Valuation adjustment mechanism (VAM) agreements, usually adopted in financing or investing activities, are concluded between an investor and an invested company (the target) regarding future uncertain conditions which, if satisfied, will entitle the investor to exercise its right to recover losses resulting from overvaluation of the target. A “VAM agreement on IPO” is used by the investor to bet on the time that the target goes public.
In practice, the legal validity and actual performance of a VAM agreement on IPO is affected by factors that include, but are not limited to, parties to the agreement, compensation mechanism, terms and conditions of the agreement, and regulatory policies.
Senior Partner
Co-effort Law Firm
Invalidity ruling
A ruling issued in 2012 by the Supreme People’s Court (SPC) established a principle that VAM clauses between investors and targets are invalid (refer to the Civil Judgment [2012] Min Ti Zi No.11). From then on, courts of various levels across the PRC followed in the footsteps of this ruling to find VAM clauses concluded with targets invalid.
You must be a
subscribersubscribersubscribersubscriber
to read this content, please
subscribesubscribesubscribesubscribe
today.
For group subscribers, please click here to access.
Interested in group subscription? Please contact us.
你需要登录去解锁本文内容。欢迎注册账号。如果想阅读月刊所有文章，欢迎成为我们的订阅会员成为我们的订阅会员。
Ma Chenguang is a senior partner of Co-effort Law Firm
上海市浦东新区陆家嘴环路958号
华能联合大厦35层 邮编:200120
35/F Huaneng Union Tower
No. 958 Lujiazui Ring Road
Pudong New Area, Shanghai 200120, China
电话 Tel: +86 21 6886 6151
传真 Fax: +86 21 5887 1151
电子信箱 E-mail:
chenguangma@co-effort.com
www.co-effort.com
