Legal issues of shallow partnership private equity funds share pledge

1. The concept and characteristics of a partnership private equity fund

Private funds (Private Equity Fund), first originated in the end of the 19th century, appeared in venture capital, mainly invested in the construction of basic industrial facilities, including railway construction, oilfield development and automobile manufacturing. After the 20th century, after the global economy, private equity funds gradually developed into a mature industry. So far, in the global modern financial industry, private equity funds have become one of the most important financial derivatives. Although my country's local private equity funds started late, they are active in my country's capital market with a strong momentum. According to the latest monthly report data disclosed by the China Securities Investment Fund Industry Association (hereinafter referred to as the "China -Foundation Association"), as of the end of May 2022, there were 132,736 durable private equity funds registered, and the scale of the duration fund was 19.99 trillion yuan.

Among the above -mentioned private equity funds filed by the China -based Association, the most widely used private equity funds are the form of limited partnerships. The private equity fund of my country's limited partnership is based on the "People's Republic of China Partnership Law" (hereinafter referred to as the "" Partnership Enterprise Law ") as the basis, consisting of ordinary partners and limited partners. The general operating model of private equity funds is the reason for ordinary partners to invest a small amount of funds directly and serve as a private equity fund manager. It is mainly responsible for the daily operation and investment management of partnerships, and undertakes unlimited joint responsibilities; investors will inject capital as a limited partner, not directly Participate in or intervene in the management and operation of the fund, obtain the income in accordance with the agreement of the partnership agreement, and bear limited liability within the scope of its funding.

Second, the feasibility of partnership private equity shares for pledge

(1) Analysis from the nature of the texture

The nature of my country's academic community has basically formed a unified identification standard for the nature of quality rights, that is, when the three major requirements of property, transferable, and qualitative quality are available, they can be used for pledge.

1. Property. In short, the right requires economic value and can be measured with money. At the same time, it is necessary to have a certain exchanges. The reason is that the main purpose of the establishment of pledge is to achieve the claims of the guarantee after the price change. Therefore, the possibility of the price change of rights is also an important criterion for judging property.

First of all, the "Partnership Enterprise Law" adopts the concept of "property share" to represent the rights and interests of the partners. The partners enjoy the distribution of investment income according to the proportion of their property shares or the agreed proportion of the partnership agreement. Obviously, the distribution of benefits can be measured by money measured by money, and its corresponding rights have the same property as other rights that are suitable for quality.

Secondly, Article 46 of the "Securities Investment Fund Law of the People's Republic of China" (hereinafter referred to as the "Fund Law") has defined it as property rights, that is, the fund shares holder enjoy the share of the fund property income, participate in the distribution and liquidation of the distribution and settlement The property rights of the remaining fund's property, transferring or applying for redemption in accordance with the law, or apply for the property rights of the fund shares they hold.

2. Transferred. In the same article, the value of the price change is not only reflected in its property, but also reflects the transferability of rights. Therefore, even if there is a certain economic value, if the rights cannot be achieved, the standards that still do not meet the rights.

Article 73 of the "Partnership Enterprise Law" stipulates that limited partners transfer their property share in limited partnerships, but the premise is in line with the agreement of the partnership agreement. In other words, as long as the holder of this share does not violate the terms of the partnership agreement, it can freely dispose of its share, and the rights are not limited by any restrictions. Moreover, the restrictions on general rights are special. If coercive measures have taken coercive measures such as being seized, frozen or other agreements, the prohibition is clearly stated. Otherwise, the share of the limited partnership private equity fund will not lose its transfer value when there is no special situation.

At the same time, the fund share specified in Article 46 of the Fund Law can be transferred in accordance with the law according to law, which further determines its transferable nature.

3. Outstanding. Generally, the types of guarantees that can be used for quality will have clear legal and provisions. For example, real estate can only achieve guarantees through mortgage, and real estate and other rights are generally applied to pledge rights. Therefore, under the premise of meeting property and transferable, if it is not regulated in relevant laws and regulations, it cannot also be the target of the rights of rights.

At present, the share of partnerships of private equity funds has made explicit regulations on the corresponding laws of the quality and will be explained in the next paragraph.

(2) Analysis of the establishment level of the priority rights

1. The scope of the bidding of the matter stipulated by the law

Article 44 of the "People's Republic of China" (hereinafter referred to as the "Civil Code") stipulates that the following rights that the debtor or third party has the right to punish can be produced: (4) Fund shares and equity that can be transferred to the transfer of funds can be transferred. (7) Other property rights that can be produced by laws and administrative regulations.

In response to the definition of the "fund share", my country's "Fund Law" was first entered into force since 2004. Due to the lagging development of private equity funds, the scope of the fund at that time only pointed to the "public fundraising fund (that is, public fund)"; After twice in 2015, it has clearly included the "non -public fundraising funds (that is, private equity funds)" into the scope of legal norms.

Therefore, no matter from the perspective of legal interpretation and law, private equity funds should belong to the "fund share" scope described in the Civil Code. 2. The pledge that can be implemented in accordance with the law

Article 443 of the "Civil Code" stipulates that when the fund shares and the equity are out of quality, the matter is established when the pledge is registered.

Article 72 of the "Partnership Enterprise Law" stipulates that limited partners can produce their property share in limited partnerships; however, except for the partnership agreement. This article stipulates that the most direct legal basis for the quality of the share partnership property shares. According to the provisions of this article, unless the partnership agreement clearly stipulates that the limited partner shall not put their partnership shares to the output quality, the limited partner can freely use the law to freely hold it in accordance with the law. Limited partnership property shares are out of quality financing.

As for the share held by ordinary partners, Article 25 of the "Partnership Enterprise Law" stipulates that if the partner's property shares in the partnership enterprise shall be unanimously agreed by other partners; Agree, the behavior of its behavior is invalid, which causes losses to a third person in good faith, and the perpetrator shall bear the liability for compensation according to law.

Based on this, the partners in private equity funds have the right to put the share of the private equity fund held by the prerequisites, and the corresponding pledge rights are established when the corresponding pledge is registered.

3. The main obstacles and implementation paths of the existing existing quality registration

(1) Lack of unified registration agencies

According to the establishment requirements of my country's pledge rights, the property rights are established when the quality of the property is delivered to the pledged property; the establishment of the right of rights needs to be divided into two types according to the different forms of the subject. For a certain amount of ticket value and popular securities, it mainly includes bills, tickets, checks, bonds, deposits, warehouse bills, bills of lading, etc. The latter is mostly the pledge of no vouchers or uniform forms, such as Fund shares, equity, etc.

However, the share of partnerships in the process of applying for pledge is difficult. Compared with the private equity funds established by the company, the quality person holds equity as a shareholder. When pledged, he can clearly clearly in accordance with the "Regulations on the Registration and Management of the People's Republic of China on the Registration and Management of the People's Republic of China" and the "Registration of Equity Equity" and other market supervision and management departments Apply for registration to complete the establishment of pledge. However, the share of limited partnerships is due to the lack of unified registration agencies and facing which department to handle the corresponding pledge registration in order to be effective registered obstacles stipulated in the law. In practice, the following processing methods are usually used for solution.

1. Market supervision and management department registration

At present, market supervision departments in some areas, such as Wuxi Industry and Commerce Administration Bureau, have launched the property share registration business of limited partnerships as early as 2015. According to the work developments released by the Bureau on September 14, 2017, the Wuxi Industrial and Commercial Bureau's move is to solve the quality of entrepreneurial investment and equity investment limited partnerships, and the attempts of this type of business have begun Essence

However, in addition to the market regulatory authorities in individual regions clearly accepting the pledge registration business of the partnership share, the vast majority of market supervision departments are based on the "Equity Equity Registration Measures". Regulations, instead of accepting the relevant business of the property share of limited partnerships.

2. China base Association

When the partnership private equity fund is established, the fundraising institution must be applied for registration. According to the "Administrative Measures for the Service Business of Private Investment Fund (Trial", the registration and changes of the share of private equity funds are completed through the fundraising institution. Entrusted with qualified service agencies raised, the former shall be registered with shares by private equity fund managers, and the latter is more complicated. The service agency shall bear the responsibility for sharing shares, and the private equity manager is responsible for handling the fund for the fund. The registration and changes of private equity shares have been regulated, and no detailed provisions of the pledged handling are not made.

3. People's Bank of China Credit Center

The common registration and publicity system of the Real Estate Department of the People's Bank of China Credit Center can achieve the role of external publicity. However, according to the official website of the agency, the pledge of limited partnership shares does not belong to its scope of acceptance of the registration business.

4. Registration of regional equity market (equity trading center)

In order to promote property management of private equity funds, broaden the fund shareholder financing channels, enhance the liquidity of the fund share, and provide vitality for the development of the economy. Individual regions are solving the registered partnership of private equity funds through the regional equity trading market. question. For example, on November 18, 2016, the Guangzhou Municipal Financial Work Bureau and the Guangzhou Municipal Administration for Industry and Commerce issued the "Guidance Opinions on Supporting the Pilot Registration of Limited Partnership Property Shareholdership and Equity Registration Business Pilot" Registered limited partnerships go to the Guangzhou Equity Exchange Center to handle property share registration and custody. In addition, on December 10, 2020, the China Securities Regulatory Commission formally approved the pilot transfer of share transfer at the Beijing Equity Exchange Center. The nation's first equity investment and entrepreneurial investment share transfer pilot was officially settled in Beijing. On June 21, 2021, the Beijing Municipal Financial Supervision and Administration Bureau and the Beijing Supervision Bureau of the China Securities Regulatory Commission, the Beijing Municipal People's Government State -owned Assets Supervision and Administration Commission, the Beijing Finance Bureau, the Beijing Economic and Information Technology Bureau and the Beijing Science The Technical Committee and Zhongguancun Science and Technology Park Management Committee released the "Guiding Opinions on Promoting the Pilot Work of Promoting Equity Investment and Transfer of Equity Investment and Entrepreneurship Investment Share". In addition to supporting state -owned fund shares to transfer transactions, the Beijing Equity Trading Center was officially clarified as a limited partnership enterprise as a limited partnership. Property share registration platform. Shanghai also released the "Several Provisions on the Development of Green Financial Development in Shanghai Pudong New District" on June 24, 2022. It clarifies the establishment of a private equity and entrepreneurial investment share transfer platform for the establishment of a private equity and entrepreneurial investment share of the Shanghai Equity Custody Exchange Center. , Pledge registration and other businesses. (2) Practical suggestions on the pledge of partnership private equity shares

In summary, because the current law has not yet made clear stipulation on the establishment of a registration authority of the partnership of the partnership of the partnership, it has caused the confusion of the relevant parties in handling the fund share pledge business, and it has increased the occurrence. The chance of legal risk. In this regard, we believe that the relevant legal risks can be reduced from the following aspects:

1. Check the pledge share

Related parties can pass the verification of the following matters to ensure the authenticity, legal, and effectiveness of the pledged share: (1) to confirm the legitimacy of the establishment and existence of the main body of the partnership; Holding; (3) confirming that the amount of contributions corresponding to the sample shares have been paid in place; (4) confirming the share of the pledged share in accordance with the law, and there is no restriction on the rights such as freezing.

2. Praising the internal effectiveness

Related parties can achieve the legal effect in the pledge in the following ways: (1) to make partnership resolutions by all partners of the partnerships, and agree to the quality of the quality of the quality. (2) The quality of the pledged contract with the pledgee, the amount of the claims of the pledge guarantee, the term of the debtor's performance, the name and status of the pledged share, the scope of pledge guarantee, the implementation of the pledge right, the pledge share of the pledge share The disposal and other matters are made clearly agreed; All the income related income related to the pledged share is paid to the designated account designated by the pledgee, and the consent of the non -pledgee shall not be paid to the pledgee, and the pledgee will be given the cooperation that the partnership should be given when the pledgee will be given).

3. In terms of pledge of external validity

Related parties can enhance the publicity effect of pledges through the pledge registration procedures of the market regulatory authorities and equity trading centers in accordance with the law and equity trading center.

Fourth, conclusion

With the long -term development of the private equity fund industry, related legal foundations and supporting facilities are becoming more and more perfect. At present, regardless of the nature of the nature of the essence or the level of the establishment of the essential power, the main form of the dual attributes of "private equity funds" and "partnership" at the same time as partnerships of private equity funds have already possessed the legal basis for handling share pledge, but at the time In practice, there are still obstacles such as lack of unified registration agencies, asymmetric information of the parties, and cannot be effectively publicized. At this stage, in some areas (such as Beijing, Shanghai, Guangzhou, etc.) in areas (such as Beijing, Shanghai, Guangzhou, etc.) in areas that have carried out partnerships of private equity funds. The real -time sharing of market supervision departments on pledge registration data can largely solve the above -mentioned pledge registration obstacles to a large extent, enhance the effectiveness of pledge behavior, and protect the legitimate rights and interests of both parties.

Source: Beijing Equity Trading Center, reprinting this article is out of the purpose of passing more information. If there is an error or infringe your legitimate rights and interests, please leave a message, we will correct and delete it in time, thank you

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