Chinese ruling changes landscape for value adjustment mechanisms in onshore private equity transactions

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China’s Supreme Court ruling in Haifu v. Shiheng changes the landscape for value adjustment mechanism - .PDF file.

The Supreme People’s Court of China rendered its final judgment on 7 November 2012, in the Haifu Investment Co., Ltd. v Gansu Shiheng Nonferrous Resources Recycle Company Limited. Despite the Supreme Court’s lack of appreciation of the role of private equity in China, the decision brings much-needed guidance to the structuring of value adjustment mechanisms commonly used in onshore private equity transactions in China.

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