Chinese Private Equity Funds Legal Risk Prevention

Recently, the private equity fund has developed in a high speed in all over the world, includingChina. But there is not a particular law to regulate the domestic private equity funds, so it is inevitableto bring legal risks when the private equity is being operated. In this thesis, the author, combined withmyself practice experience, takes the limited partnership for example, analyzes the legal risks of privateequity funds in set-up stage, decision-making stage, and exit stage. The author adopts comparativelyanalytical method, instance analysis.The main structure as follows: the introduction is about the reasons and meanings of this article.The first part is definition of the conception of private equity fund. The author compares the advantageand disadvantage of corporate system, trust system and limited partnership system, and then concludesthat the limited partnership system is the best choice to the Chinese private equity funds. The secondpart of thesis is the legal risks of private equity funds in set-up stage. After an organization chart oflimited partnership private equity fund, the article focus of analysis on choosing the main body ofsetting up the fund and the important terms of limited partnership agreement. The third part is the legalrisks and the previsions of private equity funds indecision-making stage. The author uses a chart toshow the investment decision-making process. Then take an instance to explain the legal risks and theprevisions in due-diligence, and the important terms of cooperation agreement is also needed to preventthe legal risks. The last part is about in exit stage, where the legal risks will be. The epilogue is thesimple introduction combing the full text.This thesis is wrote based on the latest regulations promulgated by our financial regulatoryauthorities and Securities Fund Investment Law, having a certain practical significance in operatingprivate equity funds in China.