Research On PE Secondary Market Legal System

The illiquid nature of private equity investment is becoming an increasing concernfor investors in China. In the developed country, private equity secondary marketemerged and experienced fast growth, and has been one of private equity fund’s exitroutes. The secondary market not only broadens the opportunity set for private equityinvestors, but also offer liquidity and provide a tool for rebalancing and diversifyingportfolios. But our secondary market emerged almost several years ago and it existedmany legal system problems, such as legally qualified buyer, information disclosuresystem, regulatory regime and so on. This paper will study the secondary marketbased on the legal point of view, analyze trading system and put forward suggestions.At first, this paper will introduce the theory of private equity secondary market anddefinition of related concepts such as private equity，primary market. Since the1982s, secondary market experienced three main stages in America. In our country,the demand for private equity secondary trading is huge. The second part, analyzelegal relationship during secondary transaction. It includes participants, object andtransaction mode. In third part, point out questions about constructing legalsystem,for example subject qualification，restrictions on assignment.At last, giveadvise on legal system.To build a trading platform in regional equity market,perfectthe information disclosure system,regulate evaluation,set up a respected regulatoryregime.