Legal Analysis On Development Dilemmas Of Trust-type Private Equity Fund

The trust-type PE fund is a kind of PE fund which is established on the trust system.It has trust and private equity's charactristics.Its basic legal relationship is the trust legal relationship.In China,trust-type PE fund has experienced a development process from the unclear legal status to legalization,it faces development difficulties in the areas of beneficiary conference,internal governance and investment exit.The article is divided into four parts respectively.The first part is the connotation and classification of trust-type PE fund.Firstly,explore the definition,characteristics,and analyze similar things in trust-type PE fund.Secondly,compare different types of PE fund systems.Thirdly,divide trust-type PE fund into single-trust mode,structure-trust mode and nested-trust mode.The second part is the dilemma and improvement of the beneficiary conference of trust-type PE fund.Firstly,analyze the dilemma and causes of the trust-type PE fund beneficiary conference.The common problem of the singular,structure and nested-trust mode is being subject to the legislative shortcomings of the beneficiary conference——there is a lack of legal provisions for the collective decision-making legislation,the legal status of the beneficiary conference has shortcomings,and the illegal operation regulations.An unreasonable diversion of beneficiary rights to intensify the contradiction between the priority and the inferior beneficiaries;in the nested-trust mode,the beneficiary conference progression cannot directly play a role.Secondly,put forward suggestions for improvement——convene a concealed voting platform for the beneficiary conference;modify the beneficiary conference to vote for more than two-thirds of the participants before voting,and you can learn from the cumulative voting system;the trust law should stipulate the beneficiary conference system,enhance its legal status,and establish internal punishment mechanism and contradictory resolution mechanism.Finally,the optimal state of the trust-type PE fund's beneficiary conference operation is discussed.The third part is the dilemma of internal governance of trust-type PE fund.Firstly,analyze the internal dilemma and causes of trust-type PE fund.The common problem of singular,structure and nested-trust modes is the imbalance of internal governance——the internal risk control has moral hazard problems,the investment decision-making committee mechanism should be normalized,fund raising and income distribution mechanism should be normalized,lack of prudent administrationmechanism for trust property.The problem of internal risk control in the singular trust mode is particularly serious;the structure-trust mode is particularly problematic in terms of fundraising and income distribution;the nested-trust mode is particularly problematic in the cautious management of trust property.Secondly,propose improvement suggestions,improve the internal risk control of trust governance through self-monitoring mechanism and corporate culture construction;speculate decision-making committee by optimizing member institutions and internal checks and balances mechanism;and negotiate the fund raising regulations and income distribution by complying with the trust law;the cautious management mechanism of trust property is established by drawing on the prudent investor rule and the Basel II.Finally,the optimal state of the trust-type PE fund's internal governance is discussed.The fourth part is about dilemmas of the trust-type PE fund's investment exit.Firstly,analyze causes of trust-based PE fund's internal dilemma.The common problem of singular,structure and nested-trust mode is investment exit being blocked.When trust-type PE fund tries exit through IPO,it will face the supervision,will be requested to clean up trust shareholders.When the singular trust mode applies for an IPO,it belongs to the "three types of shareholders" problem,which violates the ban on the shareholding of the listed company and faces the shareholder penetration supervision.The structure-trust mode is suspected of affecting the stability of the financial market due to the diversion of its beneficiary rights,it does not meet the surveillance requirements.The nested-trust mode,the trust participates in the establishment of a limited partnership or company,then applies for an IPO,there is no trust in the company's shareholder list.However,the nested-trust mode still faces penetrating supervision,the regulatory authority will clean up trust shareholders under nested carriers.Secondly,propose suggestions for improvement——first,reform of penetrating supervision,in view of the positive effect of social direct financing of trust-type PE fund,can adopt gradual reforms,allowing the trust to hold a certain proportion of the listed companies to over-represent;second,develop multi-level capital markets expand the investment channels of trust-based PE fund;third,coordinate investment exit supervision conflicts under China's financial division mode,and prevent different regulatory departments of trust-type PE fund;four,establishing a unified investment supervision system to balance financial innovation and financial stability,it is necessary not only to learn from the experience of FCA financial supervision of the UK,but also to learn the historical lessons of umbrella trust supervision in China.Finally,the optimal state of trust-type PE fund investment exitis discussed.