Research On The Enforcement Recognition Of Valuation Adjustment Mechanism

In recent years, Private Equity Investment obtained the rapid development in our country, which is a new kind of investment instruments to raise funds in private capital to specific objects, and it’s becoming more and more importance in the financial markets. On the one hand, Private Equity Investment Fund Companies have strong capital strength and professional analysis capability, tend to choose some of the high-risk and high-reward projects for investment. On the other hand, many outstanding enterprises(which are small and medium-sized) often faced with lack of the money, lack of financing channels and so on, so they generally choose Private Equity to seek development, and hope to get win-win on both sides. But it’s lack of the law for the regulation of Private Equity Investment in our country, and there are many uncertainties for the development of the enterprise. Financiers and Investors are faced with many risks in the investment of Private Equity, so that they often choose to sign a series of "Valuation Adjustment Mechanism", which can use to help investors get funding and help investors to reduce risks. But in the process of "Valuation Adjustment Mechanism" to perform, Financiers and Investors have many divergences in the effectiveness of the "Valuation Adjustment Mechanism", which caused many controversies. With actively development in the financial investment market, courts and arbitration institutions had heard a large number of cases involving "Valuation Adjustment Mechanism". But because the law isn’t clear about "Valuation Adjustment Mechanism" in our country, there are a lot of troubles in adjudications of the effectiveness of the "Valuation Adjustment Mechanism". After the "Haifu cause" has been the first invalidation cause about "Valuation Adjustment Mechanism", there are many controversies about "Valuation Adjustment Mechanism" between academia and practical circle. The effectiveness of the "Valuation Adjustment Mechanism" has a lot of impacts on the interests of Financiers and Investors, so how to identify these "Valuation Adjustment Mechanism" is very import. It’s not only beneficial for the Financiers and Investors, but also has a significant impact on the prosperity of financial capital market of the China.According to the latest case about this treaty in 2014, this article want to analysis the debates between Financiers and Investors, and analysis the attitude of courts and arbitration institutions when they heard these cases. This article will discuss how to identify the effectiveness of the "Valuation Adjustment Mechanism" from the existing law. The Valuation Adjustment Mechanism as a contract has the attribute of both civil law and commercial law and has the rationality of its existence. I think we can identify the treaty from the direction of contract law, company law, finance law and so on, and we should determine the effectiveness of the treaty combined with the specific cases.