of venture capital funds should not be less than the lower limit specified in Document 59; The fund manager should have a good commercial reputation in equity investment/venture capital, such as obtaining honorary titles from industry associations such as the China Insurance Asset Management Association or the Fund Industry Association, as well as other authoritative institutions.

（3） Management team

According to Article 79, when an insurance company invests in equity investment funds, the relevant requirements for the fund manager's management team are: having a stable management team, having no less than 10 professionals with equity investment and related experience, and having at least 3, 5, and 8 years of relevant experience respectively, meeting the requirements, and having completed no less than 3 exit projects; Have at least 3 professionals familiar with enterprise operations, financial management, and project financing. According to the provisions of Document No. 101, when an insurance company invests in a venture capital fund, the relevant requirements for the fund manager's management team are: to equip the venture capital fund with an exclusive and stable management team, with no less than 5 professional investment personnel, a total of no less than 10 successfully exited venture capital projects, and at least 3 professional investment personnel working together for at least 5 years; Investment decision-makers have at least 5 years of experience in venture capital management, with at least 2 of them having at least 3 years of experience in enterprise management and operation.

Therefore, we suggest that fund managers can refer to the requirements of the Fund Industry Association for fund manager registration, prepare the educational background, work experience, experience in equity or venture capital investment, and exit project materials and information of the management team. At the same time, personnel with relevant experience in financial management, project financing, enterprise operation, etc. should also meet the relevant requirements of Document 79 and Document 101.

（4） Project reserve, asset custody, and risk isolation

According to the provisions of Articles 79 and 101, insurance companies investing in equity investment funds or venture capital funds require managers to have a sound project reserve system, asset custody, and risk isolation mechanism, and there is no conflict of interest between different assets managed.

Therefore, we suggest that in terms of project reserve system, fund managers should have specific systems for project research, search, contact, follow-up, reserve, approval, and follow-up, standardize the selection and reserve of investment projects, and provide qualified and high-quality project sources for investors; Regarding the asset custody system, fund managers should have specific systems such as the selection of custody institutions, custody agreements, and custody supervision and management to ensure the safety of the fund's funds; The conflicts of interest between different assets managed by fund managers include but are not limited to the transfer of profits or losses between different private equity funds. Therefore, in order to prevent conflicts of interest, fund managers should have a comprehensive risk isolation system, including the isolation of different private equity fund venues, personnel, accounts, funds, information, and other aspects, and establish a reporting mechanism and accountability mechanism for conflicts of interest.

（5） Incentive constraints and follow-up investment

According to the requirements of documents 79 and 101, when an insurance company invests in equity investment funds or venture capital funds, the manager should establish a scientific incentive and constraint mechanism and follow up investment mechanism, which should be effectively implemented.

Therefore, regarding the incentive and constraint mechanism, we suggest that fund managers should establish an open and fair employee evaluation system (including evaluation indicators and processes), a reasonable salary system (including fixed salary, performance bonuses, follow-up rights and benefits, etc.), and a specific and feasible punishment system (punishment basis, punishment process, and corresponding punishment measures, etc.); Regarding the follow-up investment mechanism, we suggest that fund managers should establish a follow-up investment mechanism for employees in different positions (including follow-up investment ratio and follow-up investment returns, etc.) to achieve risk sharing between the investment team and investors, and promote the improvement of investment returns.

（6） Provide fund prospectus

According to the provisions of Document No. 79, when an insurance company invests in equity investment funds, the manager shall provide documents such as the investment fund prospectus, or provide relevant argumentation reports or due diligence reports according to the agreement.

Therefore, the fund manager should provide the insurance institution with a prospectus regarding the investment fund or provide relevant argumentation reports (including but not limited to investment reports, financial due diligence reports, and legal due diligence reports) in accordance with the agreement, and the relevant data and information in each report should not be conflicting or contradictory.

According to the provisions of Articles 79 and 101, insurance companies investing in equity investment funds or venture capital funds are required to have no major illegal or irregular activities by the fund manager and its main personnel in the past three years.

Therefore, we recommend that fund managers and their executives ensure that there are no criminal penalties or administrative penalties imposed by financial regulatory authorities; Administrative regulatory measures have been taken; Any investigation or inquiry (both formal and informal) conducted or expected to be conducted by any government department; Disciplinary action by industry associations; There is negative information in the integrity database of the capital market; Being included in the list of dishonest and executed persons; There is no bad credit record on the "Credit China" website; There are adverse records such as loan transactions, guarantee transactions, tax arrears, civil judgments, and enforcement. If the manager has any of the above situations, they should truthfully explain them and have the lawyer demonstrate in the relevant due diligence report that these situations are not major illegal or irregular behaviors.

According to Article 79, insurance companies investing in equity investment funds or venture capital funds shall sign investment contracts or agreements with investment institutions, which shall specify management fees, performance compensation, changes in key personnel of the management team, replacement of investment institutions, handling of conflicts of interest, and handling of abnormal situations.

We understand that in practice, the target fund is usually a partnership enterprise. Therefore, insurance companies should sign a partnership agreement with the fund manager and other investors (or an admission agreement if participating in fund expansion), which should cover the contents specified in Document 79.

[1] According to the Measures for the Registration and Filing of Private Equity Fund Managers (Trial), private equity fund managers applying for registration shall truthfully fill in the basic information of fund managers, senior managers and other practitioners, shareholders or partners, and management fund information through the private equity fund registration and filing system.

[2] According to the Notice of the China Insurance Regulatory Commission on Improving the Supervision and Public Inquiry System, if the questioned matter involves state secrets, trade secrets, etc., and disclosure may violate national confidentiality laws and regulations, or harm the interests of the company, the insurance company should explain the situation in writing to the Insurance Regulatory Commission, and with approval, it may be exempted from disclosure.