Research On The Right Of Private Equity Investors

As Margaret Thatcher said:"Europe has lagged behind the United States in high technology is not due to the low level of European technology, but because of the risk investment in Europe 10 years lag behind the United States". While in the world of Private Equity (PE) investment has increasingly become the major engines of the country economic, scientific and technological development, along with continued rapid economic development, China's Private Equity investment has become increasingly strong. From the beginning by foreign Private Equity investment giant's overall monopoly to the nearest local Private Equity investment institutions have being risen, Private Equity investment in China has been changed from the initial simple exclusion to the current state of the popular hot. At present, although from the central to local governments have all come up the related policies to support Private Equity investment one after another, but the legal system needed by Private Equity investment development in China have some kind of flaw, so most popular business practices and industry standards in Private Equity investment of developed countries are often encountered acclimatization in China. Meanwhile, due to domestic enterprises not to be familiar with the relevant rights and obligations arrangements for Private Equity investment contract and participate in the rules of the game set up by international Private Equity giant is often throw good money after bad. Therefore, grasps "the profession rule" of Private Equity investment of the developed country accurately is our country develops and uses the basic premise of Private Equity investment effectively.'The U.S. Venture capital Model contract" is a set of Private Equity investment contracts written by U.S. Venture Capital Association based on to summarize the best practices and industry standards. Reference and research on the model contract is without doubt giving us a quick and effective way for grasping and understanding the relevant rules of Private Equity investment quickly.The thesis is composed of five parts. The first part is the introduction. The second part is discussing about the outline of right of Private Equity investors. The third part is the relative rights and notice of "The U.S. Venture capital Model contract". The fourth part is about construct the basic proposal of our country Private Equity investors'right system. And the last part is the conclusion.In the first part, the main contents are about the background topics and literature review discussed. This thesis argues that because the research of the micro of relevant contracts of Private Equity investment process is deficient. So many people in China generated resentment for not to be familiar with Private Equity investment. At the same time, the related legislative is lag behind that is also cause the Private Equity investment popular in the overseas'business practice or industry standards often cannot obtain the effective implementation in our country. Therefore, draw lessons from "the US Venture capital Model contract" regarding Private Equity investors related right arrangement that not only has the inspiration to practice operation in our country practical realm, even lies in the legal system which lags to our country to put forward the related legislative proposal. Literature review analyze mainly about four parts, including the concept of PE investment, the rights of PE investment contracts, the risks and prevention and control measures of PE investment and improved our country' PE investment legal system that can be seen now the academic circles mainly discussing aspects of research for PE investment in government regulation, legal form of organization, exit system, but for the related rights and obligations of investment contracts in the investment phase which is almost not involved.In the second part, the thesis is discussing the related theory of PE investors'right and clarified the related concept of PE investors'right that including PE investment, PE investment investor, entrepreneurs and target firm. The thesis point out the features of PE investors'right with the agreement, the deviation, to attach the condition, to attach the deadline and selectivity and this right arrangement have the function of protection and motivation. The thesis is discussing with honesty, freedom of contract, and equity as theory basis of PE investors'right establishment.In the third part, the thesis analyze based on "the US Venture capital Model contract" for PE investors which are first right of refusal, priority right to dividends, the rights of liquidation preferences, preemptive rights, repurchase rights, forced to sell the right, tag along rights, anti-dilution rights, lock right, stock options, the right to know, stock pledge, the right to review internal controls, proxy voting rights, the right valuation adjustment (agreements on gambling). And it summarized the reality basis of right arrangement in PE investors lies in the convertible securities is the foundation of right setting and perfect legal system and proper notion of supervision and management is guaranteed the right setting.In the fourth part, the various rights under the Chinese law environment applicability were discussed by the preceding text. The author believed that construct the legislation principle of our country' Private Equity investors'right system is contract freedom, proper supervision and management, legal system coordination and unity principle. Meanwhile in order to construct our country' Private Equity investors'right system proposed relevant legislative proposals:draw up the relevant provisions of preferred stock, improve the company's share buy-back system, enact specialized "Equity Investment Fund Law," improvement of our tax system, improve other related laws and establish the effective accompanying measures.The fifth part is at the end of the thesis. The main contents discussing about our prospect of the PE Investment development and believed that advanced PE investment rules overseas is a very important significance of reference and application.