Under The Chinese Legal Environment, The Gambling Agreement

Valuation Adjustment Mechanism(VAM)is rooted in British and American capital markets, which is an important investment tool in every investment transaction. In recent years, as foreign capital coming in a continuous stream, the VAM frequently appears in the private equity investment. From the perspective of Chinese law, this paper makes an in-depth research on the VAM.First, this paper summarizes the basic content of VAM from the angle of economics. From the investment practice point, this part simply describes the meaning and main manifestation of VAM, discusses the root causes of VAM, and analyzes the"double-edged sword"effect of VAM, which provide a research framework for the following legal analysis.Secondly, this paper makes an in-depth analysis on the VAM from a legal perspective. This part redefines the concept of VAM, analyzes the legal relationship embodied in the VAM, and by comparing and analyzing reveals the unique legal nature of VAM. This part provides a new interpretation and restatement of VAM from a legal point of view, which is a highlight of the paper.Thirdly, this paper discusses the subject of the legality of VAM under the framework of law in China. Because the VAM isn't explicitly stipulated in Chinese laws, according to the contractual nature of VAM and the existing legal provisions, this part proposes the legal basis of judging the effectiveness of VAM, and demonstrates that the VAM is legitimate under Chinese laws from the functionality, positive legality and negative legality of three angles.Finally, this paper analyzes that there are some legal obstacles in implementing the VAM under Chinese laws, and raises the feasibility suggestions of preventing legal risk. Because of existing legal defects and capital market imperfections, there are still some legal obstructions in carrying out the VAM in China. Therefore, this part from the macro and micro levels puts forward the specific measures of preventing legal risk, which can propose reference and guidance for investors and financiers evading legal obstacles and preventing legal risk. That is the fundamental foothold of the paper.