Legal Regulation Of China's Private Equity Investment Fund

Along with the development of the economy and the continuous increase in social wealth, there has been strong desire for the accumulation of personal wealth.In order to meet the demands of different types of investors—that is, investors with different investing interests and different levels of tolerance for risk—privately-offered funds were created during the development of the Chinese security market.Compared to public funds, privately-offered funds are easier to set up, offer more flexibility in investment, are more difficult to trace, and are more likely to yield higher profits. It is said that there is a large number of privately offered funds in the security market. Privately- offered funds legalized by the Security Investment Funds Act; and the legal category of a privately offered fund is a trust。Privately-offered funds are like public-placement funds in that they are a kind of securities-investment fund. The definition of privately-offered fund is compared to the term of public placement fund,it is another kind of securities investment fund according to the means of collection of captital. Privately-offered funds, however, overcome the shortcomings of public-placement funds. They are a product of a particular stage of the Chinese securities market. On the one hand, privately-offered funds cannot be prohibited, but, on the other, they cannot be allowed to develop without regulation. Indeed, if privately- offered funds are going to flourish, they must be regulated and supervised. To regulate and supervise the privately offered funds is the esteem of the choice of market. And this will reinforce the positive functions and restrain the negative functions of privately-offered funds. It will also promote market balance and stability and help create a more mature and comprehensive fund system.This paper is divided into five parts.The first chapter explains the definition of privately-offered securities investment funds. First I discuss investment funds and then explain the meaning of privately-offered securities investment funds.The second chapter treats the features of Chinese privately-offered securities investment funds. First describes the situation of Chinese public-security funds. Here I analyze the causes for the development of public-security funds. Then deals with the history of the development of privately-offered securities investment fund in China; and describes the different kinds of privately-offered securities investment funds available in the China market; and analyzes their shortcomings.The third chapter compares the legal systems supporting privately -offered securities investment funds in several different coumtries, namely, the United States, England, the Cayman Islands, Japan, and Taiwan.The forth chapter presents proposals for the regulation and supervision of the privately-offered securities investment funds. Drawing on my analysis of the securities market and my knowledge of the experiences of other developed countries, I will suggest how privately-offered funds can be regulated and supervised within the law. This discussion covers the principles of regulation for the funds, the standards that should be set for them, the form they should take, the collection of capital, and so on。The fifth chapter deals with the construction of other informal systems. I believe two of the most important things are the construction of credit system and the education for investors.