Legal analysis: At present, the PE industry has basically formed the income distribution mode in the order of giving priority to all investors' investment returns, giving priority to income -GP incentives-proportional distribution. Specifically, the funds withdrawn from investment will be returned to all investors in priority according to the investment proportion, and will be distributed to investors in priority according to 8% annualized compound interest (the principle of distribution is to consider the interest occupied by funds, referred to as capital occupation fee), so as to realize the preservation of the capital contributed by all investors. Then, according to the catch-up clause, GP is encouraged on the basis of satisfying LP investment preservation. That is to say, after giving priority to investors, the remaining part is distributed to GP in proportion or between GP and all investors until the ratio of the divided part of GP to the accumulated part divided by all investors is 1:4. Then, if there is any surplus on the basis of this distribution, 20% will be distributed directly according to GP, and 80% will be distributed to all investors for the final round of distribution.

Legal basis: Provisional Regulations on the Management of Private Investment Funds

Seventeenth private fund managers should raise funds by themselves, or entrust fund sales agencies that meet the requirements of the Securities Investment Fund Law and the the State Council Securities Regulatory Authority to raise funds on their behalf. Private equity funds shall be raised or transferred to specific qualified investors, and the cumulative number of investors in a single private equity fund shall not exceed the number prescribed by law. It is not allowed to break through the standard of qualified investors in disguise by splitting and transferring the shares of private equity funds or their income rights. Specific standards for qualified investors shall be formulated by the the State Council Securities Regulatory Authority.

Eighteenth non-public offering of funds, should develop and sign a written fund contract, clearly stipulate the rights and obligations of all parties.

Article 19 Private fund managers and private fund sales organizations shall fulfill the obligations of investors' appropriateness management, fully disclose the investment risks to investors, and sell private fund products with different risk levels according to investors' risk-taking ability.

Twentieth private fund managers and private fund sales institutions shall not raise funds from units and individuals other than qualified investors; Not through newspapers, radio stations, television stations, the Internet and other public media or lectures, reports, analysis meetings and other means to promote and promote to unspecified objects; Do not publicize in a false, one-sided or exaggerated way; Do not promise investors that the principal will not be lost or guarantee the minimum income.