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Cross-border MA in China A Comparative Analysis

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Cross-border MA in China A Comparative Analysis

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    1. Cross-border M&A in China – A Comparative Analysis Robert D. Lewis AmCham China M&A Presentation Managing Partner 28 February 2007 Lovells Beijing Beijing, China

    2. Cross-border M&A in China

    3. The New Market Realities in China

    4. Old vs. New Regulations – Cross-border M&A Regulations

    5. Old vs. New Regulations – Public Company Takeover Regulations

    6. Old vs. New Regulations – Public Company Takeover Regulations

    7. Harmonization of New Regulations Foreign Acquisitions of Domestic Listed Targets in China General Rule: both the 2006 Takeover Regs and the 2006 M&A Regs are applicable

    8. National Economic Security (“NES”) Review Central MOFCOM NES approval required for following categories of acquisitions: “important industries” (not defined) “elements that may affect national economic security” (not defined) “famous trademarks” and “old established Chinese tradenames/companies” (not defined) If application for NES review not submitted, MOFCOM may unwind any transaction which “has or may have” material adverse effect on NES or take other measures to eliminate adverse NES impact.

    9. Foreign Shares as Consideration – Qualification Requirements

    10. Foreign Shares as Consideration – Approvals

    11. New Obstacles for “Red Chips” 2006 M&A Regs: CSRC approval required Clear ownership Complete business operation structure Corporate governance and internal management system No violations in past 3 years IPO proceeds ? valuation IPO to launch within 1 year of round-trip acquisition by SPV IPO proceeds to be repatriated to China, e.g. Commercial loan to domestic companies Establishment of new FIEs in China Acquisition of domestic enterprises

    12. Governing Law for Cross-border Acquisitions

    13. Practical Aspects of Cross-border M&A in China: Know Your Counterparty

    14. Practical Aspects of Cross- Border M&A in China

    15. Cross-border M&A in China: a Case Study

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