Analysis Of The Performance Of Gambling Agreements

The "gambling agreement" has always been a difficult and complicated issue in our civil and commercial trials.After reviewing the literature and case studies,it is found that since the "Haifu case",issues such as the conflict between the gambling agreement and the principle of capital maintenance,the effectiveness of the gambling agreement,and the effectiveness of the gambling between the investor and the target company.These problems has always been a hot topic of discussion from all walks of life.End of 2019,the Supreme People’s Court issued a document called “Minutes of Civil and Commercial Meetings”.The document sorted out the basic concept of the "gambling agreement" and shifted the focus of the "gambling agreement" from the issue of contract legal validity to the issue of contract fulfilment,and recognized the "effectiveness of the investor and the target company’s gambling.".The document also pointed out that in actual performance,the court needs to review whether the performance is in compliance with the mandatory provisions of the company law to meet the bottom line of the capital maintenance principle.This is a major advancement in judicial practice,but the issue of the inability to perform the "gambling agreement" still cannot be effectively resolved.Constrained by the bottom line of the principle of capital maintenance,the reasons why the "gambling agreement" can not be fulfilled are concentrated on: the obstacles of the realizable funds,the obstacles of capital reduction and repurchase procedures,and the obstacles of "money can not be fulfilled".The fundamental problem of these controversial obstacles is that,under the principle of capital maintenance,what part of the capital and what procedures can the target company use to balance the interests of the company,creditors,investors and shareholders when the target company fails to meet the performance target and perform the equity repurchase and monetary compensation after the bet fails.In fact,the order of performance of "reducing capital first and then repurchasing" conveyed in the “Minutes of Civil and Commercial Meetings” cannot solve this fundamental problem.On the contrary,it shows that the Supreme People’s Court is still stuck in the stereotype of capital maintenance principle under capital credit.As the birthplace of PE/VC investment,the United States has more mature theoretical and practical experience on the issue of "gambling agreement".The United States law "Delaware General Corporation Law" and” Revised Model Business Corporation Act” related to the "distribution","surplus",and "solvency" of gambling agreements.These provisions are in the Thoughtworks case and the Frederick case in typical judicial cases.From the perspective of review,they have fully demonstrated the behavior and implementation limits of the performance of obligations to the gambling agreement under the principle of capital maintenance.Adhere to the principle of capital maintenance as the core,based on my country’s existing civil and commercial law system,refer to the US PE/VC investment legal practice,and try to establish a set of "legally available funds" standards from the point of view of the capital sources and financial resources restrictions of the target company to fulfill its obligations after failing to gamble.The standard is divided into two layers.The first layer of the "surplus + solvency" standard is the foundation and the source of funds.Available funds are extracted from the "surplus" profits,which can not affect the company’s ability to pay off debts due,and denies the illegal acts of using capital reserve and withdrawing capital contributions.The second layer,"sustainable management ability + protection of business judgment",is the financial resource restriction of funds and is an important supplement to the first layer.The extraction of available funds is not unlimited.Sufficient operating funds should be reserved for the company to ensure the company’s sustainable development.At the same time,the board of directors should be given certain "business judgment" to protect the decision-making of the board of directors and avoid excessive interference of judicial review in corporate autonomy.However,this protection is not an absolute safe haven.Finally,the essence of the gambling agreement is the result of equal and voluntary consultation between the parties.The unclear agreement on compensation liability constitutes a contract loophole,which can be filled according to Article 510 of the Civil Code.The methods of filling contract gaps include the agreement of the parties,the compulsory filling of the referee’s interests,and supplementary contract interpretation.According to the two-tier structure of "legally available funds",the parties can perfect the contract content,and the judge can make discretion according to it,which provides new ideas for solving the performance of "gambling agreement".