| Private equity capital refers the capital that to be invested into the unlisted companies to buy its equity, while the investors providing value added service to the invested companies for the purpose to realize profits by selling the equity according to listing or transfer. With the essence of providing reasonable value judgment and regularity value added service, private equity has characteristics of investing lasting, no fluidity, information dissymmetrical, service management, high venture and prospecting high profits. As the important subsystem of modern capital market, the private equity market plays an important role in accelerating the transfer of save to investment, promoting the development of economy and technology innovation, improving employment, expediting industry recombination and technology upgrade. Hence, private equity has gotten the great support from every government in the world and has the rapid development in recent years.America is the country with the most active and developed private equity market. Besides the sustainable development of macro-economy and improvement of technology, one of the most important reasons in microcosmic area of the development of America private equity market is limited partnership. The America government created loose policy condition for private equity market to ensure the development of limited partnership, which is studied, modeled and utilized by the other governments all over the world.In recent years, with the support of the government, China's private equity market has been developing rapidly. Before the revision of the LAW OF PARTNERSHIP, the main organizational form of private equity fund is corporation, and after the revision of the LAW OF PARTNERSHIP, limited partnership becomes one of the most important organizational forms. But on the governance mechanism of new funded limited partnership private equity funds, the function between the Limited partners and General partners becomes dark, which goes against for limited partnership plays roles in inspiring and binding the General partners, so that to suppress the General partners ability of value discovering and value creation, and make the problem of rent dissipation. So the development of the private equity market is restricted in a certain extent.With the title of The Research on China's Limited Partnership Private Equity Fund Governance and on the basis of analysis the characteristic of private equity capital and the key role of human capital in private equity capital market, this paper aims at the problem of the function darkness between Limited partners and General partners in the governance mechanism of private equity fund of limited partnership which caused "rent dissipation", in order to dispose o the inter-connection between the different organizational form and different investors and explores the germ of function darkness between Limited partners and General partners which made the rent dissipation, and for the purpose to establish the scientific governance system for China's limited partnership private equity to reach the aim of promoting the development of China's private equity market.The whole paper can be divided into six parts. The first part is the introduction, which put up the theoretic hypothesis and brought forward the issue. The second part is the first chapter, which discussed the characteristics of private equity capital and the theory foundation of the fund. The third part is the second chapter, with summarizing the theories of company governance and analyzing the governance mechanism of limited partnership, the chapter discussed the revelation of America limited partnership private equity funds governance mechanism and policy supporting. The forth part is the third chapter. According to the organizations of China's private equity funds and governance mechanism, This chapter analyzed the development environment of limited partnership in China, and brought forward the approach and methods system of intensifying the governance China's limited partnership private equity funds. The fifth part includes chapter forth, fifth and sixth, which dissertated the approaches and methods system of intensify the govrenance of private equity of limited partnership fund in market, government and consortium. The sixth part is the seventh chapter, which concluded the whole paper.Chapter 0 is the introduction, which includes the background and signification, the inside and outside actuality, the instruments and methods of research, and the basic thought and logic structure and the innovations of the private equity. Chapter 1 is related to the economics analysis on private equity capital. Firstly, this chapter includes the review of the relative theory of private equity capital and private equity fund in China domestic and abroad, points out the research limitation, and opens out the importance and necessity of researching the administration of China's limited partnership private equity funds. The authors considers that private equity capital refers the capital that to be invested to the unlisted companies with equity while the investors providing value added service to the invested objects, aims at to realize profits by selling the equity according to listing or transfer. Private equity capital has characteristics of investing lasting, no fluidity, information dissymmetrical, service management, high venture and prospecting high profits. Private equity market plays an important role in accelerating save is transferred to investment, promoting the development of economy and technologic innovation, improving employment, expediting industry recombination and technologic upgrade. The domestic and foreign scholars have systematively discussed the characters of private equity capital, the organizational form and the governance mechanism, and e affect of the governance on the private equity fund, but they can't open out the key function of the fund managers in the value increment of the private equity capital deeply, and can't find out the inhesion connection between the factors of the participators and the organizational form of the fund, and of course it's hard for them to reseach systematively on the governance system of China limit partnership private equity funds. On the aspect of finance, the character of private equity capital refers the proportion that the entrepreneurs decide to release to outside investors according to the financial scales needed for the project development and the value of the project appraised by the market. On the aspect of investment, private equity refers that the investor, on the basis of collecting and clearing up the general and serendipitous information, estimate the project and get share equity from the entrepreneur, and provide increment services to the projects. On the basis of factor gifts, the market factors decided to take part in the market through any suitable approach. The capital factor owners provide capital to the project and the human capital owners provide value evaluation and increment services. If the market factors own both capital and human capital, they will take active investment strategy, and the factors which own capital but are short of human capital, they will take the passive investment strategy. The factors with human capital but being short of capital will provide management factors. With the permission of the law, the market factors with capital and human capital will be fit for the organizational form as corporation or partnership, and the factors with capital or human capital is apt to the organization of limited partnership, and the former is limited partners and the later is general partners.Chapter 2 is related to the analysis on the limited partnership private equity fund. Company governance is the core of modern company theories, and on the condition of information asymmetry and benefit inconsistent between investors and managers, the investors how to enhance the prompting and bounding the manager in order to reduce or avoid their moral risk and converse choice. The most important approaches of company governance are market governance and inside contract governance. The market governance refers to reinforce outside prompting and restrain the manager by stock markets and human capital markets, and the inside contract governance can solve the problem which can't be solved by market governance, which are used to reach the aim to control company according national law and insider contracts. Nevertheless, there is boundary problem related to the inside contract governance, and community organization play an important role in enhance the company governance. The governance of limited partnership refers that the investors as limited partners supervise and manage the general partners. In limited partnerships, the limited partners take the limited liability with the limited contribution, and the general partners have the right of controlling the company and partly come down on remnant with taking the infinitude liability to the debt. With the good mechanism of prompting and restriction to the general partners, the limited partnership becomes the most important macrocosmic organization and plays an important role in private equity market. In the world private equity market, America is the cradle of private equity capital and the most developed country. Limited partnership is the main organization of private equity fund in America. The main reasons which cause private equity funds development include the mature market economic system, developed private equity capital market, sustaining institution innovation of limited partnership, the admittance to institution investors, loose revenue institution, excellent fund managers and the self-discipline management in private equity industry, etc.Chapter 3 is to analyze the governance of China's limited partnership private equity fund. China's private equity capital market has been developing rapidly in recent years. In the organizational forms, although the PARTNERSHIP LAW has been revised and introduced limited partnership institution,after that limited partnership private equity fund becomes main organizational form in China, but the problem of the function between Limited partners and General partners is becoming dark in the governance mechanism of limited partnership private equity fund which causes rent dissipation arises, which suppresses the general partners enthusiasm and creativity, and make against full use of the limited partnership's prompting and restriction to the general partners. The reasons for corporation form is abroadly used and the function darkness between general partners and limited partners are connected to the faultiness of China's law and the development of private equity capital market. So, there are the key points to enhance the China's limited partnership private equity fund by perfecting market competing system, strengthening institution construction and making good use the partners community.Chapter 4 is related to the market governance on limited partnership private equity fund and the choice on fund managers. The market governance for company comprises stock market, M & A market and manager market. In private equity capital market, because the non-liquidity, it is very hard to govern the fund by stock market and M & A market. The manager market governance can be divided as beforehand governance and postmortem governance. Because the information asymmetry between the investors and managers and the non-liquidity, the investors must pay highly for firing fund managers, and the beforehand governance becomes the preference. Limited partners in developed countries regard the outstanding achievement track record as criterion for choosing the general partners. Because China's is getting along with the seedtime of newness and transition, and the general being lack of track records, it is a realism to regard knowledge and experience of excellent managers as criterion of choosing fund manager. By analyzing knowledge and experience of senior managers in excellent venture capital investment institutions choosed by Zero2ipo Group in 2008, the paper found the excellent managers in China have the feature of high degree, abundance experience, abroad social network, background of abroad and experience of listing, etc.Chapter 5 is related to the government governance and contract design of limited partnership private equity fund. The institution variance with compulsion is an important feature of China's market economy reform, and the development of limited partnership private equity fund needs favorable system to guarantee. After the LAW OF PARTNERSHIP has been revised, the construction of limited partnership private equity fund should consist law and rule matched with LAW OF PARTNERSHIP, permitting insurance and bank capital entering into private equity capital market, and encourage individual capital ingress to private equity capital market, etc. At the same time, on the basis of analysis on the situation of economy and society in transition period of China and the limitation of classic private equity fund contracts, the paper reckons that it is very important to optimize the contract construe of China's limited partnership private equity fund, and to reinforce the prompting, restriction and supervision mechanism to general, and to construct the limited partnership private equity fund contracts adapting to the special historical situation of China.Chapter 6 is related to the community govrenance of private equity of limited partnership fund. Community governance means community organization takes good use of the character of exchange denseness and information abundance among the members of community, and the factors of morality, sensibility and trust of the members, so that to promote the members self-check and supervise one another and achieve the aim to abide the community criterion together. Because information asymmetry exists in private equity capital market seriously and the deal between investors and managers is not supervised by government, community governance becomes an important method to enhance the govrenance of private equity of limited partnership fund. The community governance in China of limited partnership private equity fund needs to found united partners organization, establish behavior criterion for general managers and reinforce mutual supervise, etc. At the same time, because limited partnership consolidating the problem of information asymmetry, it is an important aspect of enhancing the community governance to strengthen information disclosure. Information Disclosure consists of obliging information disclosure and conscious information disclosure, and the former is guided by INTERNATION ACCOUNTANT RULE and the latter is guided by private equity fund information disclosure issued by Europe or America. The successful experience of strengthening limited partnership private equity fund governance by enhancing information disclosure in international private equity market is deserved to be studied in China.Chapter 7 is conclusion part. Private equity capital is a combination of capital and human capital and the latter is the headspring of private equity value investment. Comparing to corporation form, limited partnership has the advantage of enhancing prompting and restricting managers and can be perfect organization method of private equity fund. Of the newly founded private equity fund, the reason of corporation form being important and the problem of rent scatter arising is connected to the investor structure and conditions of China's system and economy. In the transition period, it is the key to reinforce China's limited partnership private equity fund by constructing governance system, including market governance of choosing general partners, government system governance and self-discipline community governance and information disclosure.The innovations and worthiness of this paper are follows, analyzed scientifically the characteristics of equity finance of entrepreneurs, opened out the key role of human capital of fund managers in private equity capital, and got the conclusion that the actors'gift is the key factors which decides the organizational forms and governing systems of private equity funds. At the same time, The paper analyzed the revelation of America's limited partnership private equity fund and reviewed China's the history and actuality of private equity capital and its microcosmic organizational forms, and also analyzed the economic, institution and social situations of China's private equity funds, and put forward the policy advice of enhancing the governance of China's limited partnership private equity funds in three aspects of the governance of market, government institution, and community, which has the consulting value for the government, the partners self-discipline, investors and managers. The limitation of the paper is that because China's private equity market is still in its initial stages and the statistics data is very absent, it is very hard to analyze the features of China's limited partnership private equity fund managers and governance system of the fund in quantitatively, which reduced the strictness of the analysis procedure and conclusion, and should be the research fields in the future.
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