Research On The Performability Of Equity Repurchase Type Valuation Adjustment Mechanism

The equity repurchase clause is a common clause in the valuation adjustment mechanism,and although the issue of the validity of the valuation adjustment mechanism has been resolved after the promulgation of the Proceedings of the Ninth National Conference on Civil Judicial Work of the Courts,the controversy easily arises over how to perform the equity repurchase when the operating conditions agreed in the valuation adjustment mechanism cannot be met.At present,the relevant legal provisions on the performance of the equity buyback in the valuation adjustment mechanism in China suffer from the difficulties of shareholders’ withdrawal,the lack of performance rules,the unsound rules of capital reduction procedures and the lack of perfect relief rules.Based on this,the author attempts to conduct an in-depth study on the obstacles to performance in the process of equity repurchase after the failure of a bet,and selects a total of 74 judgments made by the Supreme Court and the High Court after the promulgation of minutes as a research sample to review the problems of the current rules in the legislative theory,analyze the deficiencies of their inoperability in guiding judicial practice and commercial practice,and analyze the reasons behind the problems and deficiencies in depth.By analyzing the reasons behind the problems and deficiencies,we will reconstruct a standard of enforceability that can balance the legitimate performance interests of investors and the protection of creditors by taking into account the experience of foreign law.The two topics covered in this essay are: Secondly,how should the "capital reduction" be noted in the minutes as a need for the equity repurchase? The second is to investigate the standards for judging whether the equity repurchase clause can be enforced.The performance of valuation adjustment techniques of the type used in share repurchases is examined statistically and in a case study in the first chapter.Through the statistics of case decisions,we describe the legal principles and reasoning behind the courts’ decisions.in such cases and identify the differences in decisions.The second chapter is a theoretical analysis of the current rules under the dual perspective of civil law and corporate law,pointing out that the essence of the fulfillment issue is the source of repurchase funds,and that the fulfillment of the agreement by "reducing the registered capital" is only a possible way rather than a necessary procedure,and the real logic behind the capital reduction is to achieve creditor protection by maintaining the capital.The real logic behind the capital reduction is to achieve creditor protection by maintaining the capital,therefore,the performance should be confirmed to the maximum extent possible under the premise of observing the bottom line constraint of creditor protection.If the target company’s performance of the repurchase obligation violates the mandatory norms of corporate law regarding the standard of performability,it constitutes a "legal momentary failure to perform".The focus of Chapter 3 is to summarize the rules for determining the enforceability of foreclosure provisions in U.S.law venture capital agreements with a view to providing a reference for the relevant standards for the performance of valuation adjustment mechanisms in China.Through the introduction of the rules and precedents on "solvency test","legally available funds" and "directors’ business judgment",the chapter provides inspiration for the construction of performance standards in China.The fourth chapter focuses on improving the rules and makes the suggestion that the solvency test should be properly integrated with the capital maintenance principle as the standard for evaluating the fulfillment of the equity repurchase clause in the valuation adjustment mechanism.This is done by exploring the aforementioned fundamental principles and operational standards.In addition,by reasonably delineating the boundaries of the application of the regulation and appropriately and precisely balancing the conflicting interests of the parties,we propose relevant adjudication rules and legislation to improve the controversial issues in the performance of equity repurchase type valuation adjustment mechanisms.