By Xia Dongxia Yang Ting King & Wood Mallesons’ Dispute Resolution Group
In November, 2012, the Supreme People’s Court entered into the decision of retrial for HaiFu Investment Co., Ltd. v. ShiHeng Non-ferrous Recourses Recycling Co., Ltd. (hereafter referred to as the “HaiFu Investment Case”). This judgment made a distinction between signing a valuation adjustment mechanism (hereafter referred to as “VAM”) agreement with the target company and signing a VAM agreement with the shareholder. In essence, it confirms that a VAM Agreement between the investor and the shareholder is valid, whereas a VAM Agreement between the investor and the target company is invalid because such agreement would harm the interests of the company and its creditors. After that, the Supreme People’s Court, various people’s courts at the local level, and arbitration institutions dealt with a number of cases related to issues of VAM agreement under the Private Equity (hereafter referred to as “PE”) framework. A select number of such typical cases are summarized below:
Continue Reading Typical Cases Re Valuation Adjustment Mechanism Agreements post HaiFu Investment Co., Ltd. v. Shiheng Non-ferrous Recourses Recycling Co., Ltd.