The Legal Risk Prevention Of VAM

In our country, the financing problems are becoming the sensitive issues that exist in the private enterprises, as well as small businesses. But private equity funds(PE) and other investment institutions play a large role in this issue. When the two sides sign VAM, they often agreed premium capital increase at with a higher valuation to lock in investment risks. On the one hand, enterprises predict results with confidence;On the other hand, PE and other investment institutions canno eliminate the suspicion of certainty.To balance the interests of both sides, VAM is widely used.In recent years, the discussions on VAM are increasingly fierce. Related disputes also frequently appear in public, litigation or arbitration, performance compensation or share buyback disputes,and ranging from legal effect to calculation of interest.VAM is not just a contract, because it’s very professional. The existing laws is blank, so it’s also a challenge for judges. At the same time, VAM involves many problems and interests, such withdraw the capital, disguised debt, shareholders and creditors, medium and small investors and companies independence, even involves interdisciplinary problem such as value rationality. Therefore, how to carry out the applicable law, how to treat regulatory risks, how to avoid legal risk and play a positive role of VAM,all of them are questions of worth exploring. This thesis, besides preface and epilogue, includes three chapters, from the basic theory to the legal risks and the corresponding prevention mechanism.Chapters are arranged as following: the first part is the meaning, types, characteristics, legal structure and the legitimacy of existence. The second part mainly discusses legal risks faced by both parties, no matter the applicable laws or the regulatory audit. The third part is for the second part discussed the legal risks, and puts forward a more complete and detailed legislative proposals as well as how to conduct regulatory system to carry on the reasonable regulation,.in this way, both sides who sign the VAM also can better avoid risks.