A Study On The Legal Protection System Of Limited Partner Interests In Private Equity Funds

Private equity funds as imported goods in China have experienced rapid development ina few years. Although thriving in the industry, we still cannot ignore the potential problem ofthe private equity fund industry. Despite the limited partners in private equity funds are majorinvestors, they still live in a weak position, and their own legitimate rights and interests oftencannot be protected. This article is trying to explore the concept of private equity fund,analyze and summarize the causes and manifestations of the limited partner interests’infringement from the practical and theoretical perspectives. Drawing on the basis of theexperience of the British and American private equity fund regulatory reform, this article putsforward suggestions for improvement of the system of legal protection of limited partnerinterests in private equity funds.Besides the introduction, epilogue,references,postscript,there are four major sections in this context.The first part is overview of the limited partner of the private equity fund. Firstly, startfrom the concept of limited partner of the private equity funds, it clarifies two core conceptsof the private equity funds and limited partnerships and combines the three main issues ofprivate equity funds. Secondly, for discriminating the limited partnership and corporateprivate equity funds, emphasizing the basic subjects of this study limited partnership limitedpartners of private equity funds. Finally, it summarizes the three characteristics of the limitedpartners in private equity funds.The second part，investigation of the infringement of limited partner interests in privateequity funds by the. Firstly, because of the asymmetry of information, the lack of a generalpartner of the limited regulation, reputation mechanism and the absence of the Trophy system,the interests of the limited partners would be hurt by the general partner. Secondly, frompractice, analysis the main forms of how limited partner interests be hurt by general partnerfrom a number of private equity funds chaos and case analysis. Finally, it aims to clarify thepositive significance of the protection of limited partner interests.The third part, research and learn from the private equity fund limited partner interests inthe legal protection system the extraterritorial. Britain and America, two of the mostdeveloped countries in PE industry, have a sound system of legal protection of limited partnerinterests in private equity funds. In recent years, under the influence of the financial crisis, thetwo countries have taken large financial reform measures, and made great impact on private equity funds. After analysis of relevant systems of the two countries, the author learns someadvanced concepts and systems from the two countries.The part IV, some recommendations on private equity fund limited partner interests inthe legal protection system improvement. Firstly, put forward suggestions from the legislationof the relevant laws in macro. Secondly, establish and improve the level of SEC as the core ofthe external regulatory and industry self-regulation as the core of China Private EquityAssociation. Finally, put forward suggestion to improve the internal governance practices ofprivate equity funds at micro level.