First, the characteristics of limited partnership private investment funds
Private investment funds in the form of limited partnership can effectively avoid double taxation, and through reasonable incentive and restraint measures, in the case of separation of ownership and management rights, ensure the interests of operators and owners are consistent, promote the division of labor and cooperation between general partners and limited partners, and give full play to their respective strengths and advantages; In addition, the limited partnership private investment fund has the characteristics of low threshold, simple establishment procedure, simple and flexible internal governance structure, efficient decision-making procedure and flexible benefit distribution mechanism.
From the legal point of view of limited partnership, limited partnership private equity investment funds also have the following characteristics:
1. The property of a limited partnership private equity investment fund is independent of the property of each partner. As an independent unincorporated enterprise entity, the limited partnership private equity investment fund has independent property; For the debts of the partnership, firstly, the partnership's own property is used to pay off the debts, and the insufficient part is borne according to the different status of each partner; During the existence of a limited partnership, each partner may not require the division of the partnership property. Thereby ensuring the property independence and stability of the limited partnership private equity investment fund.
2. General partners and limited partners enjoy different rights and bear different responsibilities. In a limited partnership, the general partner carries out the partnership affairs, and the limited partner does not participate in the operation of the partnership; Limited partners shall be liable for the debts of the partnership to the extent of their subscribed capital contributions, and general partners shall be jointly and severally liable for the debts of the partnership. This institutional arrangement can urge the general partner to carry out the partnership affairs carefully; For limited partners, it has the advantage of controllable risks.
Second, the comparison of different forms of private investment funds
(See table below)
Organizational form
Company trust limited partnership enterprise
Form of capital contribution currency
Registered capital or subscribed capital contribution and payment period
The minimum paid-in capital shall not be less than 6,543,800 yuan.
The funds are in place at one time
Commitment system, without minimum requirements, is gradually put in place according to the agreed time limit; If filing is required, it will be at least 654.38 billion yuan.
Investment threshold
No special requirements
The minimum contribution of a single investor is not less than 6,543,800 yuan.
There is no mandatory requirement; However, if an application is filed, the individual investor shall not be less than 6,543,800 yuan.
Debt model
Investors shall bear limited liability within the scope of capital contribution.
Investors are responsible for the trust assets.
The general partner shall bear unlimited liability, and the limited partner shall bear limited liability to the extent of the subscribed capital contribution.
Number of investors
There shall be no more than 50 people in a limited liability company and no more than 200 people in a joint stock limited company.
There are no more than 50 natural person investors, and the number of qualified institutional investors is not limited.
2 to 50 people
administrator
Shareholders' decision
Managed by a trust company.
General partner
management mode
The same shares and rights can be entrusted to the management.
The trustee decided to entrust an investment consultant to provide advice.
The general partner is responsible for decision-making and implementation, and the limited partner does not participate in the operation.
distribution of profits
Generally according to the proportion of capital contribution
According to the trust contract
According to the limited partnership agreement
Tax commitment
double taxation
Trust beneficiaries do not pay taxes, and when they obtain trust income, they pay enterprise income tax or personal income tax.
Partnership enterprises do not pay taxes, and partners pay enterprise income tax or individual income tax respectively.
According to the research group of Tianjin Branch of the People's Bank of China, based on opportunistic behaviors such as adverse selection and moral hazard under asymmetric information, the unanimous conclusion is that the contractual (trust) and limited partnership private equity fund governance institutions are superior to the corporate system.
Third, the core mechanism of limited partnership private investment fund.
The core mechanism of limited partnership private equity investment fund is to establish an effective incentive and restraint mechanism for professional investment talents, improve the operation level and efficiency of the fund and maximize the interests of investors. The main content is reflected in the following aspects:
1, restrictions on investment scope and investment methods
Private investment is a high-risk investment mode, so it is particularly important to limit the investment scope, investment mode and investment proportion of each project. However, due to the complexity and inexhaustible scope of investment and investment methods, "negative constraints" are often used in practice to control investment risks. For example, it is agreed that the investment in a project shall not exceed 20% of the total subscribed capital contribution, and the investment shall not bear unlimited joint liability, and the bank loan of the partnership enterprise shall not exceed 40% of the total subscribed capital contribution.
2. Control of management expenses and operating costs
In practice, there are usually two ways: first, management fees include operating costs. The advantage is that it can effectively control operating expenses and control costs. At present, in order to attract funds, many domestic private investment funds have adopted this simple way. Second, the management fee is shared separately, and the operating expenses of the limited partnership are collected by the limited partnership as a cost, which is not included in the management expenses of the general partner. This is an internationally accepted way. The amount of management fee is usually 0.5%-2.5% according to a certain proportion of the managed funds, and the extraction method can be quarterly, semi-annual or annual.
3. Benefit distribution and incentive mechanism
The general partner and limited partner of a limited partnership enterprise can flexibly agree on the distribution method of investment income; Generally speaking, for the part within the expected investment income, both parties can agree that the general partner can enjoy the income at a lower proportion; The general partner can enjoy a higher proportion of the income beyond the expected income; The higher the investment income, the higher the proportion that the general partner enjoys as a reward for the limited partner, which can promote the general partner to actively, effectively and beneficially carry out the partnership affairs. In domestic practice, in order to attract investors, some private investment funds often adopt "priority recovery mechanism" and "callback mechanism" to ensure that the general partner can enjoy the profit distribution after the limited partner recovers the investment, so as to ensure that the interests of the general partner and the limited partner are consistent.
(1) About "Priority Recovery Mechanism"
The so-called "priority investment recovery mechanism" means that when the fund expires or an investment project is liquidated, the limited partner must first ensure that the investment has been fully recovered or reached the minimum rate of return before the partnership enterprise is distributed. For example, you can agree to the following income distribution methods:
First, the limited partner gets back all the investments invested in the fund;
Secondly, calculate the internal rate of return. If the IRR is less than 8%, all investment income will be distributed to all partners according to the proportion of capital contribution, and the general partners will enjoy the income according to the proportion of capital contribution.
Thirdly, if the IRR is higher than 8% but lower than 10%, the part below 8% will be distributed to all partners according to the proportion of capital contribution, the part above 8% will be distributed to the general partners first, and the remaining 80% will be distributed to all partners according to the proportion of capital contribution;
Finally, if the IRR is higher than 10%, the income within 10% will be distributed according to the above principle, and 25% of the income above 10% will be distributed to the general partner first, and the remaining 75% will be distributed to all partners according to the proportion of capital contribution.
(2) About "callback mechanism"
The so-called "callback mechanism" refers to the mechanism that the general partner takes out a certain proportion of funds from the management fees received and the profits distributed after the withdrawal of investment projects, and deposits them in a specific account to make up for the losses or make up for the gains when the funds or some investment projects lose money or fail to reach the minimum income. For example, in a limited partnership private equity investment fund, it is agreed that the general partner will keep 40% of the income, which will be used to make up for the loss or income when the fund loses or fails to reach the minimum income of 8%.
To sum up, we can see that both the "priority investment recovery mechanism" and the "callback mechanism" reflect the difficulties of domestic general partners in raising funds and the compromises and concessions made in the distribution of benefits in order to attract funds.
4. Ways for limited partners to join or withdraw from the partnership and restrictions on the amount of capital contribution transferred.
After the establishment of the limited partnership private equity investment fund, new limited partners can still be allowed to join; Generally speaking, the access of limited partners is decided by the general partners, but some restrictions will be set, for example, limiting the new limited partners to qualified institutional investors and corresponding capital requirements. In addition, it is also necessary to clarify the calculation method of the rights and interests of newly hired limited partners or the compensation scheme for the original partners. Regarding the withdrawal of limited partners, in practice, the partnership agreement requires limited partners to ensure that they cannot withdraw during the existence of the partnership.
In order to ensure the stability of limited partnership private equity investment funds, limited partners are usually restricted from transferring the capital contribution of the partnership. The transfer of the limited partner's contribution to the partnership can be divided into two forms: self-transfer and entrusted transfer. "Self-transfer" refers to the way that the limited partner finds the transferee by himself, and the general partner reviews and assists the transfer. "Entrusted transfer" refers to the way in which the limited partner entrusts the general partner to find the transferee and the general partner assists in the transfer. Under normal circumstances, when the limited partner transfers his capital contribution, the general partner requires to pay a certain fee, and the rate is different according to the different forms of transfer; The commission rate of self-transfer is low, for example, it can be 65438+ 0% of the transferred capital contribution, and the commission rate of entrusted transfer is high, for example, it can be 5% of the transferred capital contribution; By charging a certain transfer fee, limited partners can be controlled to frequently transfer their capital to the partnership. The fees collected can be regarded as the income of the partnership. If the general partner provides intermediary services, he may also extract a certain percentage of intermediary remuneration.
5. Constraints on General Partners
In the limited partnership private investment fund, the general partner carries out the partnership affairs, and the limited partner does not participate in the operation of the limited partnership, so it is necessary to prevent the general partner from infringing on the interests of the partnership. In addition to the binding mechanism already described in this document, there are the following binding measures for general partners:
(1) Related Party Transaction Restrictions
The limited partnership agreement prohibits the general partner from engaging in related party transactions, and prohibits the general partner from engaging in business competing with the partnership alone or in cooperation with others, unless it is approved by the general meeting of all partners. However, a limited partner may conduct transactions with the partnership.
(B) restrictions on raising new funds
To ensure that the general partner has enough attention to carry out the partnership business, private investment funds will generally limit the speed of the general partner's refinancing.
(3) Follow the investment restrictions of the fund.
In order to prevent general partners from investing or withdrawing from projects objectively based on their own interests, private equity funds restrict general partners from investing or withdrawing from funds.
(4) The system of regularly reporting the operation and financial status of the fund.
For the matters mentioned, the private equity investment fund requires the general partner who carries out the partnership affairs to report to the limited partner regularly, and the limited partner has the right to consult and copy the accounting books and other financial materials of the limited partnership enterprise, and has the right to obtain the valuation report of the investment project.
6. Sub-partners shall bear the loss mechanism first.
In order to satisfy the preference of risk-averse investors, some private equity funds require general partners or related limited partners to be sub-partners, and bear the losses first with the amount of capital subscribed to the partnership. For example, its risk-taking methods are as follows: first, the secondary partners bear the losses with the capital subscribed by the partnership; Secondly, if the contribution of the junior partner is not enough to bear the loss, the other partners shall share it according to their share of contribution.
7. Entrust management mechanism
The partnership affairs of a limited partnership private investment fund are generally carried out by the general partner, but the general partner may also entrust the partnership affairs to a third party. At present, due to the fact that China has not released foreign capital to participate in the establishment of partnership enterprises and the restrictions of foreign exchange control on capital projects, there are certain obstacles for foreign capital to directly set up private equity investment funds as general partners. Therefore, it is a flexible solution for foreign capital to participate in the establishment of fund management companies and obtain the profits of general partners through monopoly trade arrangements.
Where a general partner entrusts partnership affairs to a third party, it shall comply with the relevant provisions of the contract law on entrustment contracts. However, in the context of contract law, the entrusted management mechanism has the following shortcomings:
First, the entrustment relationship can be dissolved at any time, and the legal relationship is unstable. However, if the entrustment contract is unilaterally terminated and losses are caused to the other party, it shall compensate for the losses.
Second, fund management companies can only bear the legal responsibility for investment failure if they are at fault, which is lighter and less restrictive than general partners who bear unlimited liability.
Fourthly, the internal governance of limited partnership private investment funds.
A typical limited partnership private equity fund is characterized by the separation of owners and operators. On this premise, how to solve the two major problems of information asymmetry and risk asymmetry in fund operation and prevent operators from deviating from the interests of owners; At the same time, the internal governance of the limited partnership private equity investment fund aims to ensure the full play of the management ability of professional investment talents and find the best balance between different interests, so as to improve the efficiency of fund decision-making operation and decision-making and ensure the maximization of fund investors' interests.
Among them, the partners' meeting generally only makes decisions related to the admission of new partners, the withdrawal of partners, the modification of limited partnership agreement and the liquidation of partnership enterprises. And listen to the general partner's report on the implementation of partnership affairs and supervise the general partner to implement partnership affairs according to the requirements of the partnership agreement, but the partner meeting does not control the investment decision of the partnership enterprise and the operation of the invested project. Different partners have the same voting rights in the partnership, and the matters decided by the partners' meeting shall be voted according to the number of people, regardless of the proportion of capital contribution.
Some foreign private equity investment funds have also set up advisory committees, which are generally composed of limited partners who have subscribed a certain proportion of capital contributions, to make decisions on investment matters with conflicts of interest, such as related transactions between partnership enterprises and general partners, investment projects with foreign capital exceeding a limited proportion, but they cannot replace and surpass the functions and powers of general partners.
The general partner is the actual operator of the fund and the decision-maker and executor of the fund investment. Within the scope authorized by the partnership agreement, the investment decision of the fund is completely completed by the general partner without interference and influence from other limited partners. To sum up, the original intention of limited partnership private equity investment fund is "capable people contribute, rich people pay the bill".
2. Compromise of internal governance structure of domestic private equity investment funds.
Because the concept of domestic debt investment has not been widely recognized by the society, mature investors need to be gradually cultivated, and there is also a lack of general partners with high credibility and appeal; Therefore, the general partners of domestic private equity funds often transfer part of the decision-making power and management power to the limited partners, which reflects the compromise of domestic private equity funds under the domestic objective reality.
The biggest feature of this internal governance structure is the establishment of an investment decision-making Committee composed of general partners, limited partners and third-party professionals, which has the final decision on the investment matters of the fund. For example, the Jiafucheng Fund in China stipulates in the partnership agreement that the investment and decision-making committee consists of seven members, two of whom are appointed by the general partner, three representatives of the limited partner and two external experts, with financial and legal backgrounds. In addition, Sequoia Fund, a well-known domestic private equity investment fund, also adopts this form of governance.
3. Private investment funds with limited partnership and company as the core.
Although this private investment fund is established in the form of limited partnership, the investment operation of the fund is decided by all partners. Generally speaking, the fund's partners' meeting or investment committee votes according to the proportion of capital contribution, which is similar to the decision-making form of the company's shareholders' meeting. Wenzhou Donghai Venture Capital, the first limited partnership private equity investment fund in the Yangtze River Delta, adopted this form. However, due to the inconsistent investment intentions of investors, it is difficult to reach an agreement on investment matters, which eventually led to the early death of Donghai Venture Capital.
Abstract: Reasonable design of internal governance and operation mechanism of private investment funds can effectively improve the acceptance of investors, and then promote the successful collection and establishment of private investment funds.
Verb (abbreviation of verb) Relevant laws, regulations and local policies on the establishment of limited partnership enterprises in Tianjin Binhai New Area
At present, the management of limited partnership private equity investment funds by Chinese laws and related policies exists in the form of the Partnership Enterprise Law and related laws and regulations, as well as the special provisions of venture capital private equity investment funds. This paper only sorts out the legal policies applicable to the establishment of ordinary limited partnership private investment funds (non-venture capital); Among them, Tianjin's important laws, regulations and local policies are as follows:
filename
nature
Implementation time
On the establishment and operation of limited partnership enterprises;
People's Republic of China (PRC) enterprise legal person law
law
June 2007 1 day
Measures of People's Republic of China (PRC) Municipality on the Administration of Enterprise Legal Person Registration
administrative laws and regulations
June 2007 1 day
Notice of the State Administration for Industry and Commerce on Doing a Good Job in the Registration and Management of Partnership Enterprises (No.[2007] 108)
Departmental regulations
May 29(th), 2007
Opinions of Tianjin Municipality on Industrial and Commercial Registration of Private Investment Funds and Private Investment Fund Management Companies (Enterprises)
Local policies
165438+20071October
Trial Measures for the Administration of Registration and Filing of Tianjin Equity Investment Funds and Equity Investment Fund Management Companies (Enterprises)
Local policies
165438+200815 October
Tax problems of limited partnership enterprises;
People's Republic of China (PRC) enterprise income tax law
law
1, 2008 1
Provisional Regulations of the People's Republic of China on Business Tax
administrative laws and regulations
165438+200815 October
Notice of Tianjin Municipality on Issues Concerning Individual Payment of Income Tax by Partners in Partnership Enterprises (Tianjin Local Taxation Bureau [2007]17)
Local policies
2007 65438+26, 00
Supplementary Notice of Tianjin Municipality on Issues Related to Individual Payment of Income Tax by Partners in Partnership Enterprises (Tianjin Local Taxation Bureau [2008]1No.)
Local policies
65438+200813 October
Supplementary Notice of Tianjin Municipality on Issues Related to Individual Payment of Income Tax by Partners in Partnership Enterprises (Tianjin Local Taxation Bureau [2008]14)
Local policies
March 28(th), 2008
The requirements, steps and key points of setting up a limited partnership private equity investment fund.
Limited partnership private investment funds can be managed by fund management companies; Therefore, while setting up funds, it is necessary to set up new fund management companies; The following is just to sort out and analyze the plans of setting up limited partnership private equity investment funds and corporate fund management companies in Tianjin.
1. Establishment requirements (see the table below for details)
Table 1: limited partnership private equity fund
project
Relevant regulations
point out
On the establishment of limited partnership private investment fund;
name
XX Equity Investment Fund Partnership (Limited Partnership)
Indicate the nature of the enterprise
scope of business
Engaged in investment in non-listed enterprises, non-public offering of shares by listed companies and related consulting services.
Total raised amount
The minimum amount is100000 yuan.
Investment form
Currency form
The capital contribution must be in monetary form.
partner
The number of partners is more than 2 and less than 50.
At least one general partner
General partner restriction
Wholly state-owned companies, state-owned enterprises, listed companies, public welfare institutions and social organizations may not become general partners.
For foreign investors, it has not been liberalized.
Other requirements
No public offering and issuance of funds may be made in any way.
Approval restriction
If the business scope of the partnership belongs to pre-approval, it needs approval.
Special Provisions on the Filing of Limited Partnership Private Investment Funds (Tianjin);
Total raised amount
Not less than 654.38 billion yuan, and the initial subscription amount is not less than 20 million yuan.
Major investor requirements
It has made profits for two consecutive years and has not been severely punished by the relevant administrative organs or judicial organs.
Individual investor requirements
The investment of a single investor shall not be less than RMB 654.38+0 million.
Investment direction
Conform to the national industrial policy
Management requirements
Having qualified fund managers and custodians.
Filing organ
Tianjin stock right investment fund development Yu record management office
Responsible for the filing of funds with a total amount not exceeding 5 billion yuan.
Table 2: Fund Management Companies
project
Relevant regulations
point out
Conditions for establishing a fund management company (limited liability company):
name
XX stock right investment fund management co., ltd
scope of business
Entrusted to manage equity investment funds and engage in investment and financing management and related consulting services.
registered capital
Not less than 1 ten thousand yuan
Investment form
Currency form
The capital contribution must be in monetary form.
Number of shareholders
No more than 50 people
Special Provisions on the Filing of Fund Management Companies (Tianjin)
registered capital
The paid-in capital is not less than 6,543,800 yuan.
Major investor requirements
It has made profits for two consecutive years and has not been severely punished by the relevant administrative organs or judicial organs.
Administrator requirements
There are 3 senior managers with more than 2 years experience in equity investment or related business; Among them, at least 1 senior managers have more than 5 years experience in equity investment and management.
Special Notes on Foreign Capital Participating in the Establishment of Fund Management Companies:
At present, there are still restrictions on the approval of foreign participation in the establishment of fund management companies. Foreign capital can only participate in the establishment of general investment consulting companies and cannot be named as "fund management companies". However, investment consulting companies that allow foreign investors to participate in the establishment become the actual managers of funds by providing consulting and consulting services.
2. The establishment steps and key points of the limited partnership private investment fund.
step
Main points of content
point out
time
The first step is to sign a partnership agreement.
The main contents of the partnership agreement are: the amount of capital contribution of partners, the payment period, the implementation of partnership affairs, the way of profit distribution and loss bearing, the admission and withdrawal, the dissolution and liquidation of the partnership enterprise, etc. See the requirements of the Partnership Enterprise Law for details.
The affairs of a limited partnership shall be carried out by the general partner. Where the general partner is a legal person, a representative shall be appointed.
The second step is the contribution of partners.
After the capital contribution is completed, all partners shall sign a capital contribution confirmation letter to each partner.
Can be paid in installments
The third step is to apply for industrial and commercial registration.
The main materials to be submitted include: application for establishment, identification of all partners, partnership agreement, and confirmation of all partners' subscribed capital contribution, etc. For details, please refer to the relevant requirements of the Measures for the Administration of Registration.
Representatives or entrusted agents designated by all partners shall apply to the Administration for Industry and Commerce.
Step 4: Get a business license.
Obtain a partnership business license.
The date of issuance of the business license is the date of establishment of the partnership.
Make a decision on whether to register within 20 days from the date of accepting the application.
3, Sino-foreign joint venture investment consulting company establishment steps and implementation points
step
Main points of content
point out
time
The first step is to sign the joint venture contract and articles of association of the joint venture company.
Core legal documents of Sino-foreign joint ventures
Step 2: Pre-approval of application name and other preparatory matters
Go through the name pre-approval in the industrial and commercial department and obtain the Notice of Enterprise Name Pre-approval.
Step 3: Examination and approval by the commercial department
Receive the approval and the approval certificate of foreign-invested enterprises.
Meet the requirements of the catalogue of foreign-invested industries
Twenty working days after receiving the materials.
Step four, go through the industrial and commercial registration and get the business license.
Application materials, receive the "application for approval of establishment registration"; And get the business license on the date specified in the notice.
If the business scope involves pre-approval, it shall be approved.
If the materials are complete, the business license will be issued within five working days.
In addition, TEDA will review the qualifications of fund sponsors and fund operation experience when setting up a private investment fund in Tianjin, but this is not a necessary procedure required by law.
Summary: If a limited partnership private equity investment fund is established in Tianjin to engage in equity investment, there is no need for pre-approval and no special requirements for general partners. The establishment threshold is low and the establishment procedure is relatively simple.
Seven, limited partnership private investment fund tax commitment.
For the production, operation and other income of a limited partnership enterprise, the partners shall pay enterprise income tax and individual income tax respectively; Where the management is entrusted to a fund management company, the fund management company shall pay enterprise income tax and business tax in accordance with the relevant tax provisions of the state. Regarding the taxation of limited partnership private equity investment funds, it is necessary to listen to the opinions of tax agents; Here, I suggest the following two points:
1. A natural person limited partner who does not participate in the execution of business in a limited partnership enterprise shall pay personal income tax in the tax bureau where the limited partnership enterprise is registered according to the item of "interest, dividend and bonus income".
2. The legal partner of a limited partnership may pay enterprise income tax in the place where the partnership is registered or where the investor of the legal partner is located. Once the tax payment method of legal person partners is determined, it shall not be changed at will during the tax year.
Eight, the establishment of Tianjin private investment funds and fund management company's financial policy.
The financial support policy of Tianjin Development Zone for private investment funds adopts the way of "one thing, one discussion", which needs to be considered from many aspects, such as the scale of the fund, whether the project invested by the fund is local, the contribution of the fund to local tax revenue, etc., and then the fund company and the local government will negotiate to determine it. Generally speaking, local governments generally provide financial support for private investment funds in the following ways:
1. The enterprise income tax paid by the partners on their investment in the partnership enterprise can be refunded according to a certain proportion.
2. Investment funds and fund management companies can give certain housing rental subsidies if they rent housing for office use in the registered place.
3. The personal income tax paid by senior managers of investment funds or fund management companies at the place of registration can be refunded according to a certain proportion.
4. The enterprise income tax and business tax paid by the fund management company can be returned according to a certain proportion.