Legal Analysis Of Vam Used In Private Equity Under The Practical Application In China

In the beginning of2013, the Supreme People’s court of Hanfu Investment limited Corp. VS Gansu Shiheng which the major shareholder of HK dira Corp. case made a final decision, that found agreement on VAM between companies is legal. HK dira Corp. Shall pay1,998.2095million for the Haifu Investment limited Corp. So far, the first native VAM of PE lawsuit rang down the curtain.As the domestic PE industry to grow up, some foreign-funded enterprises began to have more focused on our growth potential companies. However, due to lack of acquaintance of the Chinese market, investors will generally choose to VAM as a tool to protect themselves. VAM occupies a pivotal position in the financing of PE. Some people think that VAM as a means to lock the investment risk, but the others suggested that VAM would do serous investors solely on VAM, it is more impetuous performance. Although there are different voices domestic undeniable agreement on VAM remains a means of PE in a wide range of applications. In this paper, the use of legal knowledge, combined with a certain degree of financial theory, and strive to put forward their views and suggestions. The paper includes the following sections:The first chapter, the paper give an introduction, a brief description of the background, content and research methods.The second chapter, the paper describes the background knowledge%the concept、 characteristics and basic mode of PE and VAM.The third chapter,the paper combined with domestic situation, starting from practice of VAM elaborates the the plight and problems.The fourth chapter,standing in different position of micro、 macro standpoints, the paper has proposed the risk prevention, regulatory and perfect the legal system. VAM, this "double-edged sword" play the biggest role to achieve a win-win situation.The fifth chapter, the paper concluded that:in order to use for VAM,at the macro views, we should be continuous improvement associated with the law; at micro views, we should conjunction with the market, improve the valuation system, in order to achieve the investment and financing companies’s win-win situation.