2 VIP Class Notes (JJ)

[Continued] MA interview preparation

I had to take charge of the communication stuff —> I took charge of the communication between all parties/I took charge of the communication

We went through a lot of brainstorm to come up with this idea —> We went through a lot of brainstorming to come up with this idea/We did a lot of brainstorming to come up with this idea/We brainstormed a lot to come up with this idea

To summarize the normal steps you would follow for an M&A case —>

We did blablabla and blablabla, as you would normally handle an M&A case… 

The highlight of this project would be the most difficult part of it which is …. and after a lot of brainstorming to resolve this issue, we came up with the idea of …

When I was working at my previous company, I was assigned this MA project where I was representing the acquiring company … 

For those shareholders which —> For those shareholders with 5% of the shares/less shares 

It would increase the opportunity for them to approve this project —> It would increase the likelihood/chances for them to get approved for this project

Since the acquired company is listed in the OTC market, the whole MA project required the approval from the CSRC so we needed to prepare the legal opinion letter to guarantee the qualification of all shareholders. Also to ensure that the whole procedure of this MA project and the source of the transaction fees are legal. 

(…) it makes us prepare two entities —> because the company is blablabla, we had to prepare two separate entities of the acquiring company

The highlight of this project was also the most difficult part. First of all, because the acquired company is a stock company, it has to have at least 2 shareholders which means we have to prepare at least 2 entities of the acquiring company. And secondly, because the whole project needs to be approved by the CSRC, we had to provide them all the information and materials of the new shareholders for review. However, given the strict criteria of the CSRC, the qualifications of certain shareholders with less shares might affect/complicate the whole application process. So after a lot of brainstorming, we came up with an idea to prevent that from happening. We prepared 3 separate transaction agreements and made each shareholder sign the agreement respectively. In that case, we only need to provide the information of the largest shareholder to the CSRC and for those shareholders who own only 5% of the shares, their qualifications can instead be approved by the local SRC. This way, it would increase the probability for the Chinese authorities to approve the whole project and also to simplify the whole procedure. 

MA project description (try to keep it between 3 min 30 sec to 4 min):

When I was working at …. I was assigned to this MA project where I was representing the acquiring company and the acquired company was listed in the OTC market. I’ve learned so much from this project. I took charge of communication between all the parties and I also made the first draft of the intent letter, the due diligence report and the transaction agreement as you would normally handle other MA projects. And since the acquiring company is listed in the OTC market, we also need to prepare the legal opinion letter to guarantee the qualifications of the shareholders and to ensure the procedures and the source of the transaction fees are legal.

Q: Tell us about a time you helped your client set up WFOE.

Intro:

Our client was a Swiss company. This project is a very complicated one because it involves FDI, ODI and shareholder transfer. In order for you to have a better understanding of this project, let’s call this company A. They already have an entity in China so I’m going to call this company B. They came to us for setting up a new investment company in China which I call company C. They also want to use company C to make an application for the recognition of headquarter in China. In summary, A owns B and C.

What I did specifically:

I handled this project independently. I first helped them prepare all the required documents needed to set up company B and to get the approval from the commercial commission about the recognition of headquarter in China. Initially, A was the shareholder of B and C and we wanted to change it into A being the shareholder of B only and B as the shareholder of C. So in order to simplify the procedure, I did it in two steps. First, I advised them to increase the capital of company B using the equity of company C. Secondly, I advised them to sign the transfer agreement between A and B and to apply for the shareholder transfer registration in industrial and commercial bureau.

As I mentioned before, this project also includes some ODI works. Our client is planning to transfer the shareholders of the overseas subsidiaries owned by A in Korea, Japan and Singapore to company B. So I had to contact foreign lawyers and ask them to cooperate regarding/take care of the foreign currency part. I prepared the paperwork for our client.