A Research On The Typical Cases Of Valuation Adjustment Mechanism With Target Companies As The Main Body

In the field of private equity investment,valuation adjustment mechanism(VAM)as a financial innovation tool is more and more widely used.To a certain extent,the use of the VAM not only broadens the financing channels of small and medium-size enterprise but also alleviates the problem of financing difficulties.With the frequent occurrence of the events that resort to the judicial procedure due to the breach of the gambling agreement,such cases have gradually come into people’s sight and become familiar to the public.Influenced by the view of retrial of the first bet case "ShiHeng case",the validity of the bet agreement is usually determined by distinguishing the bet subjects in the judicial trial,that is,the bet with the shareholders of the target company is effective and the bet with the target company is invalid,which has caused great controversy in the academic and practical circles.It is undeniable that the betting agreement with the target company as the main body has its existing legal value and commercial value in the commercial practice,its legal effect should be recognized and its due value should be given play to,and should not be regarded as invalid.Therefore,it is necessary to carry out an in-depth study of such gambling cases in judicial practice.This paper consists of three parts:The first part is "question raising:reflections on two typical cases".This part mainly introduces the cases of Gansu ShiHeng case and Shandong HanLin case as well as the opinions of the court.On this basis,the research questions in this paper are proposed to provide the premise and basis for further research.The second part is "legal issues analysis:with the target company as the main body of the bet agreement",this part mainly through to the first part of the focus of controversy combing with the target company were summarized as the main body of performance compensation type bet protocol type and share repurchases bet against controversial issues in the case of two types of the legal issues of bet agreement is analyzed.The main points of dispute in the case of performance compensation betting agreement are as follows:whether the performance compensation violates the provisions of legal profit distribution,whether the performance compensation is actually borrowing and lending as investment,and whether the performance compensation makes the investors obtain fixed income which is separated from the operating performance;The disputes in the case of the equity repurchase agreement mainly focus on whether the agreed equity repurchase violates the legal repurchase provisions of the company law,whether the agreed equity repurchase constitutes capital withdrawal,and whether the target company is responsible for returning the investment surplus.Whether performance compensation or share repurchase constitutes abuse of shareholders’ rights is a common issue in performance compensation or share repurchase.Through the analysis of the above dispute focus,this paper thinks that in judicial practice,the reason why the court tends to find that the bet agreement with the target company as the main body is invalid is mainly due to the consideration of the company’s capital system and the protection of creditors’interests.Even so,this paper believes that the target company as the main body of the bet agreement is not necessarily invalid.The third part is "Suggestions for improvement:judicial trial and practical operation".Based on the analysis of the second part,this part mainly puts forward Suggestions for improvement in judicial trial and practical operation.At the judicial level,the attitude towards this kind of gambling agreement is "better open than block".In the practical operation level,the signing of the bet agreement with the target company as the main body should meet the requirements of the company’s capital system.By studying this paper argues that in the target company as the main body of the agreement is not invalid,nor are all effective,as long as it doesn’t make the contract invalid situations,such as fraud,coercion and bet against the agreement to perform and do not hurt the company capital system,and also there is no lack of influence to the creditor benefit protection,such bet against the agreement shall be effective.