Business Partner System Reform Of Public Fund Management Corporation In China

The earliest form of limited Partnership has emerged since the beginning of "Commenda Contract", which was a combination of the oldest "capitalists" and "adventurers". In the course of several centuries’development, the limited partnership system included in the European and American law system has been modified and developed into a common, universal and dominated economic organization form in contemporary society. Chinese corporate law did not make innovative breakthrough on its common partnership form of corporates until 1 st June 2007. The concept of "limited partnership" was initially introduced in this new "Partnership Enterprise Law", The business partnership system has utilized the concept of bearing limited reliability in operational process and sharing common benefits. The arrangement of limited reliability is set on the basis of business partners’initial investment. The "limited reliability" concept is set up with an aim of improving business owners’controlling rights towards their enterprises.For quite a long period of time, individual holdings were not allowed in China’s public fund industry. However, confronting with giant bottleneck, the public fund industry has recalled implementation of new policies. As a result, "Securities Investment Fund Law" and "Opinions about further modification approaches for enhancing management of fund management enterprises’governance issues" have been put forward. It indicates that the government has liberalized management of corporate staffs’stock ownership from policy level. China’s public fund enterprises have started reforming their partnership management mechanism since 2014. Z Corporation has become one of the pioneering enterprises that benefit from this mechanism reform. In this research paper, the researcher will adopt Z Corporation as a case study object and investigate how partnership management mechanism is being reformed within the enterprise. Following development of forming a research paper, this research is divided into five parts.In the first chapter, the researcher will provide analysis of background information of the researched topic, research significance, research objects and research methods.In the second chapter, the researchers will provide an analysis of literature review and some basic theoretical principles. In particular, the researcher will utilize the principal-agent theory to analyze several problems confronted by the case studied enterprise, including the relationship between corporate equity and control, incentive and management practices that can be applied to administrative team and managers. In contemporary enterprise management, corporate equity and actual operational rights will gradually be separated. Founder shareholders hold shares of the enterprise, whereas professional managers occupy actual controlling rights of the enterprise. The inconsistency of objective utility functions between professional managers and shareholders may result in mutual interest conflicts. Thus, agencies may create moral hazard and adverse selection problems if they merely pursuing for their own gain. In view of this, it is necessary for the enterprise to set up effective incentive mechanism, which can bind long-term interests of shareholders and executive team, as well as senior management personnel together. Through doing so, the enterprise can prevent underlying risks and achieve the goal of "win-win"In the third chapter, the researcher will provide an analysis of China’s business partnership system from conceptual, formation and mode levels. By introducing concepts of business partners, business partnership system and limited partnership law, as well as differences between business partners, corporate shareholders and professional managers, the researcher will then explicitly demonstrate core principles of business partnership system. In addition, the researcher will introduce two cases--Alibaba and Vanke and analyze their business partnership modes. In the end, the researcher will come to a conclusion of five basic conditions for enterprises to execute business partnership system.In the fourth chapter, the researcher will focus on analyzing business partnership management mode of Z Corporation. Feasibility analysis will be carried out through demonstrating change of the company’s shareholder structure and operational environment. In the meantime, the researcher will further analyze approaches that can be adopted for the Z Corporation to carry out reform on its business partnership mechanism via arrangement of the company’s equity and controlling rights, adjustment and constraints on the company’s organizational structure and arrangement of incentive system. Finally, the researcher will make quantified comparative analysis between Z Corporation and T Corporation, the latter of which has similar shareholder structure with the former. However, T Corporation did not execute reform on its business partnership mechanism. In the end, the researcher will come to a conclusion that business partnership mechanism is one effective operation that suits reforming need of Z Corporation. It plays a vital role in expanding management scale, improving fund performance, increasing sales revenue and decreasing turnover rate of core employees.In the fifth chapter, the researcher will put forward major findings and some limitations of this research. The research result is perceived as effective for providing theoretical and practical guidance for China’s public fund corporations. However, during actual operational processes, different fund corporations should formulate their own mechanisms based on varying differences, like shareholder background difference. It is widely believed that the most suitable one is the best one.