Research On The Implementation Dilemma And Perfection Of VAM Agreement Of Equity Repurchase

With the rapid and vigorous development of my country’s market economy,as a new financing tool in the capital market,the " Valuation Adjustment Mechanism" has become frequently used in practice.Since the emergence of the "Haifu case",the first case of VAM,whether in the practical or theoretical circles,the dispute over the validity of the "VAM agreement" of equity repurchase has not been interrupted.With the official release of the Minutes of the National Court of Civil and Commercial Trial Work,hereinafter referred to as the "Ninth Conference Minutes",the first document has made a clear explanation in the form of a written form of the rules for determining the validity of the "VAM Agreement" of equity repurchase and the implementation of the applicable rules,which has helped the relevant judicial organs to clarify and resolve the litigation disputes that continue to arise in practice,and provided a strong institutional support for the continuous development of China’s capital market.However,the fly in the ointment is that although the Ninth Conference Minutes unify the adjudication rules of various local judicial organs on the validity of risk VAM clauses,the relevant regulatory arrangements made by them for the performance of equity repurchase obligations are obviously insufficient.In particular,the completion of the company’s capital reduction is regulated as a preliminary procedure for the performance of the equity repurchase obligation,which often makes the "VAM agreement" that is recognized by the court as valid in judicial practice,but faces the dilemma that the equity repurchase obligation is difficult to perform,which seriously damages the legitimate rights and interests of the investor and greatly affects the enthusiasm of market entities to participate in venture capital.Therefore,this paper puts forward feasible rectification suggestions for the actual performance obstacles of the VAM clauses of equity repurchase in China by sorting out the validity of the "VAM agreement" and the application of the rules for performance.The first part provides an overview of the "VAM Agreement" of equity repurchase.Through the elaboration of the basic theories such as the definition,classification,nature and functional value of the concept of the "VAM agreement" of equity repurchase,it lays a theoretical foundation for the subsequent study of the rules for the repurchase performance of the "VAM agreement" in judicial cases.The second part is a judicial case study of "VAM agreement" equity repurchase of and a dilemma of performance.Through sorting out the VAM dispute cases that have occurred in recent years,this paper sorts out,summarizes and interprets how the court has applied the validity rules and performance rules of the equity repurchase clauses,and analyzed and explained the obstacles to the performance of the "VAM agreement" of equity repurchase.The third part illustrates the similar experience in U.S.VAM and its implications.It introduces the application mode of the installment financing clause and redemption restriction clause of the Model Legal Documents for Venture Capital Investments in the US capital market.At the same time,citing the applicability of the rules on the scope of "legally available funds" in the Thoughtworks case,and how to apply the principle of commercial judgment of directors,are used to provide a reference for the performance of risk VAM clauses in China.The fourth part is a suggestion for improving the implementation of China’s "VAM Agreement" of equity repurchase.Combined with the research of China’s judicial practice and the experience of the United States,the following suggestions are proposed for the obstacles to the implementation of equity repurchase in China: 1)Unbind the equity repurchase and capital reduction procedures;(2)expand the sources of funds used to fulfill the equity repurchase obligation;(3)learn from the relevant system of the company’s board of directors centrism;(4)introduce a new model of equity repurchase installment performance.