Since the Chinese authorities put forward the method of One Belt One Road in Oct 2013, persons have witnessed a lot of state-owned enterprises commence their overseas M&A investment afterwards in Europe, Middle Asia, Africa and South America. Till now, an increasing lawyer has published articles about how to do the due diligence in different industry in different country, what is the vital point in the process etc.
Actually, the process of due diligence is just one dependent part of overseas M&A, except the due diligence, the other parts of contemplation stage, trade negotiations, governing administration approval stage, delivery consolidation phase are all necessary, the risk go through every stage. Chinese enterprises should comprehensively track every stage of the process of trading, being prepared for situation, the gauge control transaction risk.
Chinese enterprises should pay attention to some aspects of due diligence in acquisitions. First of all, the thorough due diligence must be carried on to the major commercial contracts and leases agreements of the bankrupt enterprise; secondly, thorough due diligence must be carried on to your assets that may be assumed by the heir; thirdly, guaranteeing rights and interests of creditors and their scope of lien.
In abroad mergers and acquisitions of listed companies, the whole offer need to conform for the requirements of the China securities regulatory commission (CSRC) and the regulation of the stock exchange, and therefore including legal due diligence of target company, deal structure design, core legal provisions in the acquisition agreement design, a legal letter format issued by foreign lawyers, the project schedule requirements etc. satisfying the demands of the CSRC and stock exchange .
The legal opinions issued by templates are also needed to be in accordance with the Chinese law. When foreign lawyers drafting the acquisition agreement, it involves the profit and loss compensation, acquisitions, staffing, performance of payments which shall be checked by Chinese lawyers according on the CSRCs audit in practice to provide important advice; in particular, the CSRC and stock exchanges feedback often mainly focus in related content of foreign laws, therefore, Chinese lawyers need to coordinate with foreign lawyers in the whole process.
In addition, compared with ordinary overseas M&A project, thanks to strict requirements of the CSRC for the suspension time of listed companies, thinking of the time needed for comprehensive due diligence of legal, financial aspects and approval time of Chinese governing administration department. Obviously, it requires Chinese lawyers, financial advisers, foreign lawyers to cooperate with each other, to design for customers the quickest, most efficient, and the most feasible solutions.