Regulation Of Private-raised Investment Fund In Legal Dimensions

Investment Fund is a scheme or system of investment for the special purpose with the professional management of the assets, the profits and risks being shared, to concentrate the investors'money by issuing the fund unit."Private placement"means offering its securities privately to sophisticated investors and institutional investors. As a concept in relation to public offering fund, the widely accepted definition of"private-raised investment funds"should be those investment funds established in non-open forms to raise capital from a limited number of institutional investors or individuals. Since the investors have different risk preferences and different investment scales, the pri-vate-raised investment funds are endowed with born reasonableness, coexisting and competing with public offering fund.Analyzed from the regulation perspective, countries around the globe exercise relatively lax regulation over the private-raised investment funds. Funds falling within the defined standards may be issued without reference to the regulator, leaving others authorization to the ex-ceptions. The regulations are mainly over the fund investors, including the regulations over the number of investors and the qualifications of the investors, and over the issuance and advertising of the private-raised investment funds. To a large extent, private-raised investment funds can shun governmental regulation and bring to full play their character-istics.Except some private-raised investment funds existing in less transparent forms like entrusted financing apart from the kinds of open-ended private placement funds in the form of trust, there are a lot of illegal funds collecting money in the name of"private-raised investment funds". However, there's neither a legal system to adjust and regulate the private-raised investment fund nor a clear legal definition to identify it. It is therefore highly necessary for us to give private-raised investment funds the legitimate status. What deserves discussion first is how to regulate the private-raised investment fund. If we are stuck in the vicious cycle of administrative regulations and approvals, the vigor of the market itself will be strangled. The su-pervision brought about by the supervisory mechanisms will deal a serious blow to this highly market-oriented industry. Overall speaking, such a move would not benefit the healthy development of the Private Placement Funds. The regulation of private-raised investment funds should abide by this conclusion and differ from public offering fund so as to enhance the healthy development of the industry of private-raised investment funds in China.As we conclude after a comparison between the development experiences of the foreign private-raised investment funds, the root causes for the existing problems in this industry lie in the lack of external conditions. What we should do indeed is achieve the regularizing of the private-raised investment funds through the constant improvement of the capital market and regulated development of the funds, aiming to provide the pri- vate-raised investment funds with a nice environment for development. While formulating regulatory measures, the relevant authorities should always keep in mind that the market is always right.