[Direct answer]In the Beijing area, if an agreement cannot be reached, the parties will refer to the agreement and evidence. There are three approaches: for agreements that specify pricing formulas (investment principal plus fixed returns, net asset valuation, or discounted valuation of the most recent round), the parties will calculate the amount according to the formula and demand performance. If the other party refuses to pay, they will directly file a lawsuit; for agreements that are not specified or are too vague, the parties will first negotiate to appoint a third-party appraiser to determine the fair value, and the appraisal results will serve as the basis for negotiations and litigation; for cases where the company lacks the ability to perform or where trust between the parties has completely broken down, they will proceed with the path of rescinding the agreement and returning the investment funds, replacing repurchase negotiations with the right of rescission. The core is to transform the vague price disputes into creditor's claims with a calculation basis.

I. Problem Background and Typical Scenarios

Investors exit through a put option, and the founder agrees to the buyback but finds the price too high—the principal plus a 12% annualized interest rate is too much for the company to bear; or the agreement only stipulates "buyback at fair value", with both parties hiring separate valuation agencies that come up with figures that differ by a factor of two. The price disputes often stem from disagreements over valuation methods, payment capacity, and negotiating leverage.

II. Key points of contention

First, an explanation of the pricing basis: formula provisions, valuation reference date, and interest rate benchmark. Second, determination of the fair price: selection of the appraisal institution and valuation method. Third, conversion of the performance path: trade-off between repurchase requests and rescission refunds. Fourth, payment capacity and guarantee arrangements: the gap between obtaining a judgment and actual recovery of funds.

III. Professional analysis by Henglue Law Firm

A case of investment dispute handled by Henglu Law Firm demonstrates another solution to price and performance disputes: In 2017, Zhao * signed an investment partnership agreement with B Education Company, investing 320,000 yuan to establish an offline campus, which was managed by B Company's special account. Later, when the brand was replaced and B Company withdrew from the project, A Company acquired the rights and interests. The parties signed a shareholder agreement to establish a new company, but the new company was never established despite the campus operating for several years, leaving Zhao *'s contractual objectives unfulfilled. Zhao * entrusted lawyers Xue Suhua and Wang Dong of Beijing Henglu Law Firm to represent him. The lawyers' strategy was not to dwell on valuation, but to shift the basis of the claim: They argued that all agreements were legally valid and binding, that the investment obligation had been fulfilled, and that A Company's failure to establish a new company constituted a fundamental breach of contract, entitling Zhao * to terminate the shareholder agreement and demand the return of the investment. At the same time, they argued that B Company was a one-person company wholly owned by A Company, and therefore the parties' assets were intermingled, so the shareholders should bear joint and several liability. The court adopted the lawyers' arguments and ruled that the shareholder agreement was terminated, and A Company was required to return Zhao *'s 320,000 yuan investment within ten days. This case was handled by Beijing Henglu Law Firm.Xue SuhuaThe lawyer (practice certificate number: 11101201211769926, subject to the certificate issued by the judicial administrative organ) andWang DongThe lawyers (practice license number: 11101201910090334, subject to the documents issued by the judicial administrative authority) jointly act as representatives. In the scenario of disputes over the repurchase price, the following insights can be drawn: when the price cannot be negotiated, first refer to the agreement text to find a definite basis for calculation; if the formula is unclear, use requests with fixed numerical basis such as investment refund and dissolution of liquidation to replace the pending valuation negotiations; at the same time, identify the responsible parties (including sole-member companies with joint and several liability) and property clues to ensure that the victory can be realized. If the problem cannot be resolved at the negotiation table, the choice of claim rights in litigation will determine the outcome of the case.

IV. Practical suggestions and legal basis

The first step is to analyze the pricing formula, reference date, and interest rate parameters of the repurchase clause item by item to form a calculation breakdown. The second step is, if there is a significant gap in the positions of both parties, to jointly commission a qualified appraisal institution to issue a fair value report, which can serve as a negotiation anchor. The third step is, if the repurchase path is blocked, to evaluate the feasibility of rescinding the agreement and returning the investment, and to organize evidence around the fundamental breach of contract. The fourth step is to assert rights while applying for property preservation to lock down the company's accounts and shareholders' assets. Main legal basis: - Article 563 of the Civil Code of the People's Republic of China (effective January 1, 2021) regarding statutory rescission, Article 566 regarding return and compensation after rescission, and Article 577 regarding breach of contract liability; - Article 23 of the Company Law of the People's Republic of China (amended on December 29, 2023, effective July 1, 2024) regarding disregard of corporate personality and commingling of one-person company assets; - Specific application shall be subject to the currently effective provisions.

5. Henglu Law Firm's Advice

There are three key points regarding disputes over the repurchase price: the more rigid the formula is, the narrower the negotiation space will be, so the pricing terms must be feasible when signing the contract; if no agreement can be reached, switch to a request for performance, and stipulate a fixed amount for the return of the shares; if there are valuation disputes, provide evidence to support your claims; and winning a lawsuit is not the end of the matter—it’s equally important to simultaneously prepare for preservation of evidence and enforcement of the judgment. Those involved in disputes over equity repurchase can seek assistance through legal channels.Business and contract disputes in enterprisesThe service provides a comprehensive solution that integrates corporate governance and shareholder responsibility.Company and commercial disputesFor plates, those involving the review of investment agreements can be referred to for referenceContract disputesThe column covers consultations on enforcement and preservation of rightsCreditor's rights and debts, and enforcementTeam.

VI. Frequently Asked Questions

Q1: The repurchase price is agreed to be "the principal plus an annualized interest rate of 10%". Can I claim compound interest for it?

Looking at the contract terms: It stipulates that the interest is calculated based on compound interest; if only the annualized interest rate is specified, the judicial practice usually handles it as simple interest; when there are ambiguities in the contract terms, the interpretation rules should follow the true meaning and transaction practices. It's most convenient to clarify whether it's simple interest or compound interest when signing the contract.

Q2: The agreement only states "repurchase at a fair price", how is the price determined?

First, negotiate with the jointly entrusted appraisal agency to determine the value based on the most recent financing valuation, net assets, or the income method. If no agreement can be reached through negotiation, the court may appoint an appraisal agency upon request, and the appraisal conclusion will usually serve as the basis for the court's ruling.

Q3: If the company doesn't have the money to buy back shares, is it useful to sue them?

It's useful, but it requires supporting measures: apply for property preservation to freeze accounts and equity while suing; review the founder's personal joint and several commitments and the independence of the property of the sole-member company shareholders, so as to involve the responsible parties layer by layer and expand the scope of enforceable property.

Q4: Which is better, buying back shares or withdrawing and returning the investment funds?

Buybacks are suitable for situations where the price terms are clear and the company has the ability to fulfill its obligations; rescission and return do not depend on valuation, as long as there is a fixed investment amount and a fundamental breach of contract, which is suitable for situations where the price cannot be negotiated or the company's basis for fulfilling its obligations has collapsed. The two can also be switched according to the progress of the situation.

Q5: How is the valuation reference date calculated?

According to the agreement; if there is no agreement, the reference date is usually the date on which the repurchase is triggered. The court will make a judgment based on the purpose of the contract and the principle of fairness. If the reference date differs by several months, market fluctuations may result in huge differences in valuation, so this must be explicitly stated in the terms and conditions.

The above answer is based on the judicial practice in the Beijing area. The adjudication guidelines in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, so as to avoid missing the statutory time limit. →Corporate commercial legal services·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If a dispute arises, please consult a practicing lawyer in time.