金杜律师事务所破产、重组和清算组
中国证监会于2011年1月发布了5个并购重组法律适用意见，内容包括上市公司严重财务困难认定、要约豁免申请条款选用、二级市场收购的完成时点、拟购买资产存在资金占用问题、上市公司在12个月内连续购买、出售同一或者相关资产的有关比例计算等。
中国证监会有关部门负责人表示，这些法律适用意见就市场参与主体对《上市公司收购管理办法》、《上市公司重大资产重组管理办法》有关法律理解上可能存在不一致的问题加以明确，并以证监会公告的形式对外发布，体现其严肃性和法律效力。
Continue Reading...By Susan Ning and Huang Jing
On 21 September 2011, Mr. Shang Ming, Director General of MOFCOM's Anti-Monopoly Bureau revealed the yearly merger control statistics at the BRICS International Competition Conference 2011 held in Beijing.
According to Mr. Shang, the merger control statistics for 2008, 2009 and 2010 are as follows:
| Case numbers |
|||
| Year | Cleared without conditions | Cleared with conditions |
Rejected |
| 2008 | 16 | 1 | 0 |
| 2009 | 75 | 4 | 1 |
| 2010 | 116 | 1 | 0 |
By Susan Ning, Huang Jing and Yin Ranran
On 25 August 2011, the Ministry of Commerce (MOFCOM) released the MOFCOM Rules for Implementation of Relevant Issues regarding National Security Review Mechanism for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (NSR Rules). From 1 September 2011, the Rules replaces the MOFCOM Interim Rules for Implementation of Relevant Issues regarding National Security Review Mechanism for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (NSR Interim Rules) issued on 4 March 2011 (see our article entitled "MOFCOM issues national security review interim rules").
Compared with the Interim Rules, the key change we see in the NSR Rules is that MOFCOM clearly states that the authority will assess the applicability of the national security review (NSR) process from the substance and actual impact of a transaction; and that foreign investors shall not evade the NSR regime via alternative transaction structures, including but not limited to warehousing arrangements, trusts, multi-tier investments, leases, loans, contractual control, or offshore transactions, etc.
2011年8月25日，商务部公布了《商务部实施外国投资者并购境内企业安全审查制度的规定》（下称“规定”），并将于2011年9月1日正式实施。《规定》表示，凡属于上述安全审查范围的企业，外国投资者应向商务部提出并购安全审查申请。对属于并购安全审查范围的并购交易，由商务部在15个工作日内书面告知申请人，并在其后5个工作日内提请联席会议进行审查。《规定》还称，外国投资者不得以任何方式实质规避并购安全审查，包括但不限于代持、信托、多层次再投资、租赁、贷款、协议控制、境外交易等方式。
Continue Reading...By Zhang Yi of King & Wood's Corporate Group
On August 25, 2011, the Ministry of Commerce (MOFCOM) promulgated the Provisions on Implementation of Security Review System Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors ( “Provisions”), which will become effective on September 1, 2011. The Provisions state that foreign investors must file an application for security review with MOFCOM for merger and acquisition (“M&A”) transactions that fall within the scope of security review. If a given M&A transaction is within the scope of security review, MOFCOM will inform foreign investors within 15 working days of the application being filed, and submit the application to the Joint Ministerial Panel for security review within 5 working days. The Provisions also state that foreign investors must not use any means, including but not limited to nominee shareholdings, trusts, multi-tier investments, leasing, loaning, control agreements, and offshore transactions, to evade M&A security review.
By Xu Ping, Leading partner of King & Wood's Corporate Group
On February 3, 2011, the General Office of the PRC State Council issued the Notice Regarding the Establishment of National Security Review Mechanism for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (“国务院办公厅关于建立外国投资者并购境内企业安全审查制度的通知”) (the "Notice"), which will take effect 30 days after its promulgation. The Notice represents another major step that the Chinese government has taken in recent years in the area of regulating mergers and acquisitions (M&A) of domestic companies by foreign investors in China.
Continue Reading...Interview with Mark Schaub, a partner with King & Wood's Corporate Group.
Gasgoo.com: Mergers and Acquisitions (M&A in China) is not simply win-win for owners and companies. It’s also about win-win or win-lose for local governments. For example, small manufacturers provide jobs, taxes and gifts to local officials. If a larger manufacturer acquires a small one, jobs will move along with it. This is the main reason the industry is so spread out. No one wants to let go of jobs in their district. So what’s your opinion on dealing with the local government in an M&A case?
Continue Reading...Interview of Roy Zhang of King & Wood's Banking Department by Zhang Tianhui and He Ran of King & Wood's Publications Group
Financing is a critical consideration in M&A transactions. For a long period of time, financing large scale strategic M&As of listed companies in China has been a bottleneck. As such, it is important for companies to study successful M&A experiences from abroad and develop additional venues and tools for financing and venues for such transactions.
Continue Reading...By Susan Ning, Liu Jia, Huang Jing and Angie Ng, King & Wood's Competition Group
BHP Billiton (BHP)(1), a global natural resources company, has recently launched a hostile bid (the bid) to purchase PotashCorp (Potash)(2), a leading potash producer based in Canada.
This proposed acquisition is likely to have an impact in the Chinese potash industry.
By Susan Ning, Shan Lining and Liu Jia, King & Wood's Competition Practice
On 13 August 2010, the proposed acquisition of Alcon, Inc (Alcon) by Novartis AG (Novartis) was approved by the Ministry of Commerce (MOFCOM), with conditions. MOFCOM’s public announcement in relation to this acquisition is located here. This is the 6th merger that has been approved with conditions, since the enactment of the Anti-Monopoly Law (AML) in 2008.(1)
Continue Reading...By Mark Schaub, Partner, Corporate, King & Wood Shanghai
Many West European and US companies have thinned out their ranks of middle management in the never-ending pursuit of shareholder value. A China project is likely to be more time intensive and involved (and therefore expensive) than the foreign company initially forecasts. For this reason many foreign investors in China face difficulties in assembling a successful business project team to implement the project. Part I discusses the assembling of an effective in-house team.
Continue Reading...By Mark Schaub, Partner, Corporate, King & Wood Shanghai
Every multinational company needs a China strategy. The country's resilient economic
performance during the global downturn has made it even more attractive to some overseas
investors, but how should such companies arrive at a realistic appraisal of the potential
risks and opportunities of a specific deal?
Chinese outbound investment has grown rapidly in the last few years, particularly in the energy, mining, banking, IT and creative industries. On August 18, 2009 China Petroleum & Chemical Corporation (Sinopec) announced the USD 7.2 billion acquisition of the Swiss Addax Petroleum Corporation. This was the largest international acquisition by a Chinese company to date. Additionally, CNPC has made several large international acquisitions - for example, in May, 2009, CNPC acquired a 45% stake in Singapore Petroleum for USD 1.2 billion while companies such as China Minmetals, China Nonferrous Metals, Baosteel, and ICBC have also made significant outbound investments recently. With the increasing internationalization of Chinese companies, commercial disputes are almost inevitable. In our experience, when dealing with international arbitration and litigation proceedings, we see Chinese companies employing a number of different strategies:
By King & Wood's Cross Border Dispute Resolution team
Continue Reading...A. General Devolution to Lower Levels
China's Ministry of Commerce (MOFCOM) has continued their trend of further delegating approval competency to lower governmental levels. This delegation of approval competency to local authorities will greatly accelerate the approval process for foreign invested projects.
MOFCOM issued, on March 5 the Notice on Improving the Examination and Approval over the Foreign Investment (the “Notice”) which simplifies the approval process through the following means:
1. In the Notice, MOFCOM delegates its approval competency under certain conditions:
FIEs falling within encouraged sectors (regardless of investment amount) which were previously approved at the central MOFCOM level can now be approved by MOFCOM counterparts at the provincial level, vice-provincial city level (1), or national economic development zone level. It is important to note that the usual threshold of USD 100,000,000 total investment does not apply to encouraged sector projects. Accordingly, the basic policy is that encouraged projects can be approved locally except for some specific exceptions such as central government reliant projects (2) or FIEs governed by specific rules or industrial policies.
A basic rule has always been for amendments to FIEs to be approved by the original approval authority. The Notice changes this by allowing FIEs originally approved by MOFCOM to have subsequent commercial changes approved by MOFCOM’s local counterparts except for capital increases which require National Development and Reform Commission approvals or share transfers which result in a transfer of the controlling interest to the foreign shareholder.
The Notice also largely devolves approval competency for mergers and acquisitions of domestic companies by foreign investors and FIEs to local authorities. Projects falling within encouraged or permitted sectors can be approved locally if the transaction amount is below USD 100,000,000. Local approval can also be obtained in restricted categories if the transaction amount does not exceed USD 50,000,000. It is important to note that in respect of acquisitions the Notice states that competency shall be determined by reference to the transaction amount not total investment. However, it is important to note that this devolution of authority does not waive approval requirements in respect of the Chinese Securities Regulatory Commission (CSRC) or the state-owned assets supervision and management authorities. Accordingly, in many sensitive cases central level approvals will still be required. Similarly, strategic investments in listed companies will still need MOFCOM level approval.
Mark Schaub, Feng Xin, Duncan Hwang of King & Wood's Foreign Direct Investment Practice
Continue Reading...
The Chinese legislature created a hybrid from the different approaches adopted by civil and common law jurisdictions through the Copyright Law of the People's Republic of China (the “Copyright Law") and the Regulations on the Implementation of the Copyright Law of the People’s Republic of China (the“Implementation Regulations"), and produced the twin concepts of “legal entity work” and “occupational work” for assigning rights to works made in the course of an employment relationship. For example, a book written by a group of employees organized by an entertainment company for celebrating the company's anniversary would likely be considered “legal entity work”, but a piece of music composed by a composer employee (not for specific purposes) is “occupational work”, because in the former case, supervision of the company would be involved but the latter case it would not.
Being able to draw a clear line between “legal entity work” and “occupational work” is crucial during a due diligence investigation in terms of copyrighted materials in employment relationships- ascertaining an accurate chain of title from the author turns out to be a thorny issue. Though these two types of works are seemingly similar, the attribution of the copyright ownership between a legal entity employer and an employee is critical. Though the determination of “legal entity work” and “occupational work” can be extremely confusing, neither the legislatures nor judicial organs have ever promulgated any guidance. Thus far, only the National Copyright Administration of the People’s Republic of China (the “NCA") has expressed its viewpoints on this matter in the circular “Reply to the Liaoning Tieling Mediate Court Regarding How to Determine Legal Entity Work and Occupational Work” (the “NCA Circular”), which however does not have judicial binding force.
Wang Rui, Partner, International Trade
Continue Reading...
By: Liu Yanling, Partner and head of King & Wood's Bankruptcy, Restructuring & Insolvency Practice
Stellar Megaunion Corporation ("SMC") was in serious debt, as it could barely repay its liabilities. New World China Land ("NWCL"), which was seeking an opportunity to go public, proposed to acquire SMC as a shell company which has no assets, but is publicly listed. To achieve this goal, NWCL conducted several rounds of negotiations with SMC's creditors to settle SMC's debts and clear the roadblocks for the acquisition. However, the parties were unable to make much progress in the negotiations due to the large number of SMC's creditors involved. As SMC needed to solve its debt crisis as soon as possible and its negotiations with NWCL were deadlocked, the company decided to reorganize to completely release itself from the heavy debt burdens in a short period time.
A. Reorganization initiated by SMC's creditors
As SMC failed to repay it debts due, a third party creditor petitioned the proper Intermediate People's Court (the "Court") to reorganize SMC. The Court accepted the petition on March 11, 2008 ([2008] Yusanzhongbozi No.1).
SMC's Reorganization
B. Confirmation of Creditors' Rights
According to the proposed reorganization plan the administrator of SMC (the "Administrator") submitted to the Court and the first SMC creditors' meeting, 70 creditors filed claims and the total value of confirmed claims was nearly RMB 2.5 billion. [continue reading to find out the outcome]
Continue Reading...
Duncan Hwang, Foreign Lawyer, King & Wood's FDI Practice
class="MsoNormal" style="margin: 0cm 0cm 0pt">
Continue Reading...
作者：王俊峰 金杜律师事务所创始合伙人 管理委员会主席
2008年注定是不平凡的一年。2008年上半年开局就充满了变数，全球跨国并购市场各种力量此消彼长。作为深深根植于中国，全面服务于中国企业海外并购和外资在华并购的领先律师事务所，我们看到2007下半年和2008上半年的跨国并购表现出如下趋势：
Continue Reading...By Wang Junfeng, Partner, and Edward Jing, Partner, King & Wood’s Securities & Capital Markets Group
2008 is destined to be an extraordinary year for global cross-border M&A. King & Wood, as a leading law firm deeply rooted in this activity in China, has noticed the following trends in the second half of 2007 and the first half of 2008...
作者 李文博 国际贸易部
2008年6月11日，金杜荣幸的邀请到美国并购领域著名律师事务所Wachtell, Lipton, Rosen and Katz的创始合伙人Martin Lipton先生前来交流访问。Lipton先生在金杜就法律从业以及毒丸计划的影响两个话题做了演讲。Lipton先生在法律实务领域成就卓越，最体现其智慧和创造力的无疑要数“权利计划”，即目标公司董事会采取的一系列反收购措施，用于抵御股权收购者低估目标公司价值的收购计划。由于此后华尔街银行家们的敌意收购计划由于“权利计划”屡屡受挫，因此他们称“权利计划”为“毒丸计划”。
Continue Reading...By: Li Wenbo King & Wood's International Trade Group
Last month, Mr. Martin Lipton, of Wachtell, Lipton, Rosen & Katz, honored King & Wood with a speech on the implications of the “poison pill” in legal practice. Mr. Lipton is noted for hisinnovative "rights plan", a series of defensive measures taken by the board of a target company in a hostile takeover. The “rights plan” is meant to ward off hostile offers that substantially underestimate the value of the target's shares. The rights plan was later referred to as the "poison pill" by Wall Street bankers whose attempts at hostile takeover below fair value were frequently frustrated by the "rights plan."
Mr. Lipton's speech inspired me to ponder the question of how defensive measures work in China's corporate governance. I then googled the word "poison pill" and "company" in Chinese, but found no instances of companies utilizing the poison pill within China. So why is there no poison pill in China?
Enter keywords:
Add this blog to your feeds or put your e-mail in the box below and hit GO to subscribe by e-mail.