An Exploration On The Legal Effect Of Valuation Ajustment Mechanism

In recent years,with the continuous development of private equity investment,The application of the valuation adjustment mechanism(VAM)is becoming more and more common.It helps investors to reduce the risk of investment caused by asymmetric information and motivate the management of Target Corp management.In 2012,Hai Fu Investment Co.v.Gansu Shi Heng company known as "the first case of VAM" attracted the attention of all parties.In this case,three levels of courts have their own justification for the issue of the validity of VAM,It has caused a great controversy.It was found that there were no laws and regulations on VAM in our country.As an import,VAM in the developed capital markets of Europe and the United States,there have been mature legal rules for it.In recent years,there has been a constant occurrence of legal disputes over VAM,but it is still difficult for courts at all levels to have uniform standards of legal adjudication.It not only reduces the judicial credibility of the court,but also makes people feel confused about how to use VAM.Classifies VAM according to the subject and content of the signing,and collates and analyzes the typical cases of various types of referees,it is found that there are some problems in the current court in determining the effectiveness of VAM.By analyzing of the legal nature of VAM,I think that VAM is in accordance with the relevant provisions of the contract law and the company law.In view of the problems existing in the court,I put forward the criteria when judging whether VAM is valid.Finally,I propose a proposal to improve the legal rules related to VAM.To introduce the basic situation of VAM.In accordance with the content of VAM,it is divided into two types of cash compensation and share repurchase.At the same time,it is divided into three categories according to the subject of signing.According to this method,VAM is divided into six categories.By analyzing of six typical cases of VAM,it is found that the court has the thought defect in judging the validity of VAM in the form of judging the subject based on the signing of the subject.Finally,I will try to correct the defect of this thought,and put forward that the court should adhere to the thought of determining the validity of the substance more than the form and the stakeholder.By sorting out the analytical views of the scholars in recent years,it is pointed out that VAM conforms to the characteristics of the lucky contract.And it belongs to the lucky contract in the legal nature.It is necessary to analyze whether VAM is in conformity with the provisions of the contract law and the company law.Finally pointed out that effect of VAM standard should be effective in the actual principle,due to damage to the rights of VAM when filing the application,The court must investigate the existence of the injured party and,on the basis of the survey results,to determine whether VAM is invalid.Through the above-mentioned legal analysis of VAM,we can see that the most fundamental problem is the blank of legislation.Finally,the author puts forward the legislative proposals from three aspects of law,administrative regulations and judicial interpretation,hopes to provide some reference for the legislation of VAM and make up the gaps of relevant legislation as soon as possible.