The Dilemma And Solution Of The Effectiveness Of The Valuation Adjustment Mechanism In Field Of Private Equity Investment In China

The Valuation Adjustment Mechanism is an important negotiational tool in the field of private equity investment,which is of great significance for solving the financing difficulties of Chinese SMEs and stimulating the vitality of China's capital market.The Valuation Adjustment Mechanism as a new field of capital market is used the more commonly in our country,but its legal effect has not been recognized by the authorities forming the effect dilemma of The Valuation Adjustment Mechanism in our country,especially in the judicial practice of our country and financial supervision areas.Before discussing the legal effect of The Valuation Adjustment Mechanism,we should first make clear the legal nature of The Valuation Adjustment Mechanism.As long as it is correctly positioned in the legal context and clears its essential features,it is beneficial to resolve the dilemma of the effectiveness of The Valuation Adjustment Mechanism.The court has confounded The Valuation Adjustment Mechanism with the loan contract,thus negating the effectiveness of the Valuation Adjustment Mechanism.Some courts also regarded the Valuation Adjustment Mechanism as an option contract.From this,we can see that the judiciary has great differences in the nature of the Valuation Adjustment Mechanism.Through the analysis,it is obvious that the Valuation Adjustment Mechanism does not belong to the loan contract.For scholars,There are similarities between the Valuation Adjustment Mechanism with the nameless contract,"option contract","lucky contract" and "conditional contract,but they cannot completely cover the essential attributes of the Valuation Adjustment Mechanism.The Valuation Adjustment Mechanism should belong to the nameless contract in our country's contract law.Meanwhile,it will have a positive meaning to classify the Valuation Adjustment Mechanism into the nameless contract,because it can prevent the judicial practitioners from being "preconceived" in the concept,which is conducive to the development of the Valuation Adjustment Mechanism in our country.In addition,in view of the plight of the effectiveness of the Valuation Adjustment Mechanist,it is first manifested in the judicial department's non acceptance of the effectiveness of the Valuation Adjustment Mechanism.Though the first case of "Hai Fu investment case" has been given in China,the Supreme Court has given relatively clear guidelines and has limited recognition of the "legal effect" of the Valuation Adjustment Mechanism.However,the rumour which is "effective against the original shareholders of the financing enterprise,invalid against the financing company" is misleading the judiciary.Generally speaking,the theory of "effective gambling with the original shareholders of a financier company" is generally agreed with the academic circles.However,there is a lot of controversy about the "invalid gambling with the financing company".The "gambling with the financing company" clause should belong to the "relative effective contract",which the specific rights and interests related personnel can claim it invalid.Secondly,the plight of the effectiveness of the Valuation Adjustment Mechanism is manifested in the strict restrictions on the Valuation Adjustment Mechanism by the financial regulators.Based on the particularity of capital market,it is no problem that the financial regulatory authorities strictly control in the general direction,but the detailed rules for the implementation of the agreement on the Valuation Adjustment Mechanism is beg to differ.In order to play a positive role in the capital market,suggestions from the perfect legal provisions,unify the judicial judgment standard of the validity on the Valuation Adjustment Mechanism and acknowledging the effectiveness of part of the Valuation Adjustment Mechanism in securities regulation to solve the current predicament in our country.Specifically,including the Valuation Adjustment Mechanism into the "contract" category,perfecting the preferred shares in the company law legislation and other measures to perfect the legal provisions;unify the judicial judgment standard of the validity on the Valuation Adjustment Mechanism refers to that the legal validity of various types of the Valuation Adjustment Mechanism should be clear,and fix them in the form of judicial precedents and judicial interpretations in order to correctly guide market participants,judicial organs and people from all walks of life.Acknowledging the effectiveness of part of the Valuation Adjustment Mechanism in securities regulation is to correct the unreasonable aspects in the implementation rules of the Valuation Adjustment Mechanism,relax the audit restrictions on gambling agreements,and promote the positive role of the Valuation Adjustment Mechanism in the development of capital market.The purpose of this paper is to help the Valuation Adjustment Mechanism resolve its predicament in an early stage in China,so as to promote the healthy development of the Valuation Adjustment Mechanism in China's capital market,and provide a meager strength for solving the financing difficulties of small and medium-sized enterprises and stimulating the vitality of the capital market economy.