The Legal Effect Of Equity Repurchase Terms In Private Equity Investment

Private equity (Private Equity Investment, hereinafter referred to as PE), is a kindof investment capital market in recent years gradually on the rise, but becauseinvestors often lack an adequate understanding of the invested enterprise, it caused thelarger investment risk. In order to meet the requirement of the capital market, toreduce the investment risk, equity repurchase clause arises. However, this type ofagreement or clause formed a challenge to the basic concepts in civil law, itslegitimacy is often questioned, coupled with China’s laws on share buy back clauseconcerning the validity of the less, in practice the formation of more disputes ordisputes between investors and financing enterprises around the "equity repurchaseclause" is often difficult to get recognition and the implementation of justice. Basedon analysis of the effectiveness of PE share buy back clause legal problems for thepurpose of the study, purpose, essence from the provisions of the signing of the typesof gambling, terms common, characteristics, essence of the summary, for the PE sharebuy back clause under the condition of different effect, illegal PE equity repurchaseterms of different types were compared and gradually into the dispute to judge thevalidity of practice, do in-depth analysis on whether the provisions in violation oflaws and administrative regulations such as mandatory, finally put forward the need ofprivate equity investment fund investment development and existing execution PE equity repurchase clause obstacle etc. to put forward suggestions and risk prevention.This paper is divided into three parts.Legal relationship and the nature of the first part is an overview of the PE sharebuy back clause, summarizes the basic principle of PE is explained in terms of the useof repurchase shares, the legal relationship of the basic theory of law constitute thecontent, content analysis and the legal nature of PE share repurchase legalrelationship;The second part is the main body of this point of view, through the summary ofPE equity repurchase terms of legal effect of basic identification, main types ofcombing PE equity repurchase clause and its effectiveness, around the PE equityrepurchase clause company, limited partnership and trust type to analyze, finally to PEequity repurchase terms force of all kinds of argument are summarized;The third part of the combination of legal practice, the legitimacy of the PEequity repurchase terms are analyzed, the analysis summarizes the type is invalid PEequity repurchase terms and related relief way, reduce legal risks at the same time asthe use of equity repurchase terms and puts forward some suggestions, which does notdamage in PE share buy back clause premise of social public interests and mandatorylegal norms, should try to judge the validity of the terms of the contract, as well as thelawyer summarizes risk prevention experience in practice.At the end of this paper, it summarized and reflect the thoughts and viewpoints.