Research On Legal Validity Of PE's Valuation Adjustment Mechanism

Valuation adjustment Mechanism(Referred to as VAM)as a new investment tool,has been widely used in private equity investment.However,there are still few differences in the judgment of the legal effect of the VAM.Because there are no laws and regulations which have clearly defined VAM.At present,there is no dispute over the legal effectof the VAM between investors and shareholders in judicial practice and theoretical research.And it is generally considered valid in the absence of any violation of the mandatory provisions of laws and administrative regulations.However,both the judicial practice and the theoretical research,there is a great controversy over the legal effect of the VAM between the shareholders and the target company.With the gradual promotion of the important measures of capital market reform in China,the status of private equity investment in China's capital market has become increasingly prominent,and the VAM is an important tool for private equity investment,as soon as possible to clarify its Legal effect not only can effectively alleviate the difficulties of financing the small and medium enterprises,but also to fully explore the development potential of private equity investment,and further promote the reform of the capital market is of great significance.What are the institutional arrangements for VAM? What are the problems with the legal effect of the VAM between the investor and the target company in the current legal environment in China? What is the controversy over the legal effect of VAM in judicial practice and theoretical research? How to solve the problem of the legal effect of VAM? The above question is the content to be discussed in this paper.The general idea of this article is as follows: Firstly,the legal connotation and type of VAM are elaborated,and the comprehensive understanding of the operation mechanism of VAM is formed.Then,the author puts forward the problem,from the typical case and theoretical research in practice,summarizes the controversy which the legal effect of VAM exists,and draws a legal discussion of the legal effect of VAM.Finally,to solve the problem,focus on the construction of the relevant system to break the valuation of the terms of the legal effect of the problem.The main content can be divided into four parts:The first part is the elaboration of the theoretical basis level,which mainly expounds the irrationality of the appellation of the gambling agreement,and lays the rational basis for the term of VAM.At the same time,the connotation of VAM is defined in the contract law and the company law.VAM is the contract between the investment and financing sides on the basis of the autonomy of the meaning of the enterprise,and belongs to the new nameless contract.VAM is the equity price adjustment as the core of the "convertible bonds",is the productof class stock system.Finally,the actual form of VAM is sorted out.There are mainly "Earnout" and "contingent payment" in the foreign countries.In China,there are several realistic forms of cash compensation type,equity repurchase type,special equity type and equity adjustment type.The second part of the question part,through the analysis of "Gansu Shiheng capital increase dispute case","Jiangsu Jiayu equity transfer dispute case"," Guohua Industrial equity transfer dispute case," China International Economic and Trade Arbitration Commission ",This paper analyzes the different attitudes of the SFC to the regulation of the valuation adjustment clause,clarifies the different views on the legal effect of VAM in the theoretical research,and summarizes the legal effect of VAM in our country Controversy and elevate it to the current legal issue.The third part is the analysis of the problem part,this part is based on the "contract law" on the validity of the provisions of the contract,combined with the company law,securities law and other relevant laws,distinguish between different constituent elements,in-depth analysis between shareholders and target companies of the valuation of the terms of the invalid and the circumstances can be revoked.First,the abuse of shareholder rights undermine the interests of creditors,the principle of the impact of capital maintenance and the same shares of the spirit of the same provisions of the company law mandatory provisions of the valuation adjustment is invalid.Second,the proposed valuation of listed companies may lead to confusion in its ownership structure of the valuation clause is invalid.Again,failure to fulfill the administrative approval and assessment procedures and other violations of the "State-owned Assets Law" valuation adjustment clause is invalid.Finally,the subjective intentional use of their own advantages,resulting in the objective of both rights and obligations of the valuation of the provisions of the valuation can be revoked.The fourth part is to solve the problem part,this part is based on controversy of the legal effect of VAM,proposed to break the valuation of the terms of the legal effect of the legal system to determine the problem path.To solve the problem of the legal effect of VAM,it is necessary to abandon the traditional thinking of using the mandatory norm to define the validity of the contract,instead to focus on the contract itself.When the contract is invalid,the proportion of administrative law should be borrowed,the necessity of the contract itself,the necessity,timeliness and balance of the contract should be taken into account.VAM is a profound practice of the kind stocks.In order to solve the problem of the legal effect of VAM,it is necessary to strengthen the supply of the relevant provisions of VAM and improve the provisions of the Company Law on the kind system.In the case of the judicial adjustment of the valuation adjustment clause,we can consider the use of the concept of commercial trial,from the promotion of transactions,to ensure the safety of transactions,prudent identification of investors and target companies between the valuation of the terms of the terms..In the valuation of the provisions of the market regulation on the path,we can consider the implementation of VAM of the registration system,issued by the Commission to adjust the provisions of the valuation of information disclosure and format guidelines.