The Research On The Legal Problems Of Valuation Adjustment Mechanism

Valuation Adjustment Mechanism(VAM), as a kind of financial investment tool rooted in the soil of western capitalist, especially in nearly a decade or two years, with the deepening of China’s reform and opening up and the continuous development of market economy, and the state shall encourage and support entrepreneurial policies, with the advent of more and more high-tech start-ups and innovative enterprises, VAM has been widely applied to the field of investment and financing in our country, effectively solves the financing difficult problems in the development of small and medium-sized enterprises. In order to reduce their investment risk, investors convent the rewards and punishment measures on the VAM to protect their own interests and incentive for business to generate financing side effects, and at the same time, the financiers also solve the plight of funds shortage. In theory, it is not only a perfect way but also a win-win choice for both sides.In 2002, the MengNiu Group signed VAM with foreign investment institutions and success. After that, the VAM gradually known and used in our country. But not all companies can as successful as MengNiu Group, because there are many companies lose the VAM and eventually lead to lost the control of their own enterprises, lonely departure. It is based on the success or failure disastrous bet on the result, combined with our country current law does not clearly defined them, so it led to VAM generated a lot of controversy in the practical application. In 2012, along with the Supreme People’s Court final judgment of the named first of VAM case-Haifu VS ShiHeng case, which pointed out a way to the judiciary and financial investors, as long as the it does not violate mandatory provisions of the law in our country, does not damage the social and economic order in our country, does not violate the collective and other people, the VAM signed by investors and financiers controlling shareholder should be considered valid. This is also on behalf of the judiciary’s position on VMA, which is certain the function of VAM in our financing investment.This article is based on the present situation. In order to make everyone have a comprehensive full understanding on VAM, we discuss and research from the related legal issues of VAM, which we need dialectical think. This article include four parts.The first part is an overview of VAM, which briefly introduce the meaning and characteristics of the new financing instruments VAM. Following, we analyze why VAM would born and it will bring which functions in the practical application.The second part is the legal relationship and legal attributes of the VAM. As a financial tool in investment field, it is a contract signed between equality subjects base on autonomy. The same as all the other legal relation, VAM legal relation is also composed of subject, object and content. As for the legal nature of VAM, there are aleatory contracts, options contracts, attached to the contracts even the security contract. Through analyzing the difference between VAM with the above-mentioned contract, the author think that the VAM is a typical nameless contract, which should not be entirely attributed to a certain category of current contracts, although it has part characteristics of the above contract.The third part is the legitimacy and effectiveness of VAM. Due to the current law system in our country does not make clear rules on VAM, which leading to a lot of controversy about the effect of VAM. There are positive and negative points, firstly we use case analysis to make a brief comments on it. Then, I study from the view of Contract Law and Company Law, analyzing the legality problem of the VAM from the qualification of the parties, meaning of the parties and the contents. Finally, we display the revocable situation of VAM which due to misunderstanding, fraud, duress and also the invalid situation for it violate legal mandatory regulations.The fourth part is the legal risk of VAM facing in our country and the path of the regulation. The main risk include that the agreement of share transfer conflict with company law, the priority terms conflict with the principle of same stock same rights, the enterprise containing VAM may suffer restricted IPO audit, and the VAM conflict with our anti-monopoly law. We put forward the corresponding proposal facing the legal risk, firstly we should clear the legal validity of VAM, improve relevant law system of species shares at the same time. Moreover, the CSRC should properly allow the enterprise list which including VAM. Finally, investors and financicers should reasonably set the targets and exit clause of VAM.This article mainly uses the theory of the theory combined with practice method, case analysis method and comparative analysis method in the process of writing. Through analysising compared with similiar legal concepts, we obtain that the legal attributes of VAM is the unknown contract.In the analysis of legal effect and legal risk, we study from the perspective of legal theory to explain the legal connotation and the law problems which the VAM is facing, through the typical case analysis, ultimately we return to how to regulate the corresponding legal risks in the actual practice operation.There are some innovations in this paper:1.As an investment tool in the field of financial, this article analysis the content, the characteristics, the effectiveness and risk of the VAM from the the perspective of law.2.Analyzing the legal nature of the VAM in detailed, we obtain that the VAM is a new kind of nameless contract which needing our law to regulate through comparing the similarities and differences between the VAM and the related contract.