In 2022, the Hubei Securities Regulatory Bureau and the Shenzhen Securities Regulatory Bureau have successively sent warning letters to the two managers regarding their commitment to guarantee principal and income.

In 2021, the Shenzhen Securities Regulatory Bureau, Zhejiang Securities Regulatory Bureau, Anhui Securities Regulatory Bureau, etc. have all made administrative penalty decisions on the manager's commitment to guarantee principal and income. The violations include stipulating expected rate of return and fixed interest payment time in promotional materials or fund contracts.

, and at the same time, the Fund Share Transfer Agreement, the Repurchase Agreement, the Guarantee Commitment Letter, etc. shall be signed by itself, the shareholders or related parties and the investors.

In the "Disciplinary Punishment Decision" issued by the China Asset Management Association on December 27, 2019, the manager violated regulations by promising minimum returns to investors by signing a repurchase agreement with investors; the "Disciplinary Action Decision" issued on February 28, 2020

In the "Disciplinary Action Decision", the managers signed a large number of guarantee letters, liquidity support letters, share repurchases and other contents in the product promotion documents, promising investors no loss of investment principal and minimum returns; the above two managers

Everyone has been canceled as a manager due to other violations at the same time.

When it comes to repurchase arrangements, there are two levels of understanding. One is the equity repurchase at the underlying project level, which is often closely related to the project exit; the other level is the repurchase commitment at the fund raising level, which is often related to the prohibition of capital guarantee and return/prohibition.

Rigid payment goes hand in hand.

This article aims to sort out and discuss the repurchase arrangements related to private equity funds. If there are any deficiencies, please correct me.

1. Share repurchase at the underlying project level is a way for the index company, its controlling shareholder/founding shareholder/actual controller, management/employees to purchase the equity held by the private equity fund at an agreed price, thereby enabling the private equity fund to exit.

If the company has good development potential, the company's management and others have the confidence to achieve better management and control of the company by repurchasing equity, and proactively request the repurchase of equity from private equity funds, which is an active repurchase; if the company's development direction is in line with its

If the investment value-added intention of the private equity fund is not consistent, the manager actively requires the company to repurchase equity, which is a passive repurchase.

Let’s focus on the following two situations.

01 Private Equity Fund VS. Target Company According to the "Minutes of the National Court Civil and Commercial Trial Work Conference" released in 2019, the "gambling agreement" entered into between the investor and the target company should be deemed valid if there is no statutory invalidity reason.

However, it should be noted that if the target company is the party obligated to repurchase shares, the people's court shall enforce the compulsory repurchase of shares in accordance with Article 35 of the Company Law of the People's Republic of China on "Shareholders shall not withdraw capital" or Article 142 of the Company Law of the People's Republic of China on

Sexual regulations are reviewed.

If the target company has no profit or the profit is insufficient for compensation, the private equity institution's claim for cash compensation will be dismissed or can only be partially supported, and a separate lawsuit will need to be filed when there is profit in the future; if the target company has not completed the capital reduction process, the private equity institution will

The claim to repurchase the shares will be dismissed.