Research On The Legal Issues In The Development Of Private Equity Industry In China

The private equity funds in China now are mainly regulated by the Company Law, the Securities Act, the Trust Law, and the Partnership Law, which are enacted and revised one after the other, setting the solid foundation for the development of private equity industry in China. However, the contents that related to private equity of these laws is comparatively limited and have not shaped into systemic and comprehensive regulations. In recent years, the fast development of private equity has strongly promoted Chinese economy. From the perspective of development track, the private equity industry in China has experienced three stages, namely government-oriented stage, foreign investment stage and private enterprises participant stage. Compared with those countries where the private equity already develops maturely, either from the aspect of legal atmosphere, developing scale or the operation skills, the private equity in China still remains in its infant stage and needs more room for promotion and improvement. The author has accumulated plenty of theoretical principles through massive reading of domestic and overseas books on private equity industry. During the practical works in China, the author found some legal issues in the development of the private equity industry and put forward some valuable views.This paper aims to perfect the legislation of China’s private equity industry. The primary coverage of this paper involves: three main organizational forms of privately offered funds——company, trust and limited partnership; the fund raising system, which includes investors’scale, investors’criteria, given investors and forms of promotion; the legal problems that occur during funds performance, regarding principles on information enclosure and the independent storage of the equity funds; the fund supervision, related to the establishment of supervision system, supervision institutions and supervision modes. The author first combs all present Chinese laws and regulations that are related to private equity funds, then studies those comparatively well-developed legislations of private equity funds in America, Britain and Japan. Through comparison, the author discovers many valuable aspects that are worthy used as reference by China. Finally, by means of communication with famous universities and research centers overseas, the author has caught the forefront of this area and gives beneficial suggestions to the development of private equity industry in China.It is a fact that America, Britain, Japan and other developed countries have gained great boost in economy by supporting private equity funds. As a socialized investment tool, with the development of economy in China, private equity turns to be the main force of capital market and industrial investment. However, the unclear legislation of private equity industry, lack of the supervision system and incomplete regulations are the obstacles to the development of private equity. Therefore, the legal atmosphere of private equity industry shall be energetically optimized. The recent Law of Investment Securities Fund, which is under revision and of great significance for the development of Chinese private equity funds will endue a clear legal status with private equity industry and bring it into the supervision system. This paper aims to give some appropriate and practical legislative ideas and suggestions for the further development of Chinese private equity industry and make some effort to establish a perfect economic environment.