CHINA Law and Practice Contributed by: Wei Chen, Yue Zhang, Hao Peng and Yi Sun, JunHe LLP
6.12 Irrevocable Commitments It is common to obtain irrevocable commitments from principal shareholders of the target compa- ny to tender or support the transaction, in order to reduce deal uncertainty. These commitments, if made by the principal shareholders, should be binding. Whether there will be an “out” in the case of a better offer will generally be subject to negotiation between the buyer and the share- holders. Under the relevant laws and regulations, the shareholders of the target company are per- mitted to withdraw their acceptance of the offer up to three trading days before the expiry of the tender offer. 6.13 Securities Regulator’s or Stock Exchange Process The tender offer or the terms of the tender offer do not need to be approved prior to the launch by the CSRC or the relevant stock exchange, which will provide supervision to ensure com- pliance with the laws and regulations during the tender offer process. The timeframe for the tender offer is generally established by the buyer, provided that the rel- evant mandatory requirements are complied with. The period of acquisition in the tender offer will not be less than 30 days and will not exceed 60 days unless a competing takeover offer is announced. The buyer is not permitted to change the takeover offer within 15 days of the expiry of the offer unless a competing takeover offer is announced. The indicative announcement on the summary of a competing takeover offer will be made no later than 15 days before the expiry of the buyer’s takeover offer. Where a competing takeover offer is announced, and the buyer makes changes to its takeover offer so that the remaining term of its takeover offer is less than 15 days, the buyer will
extend the takeover offer to no less than 15 days and not exceed the expiration of the competing takeover offer. 6.14 Timing of the Takeover Offer Generally in the tender offer process, the buyer will make an indicative announcement on the summary of the tender offer report and will indi- cate in the summary if any regulatory or antitrust approvals are required. The buyer will typically announce the tender offer report after obtaining the approvals. The buyer is required to announce the tender offer report within 60 days after the indicative announcement. If the announcement cannot be made within the 60-day period, the buyer should notify the public company on the next business day following the expiry of the 60-day period and make the relevant announcement. It should then make an announcement every 30 days until the tender offer report is announced. If the required regulatory or antitrust approv- als cannot be obtained, the buyer may cancel the acquisition plan after making the indicative announcement and before announcement of the indicative announcement report. Under these circumstances, the buyer will announce the reason and cannot acquire the same company again within 12 months.
7. Overview of Regulatory Requirements 7.1 Regulations Applicable to a Technology Company
Setting up and starting to operate a new compa- ny in certain sectors in the technology industry in China is subject to specific regulations and/or approvals. These sectors are listed in the “Nega-
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