Private Equity Investment Fund Legislation

Private equity investment fund develops very fast in China, and has outstanding influence on the capital market and the whole society. While due to lacking of law to regulate and instruct it, there are many problems in practice, which have blocked its development, and it's an urgency to legislate. On the basis of analyzing the necessity of legislation, this paper tries to conceive basic rules for the fund on its organizations and activities.This paper includes introduction, body and conclusion. Introduction is about the background and meaning of choosing this topic, which is the demand for regulation as the fund needs laws to rule it while lack of such laws, and also meeting the requirement of balance between market self-control and law regulations, and about the study methods of this article.The body contains four chapters. ChapterⅠis about some concepts, and defines the meaning of securities, making sure that equity vouchers are also securities. In this way,it's possible for private equity investment fund to apply the securities investment fund law. After that, it defines private equity investment fund in this chapter, and compares it with private securities investment fund and public securities investment fund. ChapterⅡanalyzes legislative problems. This part adopts the method of qualitative analysis, analyzing the differences of cost and revenue taken place under market self-control and legislation regulation respectively, and is sure of the need to legislate. Then, details our country's laws that are applicable to the fund and problems that to be solved. Last, from the aspects of authority, stability and credibility, this paper suggests legislating by amending active laws rather than enacting a law. On the issue of whether private equity investment fund and private securities investment fund are applying the same rules or differently, it comes to the end of applying laws separately. ChapterⅢsets forth several countries' and Taiwan district's legislations of the fund, in which the fund has good landscape, in the hope that they would be useful for Chinese Mainland's legislation. ChapterⅣconceives basic rules to regulate the fund, containing qualified investors, fund managers, fund raising, share exchange and put provision four parts, qualitatively designing rules about investors'qualifications, counting the number of investors, legal consequences of investors not capable, fund managers'qualifications, information disclosure, raising procedures, shares exchange and put provisions.After all these comprehensive argumentations, the conclusion of this article is, it is necessary for legislators amending active laws to regulate the private equity investment fund, and during the time of conceiving rules, there are two principles to abide by, which are balancing principle and cost-benefit principle. Only in this way can it protects investors'benefits and public interests, and also promotes the development of the fund, which has a good effect on the economic and society.