At present, lending trust is the best way for private equity investment funds to gain the trust of investors. From the analysis of the legal framework of the current Company Law and Enterprise Partnership Law, investors who invest in private equity securities in the form of company system will face double taxation of 33% corporate income tax and up to 45% personal income tax. If the limited partnership is adopted, the general partner will face unbearable huge risks because of unlimited joint and several liability for the debts of the partnership. Once the investment fails, even if the general partner loses all his money, he will bear joint liability with all his personal property. Faced with such a strict legal environment, coupled with the fact that China's corporate system and limited partnership system are far less standardized and perfect than those in Europe and America, investors and fund managers tend to stay away from each other and tend to choose the trust method with a more relaxed legal environment.
In addition, from the practice in recent years, borrowing trust is a successful way to realize the healthy development of private equity investment funds.