On The Legal Supervision Of Foreign Private Equity Fund In China

PE (Private Equity Funds) is valued as an innovation of finance, and it has beenthe most popular way for financing except loans and IPO as a result of years ofdevelopment since1946. With the reform and opening-up policy, the FPE (ForeignPrivate Equity Funds) was introduced to our country in1990s, and brought funds andvitality into China’s economic development. As a developing country, our industrialstructure is still in the process of transition, which makes our economic securityfragile in front of the international capital. As a result, it is quite necessary for thegovernment to establish a proper system to supervise the FPE in order to preclude thepotential economic and society problems may be caused by the FPE. This paperpresents a feasible solution to the FPE issues mentioned above.This paper can be divided into three sections: introduction, text and conclusion.And there are three chapters in the text section:Chapter1reviews the outline of FPE. After a brief introduction to PE,thischapter puts emphasis on the partilarity of FPE,and puts forward the differencesbetween local PE and foreign PE. Besides it introduces the history of the developmentof FPE in our country, and then interprets the reasons why particular supervisionshould be put on FPE.Chapter2describes the supervision system for FPE in our country at present. Inthis section it firstly divides the supervision for FPE into two hierarchies which arecentral hierarchy and regional one. It does text analysis for central legal document inaccordance with the operation process,tax,foreign exchange and so on. And putforward the inheritance and breakthrough between the regional pilot measures and thecentral ones. After that this section comes up with the defects and shortcomings of thepresent supervision system.Chapter3presents the inspirations from the foreign countries supervision systemfor FPE, which is also the core part of this paper. First, the supervision system ofBritain and the United States will be set as examples to give background knowledgebecause PEF industry is more flawless in these two countries, and summarize theexperiences may be useful for the improvement of our supervision system for FPE.Then, suggestions about improving our supervision system for FPE, which may beuseful for legislation in the future, will be proposed, including identifying thesupervision administration, strengthen the supervision of investors and fund managers,refining investment restrictions and information disclosure, optimizing the mechanismof exit and so on.