Research On Chinese Legislation Of Investment Tools Used By PE

From the micro perspective,private equity funds(PE)can provide the target enterprises with various important resources,such as capital,knowledge,experience,brand,social relations,etc.,and can help the target enterprises grow rapidly.For instance,Chinese Alibaba,JD and Baidu all rapidly grow with the help of PE.From the macro perspective,PE invest in the high-tech field facing the mankind future,which is significant to the development of global economy.For example,Apple and Tesla which have made epoch progress in the field of communication and automobile,are all benefited from PE.However,except common stock,the Chinese legislation on preferred shares,convertible debt,stock option,and differential voting shares,which are four kinds investment tools most commonly used by PE,is very imperfect.As a result,some transactions have to be based on the private law principle of "no prohibition by law means permission";or some transactions have to go to Hong Kong of China,Cayman Islands and other jurisdictions where the legal system of investment tools is well supplied;or some transactions have to choose the second-best trading scheme.All of these have greatly increased the transaction cost,reduced the transaction efficiency,and created transaction obstacles,which is obstructive to Chinese enterprises rapidly growing with the help of PE,and which is also obstructive to the development of Chinese native PE.Therefore,how to improve the Chinese legislation on investment tools such as preferred shares,convertible debt,stock option,and differential voting shares is a very important issue.There are three parts of the thesis.The first is an overview.First,the concept,development history,functions,characteristics of PE are introduced.Second,the four most commonly used investment tools by PE,preferred shares,convertible debt,stock option,and differential voting shares,are separately introduced.In order to explain why the most commonly used investment tools by PE are preferred shares,convertible debt,stock option,and differential voting shares,the law and economics analysis is made by using the asymmetric information theory and the incentive and restraint theory.Third,the legislation reasons and characteristics of other jurisdictions(HK of China,UK,US and Japan)on the investment tools used by PE are introduced.Forth,the Chinese current legislation on each of preferred shares,convertible debt,stock option,and differential voting shares is separately introduced.Laws,administrative regulations,departmental rules on each investment tool are researched.The second part is the problems in Chinese legislation.First,the general problems in the Chinese legislation on the investment tools used by PE are analyzed.Second,the specific problems in the Chinese legislation on each investment tool of preferred shares,convertible debt,stock option,and differential voting shares are separately analyzed.The third part is the legislation experience of other jurisdictions and Chinese legislation suggestions.First,the legislation necessity,purpose,basic principles and path of Chinese legislation on the investment tools used by PE are explained.Second,the current laws of Hong Kong of China,the United Kingdom,the United States and Japan on the investment tools used by PE are researched.Then,based on the above legislation experience of other jurisdictions,suggestions are put forward to improve the Chinese legislation on the investment tools used by PE.After the above research,this thesis draws the following conclusions.First,it is suggested to introduce the system of class shares and class rights into Chinese company law,so as to perfect the legislation on investment tools of preferred shares and differential voting shares.Second,it is suggested to introduce the system of stock option into Chinese company law and to allow the stock option to be combined with other investment tools to form compound investment tools,so as to perfect the legislation on the stock option and its related compound investment tools such as convertible debt and convertible preferred shares.Third,everything is a dialectical unity of advantages and disadvantages,and so is the legal system.In order to give full play to its advantages and limit its disadvantages,it is suggested to introduce the system of compulsory publicity and timely registration of class shares and class rights into Chinese company law to protect the public interest.At the same time,when it comes to public companies with great social impact,according to the principle that special laws are prior to general laws,it is suggested that restrictive provisions need to be made in the securities law and the exchange rules to protect the public interest.Forth,along with the global modernization reform of company laws,it is suggested to renew Chinese legislative concept of company law,to replace the traditional legislative principle of big companies first with the modern legislative principle of small companies first,and to replace the traditional legislative classification of limited liability company and joint stock limited company with the modern legislative classification of public company and non-public company.