On The Legal Effect Of Private Equity Investment Agreement On Gambling

Value Adjustment Mechanism (VAM) is a kind of investment vehiclethat frequently used in Private Equity. Due to the late development of the financial and capital markets in China, and the Private Equity and VAMare also just introduced from abroad in recent years, thus, problemsexist in practicing are unavoidable. At present,laws in our country for the supervision of Private Equity are still not enough, and the newly revised "Securities Investment Fund Law" has ultimately failed to bring Private Equity into thesupervision category. Law for VAM in Private Equity is also a blank. There are three completely different judgments for the just‐concluded VAM case, which is also the first VAM case in our country. This situation showsthe big differences in the identification of legal profession to thelegal validity of VAM, thetheorists have each stick to his argument, and the practice will also be at a loose end. Therefore, a certain of theoretical value and practical significance are provided with the study on the legal validity of VAMin Private Equity.Concerning with the discussion of the legal validity of VAM in Private Equity, this paper will be divided into three major parts. The first part is an introduction about the basic content of the law onVAM, and it containscomponents of the legal relationship of VAM and the contract character of VAM. The second part will discuss the identification of legal validity of VAM from differentlaws and different judicial practice. The third part will analyze the legal risk types of VAM, and put forward the legal risk control measures forVAM. At last, this paper concluded that, VAM in Private Equity is legitimate and valid, and the risks in VAM are controllable.The academic innovation point in this paper is that,put forward the legal problems of VAM inPrivate Equity through the point of Finance Law, analyzed the legal validity of VAM with the theory of Contract Law, and directed the practical application with judicature legal precedent,then concluded a series of practical prevention measures for the legal risks of VAM,thereby, the legal validity of VAM in Private Equity that treated as a hotspot and difficult point in the financial field will be solved.