1、本科毕业论文外文翻译外文题目MANAGINGRISKSINCHINESEMATRANSACTIONS出处HTTP/WWWMONDAQCOM/ARTICLEASPARTICLEID54772作者LEFANGONG原文CHINAMANAGINGRISKSINCHINESEMATRANSACTIONS28NOVEMBER2007ARTICLEBYLEFANGONGAGAINSTTHEBACKDROPOFCHINASACCESSIONTOTHEWTOANDTHECONTINUOUSLIFTINGOFRESTRICTIONSONFOREIGNINVESTMENTINMANYINDUSTRIES,CHIN
2、AISGOINGTHROUGHANEXTRAORDINARYPERIODOFMERGERANDACQUISITIONACTIVITYHOWEVER,EXECUTINGMATRANSACTIONSINCHINAISNOTFORTHEFAINTOFHEART,ANDMAKINGSUCCESSFULINVESTMENTSANDSTRIKINGGOODDEALSREQUIREMORETHANAGOLDRUSHMENTALITYINPARTICULAR,TAKINGANOVERLYCAUTIOUSAPPROACHMIGHTRESULTINMISSINGOUTONGREATOPPORTUNITIES,WH
3、ILEANUNDISCIPLINEDOROVERLYOPTIMISTICAPPROACHMIGHTWELLLEADTODISASTERCONSEQUENTLY,ITISESSENTIALTHATDEALMAKERSANDTHEIRCOUNSELTAKEANINFORMED,BALANCED,ANDPRACTICALAPPROACHTOTHEMYRIADANDUNIQUERISKSPRESENTEDBYCHINESEMATRANSACTIONSMATTERSTHATREQUIRECAREFULATTENTIONINCHINESEMATRANSACTIONSINCLUDEREGULATORYRES
4、TRICTIONSONCOMMERCIALENTERPRISE,GOVERNMENTALAPPROVALSTHATAREREQUIREDINCONNECTIONWITHPURCHASESANDSALESOFBUSINESSES,CONFIRMATIONOFTITLETOASSETS,ASSESSMENTOFPOTENTIALLIABILITIES,ANDSTRUCTUREOFPURCHASEPRICEANDOTHERAMOUNTSPOTENTIALLYPAYABLETOTHESELLERCIRCUMSTANCESINCHINATHATTENDTOMAKETHESEMATTERSCHALLENG
5、INGINCLUDEALEGALANDREGULATORYSYSTEMTHATISINASTATEOFFLUX,UNAVAILABILITYANDUNRELIABILITYOFPUBLICRECORDS,UNFAMILIARCUSTOMSANDPRACTICES,A“SELLERSMARKET“CREATEDBYASIGNIFICANTINFLUXOFINVESTMENTCAPITAL,ANDREGULATORYRESTRICTIONSAPPLICABLETODEFERREDPAYMENTSOFPURCHASEPRICETHISCOMMENTARYIDENTIFIESSEVERALKEYARE
6、ASOFRISKASSOCIATEDWITHMATRANSACTIONSINCHINA,WITHTHEAIMOFHELPINGDEALMAKERSIDENTIFYANDADDRESSIMPORTANTISSUESATANEARLYSTAGEASSESSINGREGULATORYRESTRICTIONSANINITIALMATTERTHATAFOREIGNINVESTORNEEDSTOASSESSINSETTINGITSEXPECTATIONISHOWTHECHINESEREGULATORYRESTRICTIONSANDTHEPERSONALVIEWSOFTHEAPPLICABLEAPPROVA
7、LAUTHORITIESMAYAFFECTTHESTRUCTUREANDPROCESSOFTHEDEALONEOFTHEFIRSTTHINGSTHATABUYERMAYWANTTOLOOKINTOISWHETHERTHETARGETCOMPANY,AFTERBEINGACQUIREDBYAFOREIGNINVESTOR,CANCONTINUETOCONDUCTITSBUSINESSANDOPERATIONSINTHESAMEMANNERWITHOUTBECOMINGSUBJECTTOADDITIONALREGULATORYRESTRICTIONSTHEREARESTILLANUMBEROFBU
8、SINESSSECTORSINCHINATHATARENOTFULLYOPENTOFOREIGNINVESTORSANDINWHICHSUCHINVESTORSCANNOTESTABLISHWHOLLYFOREIGNOWNEDENTERPRISES“WFOES“OREVENJOINTVENTURESAFOREIGNINVESTORSHOULDDETERMINEASEARLYASPOSSIBLEWHETHERTHEREAREPERCENTAGELIMITATIONSONPOTENTIALOWNERSHIPINANENTERPRISEINAGIVENINDUSTRIALSECTOR,ASTHISW
9、ILLDIRECTLYAFFECTTHEDEALSTRUCTUREFOREXAMPLE,IFTHETARGETCOMPANYISACONGLOMERATE,SOMEASSETSMAYNEEDTOBECARVEDOUTTOMAKESURETHEPOSTCLOSINGTARGETCOMPANYWILLSTEERCLEAROFTHESECTORSTHATARE“PROHIBITED“OR“RESTRICTED“FORFOREIGNINVESTMENTTHROUGHTHESTATEDEVELOPMENTANDREFORMCOMMISSIONANDTHEMINISTRYOFCOMMERCE,CHINAS
10、CENTRALGOVERNMENTSETSTHEPOLICYANDPACEOFOPENINGUPTHEINDUSTRIALSECTORSANDPUBLISHESANDUPDATESTHEFOREIGNINVESTMENTCATALOGUEEVERYFEWYEARSPROSPECTIVEBUYERSSHOULDIMMEDIATELYFAMILIARIZETHEMSELVESWITHTHISGUIDANCEINADDITIONTOIDENTIFYINGPROHIBITIONSANDRESTRICTIONSONINVESTMENTINCERTAINSECTORS,THECATALOGUELISTST
11、HOSESECTORSWHEREFOREIGNINVESTMENTISENCOURAGED,WHICHCOULDMEANTAXHOLIDAYSANDPREFERENTIALTREATMENTFORFOREIGNINVESTORSIFTHETRANSACTIONPARTIESCANMANAGETOINTERPRETTHEINDUSTRIALTERMSFAIRLYLIBERALLYANDHAVETHEAPPLICABLEAPPROVALAUTHORITIESAGREETOSUCHINTERPRETATIONS,THEEFFORTMAYYIELDSIGNIFICANTBENEFITSWHENTHEC
12、OMPANYFILESITSTAXRETURNSINADDITIONTOTHERESTRICTIONSIMPOSEDBYTHECENTRALGOVERNMENT,ATTENTIONSHOULDBEPAIDTOPOSSIBLEREGULATORYCONSTRAINTSATTHELOCALGOVERNMENTLEVELFORINSTANCE,THESHANGHAIGOVERNMENTREQUIRESLICENSESFORHANDLINGPUBLICSECURITYPROJECTSTHATCANNOTBEISSUEDTOWFOESALTHOUGHITISREASONABLETOASSUMETHATA
13、SHAREACQUISITIONTRANSACTIONWOULDALLOWTHETARGETCOMPANYTOKEEPITSLICENSESANDPERMITSAFTERTHECLOSINGOFTHEDEAL,THECHANCEOFSURPRISESINCREASESWHENDIFFERENTGOVERNMENTAGENCIESAREINVOLVEDINTHEPROCESSTHUS,ITISCRITICALTODETERMINEATANEARLYSTAGEWHETHERTHEREQUIREDLICENSESANDPERMITSCANBERENEWEDOREXCHANGEDFORNEWONESA
14、FTERTHETARGETCOMPANYCONVERTSTOAFOREIGNINVESTEDENTERPRISEASARULEOFTHUMB,THESHAREPURCHASEOREQUITYINTERESTTRANSFERAGREEMENTWOULDNORMALLYTIMETHECLOSINGACOUPLEOFDAYSAFTERALLTHENECESSARYAPPROVALS,NEWLICENSES,ANDPERMITSHAVEBEENOBTAINEDASSUMINGTHATALLOTHERCLOSINGCONDITIONSHAVEBEENSATISFIEDINADDITION,PROSPEC
15、TIVEBUYERSSHOULDNOTBEENTIRELYSURPRISEDIFDUEDILIGENCEINDICATESTHATTHETARGETCOMPANYHASBEENENGAGINGINSOMEOFITSBUSINESSACTIVITIESWITHOUTPROPERLICENSESORPERMITSINTHISCASE,THEBUYERWILLNEEDTOASSESSTHERISKEXPOSUREANDDECIDEWHETHERITSHOULDFORGOTHETRANSACTION,INSISTTHATTHESELLERCURETHEDEFICIENCIESPRIORTOCLOSIN
16、G,ORSTRUCTURETHETRANSACTIONSASANASSETPURCHASEANDAPPLYSEPARATELYFORTHEREQUIREDLICENSESNAVIGATINGAPPROVALPROCESSESCHINASREGULATORYENVIRONMENTISSTILLRATEDAMONGTHETOPCONCERNSFORUSCOMPANIES,ACCORDINGTOARECENTSURVEYBYTHEUSCHINABUSINESSCOUNCIL1FOREIGNCOMPANIESINVESTINGINCHINAHAVETODEALWITHTHEAMBIGUITYOFTHE
17、LAWANDTHECONTRADICTORYVIEWSOFDIFFERENTGOVERNMENTAGENCIESANDOFFICIALSTHESECONDITIONSFREQUENTLYRESULTFROMACOMBINATIONOFEVERCHANGINGLAWSANDREGULATIONSANDFORMALANDINFORMAL“IMPLEMENTATIONRULES“FORINSTANCE,AGOVERNMENTOFFICIALWITHAPPROVALAUTHORITYMAYHAVEHISOWNINTERPRETATIONOFTHELAWANDMAYASSUREANINVESTORORI
18、TSCOUNSELTHATHISAPPROACHISCORRECT,WHILEOFFICIALSINANOTHERGOVERNMENTAGENCYSUGGESTEDOTHERWISEUNANTICIPATED“HIDDEN“RULES,WHICHCANBECREATEDBYBOTHGOVERNMENTALANDQUASIGOVERNMENTALAGENCIES,CANALSOPRESENTCHALLENGESFORINSTANCE,APROPERTYREGISTRATIONCENTER2MAYEMPLOYLOCALUNPUBLICIZEDPROCEDURESTHATREQUIRESHAREPU
19、RCHASEAGREEMENTSOREQUITYTRANSFERAGREEMENTSTOBEINAPRESCRIBEDFORMAVOIDINGTHESELANDMINESDOESNTTAKEMAGIC,JUSTHARDWORKANDVIGILANCEFOREIGNINVESTORSMUSTDOSUBSTANTIALHOMEWORKTODEVELOPKEENJUDGMENTONLEGALCOMPLIANCEANDRISKASSESSMENTINCHINAFOREIGNINVESTORSNOTFAMILIARWITHCHINASHOULDRESISTTHEURGETOMAKE“INNOCENT“A
20、SSUMPTIONSANDSHOULDENGAGESOPHISTICATEDCOUNSELTODETECTANDRESOLVEISSUESASEARLYINTHEPROCESSASPOSSIBLECONFIRMINGTITLETOASSETSINCHINA,THEVERIFICATIONOFTHEOWNERSHIPOFASSETSCANPRESENTSUBSTANTIALCHALLENGESPUBLICLYAVAILABLEINFORMATIONANDGOVERNMENTRECORDS,IFTHEYEXIST,MAYBEINADEQUATEORUNRELIABLEFORPRIVATECOMPA
21、NIES,INTERNALDOCUMENTATIONISUSUALLYNOTWELLKEPTANDORGANIZED,ANDITMAYBEINSUFFICIENTTOSHOWWHATASSETSBELONGTOWHOMFORSTATEOWNEDENTERPRISES,THESITUATIONMAYNOTBESIGNIFICANTLYBETTER,ANDREQUESTSFORINFORMATIONOFTENMEETWITHRELUCTANCEANDTHE“STATEOWNED“CULTUREOFSECRECYITISIMPORTANTTOREALIZETHATATARGETCOMPANYSASS
22、ETSMAYHAVEBEENUSEDINRELATEDPARTYTRANSACTIONSFOREXAMPLE,ONECOMPANYSASSETSMIGHTHAVEBEENPLEDGEDFORANOTHERSBANKBORROWINGS,ANDTHESAMEASSETSMIGHTHAVEBEENUSEDMULTIPLETIMESFORMAKINGREGISTEREDCAPITALCONTRIBUTIONSINDIFFERENTCOMPANIESTHEBUYERALSONEEDSTOBEEXTREMELYCAREFULIFSUBSTANTIALASSETSOFATARGETCOMPANYWEREB
23、OUGHTFROMTHEBANKRUPTCYAUCTIONOFASTATEOWNEDENTERPRISEIFTHEPROCESSWASNOTPROPERLYSUPERVISEDBYTHECOURTANDTHECASEWASNOTEFFECTIVELYCLOSED,THESALECOULDRISKBEINGOVERTURNEDBECAUSEOFAFLAWEDAUCTIONPROCESSFINALLY,PROSPECTIVEBUYERSMUSTBEVIGILANTANDVIGOROUSINTITLESEARCHANDVERIFICATIONMANYSTATEOWNEDENTERPRISES,AND
24、SOMETIMESEVENPRIVATELYOWNEDCOMPANIES,MAYUSEORCLAIMTO“OWN“LANDOFFICIALLYLABELEDAS“ALLOCATEDLAND,“WHICHISPROVIDEDBYTHEGOVERNMENTATNOMINALCOSTORNOCOSTATALLBUTCANNOTBESOLD,TRANSFERRED,MORTGAGED,OROTHERWISEDISPOSEDOFAMARKETABLETITLE,OR“GRANTEDLANDUSERIGHT,“MUSTBEOBTAINEDBEFORESUCHLANDCANBESOLDORTRANSFERR
25、ED,WHICHCOULDREQUIRETHEPAYMENTOFSIGNIFICANTLANDPREMIUMSTOTHELANDBUREAUASSESSINGLIABILITIESCONTINGENTANDOFFBALANCESHEETLIABILITIESMAYPRESENTANOTHERSERIOUSAREAOFRISKFORBUYERSOFCHINESECOMPANIESTYPICALAREASOFPOTENTIALLYSIGNIFICANTLIABILITYEXPOSUREINCLUDETAX,EMPLOYMENT,LEGACYPROBLEMS,ANDENVIRONMENTALISSU
26、ESTAXDUEDILIGENCESHOULDBEANINTEGRALPARTOFANYBUYERSASSESSMENTOFACHINESECOMPANYFAILURETOCAPTUREIRREGULARORILLEGALTAXPRACTICESANDQUANTIFYTHEASSOCIATEDHIDDENLIABILITIESANDDOWNSIDERISKSCOULDLEADTOSERIOUSPROBLEMSINADDITIONTOOVERSTATEDFINANCIALPROJECTIONSANDANINFLATEDPURCHASEPRICE,LATENTPROBLEMSINTHISAREAM
27、AYRESULTINFUTURETAXAUDITS,ASSESSMENTSFORPASTDUETAXES,ANDHEFTYPENALTIESDESPITETHESEVERECIVILPENALTIESANDTHEPOSSIBILITYOFCRIMINALPROSECUTION,ITISNOTUNCOMMONTODISCOVERTAXEVASION,AGGRESSIVEANDIRREGULARACCOUNTINGANDTAXPRACTICES,ANDEVENTAXFRAUDINACHINESECOMPANYSOMECHINESECOMPANIESKEEPTWOORMORESETSOFBOOKSI
28、NORDERTOUNDERSTATETAXEXPOSURERELATEDPARTYTRANSACTIONSARECOMMONPLACEANDSOMETIMESAREBASEDONHANDSHAKESANDORALARRANGEMENTS,WITHTHERESULTTHATTHETRANSACTIONSARENEITHERDOCUMENTEDNORREFLECTEDINTHECOMPANYSBOOKSTHROUGHTHESETRANSACTIONS,PROFITSMAYBESHIFTEDTODOMESTICENTITIESTHATAREINALOSSPOSITIONORTOOFFSHOREENT
29、ITIESSUCHASTHOSEINHONGKONGIFITISDETERMINEDTHATATRANSACTIONHASVIOLATEDPRCTRANSFERPRICINGLAWS,THECOMPANYMAYHAVETOPAYBACKTAXESANDPENALTIESBUYERSSHOULDALSOKEEPINMINDANOTHERIMPORTANTASPECTOFCHINESETAXLAWTHEREISGENERALLYNOSTATUTEOFLIMITATIONSFORTAXLIABILITIESAWARENESSOFTHISCIRCUMSTANCEMAYBEPARTICULARLYIMP
30、ORTANTWHENALLOCATINGTAXEXPOSURESANDENTERINGINTORELATEDINDEMNIFICATIONOROTHERARRANGEMENTSEMPLOYMENTISSUESFREQUENTLYARISEWHENTHETARGETISASTATEOWNEDENTERPRISEWITHSIGNIFICANTLABORREDUNDANCYMAJORLAYOFFSMIGHTTRIGGERWORKERPROTESTSANDOTHERSOCIALUNREST,THEREBYPOLITICIZINGTHETRANSACTIONANDATTRACTINGUNWANTEDAT
31、TENTIONFROMTHELOCALGOVERNMENTAUTHORITIESANOTHERFREQUENTLYENCOUNTEREDISSUEISHOWMUCHOFTHEWORKFORCETHETARGETCOMPANYMAYREDUCEAFTERTHEACQUISITIONTHISISOFTENAHEAVILYNEGOTIATEDISSUE,ANDTHESELLERMAYEVENBRINGITUPAGAINATTHELASTMINUTE,HOPINGTHEBUYERWILLCOMPROMISEGIVENTHEPOLITICALCOMPLICATIONSOFEMPLOYMENTMATTER
32、S,ITWOULDBEPRUDENTFORTHEBUYERTOTAKEAFIRMSTANDABOUTITSPOSITION,NEGOTIATERELENTLESSLYUPFRONT,ANDRESISTTHETEMPTATIONTOLEAVETHISISSUEBEHINDFORFUTURE“FRIENDLYDISCUSSION“ONCETHEDEALISOTHERWISECUT,DISCUSSIONSONCUTTINGBACKTHEWORKFORCEARELIKELYTOBENEITHERPLEASANTNORFRIENDLYFINALLY,ONEOFTHEMOSTDIFFICULTHEADAC
33、HESFORPOTENTIALBUYERSOFCHINESECOMPANIESISTHELEGACYISSUEINHERITEDFROMFORMERSTATEOWNEDENTERPRISESORCREATEDDURINGTHE“REFORMANDRESTRUCTURING“IE,PRIVATIZATIONPROCESSBUYERSOFPRIVATELYOWNEDCOMPANIESTHATWERERESTRUCTUREDORCONVERTEDFROMFORMERSTATEOWNEDENTERPRISESSHOULDBEALERTTOPOSSIBLEVIOLATIONSANDLIABILITIES
34、ASSOCIATEDWITHTHEPRIOR“RESTRUCTURINGS“ORMANAGEMENTBUYOUTSANORMALDUEDILIGENCEINVESTIGATIONFREQUENTLYWILLNOTREVEALMUCHINTERMSOFSUCHLEGACYPROBLEMS,BECAUSEANYPROBLEMATICELEMENTSOFTHECOMPANYSHISTORYARELIKELYTOBEKEPTSECRETUNTILACORRUPTIONSCANDALERUPTSUSUALLYWHENALOCALOFFICIALLOSESHISJOBORGETSINVESTIGATEDI
35、NSUCHCASES,ITFREQUENTLYTURNSOUTTHATTHESELLERDOESNOTHAVECLEANHANDSTOUNDERSTANDTHECOMPANYANDASSESSTHERISKS,THEBUYERSHOULDFULLYENGAGEITSLOCALTEAMSINCLUDINGPRIVATEINVESTIGATORS,IFNEEDEDTOGATHERLOCALINTELLIGENCEANDSNIFFOUTHIDDENISSUESTOTHEGREATESTEXTENTPOSSIBLEIFTHE“SHADOWOFDOUBT“CANNOTBEELIMINATED,THENI
36、TMAYBENECESSARYTOCONSIDERALTERNATIVECOURSESOFACTIONPURCHASEPRICEANDCLOSINGMATTERSTODEALWITHUNCERTAINTIESOVERVALUATIONANDMITIGATETHERISKSASSOCIATEDWITHTHEACQUIREDCOMPANY,ACQUIRERSSHOULDCAREFULLYCRAFTAPURCHASEAGREEMENTWITHANACCEPTABLEPAYMENTARRANGEMENTFORTHEPURCHASEPRICETHATISWORKABLEUNDERPRCLAWUNLIKE
37、MATRANSACTIONSINTHEUS,THEOPTIONSOFESCROWACCOUNTSANDHOLDBACKSINCHINAAREQUITELIMITEDANDUNSATISFACTORYDUETOREGULATORYCONSTRAINTSANDANUNDERDEVELOPEDBANKINGSERVICESMARKETPRCLAWREQUIRESAFOREIGNINVESTORTOMAKEPAYMENTWITHINTHREEMONTHSOFTHEISSUANCEOFTHENEWBUSINESSLICENSEOFTHEACQUIREDTARGETTHEDEADLINEMAYBEEXTE
38、NDED,SUBJECTTOGOVERNMENTAPPROVAL,BUTNOLESSTHAN60PERCENTOFTHEPAYMENTMUSTBEMADEWITHINSIXMONTHSOFTHEISSUANCEOFTHENEWBUSINESSLICENSE,ANDTHEBALANCEMUSTBEMADEWITHINONEYEARTHISEFFECTIVELYMEANSTHATAHOLDBACKARRANGEMENT,IFANY,CANNOTEXTENDFORMORETHANAYEAR,WHICHMAYNOTBELONGENOUGHFORTHEBUYERTODISCOVERCONTINGENTO
39、RHIDDENLIABILITIESASESCROWISAFAIRLYNEWCONCEPTTOMANYBANKSINCHINA,THEYARERELUCTANTTOGETINVOLVEDINSITUATIONSTHATMAYGIVERISETOPOTENTIALDISPUTESALTHOUGHINSOMEEXCEPTIONALCASESBANKSAREWILLINGTOACCOMMODATETHETRANSACTIONPARTIES,SUCHACCOMMODATIONSMAYWELLINVOLVETHEASSESSMENTOFHEFTYFEESIFTHETRANSACTIONCANBEPART
40、IALLYSTRUCTUREDOFFSHOREANDPARTOFTHEPAYMENTCANBEMADETOABANKACCOUNTOUTSIDECHINA,HOLDBACKSANDESCROWFORTHEPURCHASEPRICEMAYBEEASIERTOARRANGE,ASTHEYARENOLONGERSUBJECTTOCHINESEREGULATORYCONSTRAINTSACREATIVEEARNOUTARRANGEMENTCANALSOSERVEASAMECHANISMTOHELPTHEBUYERMITIGATEPOTENTIALRISKEXPOSUREARISINGFROMCONTI
41、NGENTLIABILITIESITCANALSOBEUSEDTOBRIDGEDIFFERENCESBETWEENASELLERANDBUYEROVERVALUATIONOFTHECOMPANYFORINSTANCE,ABUYERCOULDAGREETOMAKEANADDITIONALPAYMENTSEVERALYEARSAFTERTHECLOSINGIFTHEVENTUREACHIEVESASPECIFIEDEARNINGTARGETANDTHEREHASBEENNOMATERIALBREACHOFREPRESENTATIONSANDWARRANTIESBYTHESELLERINADDITI
42、ONTOCAREFULDRAFTINGTOMINIMIZETHERISKOFGAMESMANSHIPINDEFININGTHEFINANCIALTARGETSANDCALCULATIONSOFEARNOUTPAYMENTS,SPECIALCONSIDERATIONNEEDSTOBEGIVENTOCREATINGAMECHANISMTHATISENFORCEABLEANDPRACTICALUNDERPRCLAWIFANEARNOUTISTREATEDASPARTOFTHEPURCHASECONSIDERATION,THENITWILLBESUBJECTTOTHESAMEPAYMENTDEADLI
43、NEAPPLICABLETOTHEPURCHASEPRICE,WHICHISWITHINAYEARFOLLOWINGTHEISSUANCEOFTHENEWBUSINESSLICENSEOFTHETARGETCONSEQUENTLY,ITISNECESSARYTOCRAFTTHEEARNOUTLANGUAGEARTFULLYTOMAKESURETHATANYADDITIONALPAYMENT,INTHEEYESOFREGULATORYAUTHORITIES,JUDGES,ANDARBITRATORS,DOESNOTCONSTITUTEPAYMENTOFAPORTIONOFTHEPURCHASEP
44、RICEFORINSTANCE,ABUYERCOULDINSTEADAGREETOPAYACONSULTINGFEETOTHESELLERIFCERTAINLIABILITIESARENOTTRIGGEREDWITHINTWOYEARSOFTHECLOSINGHOWEVER,THESELLERMAYBEWARYOFTHETAXIMPLICATIONSOFSUCHANARRANGEMENT3ANOTHEROPTIONISABUYBACKARRANGEMENT,WHERETHEBUYERCANREQUESTTHATTHESELLERREPURCHASETHEEQUITYINTERESTSORIGI
45、NALLYSOLDTOTHEBUYERATAFIXEDPRICEUPONTHEOCCURRENCEOFSPECIFIEDEVENTS,SUCHASTHECOMPANYSFAILURETOMEETCERTAINMILESTONESORMATERIALBREACHESOFREPRESENTATIONSANDWARRANTIESBYTHESELLERBUTTHEENFORCEABILITYOFSUCHCLAUSESREMAINSTOBETESTED,ANDTHEYMAYBESUBJECTTOREGULATORYOBSTACLESFIRST,SUCHABUYBACKWILLBESUBJECTTOAPP
46、ROVALAGAINWHENTHECHANGEOFSHAREHOLDERSNEEDSTOBEEFFECTED,ANDTHEREISNOGUARANTEETHATTHEAPPROVALAUTHORITIESWILLENDORSETHEREPURCHASE,ESPECIALLYWHENTHEREISNOCLEARGUIDANCEUNDERPRCLAWONHOWTODEALWITHSUCHASITUATIONSECOND,THEPRCEQUITYJOINTVENTURELAWSTIPULATESTHATTHEUNANIMOUSAPPROVALOFTHEBOARDOFDIRECTORSISREQUIR
47、EDFORMATTERSSUCHASMERGERSANDACQUISITIONSANDCHANGESTOTHEARTICLESOFASSOCIATIONTHUS,INTHECONTEXTOFAJOINTVENTURE,IFTHEDIRECTORSAPPOINTEDBYTHE“SELLER“REFUSETOAPPROVETHEREPURCHASE,ITISANOPENQUESTIONWHETHERTHEFOREIGNINVESTORCANENFORCESUCHACLAUSEINTHEPRCCOURTSTOOBTAINBOARDAPPROVALCONCLUSIONFOREIGNINVESTORSM
48、AYFACEMANYPOTENTIALPITFALLSWHENDOINGDEALSINCHINAHOWEVER,WITHCHINASROBUSTECONOMYCONTINUINGTOATTRACTCAPITAL,THEREWILLBEMOREDEALSANDMORECOMPETITIONINACHANGINGLEGALANDREGULATORYENVIRONMENTASARESULT,INVESTORSWILLNEEDTODEALWITHTHESECHALLENGESINANINFORMED,FLEXIBLE,ANDPRACTICALMANNERWINNINGTHEGAMEWILLREQUIR
49、EADEEPUNDERSTANDINGOFTHEPECULIARITIESOFTHECHINESEPOLITICAL,REGULATORY,ANDBUSINESSENVIRONMENT,COUPLEDWITHTHEABILITYTOADAPTTOTHEPARTICULARCIRCUMSTANCESPRESENTEDEXPERIENCED,CREATIVE,ANDPRACTICALCOUNSELCANPROVIDEINVALUABLEASSISTANCEINENABLINGINVESTORSTOMAKEINFORMEDDECISIONSTHATBALANCETHERISKSANDOPPORTUNITIESINTHECHINAMARKETFOOTNOTES1SEERESULTSOFTHE2006USCBCMEMBERPRIORITIESSURVEY,AUGUST30,2006,AVAILABLEATHTTP/WWWUSCHINAORG/PUBLIC/DOCUMENTS/2006/08/MEMBERPRIORITIESSURVEYPDF2THISISAQUASIGOVERNMENTALAGENCYTHATISRESPONSIBLEFORTHEREGISTRATIONOFLEASESANDREALPROPERTYTITLE,SALE,ANDPURCHASETR
