Reference Case: Lan Zeqiao, Yidu Tianxia Special Fishery Co., Ltd., and Hubei Tianxia Sturgeon Co., Ltd. v. Suzhou Zhouyuan Jiuding Investment Center (Limited Partnership)
The Supreme People's Court recognized the validity of a share-repurchase VAM arrangement between the investor and the original shareholders, treating it as a genuine commercial allocation of investment risk and return rather than an automatically invalid guaranteed-return clause. Where the target company had already fallen into loss and timely listing had become practically impossible, the court was prepared to find that the repurchase trigger had been satisfied.
Holding
The Supreme People's Court recognized the validity of a share-repurchase VAM arrangement between the investor and the original shareholders, treating it as a genuine commercial allocation of investment risk and return rather than an automatically invalid guaranteed-return clause. Where the target company had already fallen into loss and timely listing had become practically impossible, the court was prepared to find that the repurchase trigger had been satisfied.