CHINA Law and Practice Contributed by: Nelson Zhou, Yifeng Yuan, Jianwei Yang and Jingbo Zhou, JunHe LLP
10. Jurisdiction-Specific Features 10.1 Other Acquisition Finance Issues There are no other relevant acquisition finance issues in the PRC.
financial assistance shall not exceed 10% of the issued share capital. Notably, the provision does not apply to the takeover of limited liability companies. 9.2 Listed Targets In respect of a tender offer on a listed target, the financial adviser must conduct due dili- gence over the acquirer’s financial capability and source of funds. The acquirer must provide at least one of the following facilities to demon- strate its payment ability: • for cash consideration, the acquirer must deposit cash in an amount of no less than 20% of the total consideration with a bank designated by the CSDCC; • for stock consideration, the acquirer must deposit all stock consideration with the CSDCC for custody; • a bank guarantee to secure the payment of the entire offer consideration; or • joint and several undertakings from the finan- cial adviser to pay any shortfall of purchase consideration not paid by the offeror. For leveraged deals where banks provide financ- ing, the lenders can provide debt commitment to sponsors on a certain funds basis, on terms conforming to LMA standards.
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