Study On Legal Issues Of Valuation Adjustment Mechanism

Valuation Adjustment Mechanism is designed as a kind of foreign investment institution combined with the Chinese legal system and the market environment designed to protect the right of investors.Over the past decades,the Valuation Adjustment Mechanism has gradually wildly used in China's VC/PE market and has developed quickly.However,Valuation Adjustment Mechanism as an "imported product" ?Chinese law does not make provision for it,and the " Valuation Adjustment Mechanism " is the product of the transplant under the Anglo-American legal system.Therefore,in our country,the application of the “Valuation Adjustment Mechanism” can only be implemented through contracts.Fistly,Based on the cases of disputes in the current judicial practice,the author divides into two major categories in China's judicial practice,including Dynamic adjustment based on performance or IPO,and in which performance gambling is divided into Cash compensation and Equity adjustment.Performance equity gambling,categorizing and analyzing different gambling terms,found that in China's practice,the current status of the gambling agreement in China was analyzed based on the confusing status of the Valuation Adjustment Mechanism and the current court's decision on different terms of Valuation Adjustment Mechanism.Secondly,the author introduces the function and value of the vam and finds that it aims to solve the problems of information asymmetry,agency risk,and valuation differences.Valuation Adjustment Mechanism in the United States is based on the “Model Venture Capital Venture Contract” and the corresponding legal system combined with its market environment to achieve its functions and values,including valuation methods,preferred shares and convertible preferred shares.The use of tools and terms to explore the most primitive conditions of the Valuation Adjustment Mechanism.And the obstacles that should be encountered in our legal system and market environment.Thridly,through the analysis of the situation of Chineses Valuation Adjustment Mechanism practice and judicial decisions,based on its function and value and the operating characteristics in the United States,And put forward reasonable proposal includes reasonable structure and design of Valuation Adjustment Mechanism accurately distinguish between an agreement on vam and improve the implementation of the agreement on gambling in China.