This article was first published on the WeChat public account: Things in the Investment Circle: 8 structural designs of Private Equity Funds.

They are company system, trust system, limited partnership system, company + limited partnership, company + trust, parent fund FOF, trust + limited partnership, company + trust + limited partnership, etc.

The above eight structures are all designed based on the three most basic organizational forms of PE: 1. Investors of corporate corporate funds participate in the investment of the fund as shareholders, and enjoy the shareholder rights stipulated in the "Company Law" in accordance with the law, and make their capital contributions.

Limited liability for company debts.

Fund managers can exist in two forms: one is to directly participate in the company's investment management as a senior manager of the company as a permanent director of the company; the other is to accept the fund's entrustment for investment management as an external management company.

Features of the fund: corporate income tax is required; shares can be listed; investment income can be retained for continued investment; investors need to pay personal income tax in addition to corporate income tax, which involves double taxation.

2. Limited partnership Partnership funds rarely adopt the form of general partnerships and generally adopt the form of limited partnerships.

Investors in limited partnership funds participate in investments as partners and enjoy partnership property rights in accordance with the law.

The general partner exercises civil rights on behalf of the fund and bears unlimited joint and several liability for fund debts.

Other investors, as limited partners, bear joint and several liability for fund debts to the extent of their subscribed capital contributions.

Judging from international industry practice, fund managers generally do not serve as general partners, but accept the entrustment of general partners to manage fund investments, but the two are generally related.

The current domestic practice is generally that the fund manager serves as the general partner.

Characteristics of limited partnership: General partners (GP) and limited partners (LP) form a limited partnership. The private equity investment company, as the GP, initiates the establishment of the limited partnership and subscribes for a small portion of the capital contribution, while the LP

Then subscribe the vast majority of the capital contribution of the fund.

GP assumes unlimited liability and is responsible for the investment, operation and management of the fund, and withdraws a certain percentage of the total fund amount as fund management fees every year; LP assumes limited liability, does not participate in company management, shares partnership income, and enjoys the right to know and consult, etc.

3. Trust system A trust fund is established by the fund holder as the trustee and beneficiary. The fund manager serves as the trustee in accordance with the fund trust contract and exercises the fund property rights in his own name for the benefit of the fund holder and assumes the responsibility.

Corresponding fiduciary responsibilities.

Characteristics of the trust system: Similar to a limited partnership, it also has tax-free status; but the funds need to be provided in one step, and the use efficiency is low; it involves trust intermediaries, which increases the operating costs of the fund.