The Legal Definition Of Private Equity Investors In China And Supervision

Of all the fund-raising approaches in Chinese financial market, private fund is relatively special. It develops alongside mutual fund, but it seems to exert a deeper influence on market because of its relative exemption from supervision. Currently, facing the huge demand on capital for industrial innovation, the multi-layered construction of financial system and the pressure engendered by foreign financial magnates, Chinese decision-makers have once again realized the huge potentials of private fund as a financial means. However, up to now, there is no systematic legislation concerning the standardization and development of private fund in China. This thesis points out that it is an urgent requirement for the development and shielding from financial risks to legitimize and explicitly define private fund as well as to establish a supervising system that is different from the one over mutual fund. During the whole process of legislation, the primary phase for the standardization of private fund development is to explicitly define the investors of private fund, which will also provide a practical and manageable standard for its supervision.This thesis consists of four chapters. Chapter One explores the connotations of private fund from the aspects of its legal definition and arrangement in legal system; Chapter Two discusses the reasons for a rigorous restriction on private fund investors from the perspectives of theoretical origins and the experiences of existing mature systems; Chapter Three analyzes and points out the harms incurred by the ignorance of the qualification procedures of private fund investors in the legislative activities and actual operations during the past decade. Chapter Four suggests some concrete measures to be taken based on an analysis of the legislative difficulties in the legal definition and supervising system of Chinese private fund investors.