| Value adjustment mechanism (VAM) is a general legal mechanism in the field ofcommercial investment. Such mechanism is mainly made to solve the difference oncorporate valuation between the investor and financer. These two parties often agreeon certain objects or matters, and come to a decision that which party will have theright on valuation adjustment according to current situation.VAM has been used broadly in foreign mature capital market. It lowers thetransaction cost and improves the investment efficiency greatly. However, due to therelatively special legal system and environment in our country, VAM is alwaysexposed to the controversy over legality and compliance during the domesticinvestment activity. Although the first case on VAM which happened in December2009has been closed by the Supreme Court in November2011, there are still somebasic problems, such as the nature and legal effect of VAM, deserving deepdiscussions.This essay mainly has three parts. In the first part, it will introduce the first VAMcase in our country, i.e. Suzhou Haifu corporation vs. Gansu Shiheng corporation, andby discussing which aims to analyze the problems on legal relationship, legal natureand legal effect of VAM. In the second part, it will analyze the main legal elements ofVAM, i.e. the concept, subject, object and content of VAM. It will put emphasis on theanalysis of legal nature of VAM by comparing the analogical contract system. In thefinal part, it will analyze the legal effect of VAM from different standpoint, such ascontract law, business law and financial law, based on the problems in the first caseand the legal impediment VAM could be faced in our country. |
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