Modern Social Science Research

The execution of repurchases in equity-based VAM agreements, regulated by both contract law and company law, has become a focal point of controversy in both academia and practice. The 2019 promulgation of the "Minutes of the National Conference on Civil and Commercial Trial Work of Courts" (hereinafter referred to as the "Nine Civil Minutes") by the Supreme Peoples Court shifted the debate over VAM agreements from validity to execution. However, the "Nine Civil Minutes" bundled repurchases with capital reduction procedures, creating new obstacles to the execution and application of equity repurchases. The 2023 revision of the Company Law refined the procedures for equity repurchases and capital reductions, but did not directly recognize VAM agreements as a statutory repurchase. However, adjustments such as the recognition of the class share system and the prohibition of non-proportional capital reductions have raised new application issues for the execution of equity repurchases through capital reduction procedures. To overcome the obstacles to equity repurchases under the new law, we must focus on the capital reduction process. Exploring the application of the class share system under the equity-debt integration framework and rationally defining the capital reduction process are key approaches to overcoming these obstacles.

Equity repurchase; VAM agreement; Capital reduction