The Organizational Form Of Venture Capital: Contrast Between Corporate And Limited Partnership

June 1, 2007, the"People's Republic of China Partnership Enterprise Law"revised was put into force, it not only set up a limited partnership of this new form of partnership, but also to carry out a institutional innovation, such as single tax and bankruptcy. The promulgation and implementation of new "Partnership Enterprise Law" made the limited partnership venture capital as a legitimate form of organization, which means to allow limited partners to participate in venture capital business, and it is also promoting the development of venture capital. In addition, it has vital significance under both the theoretical and practical basis. And this particular type of organizational form of limited partnership will continue to emerge, along with the implementation of legislation of the limited partnership. The choices of organizational forms and systems of investment institutions, depends upon on the institutional environment, the company's own characteristics, and requirements of internal governance structure. In fact, both the legislation of enterprise and limited partnership has its own advantages and disadvantages in terms of the establishment of venture capital, operation, and to withdraw from such areas. Even if the most widely used of limited partnership in the United States, it still may not necessarily be suitable for all the main investment bodies. Therefore, the choices of organizational forms of investment institutions must be based on the economic situations of its country of origin, and in turn, to facilitate the development of overall economy with a positive role in promoting.The aim of this paper is to research the organizational form of venture capital in China. And it applied the theories of corporate governance structure, asymmetric of information, incentive mechanisms, constrain mechanisms, risk control mechanisms, and rational theories of tax avoidance. The methodology of this paper mainly based on use of theoretical study, and comparative analysis. And it also analysis and induct of all aspects of enterprise and limited partnership from a theoretical point of view, the perspective of Chinese law and China's future direction.In this paper, the conclusions and main points are as follows: The successful operation of venture investment relies on the corresponding forms of organization; different organizations will provide different forms of incentive and restraint mechanisms. No matter what forms of organizations, we must take the existing legal conditions and the main investment conditions into consideration in order to choose the venture capital organization which possesses a relatively low operating costs, the agent risks to be effectively controlled and the relatively effective incentives ,so that the venture investment can achieve high-yield and high-risk sexual equilibrium. Only by combining the actual situation of China, China's venture capital sector can choose their forms of organization suited to the path of development, and promote the venture capital industry to develop healthily.The main innovation of this article is considering two different forms of organization and regulations, policies, respectively, the article comparatively analyzes the idea from a theoretical perspective and a of the legal point of view; the article researches China's venture capital future direction by analyzing the current status of China's venture investment. Given China's high-tech enterprise's urgent need of venture capital and the venture capital huge gap between China and developed countries, The limited partnership should be as a form of venture capital organizations to be analyzed and to be applied in practice, discussing the feasibility and practicality of the limited partnership in China where the venture capital is still in the initial stage of the country. Of course, the effectiveness of the operation needs to be tested in practice in the future.