| Summary: | 碩士 === 東吳大學 === 法律學系 === 102 === To date, private equity funds boomed in Mainland China largely in response to the unmet financial needs of small and medium-sized private companies. However, due to lack of unified rule of law of private equity funds in Mainland China, the first priority for understanding the fundamentals of arrangement of private equity funds is to analysis related laws and regulations.
Secondly, starting from a base of almost nothing in 2000, global private equity funds and their start-up local counterparts rushed into the Mainland China market — completing nearly 10,000 deals from 2001 to 2012. But of those deals, most of them remain “unexited”, means the private equity investors have not yet to find a way to cash out of their investments and pocket their profits. Because “Exit”is the most important segment in the investment cycles of private equity funds, well exit is health for private equity finds’ liquidity and sustainable development. Initial Public Offering (IPO) is the main exit mechanism of private equity funds in Mainland China, accounts for over 80% of all exits. And when China Securities Regulatory Commission conducted an IPO reform in 2013, it causes a long suspension of IPO of Portfolio Companies and also causes the illiquidity of private equity funds. For private equity funds in Mainland China, domestic and foreign, the net effect is that there is no easy way out at the time.
To avoid repeating the same mistake abovementioned, private equity funds have to find another way to exit. The thesis of this study attempts to find out another exit mechanism for private equity funds under the legal system of private equity funds in Mainland China, such as IPO, equity transfer, company acquisition, and share repurchase and New OTC Market.
Besides, the thesis of this study also attempts to introduce exit mechanism of private equity funds and evolution of the legal system of private equity funds in USA, such as Securities Act of 1933 and its related exemption, Dodd –Frank Wall Street Reform and Consumer Protection Act of 2010 and Jumpstart our Business Startups Act of 2012. The first option of exit mechanism of private equity funds in USA is Company Acquit ion rather than IPO. This situation is highly influenced by its legal system. Furthermore, to exit through secondary market is a new way to out. The thesis of this study also analysis how Jumpstart our Business Startups Act of 2012 will help Venture capital to exit through secondary market.
By learning from U.S.A on exit mechanism and related legal system by comparative method to mature the legal system of private equity funds in Mainland China.
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