Research On Legal Problems In Valuation Adjustment Mechanism Of China

Valuation Adjustment Mechanism is defined as an agreement of differences in valuation in the enterprise valuation activities, which will protect the interests of the investors as well as injecting new vitality into financiers. It is one of the most important investment tool in the venture capital activities. As the legal status of Valuation Adjustment Mechanism has not been clearly positioned under China’s legal system right now, there are considerable controversy in the practical implementation of Valuation Adjustment Mechanism in China. It is mainly represented as the controversy to the Valuation Adjustment Mechanism’s validity, legal nature, burden-sharing disputes after corporate management lost the bet, and so on. As a result, it is hardly certificated by securities regulators. This situation forces many enterprises have to hide or abandon Valuation Adjustment Mechanism to be listed, and the consequently, false information disclosure and other issues will bring lots of great dangers to China’s capital market. So, the regulatory system that regulators used in the process of IPO auditing relating to Valuation Adjustment Mechanism is imperfect, we can get a consummate Valuation Adjustment Mechanism regulatory system from following steps. Firstly, make an in-depth, accurate understanding of the legal nature of Valuation Adjustment Mechanism and categorize it. Legitimize those does not harm the stock market stability, does not harm to the interests of minority shareholders and public interest. Secondly, expose Valuation Adjustment Mechanism under the basis of legitimization. To ensure the investors’right to know, so that the risk principle can be realized. Only in this way, let the market itself to resolve the issues relating to Valuation Adjustment Mechanism is the best way. Thirdly, improve the corporate governance structure,standardize corporate investment and financing decision-making mechanism. From the Valuation Adjustment Mechanism disputes that have occurred on the gambling case,it is the environmental requirements for the Valuation Adjustment Mechanism to be applied. Finally, strengthen the financial side’s management from educate them with professional knowledge. It is the key step that let the financing side’s management and professional venture capital firms in the real equality, then the common rules of the game can be made.