Study On The Redemption Right In Private Equity Investment

With the continuous development of economy, Private Equity Investment have bloomed, providing power to China capital market. The purpose of PE is not to get the management of the company, but to get the benefit. So it is significant for the PE investor to select the right way to leave the company. However, with the impact of domestic and international economy, PE investors turn to the company’s redemption instead of IPO. Conforming the redemption right have the practical meaning.In judicial practice, the redemption right is considered to be the minimum guarantee clause, damaging the interests of the company, shareholders and creditors, or revoked,due to "the principle of changed circumstances". The redemption right cannot be applied in our "Company Law". But it is very important to clarify the different object or nature of the PE, and confirming the redemption right in the real PE. On the basis of study on three cases, I advise the stereotyped ideas for the judicial judgment. First of all, it is very important to distinguish the object the PE, if there is a fixed term and fixed foreclosure profits in the redemption clause, the redemption is invalid. In LP/trust of the PE,the redemption is valid. Judicial judgment should also confirm the valid of the company PE. In this case, we must protect the interests of our stakeholders, in the way of limiting funding redemption price, quantity, redemption treatment.