Research On The Validity Of Duidu Contract

To begin with, Duidu contract becomes widely known by the public because of the foreign institutional investors` applications. Due to its investor-protecting function, Duidu contract had been regarded as a trick for a time. With the development of capital market, that kind of conspiracy theory has been gradually discarded.Haifu vs. Shiheng case makes lawyers begin to pay attention to Duidu contract. In 2012 the Supreme Court thought that the Duidu contract between investor(s) and shareholder(s) is valid while that between investor(s) and company is void. However, it is not reasonable. Except the introduction and conclusion, this paper consists of four chapters.In chapter one, we are trying to clarify the misunderstanding of the origin of Duidu contract, which means Duidu contract is totally different from Valuation Adjustment Mechanism(“VAM”) in western legal world.In chapter two, there is an analysis about the type and validity of Duidu contract in legal practice. The result shows that the Duidu contract in legal practice can be classified into two types, repurchase and indemnity. Besides, the rule founded by the Supreme Court in 2012 has been strictly followed.Chapter three discusses the validity of Duidu contract from the aspect of traditional civil law. It shows that Duidu contract is different from manifestly unfair juristic act and it is neither a bottom profit clause nor a loan.Chapter four discusses the validity of Duidu contract from the aspect of corporate law. This chapter indicates that we cannot abstractly judge whether the Duidu contract will damage the interests of creditors or not. Financial analysis is used to find out if the two kinds of Duidu contract will violate the capital provision of corporate law, then. In addition the distinction between burden act and disposing act is also important.