How Do Companies With VAM Agreements Finish Initial Public Offerings

In recent years,Valuation Adjustment Mechanism has been gradually promoted in China.Inspired by successful cases like Mengniu and Yu Run Food,more private equity investors and enterprises in China are eager to try this contract.However,under the watchful eye of regulators,it is difficult to push forward the VAM.The reason is that many clauses in VAM may infringe the interests of small and medium investors.However,in July 2020,a company named Sihui Fu Shi successfully listed on the GEM market with a VAM,becoming the first company to issue a meeting with VAM in China.In order to discuss the reasons for the successful issuance of Sihui Fu Shi and the focus of regulators in the gambling agreement,this paper is divided into six parts to analyze this case.Based on changes in recent years our country regulations,case after their aptitude,and case companies,the company’s management effect and the market feedback and bet agreement in our practice of specific targets and multiple aspects,such as special rights clause is analyzed,this paper found case company sihui foster through regulatory audit is related to its has the following five features: 1.The issuer shall not be a counterparty;2.Small amount of betting;3.Buyback clauses will not lead to the outflow of control rights from the enterprise;4.Whether the trigger of betting clauses is relatively controllable;The private investment is from the background of state capital.The focus of regulators is mainly focused on the following four aspects: 1.2.There is no clause in the betting agreement that seriously infringes on the rights and interests of minority shareholders;3.There is no legal dispute over equity rights in the betting terms;4 private equity investment qualification.On this basis,this paper draws three conclusions: First,after this case,another enterprise almost copied the betting scheme in this case and successfully joined the GEM market,which proves the feasibility of further promotion of the betting scheme in this case to a certain extent.Second,regulators currently have enough restraint to ensure that minority investors are not burdened with excessive investment risk because issuers carry counterparty agreements.Third,the current regulatory scheme tends to protect the interests of small and medium investors from infringement,while the protection for private equity investors only covers the basic rights and interests,but in fact,it still does not play a good role in attracting private equity investment.Based on this,this paper puts forward four suggestions: First,there is still a lack of guidance for betting contracts in China,so contract templates or term lists should be established.Second,in terms of treaty signing,private equity investors and enterprises can be inspired to adopt more targets and flexibly use the betting agreement.Third,the domestic regulation still favors the interests of small and medium investors,and the betting agreement subject to issuance and listing is not high for private equity investment,so the enthusiasm of private equity investment can be mobilized from other aspects to increase social capital investment.Fourth,further promote the popularity of a variety of financial instruments,such as preferred shares,convertible bonds,to provide a foothold for the gambling agreement into financial reports in the way of accounting measurement.