Private Equity Fund Regulation Of The Legal System

Private placement fund can be broadly divided into private equity fund and private securities fund.Because the markets,the medias and the scholars are all focusing on private securities investment fund which is relative to public offering fund,so this thesis names private placement fund as private placement securities investment fund.Its definition is that investment fund which is offered through non-public way and opened to specific institutional investors or non-institutional investors corporate and individuals to raise money for securities investment activities.For the convenience of writing,the private placement securities investment fund will be written as private placement fund.Capital market is the core of the securities market.Today,the international financial market continuing becomes globalization and liberalization.China's securities market is facing a big challenge that how to provide fast,flexible,and diverse sources of funding to meet the needs of the growing market.Private placement fund is a new finance instrument emerged in our securities market.It has been 70 years old since established in America and has placed an important role in pushing forward the advance of financial market.Unlike public offering fund,private placement fund is not offered publicly,and the Government's regulation is more relaxed.It has neither strict registration system nor strict information disclosure system.So it can save a lot of costs and times of issuance and can improve efficiency.At the same time private placement fund faces investors of high quality.It requires investors obtaining information through their own channels and making judgments by virtue of their professional knowledge. On the one hand,it takes into account the convenience in funds raising.On the other hand,it also ensures unqualified investors having no access to relevant information and unable to enter the fund.So it carefully protects the interests of investors.Private placement fund has integrated advantages of efficiency value and equity value,so the gross of private placement fund has been increased and its service targets been grown and its function been improved as the development of global economic.Now private placement fund has grown to be a distinctive financial service and becomes important in economic field. However,private placement fund still has some risks.As the size of China's private placement fund continued expansion,its potential financial risks will be increasingly exposed,and then it will be a hidden threat to China's financial stability.So we must construct China's private placement fund legal supervision framework.Only this way can we formed a solid foundation for the effective regulation of private placement fund,and finally meet its investment needs and let the capital market prosperity.Studying from the perspective of law,the thesis discusses the basic supervision theory of the private placement fund and the legal system in other courties and regions.Then it analyses its development in China and the problems in funds supervision.At last,it puts forward the proposals of structuring the Chinese legal system for private placement fund based on the successful experiences of other coutries and regions.The thesis consists of four parts except preface and epilogue.The first part defines the definition and characteristics of private placement fund and limits the scope of discussion in private placement securities investment funds.Then it explains the necessity to supervision and brings forward that the supervision meets the need of evading its own risk,safeguarding our financial market and facing with economic liberalization and globalization.At last it shows target system and supervision principles to guide our private placement fund.Its targets will be guaranteeing operational efficiency,protecting investors' interests and maintaining the security and stability of financial system.Its principles will be supervision according to law,appropriate supervision and effective supervision.The second part introduces the legal system of private placement fund in Amerce,England,Japan,Taiwan and Hong Kong.It focuses on the development and supervision of private placement fund in America because its situation is more typical.Then it compares the legal system of private placement fund in these coutries and concludes some legislations and norms that we can learn from.The third part reviews the development process of the private placement fund in China,summarizes its features in present time,and shows our legislation related to private placement fund according to Trust Law,Securities Law,Company Law and Partnership Law.The conclusion can be reached that China's private placement fund supervision has just started and many basic rules are not clear such as the raising targets,the distribution,the information disclosure,the funding sources,the re-sale systems,the forms of organization,etc.The fourth part is the core of this thesis,focused on structuring the Chinese private placement fund system.This part gives proposals of five aspects according to the third part.Firstly,it limits the investor's qualification strictly and gives different restrictions according to institutional investors and non-institutional investors.Secondly,it restricts the distribution of private funds and ordains information disclosure obligations on the basis of classifying different investors. Thirdly,it restricts strictly on sources of funds,and eliminates the entry of undesirable funds.Fourthly,it establishes the re-sale system to ensure the fluidity of private funds.Fifthly,it chooses limited partnership as major organization form of private placement fund.This thesis has tow purpose.Firstly,it tries to clear the importance of private placement fund legal system and deepening the understanding of its targets and principles.Secondly,it introduces the situation and problems of private placement fund supervision in our country,and then gives some proposals to improve our supervision system.This thesis uses comparison,summarize,interpretation,and history methods to get to a reasonable conclusion.As a new type of funds,private placement fund lacks of theoretical guidance in operation.So when I writing this paper,I have referenced mature theories and practices abroad and used logical method to summarize fundamental regulatory norms of Chinas private placement fund.I deeply hope this thesis is helpful for the development of our current private placement fund.