Research On Bet Agreement Legal Issues In Private Equity

Bet agreement applied to equity investment on a large scale in the territory of China since the 21st century, more and more international famous investment Banks are keen to our country enterprise equity investment. From the start-up stage of Mengniu Dairy, or mature firms of Taizinai, and other large companies such as Gome group have participated in bet against the agreement. Bet protocol is aimed to solve the problem of asymmetric information. Its fundamental value is to adjust the invested enterprise valuation and resolve the differences of enterprise valuation. When the invested enterprise is overvalued, the financiers should make up for the loss of the investor. When the invested enterprise is undervalued, the investor should compensate to the financiers to increase funding premium income. But in theoretical and practical circles, there is a big controversy on the rationality, legitimacy, and legal attributes of bet agreement.In addition, there are many legal obstacles on the application of bet agreement in private equity investment practice in China.The paper analyzes on the legal issues of the bet agreement in private-equity investment in our country, then discuss its concept and characteristics, and define its legal relations and legal nature. The paper argues that it should be as the nameless contract, that is not aleatory contract, not conditional contract, not more guarantee contract; The provisions of the bet agreement is not clearly under the current legal system in our country. So there is a controversy on the legality of the bet to bet agreement in theory and practice. Exploring the legitimacy of the bet agreement will determine the application of legal basis. One of the focus of the article is to analyze its legitimacy under the current Chinese law. One of the highlights of the article is to define the legal effectiveness of the bet agreement from the various angles. And the paper discusses the problems and risks of the application of the bet agreement under the laws and regulations of our country. Then it puts forward the legislative suggestions and methods of risks prevention, which aimes at to provide certain reference for the theory and practice of the private equity investment.