When a major asset restructuring is quite simply very complicated

In this case involving a major asset restructuring project, a listed company (the issuer) made a non-public offer of shares to its controlling shareholder (the holding group) for the purchase of the entire shares in another listed company (target company A), and the equity interest in a non-listed company (target company B) respectively, held by the holding group.

The project involved three subject matters, i.e. the issuer (the listed company), the counterparty (the holding group) and the underlying assets (target companies A and B). The reorganisation process was so complex that seven intermediaries were engaged to advise on the project. It also needed to comply with all the rules and requirements for various aspects, like the restructuring and acquisition of a listed company, as well as the supervision of state-owned assets. The overall sequence of events in this project in the legal context can be summarised as follows: one main line and two auxiliary lines.

Main line: restructuring the issuer

The project started with a main line that focused on the issue of shares by the listed company to buy assets (i.e. a major reorganisation of assets). Supporting the main line was the Major Asset Restructuring Measures, under which an issuer is required to engage an independent financial adviser, accountants and lawyers. The financial adviser is responsible for the preparation of various application documents such as a restructuring report, while the accountants will issue various reports like an audit report and a profit forecast verification report, and the lawyers will provide a legal opinion.

Li Yonggang is a partner at Concord & Partners in Beijing