A Comparative Study On International Practices And Country-specific Regulation Of Private Equity Fund

By conducting a comparative study on international practices and associated country-specific regulation system of private equity fund sector, this paper aims to explore its common rules which could be introduced into China. During the course of study, author accessed plenty of original work, systematically investigated relevant domestic law and regulations, and echoed with real cases.This paper argues that private equity investment is derived from the interactions between long-term equity investment demands and long-term capital allocation needs. To balance the interests between demand and supply, private equity fund as a legal form, is introduced. Nevertheless, the complicated transaction terms, information intransparency, poor liquidity and high uncertainties in earning make private equity fund not suitable for general investors. The private placement to sophisticated investor is regarded as a "Must" for private equity fund raising. The most optimal arrangements could always be reached between fund manager and professional investors; whilst, what government needs to do is to direct the outcome of the best practices through business-pro regulations and taxation, and to exclude investors without knowledge to identify risks or capability to assume risks.In the last chapter, this paper systematically recap China’s private equity sector, its present situations, legal formation, capital flow control, tax burden, investor suitability and regulation framework, and raise proposals concerning a sophisticated policy system for private equity sector of China.