The Research On The Ineffectiveness Of Valuation Adjustment Mechanism

The gambling agreement,as a valuation adjustment mechanism in investment and financing activities,aims to maintain the economic interests of investors through valuation adjustment mechanisms.In judicial practice,because the relative lag of legislation makes the validity of the gambling agreement difficult to accurately determine,the dispute over the invalidity of the gambling agreement has always been its core issue.The most important invalidity dispute occurs in the gambling agreement when the target company directly acts as the subject of the commitment to compensation.In 2012,the Supreme Court made an invalid judgment on the target company’s direct participation in the gambling gambling agreement for the first time.In the subsequent court hearings,the court gradually formed a referee rule based on the case: the investor and the target company.The gambling agreement signed between the shareholders is deemed to be legal and valid as long as the meaning of the parties is true and does not violate the mandatory provisions of the law;and the court considers that the gambling agreement between the investor and the target company violates the capital system of the company.And the damage to the relevant rights and interests of creditors is based on the need to protect the public interest,so it does not recognize its legitimacy.In April 2019,the Jiangsu Higher People’s Court made a breakthrough in the above-mentioned referee rules in the judgment.For the first time in the effective judgment,the investor and the target company’s gambling agreement were effectively identified.Judging from the main disputes over the gambling agreement in reality,the risk of invalidity of the gambling agreement is mainly due to the performance compensation clause in the gambling agreement and the unfairness of the "Contract Law",the profit distribution in the "Company Law",The conflict between the principle of equal rights,the capital maintenance system,and the mandatory provisions of some of the regulatory documents of the CSRC lead to the risk of ineffectiveness.This paper discusses the ineffectiveness of the targetcompany’s direct participation in the gambling agreement by comparing and analyzing the rules that lead to the invalidation of the gambling agreement.Finally,in view of the above-mentioned invalidity risk,combined with the nature of the gambling agreement and the mature gambling mechanism in the extra-regional investment practice,the paper puts forward some suggestions on the prevention of invalidity risk and the construction of the legal system.From the perspective of the design of the terms of the gambling agreement,it is suggested that the design of the commitment index of the gambling agreement should be rational and diverse,and the controversial equity redemption clause should be double-designed to ensure its effective implementation;From the perspective of the establishment,it is recommended to establish a special legal and regulatory regulation for the gambling agreement as a famous contract as soon as possible,expand the scope of application of the gambling agreement,and strengthen the supervision of the gambling agreement.