一、What is gambling?
The Validation Agreement Agreement(VAM), also known as the valuation adjustment agreement, is a commonly used value adjustment mechanism and contractual arrangement in private equity investment(PE). The "betting agreement" is not a simple gambling contract, but a type of financing method based on the "valuation adjustment mechanism" that has emerged in China's capital markets in recent years. Its core clause is whether the target company can achieve certain performance or goals. Make an agreement between the odds and the odds. "Betting" is not "gambling". Its essence is the contingent arrangement of the value of equity investment by both sides of the investment and financing. It is an investment protection tool, a price discovery tool, and a management incentive tool.That is, when the goal is reached, the investor will continue to hold shares, and the financier will share the high return brought by the investment; Conversely, if the goal is not achieved, the financier needs to pay a premium to repurchase the investor's equity as compensation to the investor. On the one hand, the emergence of the betting agreement provides an umbrella for the investment security of private equity funds as investors, and on the other hand, it has played a sufficient incentive role for the operators of the target companies.
二、Common main types of PE gambling agreements in China.
1, according to the different investment methods, it is divided into bet based on capital increase and bet based on equity transfer.
2, according to the different gambling body is divided into: investor and the target company major shareholder, the actual controller gambling and the investor and the target company gambling.
3, according to the different points of gambling: "gambling performance", "gambling listing" and other bets.
4, according to the different gambling chips are divided into: cash bet(cash compensation), equity bet(equity buyback or transfer) and other bet. That is, the "losing" party transfers a certain proportion of equity to the other party without compensation or at a very low price or repurchase of the investor's entire equity, and the repurchase price is often the investor's investment capital and some form of expression. The sum of fixed income(interest).
三、Court decisions on the validity of gambling agreements
The Supreme people's court, in what is known as the "first case of gambling agreement", found that the invalid cases were limited to repurchase and compensation clauses with the target company as the main body, and that the compensation promises signed by shareholders and investors did not violate the prohibition of laws and regulations. It is the true intention of the parties and should be valid. Therefore, the court does not recognize the gambling agreement between the investor and the financier(the target company), which is invalid; However, the bet between the investor and the target enterprise shareholders and other parties is valid. Of course, the repayment of gambling compensation must comply with the laws and regulations of the country and the relevant interpretation of the Supreme Court.
四、The interest clause for compensation in the betting agreement is invalid
In the gambling agreement, it is generally agreed that if it can not be listed or the gambling goal can not be reached, the target corporate shareholders will compensate the investor for the loss of interest. The essence is a loan contract. Yesterday, the Supreme Court issued "the Supreme people's court on the trial of cases of private loans on the application of the law on certain issues," effective as of September 1 this year. According to the new judicial interpretation, if the annual interest rate of private borrowing exceeds 36 %, more than some courts can be considered invalid. Therefore, if the betting agreement explicitly compensates the other party's principal interest, then the above clause should be followed. Of course, if other compensation clauses that are not related to interest are agreed, according to the Supreme Court's case analysis, the bet is still valid. It seems that in the future, the betting agreement can no longer stipulate interest compensation.
五、The core content of the "Provisions of the Supreme People's Court on Certain Issues Concerning the Application of the Law in Trial of Private Loan Cases"
1, the annual interest rate of private borrowing exceeds 36 % is invalid, and the interest rate agreed upon by the two parties does not exceed 24 % of the annual interest rate. The lender has the right to request the borrower to pay interest at the agreed interest rate, but if the interest rate agreed by the two parties exceeds 36 % of the annual interest rate, Interest in excess of 36 % of the annual interest rate shall be deemed invalid, and the borrower shall have the right to request the lender to return the interest paid in excess of 36 % of the annual interest rate.
2、The court shall not accept the case of folk loan involving the crime of illegal fundraising. For the case of folk loan suspected of illegal fundraising, the people's court shall not accept or dismiss the lawsuit, and shall transfer the clues and materials of the suspected illegal fundraising crime to the public security or procuratorial organs.
3、5 kinds of loan contracts are invalid
1) The loan funds obtained from a financial institution are transferred to the borrower at a high interest rate, and the borrower knows or should know in advance;
2) The funds obtained from borrowing from other enterprises or raising funds from the employees of the unit are transferred to the borrower for profit, and the borrower knows or should know in advance;
3) where the lender knows or should know in advance that the borrower borrows money for criminal activities and still provides the loan;
4) violating the public order and good customs;
5) other violations of mandatory provisions of laws and administrative regulations.
4.It is clear that the P2P platform does not bear the guarantee responsibility. The two sides form a loan relationship through the P2P network loan platform. If the provider of the network loan platform only provides media services, they will not bear the guarantee liability. If the provider of the P2P network loan platform expressly or otherwise proves through web pages, advertisements, or other media that it provides guarantees for borrowing, the people's court may, at the request of the lender, determine that the provider of the P2P network loan platform bears the guarantee liability.
5.Private loans used for enterprise loan contracts are still valid, and the private loan contracts signed between enterprises for the purpose of production and operation, as long as they do not violate the provisions of Article 52 of the Contract Law and Article 14 of the present judicial interpretation, shall be deemed valid. This is also one of the most important provisions of this judicial interpretation; The private loan contract signed by the enterprise to raise funds from the employees through borrowing form is valid for the needs of production and operation.
6.Ten kinds of false civil lawsuits were rejected, and severe fines and detentions were imposed. If the borrower clearly did not have the ability to lend; (a) The facts and reasons on which the borrower's prosecution is based are clearly not reasonable; If the borrower is unable to submit the debt certificate or the submitted debt certificate is likely to be forged, etc., and finds that it is a false lawsuit after the trial, the people's court shall, in addition to dismissing the plaintiff's request, impose fines or detention on the participants in the lawsuit who have maliciously manufactured or participated in the false lawsuit according to law; If a crime is committed, it must be transferred to a competent judicial organ for criminal responsibility.
Source: Investment banking business information original, investment banking business information is collated according to relevant information. Reprint should be marked: Investment banking business information, responsible for infringement.