The Research Of Private Equity Funds In Trust Form

In the development process of China’s market economy, capital markets play animportant role in the allocation of resources. However, the low efficiency of theoperation of capital markets and the unbalanced development of capital markets affectthe resource allocation. Private equity funds build a bridge between the investors andthe financing party. The development of private equity funds can enrich China’scapital market, improve the current situation of high proportion of indirect financingand promote the economic development. At the same time, through the platform ofprivate equity funds, small and mediun enterprises can overcome the financingbottleneck, introduce the advanced management mode into the enterprise, andpromote business development. With the accelerated development of China’s privateequity funds, private equity fund in the trust form gradually comes into view. After thepromulgation of Measures for the Administration of Trust Companies’ Trust Plans ofAssembled Funds Trust, Measures for the Administration of Trust Companies and theGuidelines for Trust Companies to Operate the Trust Private Equity InvestmentBusiness, the private equity funds in the trust form ran into the fast track. In theprocess of development, the private equity funds in the trust form in practiceencounter a series of questions which need to be resolved, e.g., investers pay toomuch attention to the investment income while neglect the investment risks; trusteesare kind of not bounding by the investment process; the mechanism of generalbeneficiary meeting is useless and does not effectively supervise the behavious of the trustees; the rights of the investment adviser of the fund is too large and lacks ofrestraint mechanisms; trustees’ due diligence are mere formality and do not find thereal issues in the due diligence process; the fund’s information disclosure mechanismis not perfect.At present, academic research for the limited partnership private equity funds aremore abundant, but studies for the trust private equity fund are relatively few.Therefore, the study of the defects of the legislation of the private equity funds in thetrust form, and learn from the mature experience of foreign countries and further putforward legislative proposals to improve the private equity funds in the trust form hasa very important practical significance. The general idea of this thesis is: starting fromthe basic concept of the trust private equity fund characteristics, combined withproblems in practice, the thesis analyses the parties and their legal relationship of theprivate equity funds in the trust form from From a static perspective; from a dynamicperspective, combined with current practice, the thesis analyses the operation and exitmechanisms of the private equity of the trust system.This thesis is divided into four parts.The first part briefly described the basic concepts and characteristics of theprivate equity funds in the trust form, in the partnership form, the private equity fundcompany system analysis reveals that the unique advantages of the private equityfunds in the trust form. In addition, this section also describes the theoretical basis ofthe internal governance structure of the private equity funds in the trust form, withexamples to analyze the internal governance structure.The second part studied the legal relationship between the principal of the privateequity funds in the trust form in-depth. Explained the basis of trust and legal relations,carried out a detailed analysis of the trustor, trustee and beneficiary of the mainqualifications. At the same time, this part of empirical research and comparative lawresearch, important rights and obligations of the three types of main-depth study andattempt to make recommendations to improve the legislative.The third part systemly studied the establishment and operation of process of theprivate equity funds in the trust form. Combined with the problems of the private equity funds in the trust form in the practical operation, this part analyses duediligence, the choice of the fund’s internal mode of operation, the determine thecooperation partners, the conclusion of the legal documents, the management of trustfund projects, and then tries to make sound recommendations.The fourth part analyzes the exit mechanism of the private equity funds in thetrust form. This part analyzes the exit mechanism, and mainly focuses on exitmechanism of the equity funds in the trust form, the legal obstacles of suchmechanisms and alternatives ways of such exit mechanisms. Then this partycompared the advantages and disadvantages of the different exit channels. Based onanalysis above, this part trid to made proposals to improve the exit mechanism of theprivate equity funds in the trust form.