1997, the enactment of China's "Partnership Enterprise Law" indicates that the partnership enterprise has become a new enterprise organization form in China. In 2006, China revised the Partnership Enterprise Law and established a limited partnership system, which laid a legal foundation for the establishment of partnership private equity enterprises. Limited partnership private equity fund is established according to the Partnership Enterprise Law. Generally, the investment management institution or team is the initiator of establishing a limited partnership, and the partners are divided into general partners (GP) and limited partners (LP) to engage in direct equity investment. Among them, the general partner is usually a company or partnership fund initiated by an investment management institution. As a general partner, he assumes unlimited responsibilities in the limited partnership fund and is responsible for the investment, operation and management of the fund (in practice, the fund management will also be entrusted to external management institutions, usually the sponsors of GP). Other ordinary investors of the Fund, as limited partners, bear limited liability to the extent of their subscribed capital contributions, and are only responsible for the investment of the Fund, without specifically asking about the operation and management of the Fund. Limited partnership private equity fund-generally, there is no shareholders' meeting and board of supervisors, only the partners' meeting, which infringes on the rights of limited partnership private equity fund.
The risk is similar to that of bank financing