According to the Interim Measures for the Supervision and Administration of Private Investment Funds issued by China Securities Regulatory Commission (hereinafter referred to as the Measures for the Administration of Private Investment) and the Notes for Fund Filing and Information Updating issued by the Fund Industry Association, private investment funds are divided into four categories according to different investment objects: private equity investment funds (PE funds), private securities investment funds, private venture capital funds and other investment funds. Generally speaking, debt investment funds refer to private equity funds that invest in the invested enterprises by means of non-standard debt and entrusted loans, and generally do not include the way that private equity funds directly issue loans to the invested enterprises.
Article 2 of the Measures for the Administration of Private Placement adopts enumeration method rather than restriction method for the investment scope of private investment funds, and at the same time stipulates in principle that "other investment targets agreed in investment contracts" do not exclude the investment scope of creditor's rights; Secondly, the "Measures for the Administration of Private Placement" adheres to the principle of "negative list", and private equity funds implement debt investment by issuing entrusted loans to banks, which does not violate the mandatory or prohibitive provisions of existing laws in China. Therefore, although there is no clear and specific legal basis, there is nothing improper for private equity funds to invest in debt.
Second, there are precedents and regulations for debt investment.
Although the scope of debt investment is not clearly listed in the Measures for the Administration of Private Placement, it is not without sources. Article 9 of the Pilot Measures for Asset Management for Specific Clients of Fund Management Companies, which is still being implemented, stipulates that the assets of the asset management plan shall be used for the following investments: "…… (2) Equity, creditor's rights and other property rights that have not been transferred through the stock exchange; …"
According to this regulation, subsidiaries of fund management companies can carry out debt investment business by setting up special asset management plans. In practice, most of the special asset management plans of fund subsidiaries also invest abroad through the way of creditor's rights or the sandwich way of creditor's rights plus equity.
Three. The entrusted loan method is legal and compliant.
Entrusted loan business is one of the businesses of commercial banks and other financial institutions. Article 12 of the General Principles of Loans stipulates that entrusted loans refer to loans provided by principals such as government departments, enterprises, institutions and individuals, which are distributed, supervised and recovered by the lender (i.e. the trustee) according to the loan object, purpose, amount, term and interest rate determined by the principal, and the risks are borne by the principal, and the lender (i.e. the trustee) may not charge fees.
As a client, private equity investment funds entrust their funds to commercial banks to issue entrusted loans to implement debt investment, which is a legal business model and does not violate the mandatory or prohibitive provisions of the law.
4. Illegal financial activities do not include entrusted loans.
The illegal financial business activities stipulated in the Measures for Banning Illegal Financial Institutions and Illegal Financial Business Activities mainly refer to the direct or disguised operation of loan financing business by enterprises in violation of financial management laws and regulations such as the General Rules on Loans.
Article 61 of the General Principles of Loans stipulates: "Administrative departments at all levels, enterprises and institutions, cooperative economic organizations such as supply and marketing cooperatives, rural cooperative foundations and other foundations shall not engage in financial businesses such as deposits and loans. Enterprises shall not handle lending or disguised lending financing business in violation of state regulations. "
The creditor's rights investment carried out by private equity investment funds is generally implemented by means of entrusted loans from banks. It is not that private equity investment funds directly engage in lending business with the invested enterprises or operate lending financing business in disguised form. Therefore, the illegal financial activities prohibited by existing laws and regulations do not include legal creditor's rights investment methods such as entrusted loans.
Five, direct lending and entrusted loans between enterprises are different.
According to the speech of Xi Xiaoming, vice president of the Supreme People's Court, published in People's Court Newspaper on September 25th, 20 13, the validity of loan contracts between enterprises should be determined according to different situations: (1) Those who are not qualified to engage in financial business, but actually engage in loan business, and take loan income as the main profit source of enterprises, should be recognized as loan contracts. (2) If enterprises that do not have the qualification to engage in financial business temporarily borrow funds due to the needs of production and operation, and the party providing the funds does not take financing as its regular business and does not violate the mandatory provisions of national financial management, the loan contract shall not be deemed invalid.
The validity of the loan contract discussed here refers to the direct loan contract between enterprises, excluding the loan contract issued by enterprises through entrusted loans. Private equity investment funds implement creditor's rights investment by entrusting loan banks to issue entrusted loans, which does not belong to the validity scope of the loan contract for inter-enterprise lending discussed here. The legal relationship of the entrusted loan contract has a legal basis and is confirmed by the judicial organs.
Suggestions and understanding of intransitive verbs
At present, both the State Council and China Securities Regulatory Commission emphasize the principle of "negative list" supervision, reduce the pre-licensing access to market entities' business activities, and strengthen supervision during and after the event. At present, whether private equity investment funds can invest in creditor's rights is controversial or doubtful. It is suggested that the regulatory authorities further clarify their opinions, avoid the wait-and-see state of market players, and mobilize the investment enthusiasm of private equity investment funds.
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