Legal practice in listed companies’ overseas M&A

Chinese companies have sped up their pace of overseas takeovers in the past couple of years. In sharp contrast to overseas M&A transactions carried out by ordinary domestic companies, apart from compliance with general regulatory requirements of the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOFCOM), the State Administration of Foreign Exchange (SAFE) and the State-owned Assets Supervision and Administration Commission (SASAC), usually overseas M&A transactions implemented by domestic listed companies also have to observe regulatory requirements of the China Securities Regulatory Commission (CSRC) and stock exchanges (i.e., securities regulators in China) in connection with the overall transaction scheme and issuance of legal opinions.

Consequently, Chinese lawyers will play an increasingly crucial and leading role in matters that include, but are not limited to, the establishment of a transaction timetable, the design and demonstration of a transaction structure, identification of highlights in legal due diligence on the targets and counterparties it is conducted by, as well as the format of legal opinions to be issued by both Chinese and local lawyers and, last but not least, the drafting of core clauses for M&A agreements.

In other words, the role of Chinese lawyers goes beyond designing transaction schemes efficiently, focusing on possible review risks, co-ordinating various efforts involved in the M&A deals, and providing guidance to local lawyers on how to assist in these efforts. This means that the Chinese lawyers must be very capable. In addition to extensive experience in material asset restructuring of listed companies, they need to have experience in, and abilities to co-ordinate, overseas projects.

Author: Wang Guan is a partner and Meng Wenxiang is a salary partner at Grandway Law Offices. Xie Yijie, a paralegal at Grandway, contributed to this article