Eiffcacy Study On VAM Agreement

This case is the first case of the China’s Private Equity Field VAM(ValuationAdjustmentMechanism)Agreement.It have been three years from the course of thecase in2009to the the judgment of people’s supreme court. The first instance and secondinstance and the retrial court made different validity cognizancerespectivelyon the terms andconditions of the increasing bet agreement based on the same legal facts, especially totheargument of whether VAM Agreement is invalid or effective bringing huge influence to thefinancing of capital market in China, it is of great practical significance. This article willanalyze the validity of VAMAgreement in the Gansu Constant case from the perspective ofthe contract law and corporation law, through the law of bet agreement qualitatively judgeon the basis of clarifying effectiveness bet agreement, probing into the basic principle of civillaw to find its rationality and legitimacy foundation, according to the current law frameworkbet suggest law applicable to the plight of the agreement. The full text is roughly divided intothe following five parts:The first part introduces the background about the case. This part of the background to thecase of both parties to account, for the two sides signed the agreement on bet against thetransaction process and investment purposes, by all levels of the court trial process,ascertaining the facts and the reason to account for the necessary expansion of case analysis.The second part is the analysis of case law dispute points. This part of the process ofVAM Agreement law qualitative, is effective, the referee on the basis of analysis, etc, bylending to bet against the agreement of legal relation, qualitative guarantee legal relationshipwith nameless contract law, analyses the similarities and differences between court judge.The third part explores the effectiveness of the VAMAgreement in determining the basis.The bet for different court agreement effectiveness analysis, understand and apply the rules byreferees and legal basis for the research behind it, from thedisgraceful consideration of contract law, the party autonomy to the company law prohibitabuse of shareholders’ rights and risk-sharing principle to parse the bet against the agreementof rationality and legitimacy foundation.The fourth part analysis the applicable of VAMAgreement. This part from the analysis ofcurrent law system in our country VAM Agreement applicable risk and insufficient legislation, comb through institutional sure bet agreement to perform the process of investment andfinancing difficulties brought by the both sides and the potential impact of the capital markets.The last part talks about the advices of applicable rules of VAM agreement from theaward of the case. This part on the legal system of the private equity investment as a whole,from the specific methods of reducing the risk of contract effectiveness to VAM normativetype, allowed to bet on mechanism, such as diversification and introduction of convertiblesecurities legal risk coping Suggestions.