Research On The Validity Determination Of The Stock Repurchase Agreement Determined By The Limited Liability Company

In November 2019,the Supreme People's Court released the minutes of the National Conference on Civil and commercial trial work of the courts(hereinafter referred to as the minutes of the nine people's Court),in which the validity of the "bet agreement" was determined,in particular,the opinion on whether the bet between the target company and the investor is effective or not has aroused heated discussion and concern in the capital market.In recent years,venture capital has become a major source of financing for many start-ups due to internal and external financing constraints.However,the Information asymmetry and uncertainty of the target company's future development make it difficult for both the investor and the investee to accurately predict the actual situation of the target company's future,therefore,we should set up a valuation adjustment mechanism,that is,the investor and the investee will adjust the investment conditions or compensate the investor to balance the interests of both parties according to the future operation of the target company.The Valuation Adjustment Mechanism discussed in this paper is that if the conditions agreed by the investor and the target company are not fulfilled,that is,if the investor "gambles" and loses,the investor shall have the right to request the target company to buy back the equity or cash compensation held by the investor in the target company.However,the legitimacy of this valuation adjustment mechanism is controversial in practice,and it has been in a long-term conflict between legal compliance and autonomy.In particular,the target company is a limited liability company,whether it can become a suitable subject of bet is the judicial practice to identify the more ambiguous area,but also the "nine people's summary" to the public to give the opinion of the focus and difficulty.Therefore,the author defines the "bet agreement" as follows: The bet object is the target company and the Target Company is the limited liability company.Starting from the controversial Supreme Court's "summary of the nine people",the author interprets the main issues of concern and solutions to the Supreme Court's current determination of the effectiveness of a bet against a target company,although it is not a judicial interpretation,it is the Supreme Court's most explicit one on the effectiveness of the target company bet.However,the content of this breakthrough consultation opinion of the Supreme Court is consistent with the judicial opinions in recent judicial practice,but it lacks more clear and practical basis and further guidance.Therefore,the author thinks on this basis,starting from the introduction of the general situation of the Vam agreement,standing on the basis of China's current legislation,combining with the typical cases in judicial practice,the author analyzes and compares the judgment ideas of different courts in different periods,and then goes back to theory from practice,in order to reduce the risk of invalidity and impossibility of performance,the author puts forward some suggestions on the design of the limited clauses based on the future of our country and the actual situation,so as to bring some enlightenment to the investors,financiers and relevant stakeholders.In the first chapter of this paper,the author first clarifies the concept of Vam,and through analysis,induction and arrangement,classifies Vam from different angles of the localization characteristics of our country,it is pointed out that the focus of this paper is the type of bet between the target company and the investor,and the validity of bet agreement is the research object of this paper.In the second chapter,based on the current situation of legislation in China,the author mainly reviews three typical cases with stage marks which have aroused heated discussion: the Hai Fu case,the Hilead case and the Huagong case,and from the "nine people's records" to the content of the start to do a deep comparative analysis of the Vam Agreement on the effectiveness of the plight.In Chapter Three,the author theoretically returns to the basic issues involved in the discussion topic,by distinguishing the easily confused Aleatory contract,option contract and conditional contract,we can restore the essence of the share repurchase agreement as a nameless contract,which leads to the lack of pertinence legal basis and uniform judicial judgment standard,revealing the actual limitation of validity cognizance.It points out that the factors of validity determination should be examined from three aspects: Contract Law,company law and legal principle.The Fourth Chapter presents the author based on the question and the analysis question,under the recognition legislation imperfect and the judgment not unified environment,in the light of the solutions discussed in the Supreme Court's "Jiu Min Ji" and which need to be further discussed,this paper puts forward the author's suggestions on the determination of the effectiveness of China's future share repurchase agreements,and from the perspective of the investors,it is suggested to carry out limited provisions to prevent the invalidation or non-performance of share repurchase agreements in order to achieve the unification of autonomy of will and legal compliance in capital market.