Exploring the legal procedures for listing of enterprise reorganisations

Enterprise reorganisations are divided into reorganisations in the broad sense and listing reorganisations in the narrow sense. The term “listing reorganisation” means the conversion of an enterprise in accordance with the law to the joint stock system, with the objective of making an initial public offering (IPO) of A shares to the public and listing the enterprise; and also refers to the reorganisation and restructuring effected by an enterprise to satisfy offering and listing conditions as specified in laws and regulations.

The main legal procedures involved in an enterprise reorganisation and establishment of a joint stock limited company include:

• the enterprise first determining the various professional intermediary firms (e.g. underwriters, lawyers, accountants and appraisers) that engage in securities-related business for the reorganisation and listing;
• the intermediary firms conducting comprehensive due diligence of the enterprise based on their respective professional field;
• such intermediary firms as the lawyers, underwriters and others assisting the enterprise in jointly formulating the overall plan for the reorganisation and listing, determining the size of the proposed joint stock limited company, determining the asset, personnel and business spin-off issue, determining the debt restructuring issue, etc.;
• the underwriters, lawyers, accountants and appraisers (for assets and land) beginning to co-ordinate and initiate the work revolving around the reorganisation and listing plan;
• determination of the sponsors and their capital contribution percentages;
• holding of the sponsors’ meeting, execution of the Sponsorship Agreement and drafting of the company’s articles of association;
• carrying out with the administration for industry and commerce the procedure for the preliminary approval of the company’s name;
• the lawyers assisting the enterprise in formulating all of the application documents to be submitted to the relevant government authorities for approval of the establishment of the company (applicable to foreign-invested enterprises [FIEs]);
• the relevant government authorities approving the establishment of the company and issuing the approval documents (applicable to FIEs);
• each of the sponsors paying its capital contribution in full and completing the procedures for transfer of title to relevant assets; the accountants carrying out a capital verification and issuing a capital verification report;
• holding of the joint stock limited company’s inaugural meeting;
• carrying out business registration procedures with the administration for industry and commerce and collection of the licence of an enterprise with legal personality. With this, the joint stock limited company is formally established.