Research On Validity Of Guaranteed Profit In Private Fund

On February 17,2022,the Shanghai Financial Court issued the Report on the Prevention of Legal Risks in Disputes over Private Funds(the "Report")to conduct statistical analysis of private fund-related cases concluded by courts in Shanghai from2016 to 2021.The statistical data showed that 28.41% of all private fund-related cases were cases involving principal-return commitments.It can be said that against the background of the introduction of many normative legal documents by multiple departments,there are still various minimum guarantee clauses of private funds in practice,such as margin financing agreements,share repurchase agreements,guarantee provided by inferior beneficiaries for priority beneficiaries,etc.,and there are many litigation disputes caused by them.Due to the fact that the existing legal provisions on the minimum guarantee clauses of private equity funds are not directly directed against their effectiveness and are difficult to cover all the circumstances of the minimum guarantee clauses of private equity funds in practice,although the relevant regulations have made clear provisions on prohibiting the minimum guarantee clauses of private equity funds,it is difficult for the court to directly invoke the minimum guarantee clauses as the basis for determining the effectiveness of the minimum guarantee clauses due to its effectiveness level,so the court often uses the principle of fairness and damages the public interests when it determines the effectiveness of the minimum guarantee clauses.However,these adjudicative reasons are relatively abstract,and the validity of the minimum guarantee clauses depends on the judge’s value judgment,which leads to different effects of judicial practice on the minimum guarantee clauses.Since the judicial decision on the minimum guarantee clause can send a signal to the financial market and affect the behavior of the financial market subjects,it is of practical significance to regulate the judicial determination of the minimum guarantee clause of the private fund.This article mainly divides into four chapters,the first chapter is elaborates to the private placement fund bottom clause potency present situation.Taking the relevant cases of disputes over the effectiveness of minimum guarantee clauses of private equity funds collected in the database of "Wolters Kluwer" as the inspection sample,through analyzing the sample data,it is found that the judicial determination of the effectiveness of minimum guarantee clauses of private equity funds is not uniform and other problems existing in the process of judicial determination;Chapter II mainly evaluates and analyzes the reasons for the denial of the effectiveness of minimum guarantee clauses of private equity funds in judicial practice,namely,damage to public interests,violation of the principle of fairness in civil law,violation of prohibitive provisions in laws and regulations,and violation of the principle of "benefit-sharing and risk-sharing" of private equity funds,and analyzes the effectiveness of the minimum guarantee clauses of private equity funds from the empirical level;Chapter III analyzes the effectiveness of the minimum guarantee clauses of private equity funds from the natural level by analyzing the mainstream theory on the effectiveness of the minimum guarantee clauses of China,elaborating the reasons for the occurrence of the minimum guarantee clauses of private equity funds,and analyzes the effectiveness of the minimum guarantee clauses of private equity funds from the natural level,arriving at the conclusion that the minimum guarantee clauses should be adopted on the basis of reality that should not be denied in whole,and differentiating the minimum guarantee clauses provided to different subjects by the "limited recognition theory";Chapter IV is the suggestions on the determination of the effectiveness of the minimum guarantee clauses of private equity funds.First of all,the court should change the minimum clause of the validity of the ruling thinking.In the face of financial innovation,judicial decisions should not be dependent on regulatory policies,should not rigidly apply existing laws and regulations,and should not avoid the difficulty in determining the effectiveness.Secondly,it is proposed that the court should identify the effectiveness of the minimum guarantee clause in a typified manner,the effectiveness of the minimum guarantee clause with the fund manager and its affiliated parties as the obligors should be denied,and the effectiveness of the minimum guarantee clause with external third parties as the obligors should be recognized.Finally,it is proposed that the court should identify the invalidity of the minimum guarantee clause through analyzing the rationality of the public order and good customs as the judgment of the effectiveness of contracts.