Your SlideShare is downloading. ×
M&A in China
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.


Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

M&A in China


Published on

Presentation by Zhang Li, senior associate at YingKe Law Firm, Beijing

Presentation by Zhang Li, senior associate at YingKe Law Firm, Beijing

Published in: Investor Relations

  • Be the first to comment

  • Be the first to like this

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. China related International M&As Li Zhang
  • 2. I. Roadmap
  • 3. 2011 Foreign Investment Catalogue The Foreign Investment Catalogue lists industries that are encouraged, restricted or prohibited for foreign investors and is updated by NDRC and MOFCOM from time to time to reflect government policy. The 2011 Catalogue has been effective as of 30 January 2012.  Wholly foreign owned subsidiaries are not allowed in certain industries.  Foreign Investors are not allowed to be majority shareholders in certain industries.  Foreign Investors are not allowed to invest in certain industries.
  • 4. II. Approval and Registration
  • 5.  Approval: Ministry of Commerce or its local branches  Transaction agreement  Amended Articles of Association  Valuation Report  The Certificate of Incorporation of Buyer  The Appointment Letter of New Directors  The Reference Letter issued by the Buyer’s bank  Completed Forms  Application Letter Registration: The Bureau of Industry and Commerce Post -Transfer Registration: Tax, Foreign exchange, etc.
  • 6. III. Due Diligence
  • 7. Legal Due Diligence Legal establishment of the target company, including approvals of any increases in registered capital, transfers of shares/equity interest, etc.; Capital verification of all contributions to registered capital; Legal rights in respect of land / buildings; Key Clauses in Supply agreements and Sale Agreements; Existence of any cooperation (technical or otherwise) and/or other agreements/arrangements that would prevent or hinder proposed transfers/investment;
  • 8.  Chain of title of intellectual property rights; HR Matters; Approvals and Permits in connection with Environmental Matters.
  • 9. IV. Some Practical Points
  • 10.  Share/Asset transfer effective only upon approval NOT signing. Governing law for transfer agreement should be PRC law. Price must be based on appraisal by independent valuator. Payment terms shall comply with mandatory terms:  Full price should be paid within 3 months  Subject to approval, 60% within 6 months Remainder within 1 year
  • 11. Disposal of state-owned assets is subject to complicated approval procedures. Mandatory valuation by licensed appraiser firms  Appraisal results must be confirmed by SASAC Transaction price cannot be lower than 90% of the appraisal results. Target must be listed in Asset Exchange Center  Substantial delay in the schedule  Risk that a potential bidder may crash the party  Standard contracts of the Exchange Center must be used
  • 12. V. Structuring the Deal
  • 13. Share Deal Buyer will take over all business, assets, liabilities of the target. Careful due diligence is a must. Share deal may be achieved through:  Share purchase from current shareholders  Subscribe to an increase in equity of the target
  • 14. Buying the Assets An onshore vehicle is required to own and operate asset in China. Complication in transfer all business, customers, contracts, assets and employees. Encumbrance will need to be discharged before the transfer. Recommended if:  The target has high level of exposure / noncompliance  Only part of the business is desired.
  • 15. VI. Tips to Lower Risk
  • 16.  Due Diligence Closing Conditions Payment Reps & Warranties / Covenants Unilateral termination Arbitration
  • 17. Li ZhangSenior Counsel, Yingke Law FirmEmail : Website: