In order to ensure that partners can withdraw from the partnership in a timely manner and obtain investment income, the "Partnership Agreement" generally stipulates the "Fund Realization Clause": During the duration of the fund and after its expiration, private equity fund investment buyers can buy, sell and transfer funds to each other.

Realize fund realization.

In reality, it often happens that investors seek to liquidate the fund, but after the fund duration expires, there are still no other investors to buy or transfer, and what should we do if the fund cannot be liquidated? In this regard, the "Partnership Agreement" usually stipulates that "the private equity fund continues to exist"

"Term extension clause", that is: after the fund duration expires, if the project investment cannot be realized, the executive partner (fund management company) has the right to extend the fund's duration so that the fund can carry out the project until the investment income is realized

.

The meaning of this agreement is that after the fund duration expires, if the investment and income cannot be realized, investors have no right to ask the fund management company to realize it. They can only wait until the fund company extends the fund duration (extension).

The fund seeks to realize cash during the continuation period.

If the extension period expires and still cannot be realized, can the LP require the GP to bear the obligation to realize the cash? We believe that once the "Partnership Agreement" is signed, regardless of whether the duration of the private equity fund has expired or whether the extension period of the private equity fund has expired,

Before the partnership liquidation is completed, the fund management company will not have any creditor or debt relationship with the fund investors, and the fund management institution, that is, the GP, will have no compulsory compensation obligation to the fund investors.

Private equity fund management companies are not obligors and debtors to realize cash for investors; "expiration of the duration of a private equity fund" does not mean "expiration of the realization of private equity fund investment" for investors.

In this case only partnership liquidation can take place.

The "Partnership Agreement" usually stipulates the "liquidation clause": the partnership liquidation of the partnership fund (enterprise) shall be carried out in accordance with the relevant provisions of the "Partnership Enterprise Law" and the "General Principles of Civil Law".

This is also in line with the basic principles of "unless capital contribution, partnership operation, income sharing, and risk sharing" between partners stipulated in the General Principles of my country's Civil Law and the Partnership Enterprise Law, because private equity fund investors and private equity investors The relationship between fund managers is between partners. Before the liquidation of the partnership, there will be no creditor or debt relationship between the partners within the partnership.