Notice of Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau on Printing and Distributing the Administrative Measures for the Operating Fund for Intellectual Property of Key Industries in Guangzhou

All relevant units,

　　In order to promote the construction of the service system for intellectual property operations, accelerate the deep integration and development of intellectual property and finance, and improve intellectual property operations of key industries in Guangzhou, the Administrative Measures for the Operating Fund for Intellectual Property of Key Industries in Guangzhou is hereby printed and distributed. Please comply with and implement it. If there is any problems during the implementation process, please report to Guangzhou Municipal Intellectual Property Administration directly.

Guangzhou Municipal Intellectual Property Administration

Guangzhou Municipal Finance Bureau

October 17, 2024 

Administrative Measures for the Operating Fund for Intellectual Property of Key Industries in Guangzhou

Chapter I. General Provisions

　　Article 1 In order to promote the construction of the service system for intellectual property operations, accelerate the deep integration and development of intellectual property and finance, better leverage the guidance and amplification role of government funds and the decisive role of the market in resources allocation, and improve intellectual property operations of key industries in Guangzhou, according to the Interim Administrative Measures for Government Investment Funds (Cai Yu [2015] No. 210) issued by the Ministry of Finance, the Notice of China National Intellectual Property Administration on Providing Good Services for Intellectual Property Operations of Key Industries in 2016 (Guo Zhi Fa Guan Han Zi [2016] No. 111), the Notice on Granting Dedicated Central Funds for Services for Intellectual Property Operations of Key Industries (Yue Cai Jiao [2016] No. 213) issued by the Department of Finance of Guangdong Province, and based on the actual situation of Guangzhou, the Operating Fund for Intellectual Property of Key Industries in Guangzhou (hereinafter referred to as the operating fund) and the Measures is formulated.

　　Article 2 The operating fund for intellectual property of key industries mentioned in these Measures refers to a limited partnership operating fund jointly established by several institutions, guided by government funds and supported by social funds, such as industrial leading enterprises, scientific research institutions, etc., and other related funds.

　　The operating fund is used for short-term market operations dominated by patent portfolio operations, focusing on strategic emerging industries such as information technology, biology and health, new materials and high-end manufacturing, new energy, energy conservation and environmental protection in Guangzhou and key areas specified in the Made in Guangzhou 2025 Strategic Plan.

　　Article 3 At the initial stage, the financial guidance fund among the operating fund will be 120 million yuan, with 40 million yuan from the central government, 40 million yuan from Guangzhou, 20 million yuan from Guangzhou Development Zone and 20 million yuan from Nansha Development Zone. The scale of the operating fund shall be amplified to more than 5 times the scale of the financial guidance fund to attract the investment of social capital.

　　Article 4 The operating fund shall operate under government guidance in the market based on scientific decision-making and risk prevention. It shall operate, manage and bear profits and losses independently through the establishment of a market-oriented fund entity.

Chapter II. Fund Management

　　Article 5 Guangzhou Municipal Intellectual Property Administration shall manage the financial guidance fund, serve as a contributor, supervise and guide the operations of the operating fund, collaborate with Guangzhou Municipal Finance Bureau in the supervision, inspection and performance evaluation of government investment funds, and report annually to Guangzhou Municipal People’s Government on the operations of the operating fund.

　　Article 6 Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau shall work together to select a qualified and professional investment management agency as the entrusted management agency of the operating fund according to relevant regulations and sign the entrusted management agreement with the entrusted management agency.

　　Article 7 The entrusted management agency shall carry out entrusted management in accordance with relevant laws, regulations and the entrusted management agreement. It shall be responsible for the specific establishment of the operating fund and the formulation of the partnership agreement about the operating fund. It may entrust a wholly-owned fund management company with experience in intellectual property and technology investment operations and financial guidance fund management, with which it is affiliated, to operate the fund. It shall also select a custodian bank for the operating fund and regularly report to Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau the investment and operation performance of the operating fund and major matters.

　　Article 8 The fund management company is responsible for the daily investment operations of the operating fund, and shall make investments in the fields determined in the establishment plan for the operating fund, regularly report the progress of investment projects to Guangzhou Municipal Intellectual Property Administration, Guangzhou Municipal Finance Bureau and the entrusted management agency, accept the supervision over its investments and operations by relevant government departments and the entrusted management agency.

　　Article 9 The custodian bank for the operating fund shall, based on the custody agreement, be responsible for account management, fund settlement, asset custody, etc., and implement dynamic supervision over investment funds.

　　The custodian bank shall meet the following requirements:

　　(1) Hold the qualification for fund custody certified by the relevant government department;

　　(2) Maintain a good financial position for the recent more than 3 years, and have never received major penalties from administrative or judicial authorities;

　　(3) The custodian bank that has good business cooperation with the government department will be given priority.

　　Article 10 The entrusted management agency shall set up a special agency to manage fundraising, supporting fields, equity investment and withdrawal of the operating fund, and address major issues in the operations of the operating fund in a coordinated manner.

Chapter III. Operation and Withdrawal

　　Article 11 The fund management company shall organize expert teams for technology, intellectual property, evaluation, finance and law to carry out short-term market operations focusing on patent portfolio operations in accordance with the supporting fields of the operating fund.

　　Article 12 The operating fund shall mainly rely on innovative industrial clusters, leading enterprises, etc. in Guangzhou, and mainly invest in the following projects through equity investment:

　　(1) Start-ups or enterprises at the growth stage that own core intellectual property, mainly start-ups or enterprises at the growth stage that own or control core patents or high-value patent portfolios in the corresponding industrial fields, have good market prospects, and have high growth potential;

　　(2) Intellectual property operation and management projects, mainly enterprises that own operation and service models for emerging intellectual property and intellectual property operation and service platforms in the corresponding fields. Support licensing teams and companies and engage in direct patent licensing, third-party patent or standard sub-licensing and sub-licensing services. They support activities related to the generation, acquisition and transfer of high-quality patent portfolios, the transfer and demutualization of technologies that have been produced, patent trading, licensing and technology marketization;

　　(3) Patent pool projects, mainly patent portfolio (patent pool) projects operated and managed by intellectual property alliances, big enterprises, and intellectual property operating agencies in the corresponding industries. Such patent pools support sole management, patent platform management and independent third-party management;

　　(4) Patent defense projects that invest in patent defense funds in the corresponding fields, support the development of patent defense plans in the corresponding fields (for fee resistance, risk prevention, insurance and intellectual property risk control, etc.), and represent small- and medium-sized enterprises in the industry as an investor group to join defensive patent funds;

　　(5) Intellectual property operating funds that mainly invest in intellectual property operating funds for corresponding industrial fields in a phased manner, and support the initiation and establishment of new intellectual property operating funds.

　　Article 13 The duration of the operating fund is 8 years (calculated from the date of the industrial and commercial registration of the operating fund), and the investment period is 5 years. After the end of the investment period, the withdrawal period is 3 years. The duration may be extended by the parties through negotiation and after the parties report such extension to Guangzhou Municipal People’s Government and get its approval.

　　If it is necessary to extend the duration, of the government guidance fund, the fund from the central government shall be subject to central policies, and the funds from Guangzhou, Guangzhou Development Zone and Nansha Development Zone shall be subject to the policies of Guangzhou.

　　Article 14 The main ways of withdrawal include: withdrawal by project listing, withdrawal by merger and acquisition, withdrawal by transfer, withdrawal by auction, and withdrawal by original shareholder’s buyback. In terms of the withdrawal procedures, the fund management company shall propose the withdrawal plan of the investment project and submit it to the fund investment decision-making committee for consideration and decision.

Chapter IV. Risk Control

　　Article 15 The operating fund shall not be used for the following businesses during its operations:

　　(1) Engage in guarantee, mortgage, entrusted loan and other businesses other than financing guarantee;

　　(2) Invest in stocks or futures in the secondary market, real estate, securities investment funds, corporate bonds rated below AAA, trust products, non-capital guaranteed financial products, insurance plans and other financial derivatives;

　　(3) Sponsor or donate to any third party;

　　(4) Pool deposits or do so in disguised forms, or provide loans and fund lending for any third party;

　　(5) Make foreign investments with unlimited joint and several liability;

　　(6) Issue trusts or collective financial products to raise funds;

　　(7) Engage in other businesses prohibited by national laws and regulations.

　　Article 16 Risk control of the operating fund:

　　(1) Contribution by the entrusted management agency in the operating fund with its own funds. The contribution of the entrusted management agency to the operating fund shall be not less than 1% of the total scale of the operating fund, and shall account for more than 5% of the financial guidance fund among the operating fund.

　　(2) Strict risk control system. In the management process of the operating fund, independent risk control personnel shall be appointed, and independent and professional risk control personnel may coordinate with the investment department to ensure objective and fair investments with the operating fund.

Chapter V. Incentive and Constraint Mechanisms

　　Article 17 Guangzhou Municipal Intellectual Property Administration, Guangzhou Municipal Finance Bureau and the entrusted management agency shall clarify the rights and obligations of all parties in the entrusted management agreement, which shall include:

　　(1) If the establishment of the fund is slow or fundraising or project investment fails to work well, or fails to meet expectations due to the entrusted management agency, Guangzhou Municipal Intellectual Property Administration shall urge the entrusted management agency to make corrections within a time limit. If the entrusted management agency fails to make proper corrections after being urged by Guangzhou Municipal Intellectual Property Administration more than 3 times, Guangzhou Municipal Intellectual Property Administration may reduce the management fee, cancel its performance reward, or terminate the management business. If the entrusted management agency has any violation of laws or regulations, Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau shall cancel its management qualification.

　　(2) If the fund management company and its senior management personnel fail to invest in the supporting fields of the operating fund, fail to regularly report the investment progress, or fail to cooperate with supervision and inspection, Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau may require corrections within a time limit; if the circumstances are serious, Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau may withdraw the financial guidance fund in advance.

　　Article 18 The daily management fee of the financial guidance fund among the operating fund shall be allocated with the budget fund of Guangzhou Municipal Intellectual Property Administration. The previous year’s daily management fee shall be paid in the current year. The standard of the daily management fee shall be specified in the entrusted management agreement.

　　Article 19 The income from the operating fund shall be distributed in accordance with the principles of “benefit and risk sharing” and “capital return before profit sharing”, after relevant taxes and fees are deducted.

　　Article 20 According to the performance evaluation results, part of the income from the financial guidance fund can be used as performance rewards for the entrusted management agency and social investors after Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau report to Guangzhou Municipal People’s Government and get approval.

　　Article 21 The losses of the operating fund shall be borne by each contributor in proportion to the amount of contributed capital. Relevant governments shall bear limited liability according to the amount of contributed capital.

Chapter VI. Monitoring and Performance Evaluation

　　Article 22 Guangzhou Municipal Intellectual Property Administration, Guangzhou Municipal Finance Bureau, the entrusted management agency and the custodian bank shall establish communication mechanisms to strengthen supervision and inspection.

　　Article 23 The operating fund shall be subject to the performance evaluation and audit supervision of financial and audit departments over its operations; the entrusted management agency shall carry out performance self-evaluation on the establishment of the operating fund, the realization of policy objectives, and the investment and operation progress according to relevant regulations; Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau shall, according to the actual situation, carry out the performance self-evaluation review, organize the evaluation of key indicators or entrust a third party for the evaluation.

　　Article 24 Guangzhou Municipal Intellectual Property Administration shall, together with Guangzhou Municipal Finance Bureau, evaluate and supervise the performance of the entrusted management agency:

　　(1) Within 15 days after the end of each quarter, the entrusted management agency shall report to Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau the operations, assets, liabilities, investment gains and losses of the fund, and other major issues that may affect the rights and interests of investors, prepare and submit the balance sheet, profit statement, cash flow statement, financial fund statement, project list, etc.

　　(2) Before April 30 each year, the entrusted management agency shall make a self-evaluation report on the management of the operating fund in the previous year to Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance Bureau. The self-evaluation report shall specify the assets, liabilities and owners’ equity of the entrusted management agency, the operations of the entrusted management agency, the scale of the operating fund, the progress of investments, the operations of the invested enterprises, withdrawal and income of the operating fund.

　　(3) Guangzhou Municipal Intellectual Property Administration may commission a third-party institution to conduct a special audit and inspection on the use and management of the operating fund.

　　(4) Guangzhou Municipal Intellectual Property Administration shall have the right to conduct spot checks on the investment projects of the operating fund and verify the authenticity of the information reported by the entrusted management agency.

　　Article 25 After the operating fund expires or terminates according to the law, the financial guidance fund among the operating fund and the remaining income after performance rewards are granted shall be returned to the investors in accordance with the proportion of the funds from the central government, Guangzhou, Guangzhou Development Zone and Nansha Development Zone.

　　Article 26 If Guangzhou Municipal Intellectual Property Administration, Guangzhou Municipal Finance Bureau, the entrusted management agency, the custodian bank or its staff defrauds or misappropriates the funds of the operating fund, it or he shall be dealt with in accordance with relevant provisions of the Budget Law of the People’s Republic of China and the Regulations on the Punishment of Financial Violations. Enterprises that defraud, misappropriate or extract funds shall be investigated for legal responsibility according to the law. Those suspected of committing a crime shall be handed over to the judicial authority for punishment according to the law.

Chapter VII. Supplementary Provisions

　　Article 27 The Measures shall come into force as of the date of printing and distribution and shall be valid for 5 years. When relevant laws, regulations or policies change or expire, the Measures shall be evaluated and revised according to the implementation progress. The Notice of Guangzhou Municipal Intellectual Property Administration and Guangzhou Municipal Finance on Extending the Validity Period of the Administrative Measures for the Operating Fund for Intellectual Property of Key Industries in Guangzhou (Sui Zhi Gui Zi [2022] No. 1) shall be annulled simultaneously.

　　Chinese version：广州市知识产权局 广州市财政局关于印发广州市重点产业知识产权运营基金管理办法的通知