Legislation roundup: SPVs for offshore financing, asset restructuring and listed company takeovers

Foreign exchange

State Administration of Foreign Exchange, Circular on Issues Relevant to Exchange Control in Connection with Offshore Investment/Financing and Round-trip Investment by Residents in China Through Special Purpose Vehicles
国家外汇管理局关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知

The Circular broadens the meaning of “special purpose vehicle” from having financing as its objective to investment and financing as its objectives, requires registration for (first level) offshore special purpose vehicles directly established or controlled by residents in China only, abolishes the procedures for the registration of the establishment of an offshore special purpose vehicle, registration of financing and the amendment of financing registration, and simplifies the contents for changes in registration. The Circular additionally abolishes the mandatory fund repatriation provision that requires a resident in China to repatriate profit, dividends and foreign exchange revenue from changes in capital derived from a special purpose vehicle to China within 180 days from the date of receiving the same.

See full translation.

Further reading
Circular on Issues Relevant to Foreign Exchange Control with Respect to the Round-trip Investment of Funds Raised by Domestic Residents Through Offshore Special Purpose Companies
It's SAFE Again for China Venture Capital Round-trips & Red-chip Listings


M&A

China Securities Regulatory Commission, Measures for the Administration of Material Asset Restructuring of Listed Companies (Draft for Comments)
中国证券监督管理委员会上市公司重大资产重组管理办法（征求意见稿）

The Draft abolishes the requirement for the examination and approval of material purchases, sales and exchanges of assets of listed companies where the same do not constitute a backdoor listing. It abolishes the threshold requirements for the offering of shares to unaffiliated third parties to purchase assets and the corresponding mandatory provisions for profit forecast compensation, and encourages the parties to a transaction to conduct negotiations to execute a more flexible performance compensation agreement that is in line with their own particular characteristics. It improves the market-oriented pricing mechanism for the offering of shares to purchase assets, adding provisions that increase flexibility of the pricing of a share offering and provide for a price revision mechanism, and adds detailed requirements in respect of the disclosure of pricing reference information, such as the market comparative transaction price for the relevant assets, and the price-to-earning ratio and price-to-book ratio of companies in the industry; improves the definition of backdoor listings, specifies the implementation for backdoor listings of requirements equivalent to those for IPO reviews and specifies that backdoor listings are not permitted for companies listed on the Growth Enterprise Market.

See the digest for more details.

Further reading
What your M&A strategy should look like
Tentative Provisions on Strengthening the Regulation of Unusual Share Transactions in Connection with Material Asset Reorganisation of Listed Companies

China Securities Regulatory Commission, Decision on Amending the «Measures for the Administration of the Takeover of Listed Companies» (Draft for Comments)
中国证券监督管理委员会关于修改的决定（征求意见稿）

The Draft abolishes the requirement for prior examination approval of a takeover offer and for the examination and approval of two of the circumstances for waiver of a takeover offer. With respect to performance bonds in connection with takeover offers of acquirers, the Draft makes available guarantees issued by banks and the bearing of joint and several liability by the financial advisor.

See the digest for more details.

Further reading
Measures for the Administration of the Takeover of Listed Companies (Revised in 2014)
Provisions for the Acquisition of Domestic Enterprises by Foreign Investors (Revised)