Venture Capital Companies Are Expected To Crack Down On Legal Difficulties.

The current company law is mainly suitable for processing trade companies, and venture capital companies are essentially different from ordinary companies, and the general provisions of the company law should not be applied.

Liu Jianjun, Minister of Finance and finance of the national development and Reform Commission, said that the drafting of Interim Measures for the management of venture capital enterprises will solve the legal problems of venture capital companies and provide support to venture capital enterprises in private placement so as to facilitate venture capital financing.

In terms of foreign investment, the company law stipulates that the cumulative investment amount of the company to other companies should not exceed 50% of net assets in the twelfth clause and second paragraph, which is a major obstacle for venture capital to invest abroad.

However, the company law takes into account the fact that investment companies mainly engage in investment business with their own capital. In addition, the contents of the "investment companies and holding companies under the State Council" are added in the front part of the second paragraph, so that the State Council and its relevant departments can formulate special administrative regulations or regulations in accordance with the particularity of venture capitals and other investment companies.

Therefore, the interim measures will eliminate the above restrictions on foreign investment for venture capital enterprises, stipulate the liabilities and liabilities of venture capital companies, and allow them to moderate liabilities for foreign investment.

The current company law is mainly about the issue of common shares issued by the company, but at the same time, it also points out in the 135th article: "the State Council may make separate provisions for the issuance of other types of shares other than the stock stipulated in this Law".

To solve the problem of asymmetric rights and obligations of venture capital enterprises, the interim measures will provide that venture capital enterprises can invest in "convertible preferred stock" and "convertible bonds", so as to effectively protect the rights and interests of venture capital enterprises, so that venture capital companies can not only get priority dividends and priority repayment rights, but also participate in the management of enterprises.

On the question of Taxation of venture capital companies, the interim measures will not only solve the problem of double taxation, but also give preferential tax incentives to venture capital firms.

As venture capital enterprises generally distribute their income to investors, enterprises themselves are not the main body of income, so the tax on venture capital enterprises has increased the burden of enterprises.

There are two ways to solve the double taxation problem of venture capital abroad. One is to levy taxes according to the main body of income, the other is to levy taxes according to the nature of an enterprise (such as a company or partnership).

The interim measures may impose tax on venture capital enterprises in the former mode.

In addition, on the issue of venture capital sources, Liu Jianjun believes that life insurance funds and insurance funds are more suitable, because venture capital is a long-term investment, and more than half of foreign investment sources come from life insurance funds and insurance funds.

But this requires changes in the policy of the use of insurance funds.