Chinese Legal Environment For Gambling Agreement Research

Due to the development of China’s capital market is not perfect, Chineseenterprises especially private enterprise financing difficult problem has always existed,the capital demand of enterprise to the international capital markets; and the relativeworld economic environment, many international investment institutions also the lineof sight to the economy is relatively stable, broad prospects for the development ofChinese market. The big investment institutions unusually active. The agreement ongambling as a valuation adjustment mechanism of investment activities, alsogradually as we are familiar with. Mengniu and Morgan Stanley on success, the cowgrows from a common enterprise of industry leaders, the agreement on gambling willbe shot to fame. Since then, Morgan and Stanley on the gambling Yongle, GomeWing-lok merger was to end, Prince milk and Morgan Stanley and other institutionsfor gambling, but also by its founder Li Tuchun to hand over control of the businessare gone and the end. For a time, the agreement on gambling is angel money or WallStreet financial means and the terms of overlord dispute have not. Practice of VAMalso differ in thousands of ways, uneven, some good and some bad. So the agreementon gambling as born in the Anglo-American legal system and capital environment,was introduced to China from abroad, in China’s legal environment, how is its legal effect? Haifu company v. Gansu Shiheng fails to bet against the compensationagreement case will be more Chinese legal system under the effect of VAM pushed inthe teeth of the storm.The author first introduces the background of the case Haifu company v. GansuShiheng case and the trial, the court of second instance verdict, lead to controversy.The second part introduces the concept, background, gambling on the agreementand its role in China under the law of the environment. Pointed out that the agreementon gambling as a valuation adjustment mechanism, in the investment and financinginformation asymmetry of both sides, both sides of financing of investment valuationare different, in the pursuit of high speed transfer of assets to the pursuit of profit,mechanism developed, it can ensure that the investment and financing both sides inthe asymmetric information, investment agreement to be reached investment targetvaluations are different, reduce the transaction cost. A hedge and incentive effect onthe gambling agreement. In China there is no premise explicit provisions of theagreement on gambling, which mainly due to China’s "contract law""company law"and other constraints, the effect to be recognized, required to meet the laws andregulations of our country and does not violate the prohibition law.The third part the author analyzes the focus of controversy involved in the case,has carried on the theoretical analysis, combined with our existing legal environment,the author thinks, the main body gambling agreement should be for financing investment and shareholders are Finance Companies, based on the company and thecreditors interests, Finance Companies can not be used as the adverse consequencesof gambling agreement of subject. About the content of the VAM, the author thinksthat the general provisions in addition to the application of contract law, also want toconsider the "fair", but not "fair", the agreement on gambling is a kind of specialinvestment, but the essence is still investment, it should abide by the principle of riskinvestment if the investment side, set "puttable clause", no matter be investmentperformance of the company profit and loss, which can guarantee the principal andinterest, should not be protected by law. Design of gambling agreement should ensureconsistency of both sides has intrinsic interest.In the last part of the article the author makes some suggestions on riskprevention of gambling on the agreement, investment and financing both sides.