Two more schemes for companies restructuring offshore assets

In the articles of the two preceding issues, the author focused on describing the trend in the restructuring of offshore assets and the future plan of the China (Shanghai) Pilot Free Trade Zone (FTZ), while also sketching out four schemes for the restructuring and acquisition of offshore assets by listed companies. In this issue, the author will lay out a further two schemes, one of them particularly aimed at enterprises in the FTZ carrying out offshore acquisitions.

Scheme 5: The equity in the subject assets to be restructured is first dispersed and then injected into the listed company.

The listed company can first disperse the equity in the assets to be restructured and then inject it, step by step, into the listed company. The operational procedure is shown in the graphic on this page.

Avoiding risk

The advantage of this scheme is that it avoids triggering the risks of a backdoor listing. The listed company first controls a relative majority of the equity in the FTZ company, becoming the actual controller of the offshore assets to be restructured. Subsequently, in accordance with the requirements of the Enterprise Accounting Standards, No. 33: Consolidated Financial Statements, the offshore assets to be restructured are included on the consolidated statements, and their gradual injection is gradually realised.

Jonathan Sun is a senior partner at Zhong Yin Law Firm