An Analysis Of The Possibility Of Performance Of The Share Repurchase Type Valuation Adjustment Mechanism

As an instrument in the field of investment,the valuation adjustment mechanism(VAM)has always been controversial in the theoretical and practical circles due to its complexity.It was not until 2019 that the Supreme People’s Court issued the Minutes of the Civil and Commercial Trial Work Conference(the 9th Conference Minutes)that the validity of the VAM became clear.Since then,the dispute focus of the cases of the VAM has turned to the performance level.As for the share repurchase type VAM,the Supreme People’s Court,considering the interests of the company’s creditors,requires the target company to reduct capital before fulfilling the share repurchase obligation.In addition,the Supreme People’s Court believes that the capital reduction procedure is a matter of corporate autonomy,which is not actionable and judicial intervention is not appropriate.Enforcement will exert bad social effects.Therefore,when the target company fails to perform the capital reduction procedure,the investor has no legal remedy,which further leads to the dilemma that the VAM is legal and effective but cannot be performed.Based on this,this paper taking the case of "dispute of an investment enterprise ask a group limited company to purchase shares" as the main case,analyzes the obstacles of the share repurchase type VAM in our judicial practice,and tries to give a plan to solve the performance dilemma.The first part of the article based on the case,summarizes the focus of the dispute of this case,one is whether the investment enterprise can ask share repurchase,the other is whether the investment enterprise can ask the group limited company to reduct capital.The second part of the case analysis is the main content of this paper.Through the research and analysis of the theory and similar cases,the author gives his personal opinions and opinions on the two focal points of the dispute,and explores the possible implementation plan under the existing judgment path through legal interpretation.The failure of the group limited company to complete the capital reduction process has resulted in a legally enforceable situation in the VAM,but the capital reduction process in this case can be enforced.The agreement involved in the case is an share repurchase resolution for the purpose of capital reduction,which is equivalent to a capital reduction resolution,The creditor protection procedures and the handling of change registration in the capital reduction process are procedural matters,and the judiciary can intervene to explore possible implementation options under the existing adjudication path through legal interpretation.The last part is the further thinking and suggestions on the related issues of the share repurchase type VAM based on the case analysis above.The situation that the VAM is valid but cannot be performed should be the case that the liability for breach cannot be borne for a while.Effective measures should be taken to solve the performance dilemma and improve the performance of the effective VAM.