Research On The Fulfillability Standard Of Gambling Agreement

The gambling agreement between the investor and the target company stipulates that the target company needs to fulfill the obligation of stock repurchase or cash compensation under certain conditions,which touches the compulsory maintenance of capital such as restrictions on shareholder repurchase and prohibition of shareholders from withdrawing capital contributions in the company law.The effectiveness has been negatively evaluated by the judicial system.The judgment of invalidity indicates both negation and criticism.After that,the Supreme People’s Court issued the "National Court of Civil and Commercial Trial Work" on 2019.Meeting Minutes(hereinafter referred to as "Jiumin Minutes"),Article 5 of which reiterated the judicial attitude towards gambling agreements.Two ideas are provided for judicial judgments in the trial of gambling agreement disputes,that is,the target company completes the capital reduction procedure or has distributable profits as the criterion for judging the fulfilment of the gambling agreement.Problems such as the ambiguity of the role of practical guidance have led to numerous obstacles for investors to request the target company to perform their obligations in accordance with the contract,and the relationship between the protection of the legitimate interests of the investors involved in the gambling agreement disputes and the protection of the interests of the company’s creditors has not been balanced.In view of this,this article is based on the analysis of the fulfilment standard of the gambling agreement established by the "Jiumin Minutes",and reviews the status of the "Jiumin Minutes" standard in terms of legislative theory,judicial practice and commercial practice guidance,and reflects on the issues.The reason behind,and trying to reconstruct the fulfilment standard of the gambling agreement that can protect the legal rights of investors and protect the interests of the company’s creditors.The first chapter is the introduction.Through the analysis of the disputes in the gambling agreement in judicial practice,it is necessary to understand the specific structure of the gambling and the evolution of the path of judicial adjudication.The second chapter introduces the specific content of the fulfilment standard of the gambling agreement established and analyzes and combs the cases of gambling agreement disputes after the release of the "Jiumin Minutes" to understand the current judicial practice in handling gambling agreementsThe third chapter starts from the legislative theory and commercial practice,and analyzes that in accordance with the standards of the "Jiumin Minutes",investors requesting the target company to fulfill the obligation of stock repurchase or cash compensation will face many difficulties imposed by the "Company Law".On this basis,the principle established in the second section of this chapter through the analysis of the " Jiumin Minutes" standard is the principle of capital maintenance in company law.Due to the rigidity of the principle of capital maintenance in company law,this standard is not operational.The forth chapter based on the perspective of comparative law,selects the redemption rights provision in American venture capital similar to the gambling agreement to study.By summarizing the reference significance of American experience and comparing the differences between our country’s laws and market environment and the United States,it is concluded that the implementation of standards for gambling agreements cannot be fully referenced to the United States’ experience.The standards should be based on the improvement of’ capital maintenance principles.The fifth chapter,on the basis of how to improve capital maintenance principle,clarifies that the fulfillment of the equity repurchase obligation and cash compensation obligation is essentially the company’s distribution behavior,which needs to withstand the distribution of financial resources and financial indicators.The distribution of financial resources should be based on the surplus reserve and distributable profits generated by the company’s profits.The financial indicators should be based on shortterm solvency,so as to construct a balance sheet-based gambling agreement fulfilment standard,which is fully balanced.