Research On The Validity Of Valuation Adjustment Mechanism In China’s Private Equity In The Perspective Of Haifu Co.Ltd V.Gansu Shi Heng Co Ltd Dispute

The academic degree dissertation mainly discusses the subject of the legality of VAM between investors and the target company under the framework of law in China in the perspective of Haifu Co.Ltd v.Gansu Shi Heng Co Ltd dispute.That’s VAM,short for "Valuation Adjustment Mechanism" and in China it has a very vivid name,Gambling agreement.Actually,VAM originated in the US capital market and now frequently appears in the private equity investment of China as foreign capital coming in a continuous stream.Being a new type of financial institution and instrument,"VAM" aimed at by way of staging decision,cracking the corporate difficulties in valuation.Although VAM were widely used in practice,it has received less attention in this field of study.Because of existing legal defects and capital market imperfections,there are still some legal obstructions in carrying out the VAM in China.However,in the case of Haifu Co.Ltd v.Gansu Shi Heng Co Ltd dispute in 2012,the VAM was judged invalid during the first and second instance judgment,and ultimately the validity of VAM was confirmed by the Supreme People’s Court.This case raised widely discussion both in academics and practitioners,which is known as "the first case of VAM in China".The judgment of the Supreme People’s Court made a distinction between different contracting parties.Investors signed with the controlling shareholder of VAM is considered to be valid and VAM signed beween investor and investee company is considered to be invalid,because it is damaging the interests of creditors of the company.Therefore,in the viewpoint of this dissertation,the judgments have no enough legal justification.First,the dissertation gives a detailed introduction about the deal structure of VAM,with the aim of getting the contracting parties’ true meaning.Next,The dissertation makes an in-depth analysis on the VAM from a legal perspective.Finally,the dissertation gives the basic suggestions for dealing with VAM in the judicial practice.This dissertation is divided into four parts:The first chapter:Review the case and Carding the different judgments.The second chapter:Interpretation of what it is VAM.Including the concept of PE,the concept of VAM,the rationality of VAM’s existence,the deal structure of VAM,the common types of VAM,the unique legal nature of VAM and so on.The third chapter:Rethink the Haifu Co.Ltd v.Gansu Shi Heng Co Ltd dispute.Through the analysis of the Court’s judgments makes an in-depth analysis on the VAM from a legal perspective.The fourth chapter:Gives the basic suggestions for dealing with VAM in the judicial practice.