Research On Legal Regulation Problems Of Valuation Adjustment Mechanism

In recent years,Valuation Adjustment Mechanism(VAM)as private equity investment instruments have been frequently used in China's investment activities.However,China's legislation has not yet made clear legal provisions on the VAM,leading to the issue of the effectiveness of the VAM in practice controversial.Following the judgment of the Supreme People's Court in 2012 on the "first case of the VAM ",The court generally formed a basic consensus: that is,between the investor and the target company's original shareholders or controlling shareholders of the VAM,as long as the two sides The court is of the opinion that it violates the capital system of the company and damages the relevant rights and interests of the creditor,based on the agreement between the investor and the target company.The need to protect the public interest,so there is no recognition of its legitimacy.Then the China International Economic and Trade Arbitration Commission in 2014 also dealt with cases involving VAM,but in the arbitral tribunal's decision not only recognized the investors and shareholders bet,but also recognized the investors and target companies on the law of VAM Effectiveness.This paper will combine these two typical cases,the original source,from the legal level of analysis of investors and target companies on the legal effect between the VAM,and then think about China's institutional environment,domestic enterprises should be effective use of the VAM to develop their own services,and to improve the legal system of the relevant recommendations.This paper is divided into four parts,the main contents are as follows:The first part,the introduction of the Supreme People's Court of the "bet on the first case" and the China International Economic and Trade Arbitration Commission of the arbitration case,through comparative analysis,the court think that the investor and the target company between the VAM is invalid,but the arbitral tribunal believe that is lawful and valid.Therefore,the paper puts forward the legal effect of the agreement between the investor and the target company.The second part,from the perspective of practical reasons,the depth of the VAM on the three root causes of "corporate valuation of the difficulties and differences","imperfect investment law" and "poor capital market environment",and then lay the foundation for the next discussion.The third part focuses on the question of the legitimacy of gambling between the investor and the target company,that is,whether the VAM should have legal effect.The author takes the two cases ruled by the Supreme People's Court and the China International Economic and Trade Arbitration Commission as the starting point.Firstly,it analyzes the factors that need to be considered in the judicial practice,that is,the legal nature of the VAM and the performance compensation clause The relationship between the provisions of the terms of the definition of the law,to further explore the court and arbitration against the case of judicial decisions to the VAM to discuss whether the VAM in violation of the field of financial law,the principle of risk sharing,in line with the provisions of the company law Capital system,and thus draw the author's own point of view,that is,the performance of the compensation agreement is not guaranteed at the end of the terms,did not violate the principle of risk sharing,and the VAM in the equity repurchase terms did not violate the requirements of the law System,without compromising the rights and interests of creditors.Therefore,it should be determined that the investment agreement between the investor and the target company is legally binding.In the fourth part,because the target company uses the VAM as a financing tool for the phenomenon of financing more and more common,I believe that should through the introduction of the relevant laws and regulations of the US venture capital contract,comparative analysis of the current legal dilemma of the current VAM in China,as soon as possible the introduction of the corresponding legal documents and measures to carry out targeted norms.By drawing on the relevant provisions of the US law and jurisprudence,the author gives some suggestions on the VAM in the legal system environment of China: from the perspective of "Company Law",it should allow the law to set the preferred stock,from the perspective of "contract law" The inclusion of VAM in the category of well-known contracts,so that investors and target companies in the investment activities to be able to follow the law;and the development of localized venture capital model contract to build a "repeated game" mechanism;The regulatory mechanism of the agreement to guide investors to treat the game on a gambling basis;and in parallel with the law and supervision on the basis of respect for the autonomy of the parties,to give investors more space to choose,so as to better control the VAM The risk of protection of investment and financing side of the relevant rights and interests.I believe that with the economic market reform to further deepen the VAM in the field of investment and financing to play their increasingly important role.