More on restructuring offshore assets of China-listed companies

In this column in the previous issue, this author focused on an exposition of the trends in the restructuring of offshore assets and the future plan of the China (Shanghai) Pilot Free Trade Zone (FTZ). At the end of the column, this author described one scheme for the restructuring and acquisition of offshore assets by listed companies. In this issue, the author will describe another two schemes for the restructuring and acquisition of offshore assets by listed companies.

Scheme 2: China-listed company carries out a restructuring of offshore assets by way of restructuring a company previously acquired by a connected person.

In an offshore asset transaction, there is usually a bid invitation and submission procedure. In the bid undertaking, there is a major difference between the time of closing and the price of offshore assets, on the one hand, and the trading suspension time and transaction price required by the China Securities Regulatory Commission (CSRC), on the other hand.–

In such circumstances, this author recommends the adoption of the following scheme:

As shown in the graphic, the specific steps in the scheme are as follows: first, a connected person of the actual controller of the China-listed company establishes an FTZ company or establishes a company jointly established by the actual controller and an investment fund. Subsequently the company of the connected person effects the acquisition of the offshore assets by the standard procedure.

Once steps (2), (3) and (4) are completed, further compliance in law is carried out. Finally, an application is made to suspend trading of the listed company, and the board of directors and shareholders’ meeting procedures and the CSRC approval procedure are carried out.

Jonathan Sun is a partner at Zhong Yin Law Firm