On The Implementation Mechanism Of VAM

The refereeing of the gambling agreement in the judicial field has changed drastically,from the making of the judgment in the "Haifu case" to the retrial judgment in the "Hua Gong case" and the publication of the "Minutes of civil and commercial meetings".In the past,it only admitted the Effectiveness of the investors and shareholders of the company,but now that there is no cause for invalidation of the contract,the effectiveness of the gambling agreement between investors and the company is confirmed.From the simple judgment on the validity of the gambling agreement in the past,the validity of the gambling agreement is now distinguished from the enforceability of the agreement.The judicial field has begun to encourage and support the development of gambling agreements,reflecting the active role of gambling agreements in promoting the development of PE.However,it cannot be ignored that there are still many problems that need to be resolved in the actual implementation of the gambling agreement.Out of the principle of capital maintenance,the "Company Law" imposes a series of strict restrictions on the movement of company assets,and investors who participate in gambling agreements,as company shareholders,must abide by the provisions of the company law.Therefore,the performance of the gambling agreements must be carried out in strict accordance with the procedures stipulated by the company law.However,it cannot be ignored that with the implementation of the limited liability company’s subscribed capital system,the traditional capital maintenance principle has been unable to achieve the purpose of maintaining company assets,and a series of procedural regulations radiated by its principles lag behind the reality,and even impose restrictions on the company.Commercial efficiency has a negative impact.Based on the basic consensus on the validity of the gambling agreement itself,this article focuses on the implementation mechanism of the gambling agreement,and analyzes the current legal framework based on the promulgation of the "Minutes of Civil and Commercial Meetings" in the context of judicial practice.Below,the shortcomings of the implementation mechanism of the gambling agreement:there is a contradiction between the high utilization rate of the gambling agreement that continues to rise in practice and the lack of special provisions for the adaptation of the gambling agreement.Firstiy,the "Minutes of Civil and Commercial Meetings" is not an informal judicial document,and it cannot be directly cited in judicial judgments.In addition,the "Minutes of Civil and Commercial Meetings" does not provide for the situation in which the company provides guarantees for shareholders and investors for gambling.As a result,the gambling agreement lacks a complete set of specific regulations for the determination of validity and implementation procedures;Secondly,the opinions represented by the "Minutes of Civil and Commercial Meetings" will restrict the implementation of the equity repurchase clauses of the gambling agreement to the case where the company reduces the registered capital as stipulated in the "Company Law",resulting in that the equity repurchase clauses can be implemented in the actual implementation stage.Whether it is supported by the court,it is necessary to first determine whether the target company has completed the capital reduction procedure,and then misplace the sequence of repurchase and capital reduction;Finally,with regard to the specific implementation of the cash compensation clause of the gambling agreement,rigid reference to the relevant content of the "Company Law" resulted in the cash compensation clause that is not actually equivalent to the profit distribution.The mechanical application of the"Company Law" on the profit distribution provisions.On the basis of analyzing and summarizing the above-mentioned shortcomings of the implementation mechanism of the gambling agreement,drawing on the relevant judgments on the gambling agreement in the U.S.judicial precedents from the Mueller case to the Thought works case,and combining the existing judicial system and legal practice in my country,Try to put forward my own opinions.To regulate the use of the gambling agreement in practice,play its positive role as a financial tool.Firstly,it is necessary to issue formal judicial documents to formally,uniformly and specifically regulate the validity and performance of gambling agreements;Secondly,it is necessary to redefine the principle of capital maintenance in the traditional"Company Law" field,and select new standards that more reasonably reflect the company’s ability to assume responsibility,such as "solvency" to determine the possibility of fulfillment of the equity repurchase clause;Thirdly,increase the supply of the class stock system,expand the application of preferred stocks in the current provisions of the "Company Law",set up convertible preferred stocks according to the actual situation,meet the needs of different investors,and provide reasonable implementation of the cash compensation clause operating mechanism;Finally,protecting the company’s creditors’right to know is an effective measure to effectively protect their legitimate rights and interests.Establish a complete disclosure mechanism for gambling agreements,give creditors the right to consult the content of the agreement,and properly resolve the problems of information asymmetry between the investment and financing parties and lack of integrity in the capital market,promote the further development of PE.