Research On The Legal Effect Of ’Valuation Adjustment Mechanism’ In Private Equity Investment

According to the research data of the China Securities Investment Fund Industry Association,by the end of March 2018,23,400 private equity fund administrators have been registered with the Association,and the fund size is 12.04 trillion.China officially entered the Crazy times which called"People-wide PE".Due to the short history of private equity development in China,and related laws and policies are not perfect,the ’ Valuation Adjustment Mechanism’,which is an important and widely used tool for investment valuation in private equity,is subject to the legal tests and the regulatory challenges,especially when the Supreme People’s Court’s "Haifu Case" in 2012 had judged.The rejudgment of the trial aroused a heated round of discussions about the legal validity of the ’Valuation Adjustment Mechanism,and related issues.This article first defines the connotations of private equity investment funds and "VAM(Valuation adjustment mechanism)," and on this basis discusses the causes of the "VAM" in the private equity field and the main types of,VAM";the second part mainly analyzes the legal status of the"VAM" in China’s private equity investment field and analyzes the main reasons for the prohibition of "VAM" in China from the perspectives of legislation,justice,and financial supervision.The third part analyzes and discusses the reasons for the prohibition of "VAM" in China.Then analysis and refutation of the reasons for the overall invalidity of the "VAM" and the invalidity of specific provisions.And it is proposed that the "VAM" should be recognized in the current investment environment in China;Finally,based on the above-mentioned and the existing laws in China,we should propose perfect strategies and establish the correct concept of gambling in order to promote the overall development of the private equity industry.