Research On The Protection Of Limited Partners’ Rights In Private Equity Funds

Since 2014,with the improvement of private equity fund related regulations,private equity funds have entered the stage of rapid development,but the back side of the rapid development is that the private equity funds have recently shown the development trend of "brutal growth".The Fuxing private fund case that occurred in 2018 exposed many typical problems,such as frequent fund payment crises,repeated abuses by fund managers,and significant deficiencies in the protection of limited partner rights.Under this background,how to improve the protection of the rights of limited partners of private equity funds is an urgent problem to be solved.In addition to the abstract,introduction and conclusion,this thesis is divided into five parts.The first part aims to find questions from the case.In this part,Fuxing Fund is selected as the typical case and we will analyze the reasons for the infringement of limited partners’ rights from the factual level by combing the case,and summarize the typical acts of fund managers,such as the excessive rights of fund managers in partnership private equity funds,the unequal status of limited partners and fund managers,and inadequate regulatory mechanisms,resulting in low costs for fund managers.The second part is an analysis of the inadequacy of limited partner rights protection based on the existing regulatory system.This part will first comb through the existing private equity fund legislation and enforcement in China,and summarize the legislative and enforcement features under the existing private equity fund regulatory system in China,and then analyze the main problems of the existing legislation,including: unreasonable entry threshold for private equity funds,the standard is too high for qualified investors and at the same time too low for fund managers,the formal review of the filing system is not sufficient to identify potential risks at the entry stage;The restraint measures of fund managers have limited effects and are not sufficient to deter illegal activities;non-compulsory trusteeship brings operational space for circumventing supervision,and the legal status and regulatory mechanism of supervisory agencies are not clear.The third part is based on the importance of fiduciary duty in the protection of the rights of limited partners.It will be a separate chapter.There is a fiduciary relationship between the fund manager and the limited partners.The fiduciary duty can minimize the operation of the fund,so it is legitimate and effective for the fund manager to assume the fiduciary duty.China ’s laws have relatively strict provisions on fiduciary duties.This thesis combines the characteristics of professionalism,complexity,and high risk of private equity funds to refine loyalty obligations into fair trading,fair treatment,and prohibition obligations on competition;Invest prudently,review investors’ suitability and manage their obligations personally.So that the principle of fiduciary duty is fulfilled.The fourth part intends to make suggestions on protecting the rights of private equity fund limited partners from other perspectives,including redefining the criteria for admitting private equity funds,for qualified investors,considering the particularity and professional capabilities of certain special asset values,and stricting the entry requirements for fund managers;strengthening the supervision of private equity funds,and disclosing information disclosure Actually,introduce a whistleblowing system to provide law enforcement clues and increase administrative penalties;establish a liability system for custodian institutions based on the principle of fault liability,and delineate the scope of funds that can be exempted from custody.Through analysis,the thesis concludes that the protection of the rights of limited partners must take into account the efficiency of the operation of private equity funds and the balance between the status of limited partners and fund managers.Implementing fiduciary duties,strengthening supervision and perfecting trusteeship are the efforts of limited partners to protect their rights.