A private move

Author: | Published: 11 Jul 2011

The latest trend in M&A transactions involving companies based in China is so-called going-private transactions. In the last nine months, nine companies principally operating in China announced going-private transactions.

In these transactions, an affiliate (typically a significant or controlling shareholder) proposes an acquisition of the outstanding shares of a company listed on a US stock exchange with the intention of de-listing the shares from the US stock exchange and de-registering the shares with the Securities and Exchange Commission in the US. These transactions have been structured as mergers under the laws of the jurisdiction of incorporation of the target company.

While there has been uniformity in the structure of these transactions, the legal requirements applicable to the participants vary depending on the home jurisdiction of the target company. There is a sharp contrast between the legal principles applicable to a company incorporated in the US and a company incorporated...