Research On The Legal Issues Of The Validity Of Valueation Adjustment Mechanism

In recent years,the use of the valuation adjustment mechanism in the domestic investment market is more and more widely,which plays an important role in broadening the financing channels for enterprises,but at the same time,the valuation adjustment mechanism also causes a lot of legal disputes.Failure to properly resolve disputes will not only bring losses to both parties involved in the agreement,but also have a negative impact on the orderly and healthy development of the domestic market economy as an investment tool.On November 14,2019,the Supreme People’s Court of the People’s Republic of China issued "the national work conference on court in civil and commercial trial summary"(later referred to as the "meeting minutes"),In this minutes,it clearly points out the valuation adjustment mechanism and makes a distinction between its effectiveness and performance for the first time.At the same time,it analyzes and guides the relevant theories,which greatly promotes the development of the legal regulation of the valuation adjustment mechanism in China.However,it has to be admitted that although China’s legal regulation on the valuation adjustment mechanism has made significant progress,there are still many deficiencies compared with the practical needs.On the one hand,there is lack of written legislation on valuation adjustment mechanism,the hierarchy is low and unsystematic.On the other hand,the existing regulations still adhere to the traditional principle of capital maintenance,showing a conservative attitude,it’s not good for the value of the valuation adjustment mechanism,at the same time is not conducive to the protection of investment security.Legislation does not align with judicial practice,often leads to differences on the validity of the same agreement in judicial practice.As the basis of the whole agreement,the validity cannot be affirmed,not to mention the implementation of the later period.Therefore,it is particularly urgent to study the validity of the valuation adjustment mechanism.There are six chapters in this paper.The first chapter starts from the background and significance of the valuation adjustment mechanism,elaborates the background of the valuation adjustment mechanism in the capital market,and lists the research status of scholars at domestic and abroad.The second chapter discusses the general theory of the valuation adjustment mechanism from four angles of concept,nature,type and legal relationship.The nature of the valuation adjustment mechanism is discussed from the aspects of whether the valuation adjustment mechanism belongs to the conditional contract or aleatory contract.After listing the types of valuation adjustment mechanism,such as cash compensation and stock repurchase,this paper analyzes its legal relationship from three aspects of subject,object and content.The third chapter is the current situation of the legal regulation of the effectiveness of the valuation adjustment mechanism.It shows the provisions of law related to the valuation adjustment mechanism,department regulations and the relevant documents of the Supreme Court.Due to the lack of legislation,the department of law is divided into stating the basis of judging the validity of the agreement in judicial practice,and preliminarily discussing the problems existing in the practical trial of the validity of the agreement around various provisions,as well as the guiding ideology of the Supreme Law on the validity of the agreement.The fourth chapter is the core of this paper,which analyzes the legal problems of the validity of the valuation adjustment mechanism.According to the focus issues of the validity of the valuation adjustment mechanism in the trial of practice over the years,this paper sums up the four most controversial focuses for in-depth discussion.In the section of whether the valuation adjustment mechanism violates the principle of fairness,the author points out that it is important to distinguish the understanding of fairness between civil law and commercial law,and that the reasonable information difference between the two parties is inevitable when the agreement is signed,and it is unreasonable to ask for absolute fairness in investment transaction.In the question of whether the valuation adjustment mechanism violates the mandatory provisions,we should use the mandatory provisions carefully to negate the effectiveness of the valuation adjustment mechanism.Firstly,the distinction between the internal effectiveness and management of the mandatory provisions is not clear.Secondly,the legal provisions quoted by the mandatory provisions do not necessarily violate the mandatory provisions of the effectiveness.From the perspective of whether it infringes the interests of creditors,it puts forward that the investor does not have the status condition to abuse the rights of shareholders,and the financier’s fulfillment of compensation obligation does not necessarily damage the interests of the company and creditors.Finally,as to whether the agreement violates the principle of capital maintenance,the author thinks that the connotation and legislative intention of the principle should be correctly understood during the trial,and puts forward the viewpoint that the compensation of the investor does not constitute the withdrawal of capital.The fifth chapter puts forward some suggestions to solve the problem of the validity of the valuation adjustment mechanism.From the perspective of maintaining capital and protecting creditors,we should promote the conversion of the valuation adjustment mechanism to the named contract as soon as possible,improve the preferred stock system,relax the restriction of stock repurchase,flexibly use the principle of capital maintenance in judicial practice,and comprehensively improve the regulation of the valuation adjustment mechanism in combination with supervision.Finally,the sixth chapter summarizes the whole article.