[State Council: Strictly Prohibit Private Equity Funds from Engaging in Illegal Lending and 'Disguised Debt as Equity' Activities] Odaily Planet Daily News – The General Office of the State Council has issued guidelines on strengthening supervision, preventing risks, and promoting the high-quality development of private equity investment funds. The guidelines emphasize adhering to goal-oriented and problem-oriented approaches to address issues such as the need for improvement in the private equity fund industry's entry mechanisms, inadequate supervision, incomplete systems, insufficient coordination between central and local governments, failure to implement responsibilities of investors in some government investment funds and state-owned enterprise investment funds, and the misuse of some private equity funds as tools for illegal activities, new forms of corruption, and hidden corruption. The guidelines aim to establish a regulatory framework and long-term mechanisms to strengthen supervision, prevent risks, and promote the industry's development through standardization and improvement. They emphasize adhering to functional positioning, coordinating overall planning, optimizing incremental growth, revitalizing existing assets, supporting the strong while limiting the weak, and improving quality and efficiency. Strict prohibitions are placed on private equity funds engaging in illegal lending and 'disguised debt as equity' activities. The guidelines advocate for classified supervision, implementing a 'one category, one policy' regulatory approach based on different dimensions such as funding sources and product types. They stress the importance of regulating both legal and illegal activities, with strict supervision of legal institutions, resolute closure of illegal institutions, and severe punishment for illegal activities. The guidelines also call for promoting amendments to the Securities Investment Fund Law, issuing judicial documents for handling criminal cases involving private equity funds, and formulating rules for the supervision of private equity fund managers, information disclosure, fundraising, and mandatory custodianship. Additionally, they propose introducing regulations to standardize the institutional arrangements for private equity fund 'bet-on agreements.' A comprehensive regulatory system for private equity funds will be established, primarily based on administrative supervision and supplemented by self-regulation.