Research On Legal Issues Concerning The VAM Under The Chinese Law

In recent years, PE acted an important role in the financing of private enterprises. In the private equity investment agreement always contains a Valuation Adjustment Mechanism (VAM), for narrowing the difference between the investors and the financiers. It also can provide a method to figure the problems appeared in the implement of business strategy. While the VAM remains a legal vacuum in our country, and the validity of VAM is also a highly controversial issue in academia. "HaiFu-Case", as the first case which involved the VAM, went through a retrial by the Supreme People’s Court and received great attention. This article proposed to analyze and review the "HaiFu-Case", discuss the definition, theoretical basis, legal nature, validity, etc. of the VAM and finally to make a conclusion about the essential matters in a VAM.This article is divided into five chapters. The first chapter is mainly about the details of "HaiFu-Case" and reviewed the main ideas of the judgment. The second chapter set forth the fundamental theory of the VAM, discussed the definition, theoretical basis, legal nature, validity, etc. of the VAM. In the third chapter, this article pointed out that the growing enterprises preferred an equity financing and the market environment made VAM a reasonable selection to protect the interests of the business. The forth chapter mainly argued the validity of VAM in our legal system and reviewed the judgment of the "HaiFu-Case". And several suggestions for setting a VAM in private equity agreements were offered in the last chapter.