Use It For
Use this as the starting point for Chinese case law on valuation-adjustment mechanisms and private equity downside protection.
Brief English Introduction
The Supreme People’s Court accepted compensation undertakings by the target company’s shareholders but rejected target-company compensation that would give the investor a relatively fixed return detached from the company’s performance and creditor-protection constraints.
Teaching Notes
Students should compare this early rule with the Jiu Min Minutes and later company-repurchase cases to see the move from validity-only analysis to validity plus enforceability.