Private Equity Investment Funds Out Of The Legal System

During the whole process of private equity funds (PE), the exit of capitals is quite essential. Only if the private equity funds can be smoothly exited from the investing project and get high profits, can more capitals be attracted to invest in PE. The exit of PE requires a high-level legal system. Whether the legal system is sound or not is a crucial element for most PE investors in concidering investment. The PE industry in China is newly developed and the legal regulations are far away from perfect, which legally hinders the exit of private equity funds and the development of the whole industry.The paper probes into this issue from five aspects:The first chapter points out the concept and the related theories of the exit of PE, and then analyzes the system arrangement of the exit of PE fund from both macro and micro perspectives. While the micro perspective focuses on the compact arrangement of the quasi-legal attributes between the investment entities, the macro perspective of exit mechanism emphasizes the establishment of the legal system for capital market. The macro one is the main target for the essay as follows.The second chapter comes to the importance of the exit of PE by st??g the mechanism of PE. Then four exit channels are discussed: Initial Public Offering(IPO), mergers&acquisition, shares buy-back and write-off. Meanwhile, a comparison between the advantages and disadvantages of the four exit channels is delivered, which sets up a theoritical platform for research on the legal system of PE.The third chapter introduces the related laws and regulations on the exit of PE of other countries, specializing on the legal design of exit of PE in the United States and main second-board markets in Europe.The fourth chapter introduces the current situation and the legal regulations of the exit of PE in China. After the introduction of the current situation, an micro-analysis of legal obstacles on the four exit channels of PE in China is presented.The fifth chapter envisages an imporved legal system for the exit of PE in China.