The Legal Validity Of "VAM Agreement"

As a valuation adjustment and risk dispersion mechanism,the "VAM agreement"is widely used in the field of corporate equity investment in China.But at the same time,it brings difficulties in the application of the law represented by the "Haifa Case".Although legal practitioners and scholars have been studying the dispute of "VAM agreement" for many years,both of them failed to conclude a well-recognised opinion in academic circles,nor a uniform adjudication approach in practice.Among those studies,the legality of the "VAM agreement" agreed by the target company to compensate investors gradually becomes the core of the problem,and makes the fate of the "VAM agreement" closely related to the implementation of the capital maintenance principle in the company law of China.On the one hand,the "VAM agreement",in which the target company undertakes the obligation of compensation,does not directly infringe on the realization of the principle of capital maintenance in the company law,and it has the functions including valuation adjustment,business incentive,satisfying investors and original shareholders different investment preferences and diversification of investment risk and other economic roles,so it has the attribute of financial innovation.But on the other hand,this kind of "VAM agreement"does exclude the suspicion and the realistic threat of injuring the company's"capital".These two dilemma are the essential reason for the judge to become a law shopper in practice.However,adjudicators tend to adopt the extreme attitude to the fate of this kind of "VAM agreement",which not only cannot solve the dilemma problems in essence,but also lack legal legitimacy.Although the existing researches are varied in forms,but,in the final analysis,under the influence of the "Haifu case",they all attempt to find out the validity basis for the"VAM agreement",contributing no substantial help to solve the problem.The dispute of "VAM agreement" is a concentrated test for the legislative mode of the combination of civil and commercial affairs and legal practice in China by active market innovation,which exposes the absence of the rules of contract interpretation existing in Chinese judicature.There are many problems,such as the unclear boundary between private autonomy and legal order,the lack of maneuverability of corporate capital maintenance rules in legislation,and the urgent need for the establishment of preferred stock system.In view of this,this dissertation tries to review the existing adjudicators'approaches and opinions by analysing the typical cases appearing in practice.This dissertation discusses the relationship between the legality of the "VAM agreement" and the mandatory regulation of capital maintenance in the company law,so as to find the proper approach settling the dispute of the equity investment "VAM agreement".Combined with the knowledge of corporate financial accounting,this dissertation evaluates the maneuverability of the capital maintenance rules in the current company law of our country,and puts forward the idea of reform.In the first chapter,this dissertation explains the connotation,nature and characteristics of the "VAM agreement",and expounds the reasons for the popularity of the "VAM agreement" and the functions of the different types of "VAM agreement".Furthermore,the concept of "VAM agreement" adopted in this dissertation is in medium-caliber,and the object discussed in this dissertation is focused on the type of"VAM agreement" of equity investment in real disputes.The second chapter will firstly demonstrate the confusion of the adjudicator's approach to the "VAM agreement"disputes,and then introduce the theory in current academic circles and its inherent defects.The third chapter will demonstrate the legitimacy of taking contract interpretation and complement as the starting point of settling the "VAM agreement"disputes.By comparing the judicial model of contract interpretation and gap complement,this dissertation puts forward the corresponding steps to interpret and complete the "VAM agreement".The fourth part will sort out the defects of the current company law system,and demonstrate that the inoperability of the principle of capital maintenance is the fundamental cause of the dilemma of "VAM agreement".Putting forward the corresponding company law distribution system reform plays a substantial role in resolving VAM disputes.It also compares the legislation and evolution of corresponding foreign legal systems,and puts forward the reform prospects of Clfinese company law.Finally,based on the contract interpretation and gap complement,and establishing the distribution and prohibition system of the company law as the substantial resort,the dispute settlement approach of the "VAM agreement" will be concluded,which is expected to be of some benefit to the settlement of judicial difficulties.