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The Legal Analysis On The Improvement Of Internal Governance Of Limited Partnership Private Equity Fund In China

Posted on:2014-03-03Degree:MasterType:Thesis
Country:ChinaCandidate:J WangFull Text:PDF
GTID:2296330425480093Subject:Civil and Commercial Law
Abstract/Summary:PDF Full Text Request
The Private Equity Fund (hereinafter referred to as PE) is originated in the United Statesbetween the late nineteenth Century and the early twentieth Century. The earliest practice ofapplying limited partnership system to the set-up of a PE occurred in the United States in1958when the first limited partnership venture capital institution–Draper, Gaither&Anderson was established. The limited partnership system is favored by large internationalPEs due to the preferential tax policy, the flexible governance mechanism, and less restrictivelaws and regulations. In developed European countries, North America, and Latin America,limited partnership has become the main form of PE. In our country, the concept of "industryfund" is similar to the concept of PE. Guided by state policies and laws and supported bysome scholars, the limited partnership system developed slowly in China while the companysystem is still the dominant mode of PE. Nevertheless, PEs in China are expected to adopt thelimited partnership system more frequently thanks to the influence of the internationaldevelopment trend and the improvement of the country’s credit system and limitedpartnership system. Internal governance is the key to the development of enterprises and alsothe foundation of the development of PEs. However, it has long been a weakness of China’senterprises. The promulgation of Partnership Enterprise Law of the PRC(《合伙企业法》)legalizes the limited partnership system, but the practice of the system is still on the earlystage.To avoid congenital deficiencies caused by the strategy of first development and latertreatment,the internal governance of PEs in China should be improved based on generaltheories of corporate governance,the system of limited partnership and fundamentals of PE’sinternal governance. Specifically, efforts should be made in making laws and regulationsconcerning limited partnership PEs, in improving internal organization of PEs and in reachingpartnership contracts.The improvement of internal governance of the limited partnership PEs can promote the development of PEs, foster the progress of related legal systems, accelerate thetransformation of the mode of economic development and upgrade the industrial structure.This thesis is based mainly on the legal research on the subject. It raises, considering thesituation in reality, the problem of internal management of the limited partnership PE andputs forward some improvement strategies on the basis of deep analysis from the angle of theexternal basic conditions of internal governance of the limited partnership PE, the internalcontract design and the setting of organization.This thesis has a preliminary and a text consisting of five parts.The preliminary first introduces the history and the current status of PEs. And then itdiscusses the purpose, the practical value, the theoretical significance, and the main methodof the research on which this thesis is based.The first part of the text discusses the concept and the essence of PE and the theory ofinternal governance of the limited partnership PE. It begins with the concept and the essenceof PE,and then discusses the general theory of corporate governance as the basic theory ofcorporate governance of the limited partnership PE. At last, it points out the theoretical basisof the internal governance of limited partnership PE.The second part describes the features and advantages of the internal governance of thelimited partnership PE in comparison to the company system, and it analyzes the two majormechanisms of internal governance, namely, the incentive mechanism and the restraintmechanism.The third section briefs the development and problems of the limited partnership systemin China. And then it clarifies the necessity of applying limited partnership system to the PEand the difficulties concerning such application. At last, it illustrates several major problemsappeared in the internal governance of PE and the causes of those problems.The fourth part advances some strategies to improve the internal governance of thelimited partnership PE. Those strategies include the improvement of basic conditions whichaffect internal governance, the perfect design of partnership contracts and reasonable settingsof internal governance institutions.
Keywords/Search Tags:limited partnership, private equity funds, internal governance, contract, institutional settings
PDF Full Text Request
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