Study For Protection System Of Rights And Interests Of Private Equity Investments

As a special institutional arrangement, private equity investment plays a more and more important role in economic development. Meanwhile, it also faces tremendous risks in its investment. So, it is of great importance to research systematically on the protection mechanism of its rights and interests. For further special study on protection mechanism of investment rights and interests, this article probes into functions and constituents of protection mechanism of investment rights and interests of PE by combining theories of economics and theories of company law on the basis of a brief introduction to PE investment. Upon analysis and study, the writer proposes four organizational structures that can effectively prevent and evade risks (including LLP, trust etc.), ten rights of priority (eg. Priority to distribution, priority to voting) and four remedies (including derivative litigation of shareholders), and delivers a demonstration analysis to the actual operation of such institutional arrangement by two cases. The writer concludes that in the highly risky environment, PE organizational framework, special protection to right of priority and related remedies constitute core of the protection mechanism, among which, organizational framework is the basis, right of priority is keystone and remedies are safeguard. The protection mechanism for PE investment is the interactions among these 3 elements. Finally, the writer puts forward his rationalization to the enhancement of this mechanism by analyzing the institutional defects of existing PE mechanism and analyzing existing problems.