Obstacles To The Implementation Of The Valuation Adjustment Mechanism Of Stock Group Repurchase Banks And Their Resolution

Prior to the publication of the Minutes of Civil and Commercial Meetings,disputes over the valuation adjustment mechanism centered on its validity in academic circles and in court practice.,and different opinions never reached the same standard.The promulgation of the Minutes of Civil and Commercial Meetings means that the criterion for determining the validity of the valuation adjustment mechanism is clearly defined for the first time,that is,the valuation adjustment mechanism is valid in principle as long as there is no reason of legal invalidity.At the same time,it regulates the performance of the bet agreement,regarding the situation where the investor requests the target company to buy back the shares,the court will examine whether there has been a flight by the investor under section 35 of the companies act or whether the target company has complied with the mandatory requirement for share buybacks under section 142 of the Companies Act,whether the target enterprise completes the capital reduction procedure.Although the original intention of the the Minutes of Civil and Commercial Meetings is to balance the interests of the investor,the target company and the creditors,it also creates some obstacles in the actual implementation,to prevent the fulfillment of the repurchase obligation stipulated in the terms of the valuation adjustment mechanism.Based on this,this paper summarizes and analyzes the cases of the evaluation coordination mechanism,thereby arranging the problems that exist in the operation process of the evaluation mechanism.this includes the defects of the pre-repurchase procedure with the reduction of capital,the deficiencies of the repurchase examination standard and the defects of the lack of the restriction of the source of repurchase funds.These issues result in the target company failing to meet agreed targets and failing to consider the interests of the investor,the target company and creditors when the repurchase obligation of the terms of the adjustment mechanism of the assessment is triggered,often to the detriment of investors’ interests to ensure the protection of creditors’ interests,the ultimate target company failed to fulfill the terms of the agreement on the right to buy-back obligations.Based on the experience of extraterritorial law and classic cases,this paper tries to solve the obstacles in the implementation of the valuation adjustment mechanism in China,and puts forward the following suggestions: first,unbundle capital reduction programs from buybacks secondly,the review standard of repurchase should be reconstructed with the capital maintenance system as the cornerstone,and the solvency test should be introduced to establish the local review standard of repurchase,in this paper,we introduce the restriction of the source of repo funds,take the "legally available funds" as the standard,the board of directors as the main body of restrictions on the source of repurchase funds,and enumerate the scope of restrictions on the source of repurchase funds.It is hoped that the obstacles in the implementation of the valuation adjustment mechanism can be removed,and the interests of investors,target companies and creditors can be taken into account,so that the valuation adjustment mechanism can better play its due value in the capital market.