Analysis Of The Legal Effect Of The Priority Clause Of Private Equity Investment

The private equity investment priority clause exists to make up for the lack of preferential stock system in the legal system of our company.It is the private equity investor of the target company and the target company and the original shareholder.When the shareholders' rights can be compromised and agreed upon,the essence is the way in which the class shares are issued,that is,the agreement instruments are used to implement the class stock system.The series of priority clauses often include dividend priority clauses,liquidation priority clauses,priority purchase clauses,and preferential subscription terms,which are reflected in the unification of the preference of the preferred stockholders and the partial camera selection power,and the connotation of the private equity investors to the target company and the original shareholders.The best constraints and incentives for common economic purposes,interests,and risk burdens have their endogenous rationality.However,the signing of the private equity investment priority clause is accompanied by risks.The parties to the agreement not only need to consider the abuse and alienation risks of the series of priority clauses in commercial practice,but also have to face the public authority adjudication organ with the priority of the series.The dilemma of the negative evaluation of the validity of the provisions and the existing legal norms,as well as the weakening of the predictability of commercial actions and the increase in transaction costs.Therefore,it is particularly important to explore the effectiveness of China's private equity investment priority clause.Based on the substantive connotation and operation status of China's private equity investment priority clauses,this paper analyzes the legal environment of China's current applicable priority clauses from the company law,contract law and regulatory documents of securities regulatory agencies,and draws on the public power ruling authority.The determination of the effectiveness of the valuation adjustment agreement sums up the focus of the dispute that may arise,and in turn provides advice on the path reshaping of the effectiveness of the series of priority clauses.The signing of the private equity investment priority clause is the result of the party's legitimate disposition of its rights and interests.It does not necessarily involve the other party and the public interest.The public authority should maintain its humility and tolerance and should not interfere too much.The validity of the private equity investment priority clause shall be based on the nature of the contract,based on the effective effect of the contract law on the contract law,highlighting the commercial thinking of the content of the series to judge its effectiveness;The principle of matching the principle of honesty and credit and the principle of matching risks and benefits shall be vetoed by the principle of breaking the principle;the identity and form of the opposite party of the agreement shall be distinguished,and the identity of the original company of the target company and the target company shall be distinguished and closed.The target company form of sex and openness,under specific circumstances,specifically protects the rights and interests of all parties to the agreement,and rejects the "one size fits all" judgment.