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China Business Law Journal’s editorial team selected outstanding China-related deals and cases in 2019, applauding remarkable legal efforts

Our winning deals have, as in previous years, been chosen based on various factors. We attach most importance to the overall significance, complexity and innovative nature of the deals and cases, while also taking into account the deal size and broader interests. China Business Law Journal’s independent editorial team made its own choices on the deals we felt were the shining stars for the year. The winning deals and cases have been placed in four sections: deals in China; overseas deals; disputes and investigations; and Belt and Road. In each section, the deals or cases are listed in alphabetical order to avoid presumptions of ranking.






Aihuishou acquires JD Paipai

CATEGORIES: Acquisition; circular economy

LEGAL COUNSEL: AnJie Law Firm served as legal counsel to Aihuishou. Han Kun Law Offices served as legal counsel to JD Group.

KEY POINTS: In June 2019, Aihuishou, a Chinese electronic product recycling platform, acquired JD Group’s secondhand merchandise trading platform Paipai. JD also invested in Aihuishou more than US$500 million. Once the acquisition was completed, Aihuishou and JD agreed on a strategic co-operation.

AnJie says that the financing for the project is the largest to date in China’s circular economy sector, and the transaction is valuable guidance for startups acquiring business lines of internet giants. Furthermore, the time required for this transaction was extremely short, requiring about one month from formal initiation of the project to completion of closing.


BOC issues Greater Bay Area bonds

CATEGORIES: Bond issuance

LEGAL COUNSEL: JunZeJun Law Offices served as PRC counsel and Linklaters served as international counsel to Bank of China (BOC). Jingtian & Gongcheng served as PRC counsel and Clifford Chance as international counsel to the lead underwriter.

KEY POINTS: BOC’s Hong Kong and Macau branches issued the “Greater Bay Area” overseas bonds, which were listed on the Hong Kong Stock Exchange. The renminbi, Hong Kong dollar, Macau pataca and US dollar four-trade bonds under the medium-term notes programme were established by BOC. This is the first time that BOC has issued Greater Bay Area theme bonds.

The proceeds from the issuance will be widely used in Greater Bay Area-related loan projects, including the iconic Hong Kong-Zhuhai-Macau Bridge and power infrastructure projects, as well as subway, plaza and other livelihood projects, and will also support the development of science and technology innovation enterprises


Bohai Steel Group’s reorganization

CATEGORIES: Reorganization; steel industry

LEGAL COUNSEL: King & Wood Mallesons (KWM) acted as representative of the administrator. Commerce & Finance Law Offices served as legal counsel to the reorganization investor.

KEY POINTS: Bohai Steel Group was established by merging several large-scale steel enterprises in 2010. It was ranked the 327th in the Fortune Global 500 in 2015. But following the economic downturn, growth recession, credit freeze and poor internal management, the impact of the debt crisis in 2016 seriously affected Bohai Steel.

In August 2018, Tianjin High Court and Tianjin Second Intermediate Court separately accepted the filing of the reorganization of Bohai Steel Group, and appointed the Bohai Steel liquidation team as reorganization administrator.

According to KWM, the firm’s team creatively designed a “packaged spin-off” scheme, splitting the assets and debt of Bohai Steel Group into a “steel-related part” and “non-steel part”. A private steel enterprise was selected as the reorganization investor to the steel-related part, where the debt will be applied with a plan combining cash repayment, debt extension and debt-to-equity swap. Several assets management firms will take over the “non-steel part” and the debt in this part will be repaid by trust income.

KWM team is still working on the execution of this plan, which will last about 10 years.


CGN Power’s A-share IPO

CATEGORIES: A-share listing; nuclear industry

LEGAL COUNSEL: King & Wood Mallesons acted as legal counsel to the issuer, CGN Power. Grandall Law Firm acted as legal counsel to the underwriter.

KEY POINTS: In August 2019, CGN Power listed on the SME board of the Shenzhen Stock Exchange, raising proceeds of RMB12.57 billion (US$1.79 billion). With this listing, CGN Power became the first Chinese nuclear power enterprise to be listed both in mainland China and Hong Kong.

King & Wood Mallesons says this offering achieved several innovations in the pricing mechanism, promoting more independent quoting from investors and ultimately realizing a reasonable market determined price, which is of considerable significance in the history of A-share IPOs..


CRSC’s A-share listing on Star board

CATEGORIES: SSE Star board listing

LEGAL COUNSEL: Zhong Lun Law Firm served as PRC legal counsel, and Clifford Chance as Hong Kong legal counsel to China Railway Signal & Communication (CRSC). Jia Yuan Law Offices served as PRC legal counsel to the underwriter.

KEY POINTS: CRSC, a central government enterprise directly overseen by the State Council’s State-owned Assets Supervision and Administration Commission, has a specialty of rail transport control technologies. In July 2019, it became the first central government enterprise to list on the SSE Star board, raising proceeds of RMB10.53 billion. Having listed in Hong Kong in 2015, it became the first SSE Star listed company both in mainland China and Hong Kong.

According to Zhong Lun, CRSC’s IPO set several records, including largest offering, and largest number of strategic private placement recipients, etc., of the first batch of SSE Star listing projects.


CR Micro’s A-share listing on Star board

CATEGORIES: SSE Star board listing

LEGAL COUNSEL: Global Law Office (GLO) acted as legal counsel to China Resources Microelectronics (CR Micro), the issuer. Fangda Partners served as legal counsel to the lead underwriter.

KEY POINTS: CR Micro is a high-tech enterprise under the control of China Resources, engaged in investment, development and operations management of microelectronics businesses. In October 2019, its application for the IPO of A shares and listing on the Shanghai Stock Exchange (SSE) passed the issuance and listing review of the Star board.

As of publication, CR Micro was approved by the China Securities Regulatory Commission (CSRC) to register its IPO of shares on SSE Star board. Once it launches its IPO, it will be the first red-chip structured enterprise issuing A shares in China.

According to GLO, the firm further assisted the issuer in applying for the CS (controlling state-owned shareholder) certification with the State-owned Assets Supervision and Administration Commission (SASAC) to further ensure the successful completion of the project.


China Satcom’s A-share IPO

CATEGORIES: A-share listing; satellite communications

LEGAL COUNSEL: King & Wood Mallesons (KWM) served as legal counsel to the issuer, China Satellite Communications (China Satcom).

KEY POINTS: China Satcom is a subsidiary of China Aerospace Science and Technology Corporation and the only enterprise in China with its own controllable commercial communication and broadcast satellite resources. In June 2019, it listed on the SSE, raising total proceeds exceeding RMB1 billion.

According to KWM, because capital outlays for communication and broadcast satellites are relatively large, and domestic licences scarce, China Satcom is a company without peer in China. Its main customers involve various television stations, the military with its security requirements, and certain foreign customers, all spread out over a relatively wide area, making communication and in-person visits relatively difficult.

Furthermore, in a situation where historical information was lacking, KWM provided assistance in tracing out the historical evolution of China Satcom and five subsidiaries, assisted China Satcom in completing approval of its state-owned equity management plan and listing plan, and secured the compliance confirmation of the historical evolution of China Satcom from the China Aerospace Science and Technology Corporation.


Singyes Solar’s debt restructuring

CATEGORIES: Debt restructuring; photovoltaic industry

LEGAL COUNSEL: Dentons served as legal counsel for the deal.

KEY POINTS: In October 2018, China Singyes Solar Technologies (Singyes Solar) issued an announcement confirming that it had defaulted on its US dollar debt. Dentons, as the legal adviser appointed by the creditors’ committee, said that Singyes Solar was a Hong Kong-listed company, indirectly held shares in the domestic Singyes company, and had absolute control over that company. If Singyes Solar defaulted on its foreign debt, this could result in the equity that it owned being disposed of by its creditors, thereby affecting the normal operations of the domestic Singyes company.

Dentons assisted the creditors’ committee in carrying out equity pledge matters, with Singyes Solar pledging all of the domestic Singye company’s equity in favour of the creditors’ committee, making it impossible for either Singye Solar or its creditors to indiscriminately dispose of the equity in question and thereby successfully isolating the foreign debt.

In June 2019, Singyes Solar issued an announcement confirming that it proposed to issue approximately HK$1.68 billion (US$0.2 billion) in subscription shares to the subscriber, Water Development Holding (HK), signifying that Singyes Solar was ultimately successful in its restructuring.


CTG issues exchangeable green bonds

CATEGORIES: Bond issuance; greed bond

LEGAL COUNSEL: DeHeng Law Offices served as legal counsel to China Three Gorges Corporation (CTG), the issuer.

KEY POINTS: CTG is a large clean-energy group mainly engaged in water power development and operation. In April 2019, the group offered RMB20 billion worth of green exchangeable bonds. This bond offering was the first green exchangeable corporate bond offering project in the Chinese securities market, as well as the largest green exchangeable corporate bond offering project to date.

DeHeng Law Offices says that the stock swap for cash dividend path explored and implemented by CTG made it an offering project with demonstrative significance in domestic capital markets.


Nylon 66 mixed ownership co-operation

CATEGORIES: SOE mixed ownership system reform; chemical industry

LEGAL COUNSEL: Zhong Lun Law Firm served as legal counsel to China Tianchen Engineering Corporation (China Tianchen), while Gaoyang Law Firm served as legal counsel to Zibo Qixiang Tengda Chemical.

KEY POINTS: China Tianchen, a subsidiary of China Chemical Group, and Zibo Qixiang Tengda Chemical jointly invested in the construction of a 1 million tonne-per-year nylon new material production base, with a total investment of about RMB20 billion, which will, upon completion, become China’s first adiponitrile (commonly known as nylon 66) industrial production base.

The adiponitrile chemical process used in the project is a process technology independently researched and developed, and all of the IP rights to it are owned by Chinese enterprises, smashing the industry situation characterized by a foreign technology blockade and product monopoly.

Zhong Lun says this is the first pilot project by the China Chemical Group after implementation of the state-owned enterprise mixed ownership system reform. In addition to bringing in private capital from listed companies, it has implemented an employee shareholding plan, joined multiple employee shareholding platforms, and carried out exploration of several types of equity integration.


Eddingpharm Group acquires Eli Lilly China rights

CATEGORIES: Acquisition; pharmaceutical

LEGAL COUNSEL: Dorsey & Whitney represented Eddingpharm Group (EDP) as lead outside counsel, BonelliErede was EDP’s Italian counsel, Fangda Partners was EDP’s PRC counsel and financing counsel, and Kirkland & Ellis was EDP’s financing counsel. Ropes & Gray acted as Lilly’s lead outside counsel, and Baker McKenzie was Lilly’s Italian counsel in the transaction.

KEY POINTS: In April 2019, China-based specialty pharmaceutical company EDP entered into an agreement with Lilly, an America-based multinational pharmaceutical company, to acquire Lilly’s rights in China for two antibiotic medicines, Ceclor® and Vancocin®, as well as a manufacturing facility in Suzhou that produces Ceclor, for an aggregate base purchase price of US$375 million.

The transaction represents a significant milestone of a leading local Chinese company in vertical expansion into a full pharmaceutical supply chain, according to Dorsey & Whitney.


ABS triumph for First Capital-CUL&TECHFLCO Phase I

CATEGORIES: Asset securitization

LEGAL COUNSEL: King & Wood Mallesons (KWM) served as legal counsel for the deal.

KEY POINTS: The First Capital-CUL&TECHFLCO Phase I Asset-backed Specific Plan (ABS) is China’s first securitized and standardized product where the underlying assets are intellectual property financial leasing claims.

In this project, Beijing Culture & Technology Financial Leasing (CUL&TECHFLCO) is the original beneficiary, First Capital Securities is the manager, and the underlying assets cover 51 items of industrial property rights and copyrights from numerous industries. The product offering totals RMB733 million.

KWM says that in terms of its design, the ABS effectively resolves the four core obstacles that hold back the securitization of IP rights: asset confirmation, value appraisal, legal suitability and risk mitigation, achieving innovation for financing.


Chengdu Ziguang Integrated Circuit Industry Fund formed

CATEGORIES: Fund formation

LEGAL COUNSEL: Tian Yuan Law Firm served as legal counsel to Tsinghua Unigroup. Dentons served as legal counsel to the limited partner (LP).

KEY POINTS: Tsinghua Unigroup is a leading digital infrastructure and service enterprise that is active in the development of the electronic parts, components and equipment manufacturing industry. The proceeds raised by the Chengdu Ziguang Integrated Circuit Industry Fund will mainly be invested in the Ziguang Chengdu memory manufacturing base. The fund has a total size of RMB58 billion.


China National Integrated Circuit Industry Investment Fund (Phase II) formed

CATEGORIES: Fund formation

LEGAL COUNSEL: JunHe acted as legal counsel to China National Integrated Circuit Industry Investment Fund.

KEY POINTS: The China National Integrated Circuit Industry Investment Fund (Phase II) was established in October 2019, with registered capital of RMB204.15 billion.

JunHe says the fund is structured as a company and is a national-level integrated circuit industry investment fund project established with the participation of the Ministry of Finance, China Development Bank Capital Corporation, and the investment arms of various local governments.

The fund company has numerous sponsors and is complex in terms of fund investor interest co-ordination and division of management authority. The first phase of the fund was established in September 2014, with registered capital of RMB98.72 billion.


GIC acquires JD logistics warehouses

CATEGORIES: Acquisition

LEGAL COUNSEL: Commerce & Finance Law Offices served as PRC counsel, and Clifford Chance as international counsel to GIC. Han Kun Law Offices and Skadden acted as legal counsel to JD Group.

KEY POINTS: In February 2019, GIC and JD co-operated in establishing the JD logistics real property core fund, and executed an acquisition agreement under which the JD logistics real property core fund acquired several modern logistics warehouse facilities worth about RMB10.9 billion from JD, and will continue to lease out such facilities for operation by JD after the acquisition.

Commerce & Finance says this transaction has a domestic and foreign dual-layer structure and involves numerous logistics assets.


Guangdong Dongguan rail project

CATEGORIES: Infrastructure

LEGAL COUNSEL: Broad & Bright served as legal counsel to Dongguan Development Holding, the private investor.

KEY POINTS: Phase 1 of the Guangdong Dongguan rail transit line 1 project, which will cover 58 kilometres with 21 stations, is one of the key lines in the Greater Bay Area rail transport plan. The projected total investment of the project is RMB32.9 billion.

The Dongguan Municipal People’s Government has authorized the Dongguan Municipal Development and Reform Bureau to serve as the implementing body, which is using a PPP (public-private partnership) model, with Dongguan Development Holding selected through an open procedure as the lead member of the consortium. The consortium is composed of a total of 21 entities.

Broad & Bright says that promotion of the project just happened to fall in a period when the state is revising its rail transport policy. For a rail transport construction project using the PPP model, the question of whether policies for rail transport projects under the government investment model are applicable mutatis mutandis remains somewhat uncertain.


Yanglu’s bankruptcy and reorganization

CATEGORIES: Bankruptcy and reorganization

LEGAL COUNSEL: WanYi Law Firm served as the administrator to the project. Longan Law Firm served as legal counsel to China Merchants Bank, the second-largest creditor of the project company.

KEY POINTS: The Guangxi Yanglu Highway (Yanglu) bankruptcy and reorganization case is the largest bankruptcy and reorganization case in Guangxi to date, and is the only highway construction bankruptcy and reorganization case to have been brought before a Chinese court.

In August 2010, construction formally began on Guangxi’s first highway project invested in and constructed by a foreign enterprise – the Yanglu Highway. Due to a rupture in the investor’s funding chain, work on the project stopped at the end of 2013.

WanYi Law says the project involved foreign investment, project recovery and project construction. Furthermore, there was a large number of registered creditors, and the nature of their claims was complicated, making confirmation difficult. After adoption of the reorganization plan, Wan Yi, as the administrator, continued to monitor the execution of the reorganization plan and the Yanglu Highway opened to traffic on 30 July 2019.


Haier Biomedical A-share listing on Star board

CATEGORIES: SSE Star board listing

LEGAL COUNSEL: King & Wood Mallesons served as legal counsel to Haier Biomedical, the issuer. Tian Yuan Law Firm served as legal counsel to the sponsor.

KEY POINTS: In October 2019, Haier Biomedical offered its IPO and listed on the SSE STAR board, raising proceeds of RMB1.23 billion. As a subsidiary of the Haier Group, Haier Biomedical’s main business is the research, development, production and sale of biomedical low temperature storage equipment. It is a biotech comprehensive solution service provider that is based on a transformation from the internet of things (IoT).


Hua Xia Bank non-public offering

CATEGORIES: Non-public offering

LEGAL COUNSEL: East & Concord Partners

KEY POINTS: Hua Xia Bank, a Chinese commercial bank listed on the SSE, made a non-public offering of A shares, raising RMB2.92 million.

According to East & Concord, the team worked for four months and achieved a historical record of listed banks’ shortest refinancing cycles, which is usually between eight and 12 months.


Ingenic Semiconductor acquires ISSI

CATEGORIES: Acquisition; semiconductor

LEGAL COUNSEL: King & Wood Mallesons advised Ingenic Semiconductor in the deal.

KEY POINTS: Ingenic Semiconductor acquired the full stake of Integrated Silicon Solution (ISSI) for RMB7.2 billion, with support financing of RMB1.5 billion raised. The transaction was approved in November 2019 by the CSRC’s M&A and Reorganization Review Committee.

The main business of ISSI is the research and development (R&D), technical support and sale of integrated circuit memory chips and their derivatives, and integrated circuit analog chips. The company’s memory chip products maintain a world leading position in the dynamic random-access memory (DRAM) and static random access memory (SRAM) fields.

According to King & Wood Mallesons, this was a typical transaction in which a small company “swallows” a giant. The deal passed the security review of the Committee on Foreign Investment in the United States (CFIUS), regardless of the special macro environment.


JD Health’s US$1 billion series A financing


LEGAL COUNSEL: Shihui Partners and Orrick served as legal counsel to JD Group (JD). JunHe acted as legal counsel to the investors.

KEY POINTS: In May 2019, JD signed a formal investment agreement on the series A financing of JD Healthcare, which is subsidiary business of JD. The total funding amount exceeded US$1 billion. At the close of the series A financing, JD was still the controlling shareholder of JD Healthcare.

According to Shihui Partners, it took only about one month from the beginning of the project to the signing of the financing transaction agreements.


JuneYao and CEAH’s stake, co-operation

CATEGORIES: Equity swap; aviation industry

LEGAL COUNSEL: Grandall Law Firm acted as legal counsel to JuneYao Group. King & Wood Mallesons and Baker McKenzie advised China Eastern Air Holding (CEAH).

KEY POINTS: In September 2019, JuneYao Group signed a strategic co-operation agreement with CEAH in Shanghai, and announced that the two groups and their main aviation businesses – Juneyao Air and China Eastern Airlines – had upgraded their relationships from business partners to strategic partners, officially opening their “equity + business” comprehensive co-operation.

Their equity co-operation involved a variety of transaction subjects, covering both A shares and H shares. JuneYao Group and its subsidiaries jointly hold about 10% of China Eastern Airlines, while Eastern Airlines Industry Investment, a subsidiary of China Eastern Airlines, holds 15% of Juneyao Air.

The total value of the deal exceeded RMB13 billion, making it the largest equity deal to date in China’s civil aviation industry. The two sides will also send directors to each other to further optimize the corporate governance structures of both groups and enhance their risk management abilities.

According to Grandall Law Firm, the co-operation is not only about the participation of private capital in the restructuring of central state-owned enterprises, but also has strengthened the strategic co-operation between state-owned capital and private capital in China’s civil aviation sector.


Kingsoft’s A-share listing on Star board


LEGAL COUNSEL: JunHe acted as legal counsel to Kingsoft. Commerce & Finance Law Offices advised the sponsors.

KEY POINTS: In November 2019, Kingsoft was listed on the science and technology innovation (Star) board of the SSE, raising a total of RMB4.63 billion. According to JunHe, the firm’s team participated in the overall process, including the planning and implementation of demolishing the red-chip structure, the splitting of the Hong Kong-listed company, and the application for A-share listing.

JunHe assisted Kingsoft in the adjustment of its domestic and overseas equity structures, business restructuring, parallel transfer of overseas investors, verification of overseas subjects, verification of affiliated parties, reviewing of its historical evolution, shareholding system reform, employee equity incentive plan, and other major legal issues.


NFC acquires United Family Healthcare

CATEGORIES: Acquisition; pharmaceutical

LEGAL COUNSEL: Simpson Thacher, Winston & Strawn, Kirkland & Ellis, Global Law Office, Maples Group and Harneys’ Shanghai team served as legal counsel to New Frontier Corporation (NFC). Paul Hastings served as legal counsel to Shanghai Fosun Pharmaceutical (Fosun Pharma). Cleary Gottlieb and Fangda Partners acted as legal counsel to TPG Capital. Hughes Hubbard & Reed served as legal counsel to United Family Healthcare (UFH). Sidley Austin acted as legal counsel to Vivo Capital, one of the investors.

KEY POINTS: China-focused investment firm NFC acquired domestic private healthcare provider UFH from its existing shareholders, including Fosun Pharma, for US$1.3 billion.

Paul Hastings says that the most significant challenge for its team was managing the conflicts of interest between two sellers with very different goals, and the revolving seller-turned-buyer/buyer-turned-seller roles of Fosun Pharma and NFC when negotiating the terms of the share-swap.

According to Simpson Thacher, the transaction represented one of the few special purpose acquisition company (SPAC) acquisitions in the Asia market. The acquisition component involved a deal protection mechanism and cash-out, roll-over and go-forward governance arrangements over a period of almost 12 months, in addition to a debt leverage feature.


Offcn’s A-share backdoor listin

CATEGORIES: Backdoor listing; education industry

LEGAL COUNSEL: Tian Yuan Law Firm

KEY POINTS: Offcn’s backdoor listing, through material asset reorganization with Yaxia Group as the shell, was approved in November 2018 by the CSRC. In February 2019, Offcn officially entered the A-share market, becoming the first A-share education company to have gone public via a backdoor listing.

According to Tian Yuan, the deal lasted three years. The team assisted Offcn to handle the major changes brought about by the revision of the Non-state Education Promotion Law, and provided legal analysis on issues such as the licence of the company’s training business during the transitional period, when the draft implementation regulations of the law was going to be issued.


PerkinElmer acquires Meizheng Group

CATEGORIES: Acquisition

LEGAL COUNSEL: AllBright Law Offices acted as legal counsel to PerkinElmer. Hui Ye Law Firm advised Meizheng Group.

KEY POINTS: PerkinElmer, headquartered in the US, mainly provides testing instruments, diagnostic tools, and medical and industrial imaging equipment for environment, food and consumer products. Meizheng Group is a leading food safety company in China. Through its wholly-owned subsidiary in the Netherlands, PerkinElmer directly acquired a 100% stake of the restructured Meizheng Group for more than RMB1 billion.

According to AllBright Law Offices, the transaction adopted the internationally accepted settlement account pricing mechanism. The AllBright team, after sufficient communication with both parties to the deal, designed the mechanism in a more detailed manner, and in a way that could be operated in China. The transaction also introduced the arrangement of convertible restructuring loans to address issues related to the source and provision of funding for the restructuring fees and costs during the restructuring process.


Portugal issues RMB2 billion panda bond

CATEGORIES: Bond issuance

LEGAL COUNSEL: King & Wood Mallesons acted as legal counsel to the issuer, the Republic of Portugal. Morais Leitão acted as Portuguese counsel to the issuer. Global Law Office served as legal counsel to the lead joint underwriters.

KEY POINTS: In June 2019, the Republic of Portugal issued RMB2 billion panda bonds in China with a tenor of three years. This project marked the first issuance of renminbi bonds on the China Interbank Market by a eurozone country


SenseTime C++/C-prime round financing


LEGAL COUNSEL: Llinks Law Offices acted as legal counsel to SenseTime. Jingtian & Gongcheng, Ropes & Gray, Morrison & Foerster, Zhong Lun Law Firm, Covington & Burling, and Harneys’ Shanghai team also participated in this deal.

KEY POINTS: SenseTime, a leading global artificial intelligence (AI) company, raised more than US$1 billion in the series C++ and C-prime financing. This round of financing was participated in by many overseas investment institutions, and faced a tight schedule. In addition to mainland China, it involved jurisdictions including Singapore, South Korea, the UK, Hong Kong, Cayman Islands, and British Virgin Islands.


SPD Bank issues RMB50 billion convertible bonds

CATEGORIES: Bond issuance; banking

LEGAL COUNSEL: AllBright Law Offices advised Shanghai Pudong Development Bank (SPD Bank). Grandall Law Firm acted as legal counsel to the underwriters.

KEY POINTS: The SPD Bank, a large joint-stock commercial bank in China, made a public issuance of RMB50 billion convertible corporate bonds, the largest convertible corporate bond issuance in the A-share market to date.

According to AllBright, the SPD Bank has a large volume of assets and businesses, and its main shareholders are state-owned shareholders. Issuance of the bonds was subject to approval by the local regulatory authority in Shanghai for state-owned assets. It was also subject to the approval by China Banking and Insurance Regulatory Commission (CBIRC), the country’s main regulator for the banking industry.


Sinotrans merges with Sinoair

CATEGORIES: Merger; aviation

LEGAL COUNSEL: Zhong Lun Law Firm advised Sinotrans on mainland law, and Reed Smith advised Sinotrans on Hong Kong law. Sinobridge PRC Lawyers (now merged into Anli Partners) acted as legal counsel to Sinotrans Air Transportation Development Corporation (Sinoair).

KEY POINTS: The H-share listed company Sinotrans absorbed the A-share listed company Sinoair by way of a share exchange. After completion of the transaction, Sinotrans, as the entity that continues to exist, will via the receiving party inherit and undertake all the assets, liabilities, business, contracts, qualifications, personnel and all other rights and obligations of Sinoair. Sinoair will terminate its listing and cancel its legal personality. The A shares issued by Sinotrans for this transaction were listed on the SSE in January 2019.

According to Zhong Lun, the transaction was difficult. It constituted an IPO of A shares and listing under the mainland’s securities rules, and was a major and connected transaction under Hong Kong’s listing rules. For Sinoair, which was absorbed, the transaction constituted a major asset restructuring of a listed company under the mainland’s securities rules.


Suning acquires Carrefour China

CATEGORIES: Acquisition

LEGAL COUNSEL: Global Law Office and Jingtian & Gongcheng were domestic legal counsel to Suning. Linklaters was foreign legal counsel to Suning. Clifford Chance was foreign legal counsel to Carrefour China.

KEY POINTS: Suning, a leading online to offline (O2O) smart retailer in China, acquired an 80% stake in Carrefour China to continue to push forward and accelerate its expansion in the brick-and-mortar retail field.

According to Jingtian, since the two companies are listed in China and France, respectively, the deal involved arrangements to bridge the gap between the listing and regulatory systems in the two countries. The firm also needed to prepare for antitrust filings and other related approval matters. The overall arrangement for the transaction was also complicated. It was necessary to retain the original structure and personnel despite the restructuring of the board of directors, so that the impact on the business could be minimized.


Suzhou HYC Technology’s A-share listing on Star board

CATEGORIES: SSE Star listing

LEGAL COUNSEL: Llinks Law Offices advised the issuer, Suzhou HYC Technology.

KEY POINTS: Suzhou HYC Technology made its IPO and listing on the Star board of the SSE in July 2019. HYC is the first company to have completed its registration and IPO on the Star board.

HYC is mainly engaged in the R&D, production and sale of testing equipment for flat panel displays and integrated circuits. Its products are used for liquid crystal displays (LCDs), organic light-emitting diode (OLED) panel displays, integrated circuits, and automotive electronics. Its customers include Apple, LG, Samsung, Sharp and BOE.


Syndicated loan for SK Hynix plant project

CATEGORIES: Syndicated loan; semiconductor

LEGAL COUNSEL: DeHeng Law Offices acted as lead legal counsel for this deal. Holland & Knight was New York counsel, and Yulchon was South Korean counsel to China Development Bank (CDB), which led the bank consortium.

KEY POINTS: The project of building the second plant of SK Hynix was backed by a US$3.5 billion loan from a bank consortium led by the Jiangsu branch of CDB. After completion, SK Hynix’s plant in Wuxi will become the largest and most advanced semiconductor manufacturing base in the world.

According to DeHeng, the guarantee structure for this deal was very complicated, including not only the conventional guarantee methods such as pledge of assets and account supervision, but also unconventional guarantee methods under PRC law such as the transfer of rights and interests under overseas laws.


Bankruptcy reorganization of Pangda Group

CATEGORIES: Bankruptcy reorganization

LEGAL COUNSEL: Merits & Tree Law Offices acted as legal counsel to the financial institution debt committee for Pangda Group. Tiantong & Partners is a member of the administrator group.

KEY POINTS: Pangda Group is a leading automobile dealer group in China and an A-share listed company. After it fell into debt in 2018, the major creditors organized a Pangda Group debt committee under the guidance of the CBIRC.

Pangda Group had been established for more than 30 years, with more than 1,900 subsidiaries and branches, and the amount of debt involved was about RMB30 billion. There were 131 financial institutions involved as creditors.

According to Merits & Tree, the deal was challenging, with heavy social responsibilities. Different from other large-scale reorganizations in the past two years, which were mainly led by the government, the reorganization of Pangda Group was a market-oriented reorganization under the support of the regulatory department and the government. The government supported and participated in the reorganization by way of providing common debt financing and financial investment.


Wanda Film major asset restructuring

CATEGORIES: Asset restructuring

LEGAL COUNSEL: Tian Yuan Law Firm acted as legal counsel to Wanda Film. Haiwen & Partners advised the China International Capital Corporation (CICC), which was the independent financial adviser.

KEY POINTS: Wanda Film issued shares to acquire a 95.77% stake in Wanda Pictures for RMB10.5 billion. Wanda Film has been the only private film and entertainment company that has passed the M&A and restructuring approvals in recent years.

According to Tian Yuan, the target assets under Wanda Film’s restructuring involved film production and distribution, TV production and distribution, and game distribution and artist brokerage. The deal faced a strict regulatory environment and high compliance requirements at a time when regulators were cracking down on such issues as extremely high remuneration, unreal contracts, and tax evasion.

In addition, the restructuring involved a large number of counterparties, including more than 10 private equity funds. The counterparties’ structures involved the “three types of shareholders” (contractual funds, asset management plans and trust plans), so the penetration requirements in the transaction and the verification requirements for the three types of shareholders needed to be determined with reference to the regulatory practice.


Will Semiconductor acquires OmniVision Technologies

CATEGORIES: Acquisition; semiconductor

LEGAL COUNSEL: Tian Yuan Law Firm was legal counsel to Will Semiconductor.

KEY POINTS: Will Semiconductor issued shares to acquire an 85.53% stake in Beijing OmniVision Technologies, a 42.27% stake in Superpix Micro Technology, and a 79.93% stake in Beijing Shixinyuan Technology, and at the same time raised the supporting financing. The total transaction value was RMB15.5 billion.

OmniVision Technologies, a subsidiary of Beijing OmniVision Technologies, was a US company previously listed on Nasdaq and a leading global supplier of image sensor chips.

According to Tian Yuan, Beijing OmniVision Technologies is a multinational corporation with a large scale of assets and business. In addition to filing with the CSRC, the firm conducted a business concentration filing with the State Administration for Market Regulation (SAMR). Outside China, Tian Yuan lodged an anti-monopoly filing with the US Federal Trade Commission and the US Department of Justice, and also filed for national security review with the CFIUS.


Alibaba Group’s Hong Kong IPO

CATEGORIES: Hong Kong IPO; e-commerce

LEGAL COUNSEL: Fangda Partners acted as PRC counsel, Maples Group acted as Cayman Islands counsel, and Simpson Thacher acted as Hong Kong and US counsel to Alibaba Group. Freshfields advised the sponsors and underwriters on Hong Kong and US law, while King & Wood Mallesons advised on PRC law.

KEY POINTS: Alibaba, the first Chinese internet company to list in both the US and Hong Kong, went public in Hong Kong in November 2019, raising a total of HK$88 billion (US$11.33 billion) globally, making it the world’s largest new share issue in 2019.

The deal is the first listing under the new “chapter 19C regime” introduced by the Hong Kong Stock Exchange to attract listings from high-profile issuers that are already listed on the US and London stock exchanges. It was also the first fully paperless offering to be conducted in Hong Kong.

“The Alibaba listing has cleared the path for other companies to come to Hong Kong and benefit from full fungibility between the two markets, and potential access to a large pool of Chinese capital,” Chris Wong, a Hong Kong-based partner at Simpson Thacher, told China Business Law Journal at the time.


Ascentage Pharma’s HK listing

CATEGORIES: Hong Kong IPO; pharmaceutical s

LEGAL COUNSEL: Goodwin served as US counsel, Wilson Sonsini was Hong Kong counsel, Jincheng Tongda & Neal was PRC counsel, Walkers served as Cayman Islands counsel, while Allens was Australian counsel to Ascentage Pharma Group International (Ascentage Pharma). Clifford Chance advised the underwriters on Hong Kong and US law, and Zhong Lun Law Firm advised on PRC Law.

KEY POINTS: Ascentage Pharma was oversubscribed about 750 times during the global placement, ranking first among the innovative medicine companies listed on the Hong Kong Stock Exchange.

Ascentage Pharma is a clinical-stage Chinese company of novel drug research and development in treating cancer, hepatitis B, and age-related diseases. In October 2019, Ascentage Pharma went public on the Hong Kong Stock Exchange, becoming the first small-molecule drugs stock in Hong Kong.


Baiyin Nonferrous acquires China-Africa Gold Investment Holding

CATEGORIES: Overseas M&A; mining

LEGAL COUNSEL: Dentons acted as PRC counsel to Baiyin Nonferrous. Elias Neocleous & Co, Walkers, SAL & Caldeira Advogados, and Squire Patton Boggs also participated in the deal.

KEY POINTS: By issuing shares and raising counterpart funds as consideration, Baiyin Nonferrous acquired 100% equity of an overseas target company, China-Africa Gold Investment Holding, for approximately RMB2.2 billion, of which about RMB1.5 billion of Baiyin Nonferrous shares were taken as part of the consideration.

The asset acquisition process involved numerous jurisdictions. The assets of the overseas target company are minerals located in countries including South Africa, Australia, Cayman, Mozambique and so on. Since the law firm ultimately facing the CSRC hearing would solely be the domestic counsel of the listed company, rather than the offshore lawyers, ensuring the accuracy and reliability of the legal advice from the offshore lawyers was a major task for the onshore lawyer in terms of quality control.

As one of the representatives of China’s mineral resources and non-ferrous metals industry, Baiyin Nonferrous issued shares and paid cash to acquire overseas mining and gold assets, which provided a model on overseas development for enterprises in the industry.


Canaan Technology’s Nasdaq listing


LEGAL COUNSEL: Commerce & Finance Law Offices acted as PRC counsel, Simpson Thacher acted as US legal counsel, while Maples Group acted as Cayman Islands counsel to Canaan Technology. Zhong Lun Law Firm and Freshfields, respectively, advised on PRC and US law for the underwriters.

KEY POINTS: Canaan Technology, the world’s second-largest designer and manufacturer of Bitcoin mining machines, became the first blockchain-related Chinese company to go public in the US, in November 2019, issuing 150 million Class A common shares and raising US$400 million.

Based in Hangzhou, Canaan provides supercomputing solutions through its proprietary performance computing application-specific integrated circuits (ASICs).


CanSino Biologics’ HK listing

CATEGORIES: Hong Kong IPO; pharmaceutical

LEGAL COUNSEL: Tian Yuan Law Firm acted as PRC counsel, and Sidley Austin acted as Hong Kong and US counsel to CanSino Biologics. Commerce & Finance Law Offices advised on PRC law for the sponsors and the underwriters, while Paul Hastings advised on the US and Hong Kong law.

KEY POINTS: As the first vaccine stock in Hong Kong, CanSino Biologics was listed in March 2019, raising more than HK$1.2 billion (US$154 million) from global issuance.

Tian Yuan Law Firm says that when receiving CanSino Biologics’ listing request, time was pressing and the task was arduous. The firm assisted the company in designing and demonstrating the listing plan, communicating with relevant parties, and obtaining various approvals at home and abroad. Finally, it successfully helped CanSino Biologics become the first pure H-share company listed in accordance with Hong Kong Stock Exchange’s new chapter 18A regime.

CanSino Biologics is a vaccine R&D company. With its founder and management team having worked in well-known international pharmaceutical companies, its current vaccine production and research covers pneumonia, tuberculosis, Ebola virus disease, meningitis, DPT and a series of diseases.


China East Education’s HK listing

CATEGORIES: Hong Kong IPO; education

LEGAL COUNSEL: Haiwen & Partners advised on PRC law for China East Education, Luk & Partners and Morgan Lewis advised on Hong Kong and US law, while Conyers Dill & Pearman advised on Cayman Law. JunHe acted as PRC counsel for the sponsors and underwriters, while Sullivan & Cromwell acted as Hong Kong and US counsel.

KEY POINTS: China East Education is the largest provider of vocational training and education services in China. In June 2019, China East Education was listed on the main board of the Hong Kong Stock Exchange, raising about HK$4.9 billion globally.

JunHe says that China East Education has many business bodies in China, including all provinces and autonomous regions except for Tibet and Guangxi, and thus an immense workload of due diligence. The project was in a transitional period for relevant legislation and regulatory reform, and as a result policy interpretation was also a major difficulty.


China Reinsurance acquires Chaucer, Hanover

CATEGORIES: M&A; insurance

LEGAL COUNSEL: Sidley Austin and A&L Goodbody advised China Reinsurance, while William Fry (Ireland) advised The Hanover Insurance Group.

KEY POINTS: China Reinsurance completed the acquisition of 100% ownership of Chaucer Insurance Company (including Hanover Insurance International Holdings, Chaucer Insurance Company DAC in Ireland, and SLE in Australia) from American Hanover Insurance Group.

A&L Goodbody says the acquisition involved overseas companies, and thus required regulatory approvals. The deal is a significant acquisition for China Reinsurance as it delivers their “one core, three breakthroughs and five crossovers” strategy, marking a new milestone for the company’s global expansion.

China Reinsurance is Asia’s largest reinsurance by premium size and a Hong Kong listed company, Initiated and established by China’s Ministry of Finance and Central Huijin Investment. The acquired company, based in London, is the first echelon when it comes to capacity and profitability among Lloyd’s market as a global (re) insurance company and special insurance expert.


China Tianying acquires Urbaser

CATEGORIES: M&A; environmental services

LEGAL COUNSEL: Zhong Lun Law Firm acted as PRC counsel and the project’s general law firm. Freshfields performed due diligence on Urbaser’s subsidiaries in Spain, France, Bahrain and Tianying-controlled Ying Zhan Investment. Marval O’Farrell & Mairal, and Ossandon Abogados, respectively, performed due diligence on Urbaser’s Argentine and Chilean subsidiaries. Farrell Law Firm, Hoet Pelaez Castillo & Duque, Carey, Creel, Bennani & Associés, Morais Leitão, and Al Busaidy Mansoor Jamal & Co also participated in the deal.

KEY POINTS: Tianying’s purchase of Urbaser for RMB8.9 billion is the largest cross-border M&A transaction for an A-share listed company in the environmental services industry to date. Urbaser, the acquired company, is an advanced solid waste management global company. Upon completion of this transaction, 100% of its shares were indirectly held by Tianying through its holdings of Dezhan, Yingzhan and Firion, making it the fourth-largest company in the global urban environmental services industry.

Urbaser’s business covers more than 20 countries and regions. Zhong Lun Law Firm says that, in addition to China legal services, the firm was also involved in co-ordinating the legal services of other foreign law firms on Urbaser’s subsidiaries in various jurisdictions.

The acquisition was subject to approval procedures in different jurisdictions, and included antitrust approvals. As a listed company in China, the acquisition project involved a major asset restructuring, so the transaction required approval by the CRSC and relevant disclosures of information.


China Yangtze Power acquires Luz Del Sur


LEGAL COUNSEL: Tian Yuan Law Firm served as PRC legal counsel, Baker McKenzie was US counsel, Estudio Muñiz served as Peruvian Counsel, and Walkers served as Bermuda counsel to China Yangtze Power. White & Case advised the seller, Sempra Energy.

KEY POINTS: China Yangtze Power, through its wholly-owned subsidiary, signed an agreement with Sempra Energy to acquire its 83.6% stake in Luz Del Sur, Peru’s largest listed electricity company, for US$3.59 billion, which made it the largest overseas M&A project by a Chinese company in 2019, and the largest power industry M&A project in the world in the past three years.

Tian Yuan Law Firm was the leading counsel for the transaction, organizing and co-ordinating law firms in Peru, the US and Bermuda. China Yangtze Power is the largest listed electric power company in China, and the largest listed hydropower company in the world, with four power plants in its possession, including Three Gorges Dam and Gezhou Dam. Sempra Energy is a large listed energy utility company in the US, mainly engaged in oil, gas and power transmission and distribution.


CMGE’s Hong Kong listing

CATEGORIES: Hong Kong IPO; games

LEGAL COUNSEL: Guantao Law Firm acted as PRC counsel, Kirkland & Ellis acted as US and Hong Kong counsel, while Maples Group acted as Cayman Islands counsel to CMGE Technology Group. Commerce & Finance Law Offices advised the sponsors and the underwriters on PRC law, and Freshfields advised on Hong Kong and US law.

KEY POINTS: CMGE Technology, a well-known game operator and mobile game publisher in China – with popular games such as “Legend of Sword and Fairy” and “Xuan Yuan Sword” – went public in Hong Kong in October 2019, raising HK$1.31 billion.

The online game industry in China is strictly regulated, and the regulatory system is still constantly changing. Guantao says the shareholder structure of CMGE is diversified and subject to different regulations. The restructure of the listing needed to meet the shareholders’ demands from all parties, consider the tax impact, and comply with the regulatory requirements and listing rules of each jurisdiction. With a tight schedule, the law firm assisted the company in building a red-chip structure, established a variable interest entity (VIE) arrangement, introduced and completed pre-IPO investment, and successfully listed.


Douyu’s Nasdaq IPO

CATEGORIES: US listing; internet

LEGAL COUNSEL: Global Law Office acted as PRC counsel, Davis Polk & Wardwell acted as US counsel, while Maples Group acted as Cayman Islands counsel to Douyu. CM Law Firm and Han Kun Law Offices advised the underwriters on PRC law, and Latham & Watkins advised on US law.

KEY POINTS: Douyu is a live barrage video platform that mainly broadcasts games. In July 2019, Douyu was listed on the Nasdaq Stock Exchange, raising about US$775 million.

Douyu had previously planned to go public in Hong Kong, without success. CM Law Firm says that it participated in the enaction and revision of the restructure plan for the US listing, and assisted the company in rectifying its structure and operation.

Legal issues such as intellectual property infringement of live pictures in the company’s business needed to be argued and demonstrated in accordance with Chinese laws and regulations. At the same time, Douyu had signed thousands of individual anchors, and listing involved compliance issues related to the development of business around the platform and these anchors.


Fosun Tourism Group’s HK listing


LEGAL COUNSEL: AllBright Law Offices acted as PRC counsel, Paul Hastings acted as US counsel, Harney Westwood & Riegels acted as Cayman Islands counsel, and Koimtzoglou-Leventis & Associates and Ovvadias S Namias Law Firm, respectively, acted as Greek civil and criminal counsel to Fosun Tourism Group. JunHe advised the sponsors and underwriters on PRC law, and Kirkland & Ellis advised on Hong Kong and US law.

KEY POINTS: Fosun Tourism Group (FTG) as a spin-off from its parent company, Fosun International, was listed on the main board of the Hong Kong Stock Exchange in December 2018 with an IPO of US$428 million.

Paul Hastings says that the listing required a plan to avoid conflicts of interest in accordance with Practice Note 15 of the spin-off listing rules, in order to obtain HKEx’s permission. In addition, the law firm achieved a waiver from HKEx rules 4.04 and 4.28, by persuading the HKEx to assess FTG acquisitions independently, before and after the track record period. Such a waiver combination for acquisitions made in a single target is unprecedented.

Unlike more conventional listings of the leisure and entertainment industry, this transaction covered more than 20 jurisdictions, and the cultural, compliance and legal issues involved were extremely complex.


Haitong Unitrust’s spin-off and HK listing

CATEGORIES: Hong Kong IPO; securities

LEGAL COUNSEL: Grandall Law Firm acted as PRC counsel, and Davis Polk & Wardwell acted as Hong Kong and US counsel to Haitong Unitrust International Leasing. Jia Yuan Law Offices advised the sponsors and the underwriters on PRC law, while Clifford Chance advised on Hong Kong and US law.

KEY POINTS: Haitong UniTrust, as a spin-off from its parent company Haitong Securities, was officially listed on the main board of the Hong Kong Stock Exchange in June 2019, raising a total of about HK$2.32 billion and becoming the first financial leasing company among securities company derivatives in China. In terms of total assets and revenue at the end of 2017, Haitong UniTrust ranked first in financial leasing companies among securities company derivatives, by scale and growth rate.

This transaction is one of the few cases of “A + H” listed companies splitting their subsidiaries for overseas listing, involving multiple communication with, and approval of, domestic and foreign regulatory authorities. Securities companies themselves are under strict supervision of the CSRC, whereas the financial leasing regulatory authorities changed during the transaction.

The General Office of the Ministry of Commerce issued a notice in May 2018, assigning the business operation and supervision responsibilities of three types of companies, namely financial leasing, commercial factoring and pawnshop, to the China Banking and Insurance Regulatory Commission (CBRC). Jia Yuan Law Offices says this made it relatively difficult for Haitong Unitrust to obtain the regulatory opinion letters of the industry, and for the approval process of the CSRC. The transaction was launched in 2017, received several rounds of inquiries, and was finally recognized in two years.


Hansoh Pharmaceutical’s HK IPO

CATEGORIES: Hong Kong IPO; pharmaceutical

LEGAL COUNSEL: Li & Partners acted as PRC counsel, Cleary Gottlieb acted as Hong Kong and US counsel, while Maples Group acted as Cayman Islands counsel to Hansoh Pharmaceutical Group. Tian Yuan Law Firm advised the sponsors and underwriters on PRC law, while Clifford Chance advised on Hong Kong and US law.

KEY POINTS: Hansoh Pharmaceutical, an R&D pharmaceutical company, was listed on the main board of the Hong Kong Stock Exchange in June 2019, raising more than US$1 billion in its global offering. Tian Yuan Law Firm says this was the largest IPO in the pharmaceutical and healthcare industry in Hong Kong’s capital market in 2019, and carried the most expensive minimum subscription fee in the history of Hong Kong IPOs. After the market opening, its shares surged 30%, with market capitalization exceeding HK$100 billion.

The main research areas of Hansoh Pharmaceutical include central nervous system (CNS), oncology, anti-infectives, diabetes, gastrointestinal and cardiovascular illnesses.


Huatai Securities’ listing in London via Shanghai-London Stock Connect

CATEGORIES: UK listing; securities

LEGAL COUNSEL: Fangda Partners acted as PRC counsel, and Clifford Chance acted as Hong Kong, US and UK counsel to Huatai Securities. King & Wood Mallesons advised the underwriters on PRC law, while Linklaters advised on Hong Kong, US and UK law.

KEY POINTS: Huatai Securities, one of the largest securities companies in China, in June 2019 completed its London listing by issuing global depositary receipts (GDRs) under the Shanghai-London Stock Connect arrangement, with the issuance accounting for approximately 10% of the company’s issued share capital and raising a total of US$1.69 billion, opening the prelude to the interconnection between the Shanghai and London stock exchanges.

Huatai Securities had originally planned to seek a listing in December 2018, but delayed it due to uncertainty over how the government would treat the conversion of currency back into yuan, Reuters reported. In May 2019, China’s foreign exchange regulator issued cross-border capital management rules on depository receipts, paving the way for this listing.


ICBC Financial Leasing completes maritime sale, leaseback deal

CATEGORIES: Financial leasing

LEGAL COUNSEL: Watson Farley & Williams advised ICBC Financial Leasing, and Arias B. & Associates acted as Panama counsel. GE Bairactaris & Partners advised the charterer, Capital Maritime.

KEY POINTS: ICBC Financial Leasing and the charterer, Capital Maritime, completed the sale and leaseback of two very large crude carriers (VLCCs), Amphion and Anbar, in January and April 2019, respectively, for US$106 million.

Capital Maritime, a Greek company, had traditionally approached European commercial lenders, but for the first time arranged Chinese leasing money to fund newbuilt VLCCs in this transaction, paving the way for Chinses capital investing in VLCCs.

The deal involved two new Tier-III scrubber-ready ships, flying Liberian flags and delivered by Samsung Heavy Industries, with obligators coming from different countries and jurisdictions. The complexity of the deal required the Hong Kong branch to work closely with counsel from New York, Germany and elsewhere overseas to register Liberian flags in Shanghai, Greece, Tokyo and Hong Kong, to finalize and adjust the charterer’s insurance arrangements and complete the deal under a tight schedule, according to Watson Farley & Williams.


IDreamSky Technology’s HK listing

CATEGORIES: Hong Kong IPO; internet

LEGAL COUNSEL: Han Kun Law Offices acted as PRC counsel, Clifford Chance acted as Hong Kong and US counsel, and Maples Group acted as Cayman Islands counsel to iDreamSky Technology. Grandall Law Firm advised the sponsors and the underwriters on PRC law, and Kirkland & Ellis advised on Hong Kong and US law.

KEY POINTS: iDreamSky Technology, which was privatized and delisted two years after its Nasdaq listing in 2014, was listed on the Main Board of the Hong Kong Stock Exchange in December 2018. The global issuance raised HK$838 million.

iDreamSky Technology, a digital entertainment platform and mobile gaming company, terminated its previous VIE structure after delisting from the US, and continued to undergo a series of restructuring, including rebuilding its VIE structure, before listing in Hong Kong.

Han Kun Law Offices says due to the above-mentioned history of the company and the number of direct and indirect shareholders, the listing needed to establish a comprehensive and complex transaction structure, which involved legal due diligence, interviews with government authorities, and the drafting, reviewing, commenting and negotiation of listing application documents.


Jinxin Fertility Group’s HK IPO

CATEGORIES: Hong Kong IPO; healthcare

LEGAL COUNSEL: Zhong Lun Law Firm acted as PRC counsel, Fangda Partners as Hong Kong counsel, Shearman & Sterling as US counsel, and Sheppard Mullin as US counsel on medical regulatory matters, while Conyers Dill & Pearman acted as Cayman Islands counsel to Jinxin Fertility Group. Tian Yuan Law Firm advised the shareholders of Jinxin Fertility on PRC law, and William Ji & Co, in association with Tian Yuan Law Firm’s Hong Kong Office, advised on Hong Kong law. Commerce & Finance Law Offices served as PRC counsel for the sponsors and underwriters, while Paul Hastings served as Hong Kong and US counsel.

KEY POINTS: As Hong Kong’s first assisted reproduction medical stock, Jinxin Fertility was listed on the main board of the Hong Kong Stock Exchange in June 2019, raising about HK$3.05 billion. Tian Yuan Law Firm says that this is the largest IPO of medical institutions in Hong Kong to date. Jinxin Fertility is the only listed medical institution with a market value of more than HK$10 billion in Hong Kong, with a current market value of more than HK $30 billion.

As a provider of assisted reproductive services, Jinxin Fertility covers both China and the US in its business, and the restructure process was complex.

According to Commerce & Finance Law Offices, the transaction involved the registration of the State Administration of Foreign Exchange’s (SAFE) circular 37 for nearly 200 domestic natural persons, the exit of shareholders of various institutions and outbound direct investment (ODI) registration, numerous forms of VIE structure construction, continuous adjustment of group equity, private non-hospital restructuring, non-profit hospital trusteeship co-construction, and other matters.


Junshi Biosciences’ Hong Kong listing

CATEGORIES: Hong Kong IPO; pharmaceutical

LEGAL COUNSEL: Jia Yuan Law Offices acted as PRC counsel, and Jones Day acted as Hong Kong and US counsel to Junshi Biosciences. Tian Yuan Law Firm advised the sponsors and underwriters on PRC law, while Herbert Smith Freehills advised on Hong Kong and US law.

KEY POINTS: Junshi Biosciences was listed on the main board of the Hong Kong Stock Exchange in December 2018, with net proceeds of about HK$2.94 billion, and net proceeds of about HK$448 million from the subsequent exercise of the overallotment option.

The transaction involved multiple rounds of regulatory communications and proposal negotiations. Jia Yuan Law Offices says that Junshi Biosciences was the first company listed on the main board of the Hong Kong Stock Exchange in the form of “NEEQ + H Shares” after NEEQ (National Equities Exchange and Quotations exchange) signed a memorandum of understanding with HKEx in April 2018.

It is also the first biotechnology company listed on the main board of the HKEx in the form of H shares since the HKEx promulgated the new regulations on unprofitable biotechnology companies in April 2018.


Koolearn’s Hong Kong listing

CATEGORIES: Hong Kong IPO; online education

LEGAL COUNSEL: Tian Yuan Law Firm acted as PRC counsel, Skadden acted as Hong Kong and US counsel, while Conyers Dill & Pearman acted as Cayman Islands counsel to Koolearn Technology Holding. Jia Yuan Law Offices advised the sponsors and underwriter on PRC law, while Shearman & Sterling advised on Hong Kong and US law.

KEY POINTS: Koolearn, a leading education service provider in China, was listed on the Hong Kong Stock Exchange in March 2019, raising about HK$1.56 billion in global placement and becoming the first online education stock in Hong Kong.

The controlling shareholder of Koolearn, New Oriental Group, is a listed company on the New York Stock Exchange that controls and operates its domestic business through a VIE structure. Jia Yuan Law Offices says that under the existing foreign investment policy, as a subordinate online education plate of New Oriental Group, Koolearn also chose the VIE structure, while the company at the equity level is held by the Group’s domestic companies.

The transaction period coincided with changes in domestic regulatory policies, especially in the field of foreign investment and education industry. The Foreign Investment Law was officially promulgated in March 2019, but did not address the issue of a VIE structure, and Koolearn was one of the first batch of listed companies to make significant adjustments to information disclosure due to policy changes.

Meanwhile, since 2016, China has introduced a series of regulations and policies in the field of private education to strengthen supervision. Koolearn was affected accordingly in its relevant online business areas, so compliance demonstrations were required during the transaction.


Luckin Coffee’s Nasdaq listing


LEGAL COUNSEL: King & Wood Mallesons acted as PRC counsel, Davis Polk & Wardwell acted as US counsel, and Conyers Dill & Pearman acted as Cayman Islands counsel to Luckin Coffee. Cleary Gottlieb advised the sponsors and underwriters on US law, and Jingtian & Gongcheng advised on PRC law.

KEY POINTS: Luckin Coffee, a representative of the new internet retail model, completed its listing on the New York Stock Exchange In May 2019, raising US$695 million. Luckin Coffee listed 18 months after its establishment.

Jingtian & Gongcheng says that Luckin Coffee had more than 50 companies and 2,300 coffee stores in China during the transaction, with a heavy workload and urgent timelines for legal due diligence, including but not limited to qualification certificates, fire control, environmental protection, leased property, litigation and penalties.

As Luckin Coffee uses a mobile app to sell coffee, the issue of whether it needs to obtain an internet content provider (ICP) licence and then build a VIE structure for listing needed to be carefully investigated. According to Jingtian & Gongcheng, through consulting relevant government authorities, the law firm finally confirmed that with the existing business model, neither the ICP certificate nor a VIE structure for the company’s domestic and foreign restructuring before the IPO was required.


Magnitogorsk contract with Sinosteel

CATEGORIES: Iron and steel manufacturing

LEGAL COUNSEL: King & Wood Mallesons advised Magnitogorsk Iron and Steel Works (MMK), and VEGAS LEX Law Firm advised Sinosteel Corporation.

KEY POINTS: MMK, one of the largest Russian steel companies, signed a coking production agreement with Sinosteel in December 2018 worth approximately US$682 million, equivalent to 60% of Sinosteel’s post-audit annual revenue, to modernize MMK’s production, with an annual output of 2.5 million tons.

The project involved the construction of coke oven battery complex No. 12, the reconstruction of a plant for capturing and processing chemical products, as well as the construction of a biochemical installation, as part of MMK’s coking and by-product production. King & Wood Mallesons says the deal was subject to security measures for MMK’s payment obligations, review and amendment of engineering, procurement and construction (EPC) contracts, and on-site negotiations in Russia.

Sinosteel is a central enterprise under supervision of the SASAC. It is mainly engaged in the development and processing of metallurgical mineral resources, as well as metallurgical raw materials, products trade and logistics business. Sinosteel has 63 domestic and 23 overseas companies.

Due to the long construction period, subsequent uncertainties (such as increases in raw material prices and engineering construction) and changes in regulations and policies, King & Wood Mallesons says Sinosteel chose the law firm to continue to assist in the execution of the contract after the transaction.


NCF Wealth’s reverse merger with Hunter Maritime Acquisition

CATEGORIES: M&A; fintech

LEGAL COUNSEL: Grandall Law Firm served as legal counsel to NCF Wealth Holdings.

KEY POINTS: Hunter Maritime Acquisition, a US listed company, completed in March 2019 its merger with fintech company NCF Wealth by issuing 200 million class A common shares to its shareholders. NCF Wealth, as the surviving company, became a wholly-owned subsidiary of Hunter Maritime through this reverse merger, and was thus listed on Nasdaq.

NCF Wealth aims to provide simplified and convenient financing solutions for small and medium enterprises (SMEs) and individual borrowers. Hunter Maritime is a special purpose acquisition company (SPAC), which is a blank check company formed for the purpose of raising capital through an IPO and using those funds to acquire an operating business.

Grandall Law Firm says that the deal adopted the reverse merger mode for NCF Wealth’s listing, which took several months before and after, and was the first to do so among fintech companies, providing a path reference for other peers to go public in the US under the current dilemma of indefinite filing and difficult IPOs for Internet financial institutions.


Ningbo Jifeng Auto Parts acquires Grammer

CATEGORIES: M&A; automobile manufacturing

LEGAL COUNSEL: Herbert Smith Freehills and King & Wood Mallesons (KWM) advised Ningbo Jifeng Auto Parts.

KEY POINTS: Ningbo Jifeng Auto Parts purchased 100% equity interest in Ningbo Jifeng Investment in October 2019, through issuance of convertible bonds, shares and payment of cash, thereby indirectly holding approximately 84.23% of the shares of Grammer, a listed company in Germany, worth RMB3.754 billion. King & Wood Mallesons says that the transaction was supported by the relevant government departments in China and Germany, and attracted wide attention in the German capital market and the automotive industry.

The firm said the acquisition was divided into two steps: First was to complete the necessary tasks for the acquisition including the structuring, financing, antitrust filing, foreign investment approval in Germany, trade document drafting negotiations, and information disclosure; Second was through the issuance of shares, convertible corporate bonds to purchase assets and raise capital to incorporate Grammer into the listed Jifeng’s shares system, which involved a major asset restructuring-related antitrust review, domestic approvals and other matters.

Since Grammer conducts a wide range of businesses worldwide, the second step of legal due diligence covered around 20 jurisdictions. In addition, the acquisition project coincided with the promulgation of the Measures for the Administration of Overseas Investment of Enterprises (notice No.11), according to KWM, and the transaction needed to consider the specific implementation of decree No.11 and supporting texts, as well as convergence with existing regulations.


PBOC renminbi bill issuances in HK

CATEGORIES: Capital markets s

LEGAL COUNSEL: Linklaters served as Hong Kong counsel to People’s Bank of China, while Fangda Partners and Deacons, respectively, advised the issuing and lodging agent on PRC and Hong Kong law.

KEY POINTS: The People’s Bank of China (PBOC), through its issuance and deposit agent, the Bank of Communications, issued a total of RMB160 billion of bills in Hong Kong in November 2018, and February, May, June, August, September and November 2019, through the Central Moneymarkets Unit of the Hong Kong Monetary Authority (HKMA).

Among them, according to Deacons, the issuance in November 2018 was the debut bill issuance by the PBOC in Hong Kong. It marked another important milestone in the development of the offshore RMB market by, among other things, setting a significant benchmark for plotting the yield curve for shorter-term debt instruments.

The issuance in June 2019 was the first time for the PBOC to issue one-month and six-month bills in Hong Kong, and the total bid amount exceeded RMB85 billion.


Sinomine acquires Cabot Corporation


LEGAL COUNSEL: Zhong Lun Law Firm acted as leading legal counsel, McCarthy Tétrault acted as Canada counsel, Hogan Lovells Lee & Lee acted as Singapore counsel, Hogan Lovells BSTL acted as Mexican counsel, while CLP acted as Norway counsel to Sinomine Resource Group. Jones Day served as legal counsel to Cabot Corporation.

KEY POINTS: The acquisition of 100% of Tanco, CSF Inc and CSF Limited, held by Cabot, and its subsidiary, Cabot G.B. Company, was completed by the Chinese listed company Sinomine Resource Group in June 2019 for US$134.7 million. The transaction makes Sinomine Resource the world’s largest mining company for caesium, and the world’s largest producer and supplier of caesium products.

Zhong Lun Law Firm says that this transaction involved bidding acquisitions in six countries, so it was necessary to comprehensively revise the equity acquisition agreement provided by the seller, co-ordinate with all parties, and conduct several rounds of negotiations with the seller when combining the reports of multinational due diligence and the opinions from the leadership, financial and technical intermediaries.

In view of the sensitivity of the caesium mine transaction, Zhong Lun Law Firm made a diagnosis on whether it would trigger the voluntary declaration obligation of antitrust and national security review, and co-ordinated with Canadian lawyers to assist the company to make an ICA (Investment Canada Act) declaration on the transaction.


Coal-fired power station project in Bangladesh


LEGAL COUNSEL: : Deheng Law Firm advised the owner on PRC law. Sunshine Law Firm acted as the leading counsel, and Doulah & Doulah acted as Bangladesh counsel to China Export & Credit Insurance Corporation (Sinosure). JunHe served as PRC counsel to the financing party.

KEY POINTS: The $2.5 billion S. ALAM project is an important part of the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor, and the Belt and Road Initiative (BRI). It is the largest single-unit thermal power unit and the largest coal-fired power plant project in Bangladesh.

Sunshine Law Firm says that the transaction was of strategic importance to enhance the brand image of Chinese equipment and expand its overseas markets. The project was designed to build two 660MW supercritical units and a new special coal unloading wharf, and the host equipment of the project would all be made in China. The project was financed by a syndicate composed of the China Development Bank, Bank of China and China Construction Bank. Sinosure will provide medium and long-term buyer credit insurance and overseas investment (equity) insurance.


Tencent Music’s US listing

CATEGORIES: US listing; entertainment industry

LEGAL COUNSEL: Davis Polk & Wardwell acted as US counsel, Han Kun Law Offices acted as PRC counsel, and Maples Group acted as Cayman Islands counsel to Tencent Music Entertainment Group (TME). Grandall Law Firm and Skadden, respectively, advised the underwriters on PRC and US law.

Slaughter and May acted as Hong Kong counsel, Wilson Sonsini acted as US counsel, and Zhong Lun Law Firm acted as PRC counsel to Tencent Holdings, parent company of Tencent Music.

KEY POINTS: TME, China’s largest online music entertainment platform, successfully listed on Nasdaq in December 2018, issuing 82 million American depositary shares (ADSs) and raising about US$1.1 billion. TME also granted the underwriters an option to purchase an additional 12.3 million ADSs. By market value, this deal was the largest listing of Chinese companies in the US since 2014. TME owns QQ Music, Kugou Music, Kuwo Music and WeSing.


Tianqi Lithium acquires part of Sociedad Química y Minera


LEGAL COUNSEL: Zhong Lun Law Firm acted as PRC counsel, Weil acted as US counsel, Carey acted as Chile counsel, while Fasken acted as Canada counsel to Tianqi Lithium. Jones Day and Claro & Cia (Chile) acted as legal counsel to Nutrien.

KEY POINTS: Tianqi Lithium acquired, by bidding in December 2018 from Nutrien, a listed company in the US and Canada, 23.77% of the class A shares of Sociedad Química y Minera, a leading Chilean lithium company, at a price of US$4.06 billion (RMB25.9 billion) through its acquisition platform Inversiones TLC, a wholly-owned Chile-based subsidiary of Tianqi Lithium. This transaction was the largest M&A by a Chinese company in Chile to date.

The deal involved major securities asset restructuring, and cross-border M&A financing and antitrust issues, in an effort to break through the legal barriers for Tianqi Lithium as a listed company’s minority stake acquisition. Zhong Lun Law Firm says that the three indicators of operation revenue, total assets and net assets of the target company’s equity to be held by Tianqi Lithium in the latest fiscal year after the completion of the acquisition exceeded 20% of the corresponding indicators in the consolidated statements for the same period, and 20% was the upper limit stipulated by the CSRC. By demonstrating the attributes, expectations and ownership structure of the target company, the law firm managed to prove that the transaction would not apply to the relevant provisions above and bypass this obstacle.


TUS acquires Telit Automotive Solutions

CATEGORIES: M&A; automobiles

LEGAL COUNSEL: Jingtian & Gongcheng and Bryan Cave Leighton Paisner, respectively, acted as the transaction counsel and IP counsel to TUS International. CMS Cameron McKenna Nabarro Olswang and Pearl Cohen acted as the transaction and IP counsel to Telit Automotive Solutions, respectively.

KEY POINTS: TUS International acquired Telit Automotive Solutions for US$105 million, which was completed in February 2019. The workload of legal due diligence was arduous for the transaction. The subsidiaries and assets of Telit Automotive Solutions are located in Belgium, Germany, France, Israel, Italy and other countries and jurisdictions. With high technology in its products, the deal needed special IP due diligence.

Jingtian & Gongcheng says that this transaction first required the reorganization of companies, assets, personnel and IP distributed in various countries, and then the overall acquisition by TUS International. Because both parties are listed companies in Hong Kong and London, respectively, it involved the convergence and arrangement of the listing system and announcement of the two locations, plus various other legal issues, and required the close co-operation and division of labour for intermediaries.

Telit Automotive Solutions is one of the leading suppliers of vehicle communication modules in the world and the main formulator of vehicle communication standards in Europe. TUS International is a tier-one supplier of advanced driver-assistance systems and a provider of city-level cloud control solutions for automatic driving in China.


Wanda Sports Group’s listing on Nasdaq

CATEGORIES: US listing; sports industry

LEGAL COUNSEL: Jingtian & Gongcheng acted as PRC counsel, while Paul Weiss acted as Hong Kong and US counsel to Wanda Sports Group. Commerce & Finance Law Offices and Shearman & Sterling, respectively, advised the underwriters on PRC and US law.

KEY POINTS: Wanda Sports Group became the first sports company to go public directly outside of China when it listed on Nasdaq in July 2019, raising US$190 million.

The deal required the law firm to understand the pros and cons of different capital markets. Jingtian & Gongcheng says that the main assets of Wanda Sports involved Swiss company Infront and American company World Ironman Company (WTC). The listing had gone through multiple plans, including A-share, H-share, red chips and US stocks, and was finalized on the US listing.

In addition, there are businesses in Wanda Sports China that prohibit foreign investment. Based on this, the law firm assisted the company to build a VIE structure and draft an agreement to apply it to the sports industry.

Wanda Sports is a platform that contains global sports events, media and marketing. Its assets include sports event-oriented rights and interests, broadcasting rights, etc., so in addition to regular legal due diligence it was necessary to conduct special due diligence on the company’s rights and interests.


Ant Financial obtains first pre-litigation act preservation order from Hangzhou Internet Court

CATEGORIES: Act preservation; interne

LEGAL COUNSEL: King & Wood Mallesons (KWM) represented Zhejiang Ant Small and Micro Financial Services Group (Ant Financial) and its subsidiary, Chongqing Ant Micro and Small Loans (Ant Micro Loans).

KEY POINTS: Hangzhou Internet Court issued the first order for pre-litigation act preservation when Ant Financial sued Qichacha for unfair competition. This case is the first of a kind that discusses the legal liability under the competition law caused by data accuracy in the data industry.

Qichacha is a popular domestic platform for business information inquiries. In May 2019, Qichacha repeatedly pushed erroneous information to users who followed Ant Micro Loans. The erroneous information attracted the attention of the regulator and the public, the latter of which mistakenly believed that Ant Micro Loans was in liquidation.

Ant Financial and Ant Micro Loans applied to the court for a pre-litigation act preservation order. Hangzhou Internet Court decided that there was a high probability for Qichacha’s act to constitute unfair competition and it was urgent and necessary to order Qichacha to immediately cease its infringement.

So the court ordered Qichacha to immediately cease dissemination of erroneous information about liquidation of Ant Micro Loans and to push a clarification message in the same way within the same scope of release of the erroneous message, and to publish a clarification statement on the homepage of its official website.

KWM believes this case indicates a conducive exploration of the duty of care in capturing, screening, processing and consolidation of big data, and the liability to be assumed for data product errors.


Apple and Qualcomm’s antitrust disputes

CATEGORIES: Patent litigation; antitrust

LEGAL COUNSEL: Qualcomm was represented by Tian Yuan Law Firm and Zhong Lun Law Firm, and Apple by Fangda Partners.

KEY POINTS: In January 2017, Apple filed two lawsuits before Beijing Intellectual Property Court against Qualcomm for allegedly abusing its market dominant position (antitrust litigation) and conditions for standard essential patent (SEP) licensing and fair, reasonable and non-discriminatory (FRAND) litigation.

In the antitrust case, Apple claimed for damages in the amount of RMB1 billion. It also alleged that Qualcomm abused its dominant market position by excessive pricing and bundling, in an attempt to challenge Qualcomm’s business modes of licensing SEPs at the device level and licensing patent portfolios.

In the FRAND litigation, Apple requested that the court re-determine the fees for licensing of Chinese SEPs, because it alleged Qualcomm practised patent licensing in violation of FRAND terms. The parties later filed litigations against each other in many countries throughout the world. In April 2019, Apple and Qualcomm settled globally and withdrew both cases.

According to Tian Yuan, these cases in recent years, not only for the highest claim amount ever recorded in China, but also their importance in the antitrust and patent dispute between Apple and Qualcomm worldwide. They were a part of worldwide co-ordination in litigation, and also raised questions regarding the effect of promised corrections made by Qualcomm after the investigation of the National Development and Reform Commission (NDRC).

Zhong Lun views these cases a rare precedent in China for their involvement of innovative content such as confirmation of licensing conditions and SEPs, and says their hearing processes and results are of great significance to the legal profession.


Arbitration between CVC and Zhang Lan

CATEGORIES: Arbitration

LEGAL COUNSEL: Duan & Duan Law Firm, Des Voeux Chambers, and Gall represented Zhang Lan in the arbitration.

KEY POINTS: I In 2013, CVC Capital Partners, a private equity and investment consulting company, executed an agreement on its acquisition of South Beauty, a famous restaurant brand, for about US$300 million. For the acquisition, CVC borrowed a syndicate loan in the amount of US$140 million. In June 2015, CVC defaulted for overdue payment of the loan and the syndicate authorized Borrelli Walsh to take over the management of South Beauty. The entity designated by CVC applied to a Hong Kong court for an injunction in February 2015, and sought arbitration in June 2015.

The China International Economic and Trade Arbitration Commission (CIETAC) commenced hearing of the case four years ago and made an interim decision at the end of March 2019. It dismissed the core request of the affiliate of CVC that the agreement on acquisition of South Beauty should be cancelled because Ms Zhang Lan was fraudulent. The assumption of attorney’s fees is still to be determined by the arbitration tribunal.

According to Duan & Duan, in addition to applying to CIETAC for arbitration, the parties took 10 legal actions in six jurisdictions, including applying to a Hong Kong court for injunction, reporting to Hong Kong police for investigation of commercial crime, applying to a Singapore court for injunction, bringing an equity dispute before a Cayman court, referring a trust dispute to a court in the Cook Islands, and filing a property dispute before a US court.


Hynix co-insurers recover fire accident claim

CATEGORIES: Insurance; litigation

LEGAL COUNSEL: AnJie Law Firm represented the five co-insurers, including Hyundai Insurance (China). Haiwen & Partners represented Meidesheng Gas Technology Wuxi. JunHe represented the third party, SK Hynix Semiconductor (China).

KEY POINTS: In August 2013, five co-insurers, including Hyundai Insurance, underwrote property all-risk insurance and business interruption insurance for SK Hynix Semiconductor (China) and SK Hynix Semiconductor (Wuxi). SUNGDO ENC, a contractor that signed the construction contract with SK Hynix Semiconductor, caused the fire accident due to the incorrect connection of pipelines.

In September, a fire broke out in the Wuxi factory of SK Hynix Semiconductor (Wuxi), resulting in great property loss to the insureds. The co-insurers paid the insureds US$860 million after the accident. This is the largest insurance claim by value in China’s insurance industry to date, according to

When the five co-insurers paid the compensation to SK Hynix Semiconductor, they exercised their subrogation right and claimed compensation against SUNGDO ENC.

The Supreme People’s Court held that insurance companies were entitled to the right of recourse after claim settlement. SUNGDO ENC and SK Hynix were both faulty in the occurrence of the accident. Their liabilities for the loss should be determined based on the extents of their faults and the cause of loss. SUNGDO ENC would not be exempted from the liability for loss on the ground that the co-insurers were compensated through the re-insurance arrangement. Therefore, the court ruled that SUNGDO ENC should be liable for the compensation to the insurers.


Discovery wins civil suit against JD and online store

CATEGORIES: Trademark litigation

LEGAL COUNSEL: Wanhuida Intellectual Property represented Discovery Communications in court proceedings

KEY POINTS: Leading global entertainment company Discovery Communications (Discovery) is the registrant of the trademarks “DISCOVERY” and “探索” (the Chinese translation of DISCOVERY) in class 41.

Discovery found that Zhongshan Discovery Outdoors Products (Zhongshan Discovery) was using the trademarks “DISCOVERY ACTIVE”, “探索” (Discovery) and “探索户外” (the Chinese translation of “Discovery Outdoors”) on outdoors products. Zhongshan Discovery also opened an online store “DISCOVERY探索户外官方旗舰店” (the official flagship store of Discovery Outdoors) on JD’s online mall.

Discovery filed a lawsuit against Zhongshan Discovery and JD before the Beijing Intellectual Property Court on the ground of trademark infringement. The court ordered Zhongshan Discovery to pay damage of RMB3 million, of which JD shall take the joint and several liability. Zhongshan Discovery appealed. The Court of Appeal, the Beijing High Court upheld the first instance judgment.


Dispute over Meiya Construction contract

CATEGORIES: Arbitration

LEGAL COUNSEL: Huang & Huang Co. Law Firm represented the third party, Guangdong Qingyuan Rural Commercial Bank, in the trial of second instance by the High People’s Court of Guangdong province, and the procedure for trial supervision by the Supreme People’s Court.

KEY POINTS: Meiya Construction filed a lawsuit against Changlixing Travel Service and Guangdong Qingyuan Rural Commercial Bank for the dispute over a construction contract. After the trials of first instance, second instance, remand, retrials of first instance and second instance, case review, and procedures for trial supervision, the case ended in the dismissal of Meiya Construction’s request.

In this case, Changlixing Travel Service, the developer, borrowed a loan from Guangdong Qingyuan Rural Commercial Bank with its “Qingyuan Qinyuan” development as the mortgage. Meiya Construction as the contractor claimed priority of construction project to the auction proceeds of Qingyuan Qinyuan and filed litigation to the Intermediate People’s Court of Qingyuan City on this ground.

According to Huang & Huang Co. Law Firm, the focus of the case lay in the conflict between the statutory priority of construction project and the bank’s priority arising out of the mortgage of the construction in progress. The case was complicated by the crisscross of two legal relations and powers, and interwoven and contradicting transactions and legal relations among the civil entities.

The Supreme People’s Court’s review of the case and final decision provided significant guidance for future hearings and rulings of similar cases.


Dispute over validity of AstraZeneca’s invention patent

CATEGORIES: Patent litigation; pharmacy

LEGAL COUNSEL: : China Patent Agent (Hong Kong) and AnJie Law Firm represented AstraZeneca in the case.

KEY POINTS: This is an administrative litigation case regarding invalidation of the patent of AstraZeneca, a leading global pharmaceutical company, for invention of Ticagrellor (Brilinta), a platelet aggregation inhibitor with annual sales revenue exceeding US$1 billion globally. Validity of the patent in question has a direct impact on the exclusivity of AstraZeneca in the market, and drug pricing.

China Patent Agent (Hong Kong) defended AstraZeneca against the Patent Re-examination Board of China National Intellectual Property Administration (CNIPA) in the trial of second instance, and won the case.

According to lawyers who advised on the case, this case relates to the criteria for originality of chemical compounds of similar structures under the patent law and other edge-cutting issues such as how to determine the relationship between structure and efficacy, as described in a Markush claim, and originality of the invention.

Prior to this case, the Patent Reexamination Board had invalidated more than 50% of the patents for compound inventions. Only 10% of such invalidation decisions were revoked by courts. In the trial of second instance, the court ruled on the originality of the compound in favor of the patent holder and patent applicant, which would have profound influence on pharmaceutical patents and chemical patents.


Founder Group, subsidiaries, defend in civil compensation litigation

CATEGORIES: Capital market litigation n

LEGAL COUNSEL: Zhong Lun Law Firm represented Founder Group and Founder Technology, while Jingtian & Gongcheng and Tongcheng Law Firm represented Founder Securities

KEY POINTS: In May 2017, the CSRC issued Written Decision of Administrative Punishments No. 42 to Founder Group and Founder Securities, and No. 43 to Founder Technology, respectively, punishing the companies for illegal acts regarding information disclosure. More than 1,000 investors filed civil claims for securities misrepresentation.

Founder group, a large state-controlled conglomerate founded by Peking University, owns six listed companies, including Founder Technology and Founder Securities.

The Founder Technology case was heard in Shanghai Financial Court. The court ruled that Founder Technology was liable for securities misrepresentations, and upheld some of the four investors’ claims.

During the first instance of the case, the Shanghai Financial Court issued the Provisions on the Model Judgment Mechanism for Securities Disputes, and selected one of the series of cases brought by the plaintiff investor as a model case accordingly.

Regarding the Founder Group, Founder Securities case, The court of first instance ruled that the companies were responsible for 30% of the compensation claimed. In the trial of second instance, the High People’s Court of Hunan Province overruled the judgment of first instance and decided that Founder Group and Founder Securities were responsible for 15% of the compensation claimed.
According to Zhong Lun, both cases are major group securities litigation cases of recent years.

In the case of founder Technology, the Shanghai Financial Court showed an obvious tendency to protect investors at the beginning of the case, and adopted the calculation method of loss on investment difference that was more favorable to investors. It also held a very conservative attitude in the identification of systematic risk of the securities market.

In this regard, Zhong Lun proposed the system risk calculation method of “section calculation” or “one-by-one calculation” in the trial, which was finally recognized by the court and reduced the compensation amount in this case.

Regarding the Founder Group, Founder Securities case, the Zhong Lun team convinced the court of second instance of the effect of “a bull market” and business risks of a company on investors. The court also made an explicit decision on the extent of the effect of such non-systematic risks, and ruled them out. In this case, the Chinese court quantifies the effect of non-systematic risks on investment loss and rules them out for the first time. It serves as a precedent for determination of the causal relationship of loss during trial of similar disputes over the responsibilities for misrepresentation.


Samsung and Huawei’s patent infringement and invalidation disputes

CATEGORIES: Patent dispute

LEGAL COUNSEL: Lifang & Partners and Liu Shen & Associates represented Samsung in the dispute. King & Wood Mallesons and Jingtian & Gongcheng represented Huawei.

KEY POINTS: In May 2016, Huawei filed lawsuits against Samsung before the Intermediate People’s Court of Shenzhen, and in the US Northern District Court of California, requesting that Samsung should immediately cease infringement and compensate Huawei for corresponding losses. Samsung counterclaimed in July 2016. These two companies filed more than 40 lawsuits in China and other related countries and regions.

n May 2019, Samsung and Huawei reached a framework agreement on cross-licensing of SEPs worldwide under the mediation of the High People’s Court of Guangdong province, enabling a package solution to the lawsuits filed by these two parties globally.

In one of these cases, Jingtian assisted Huawei to successfully obtain a permanent injunction in SEP disputes, and this was the first injunction of this kind ever granted by a Chinese court.

According to Lifang & Partners, this SEP infringement dispute between Huawei and Samsung featured massive amounts of evidence, complex legal relations and intricate technical questions. Many unprecedented problems were encountered in the process.


Sogou and Baidu’s patent infringement disputes

CATEGORIES: Patent dispute

LEGAL COUNSEL: Lifang & Partners and Zhong Lun Law Firm represented Sogou, and King & Wood Mallesons represented Baidu.

KEY POINTS: In October and November 2015, Sogou initiated legal proceedings before Beijing Intellectual Property Court, Shanghai Intellectual Property Court, and the High People’s Court of Shanghai, alleging that “Baidu Input” designed by Baidu, infringed on 17 of its patents, and demanding compensation of RMB260 million.

In October 2016, Baidu counterclaimed before Beijing Intellectual Property Court, alleging that “Sogou Pingyin Input” and “Sogou Mobile Input” infringed on 10 technical patents of Baidu Input, and demanding RMB100 million from Sogou. These cases, attracting extensive attention within the industry and the general public, are known as “China’s first internet patent cases”.

According to Lifang & Partners, the cases feature unprecedented numbers of patents and amounts of claims. The dispute is focused on the infringement on the patents for software methods and how the compensation is calculated, which derives from the uniqueness of the software patents. There was no judicial precedent for these cases, so how the court rules and decides on these cases would significantly influence the entire internet industry.

In December 2019, the Supreme People’s Court publicly heard the dispute between Baidu and Sogou over infringement on invention patents. The plaintiff, Baidu, suddenly requested a change of attorney. The court approved after deliberation, adjourned and was due to reconvene on 11 February.


SPC’s IP tribunal issues final ruling in patent dispute

CATEGORIES: Patent dispute

LEGAL COUNSEL: King & Wood Mallesons represented Safe-run Machinery (Suzhou).

KEY POINTS: In July 2019, the Intellectual Property Tribunal of the Supreme People’s Court issued its final ruling on the declaratory judgment of non-infringement regarding a case filed by VMI and Cooper Tyre (Kunshan) against Safe-run. The tribunal decided that Safe-run did not infringe on the patents of the plaintiffs, dismissed the appeal of VMI and Cooper, and upheld the decision of the court of first instance to dismiss the case. This case is the first declaratory judgment on non-infringement heard by the Intellectual Property Tribunal of the Supreme People’s Court since its establishment on 1 January 2019.

Safe-run is a leading high-end tyre equipment manufacturer. VMI is a Holland-headquartered production machine manufacturer, with products including tyre and rubber product equipment.

The patent battle between these two companies dates back to 2016. In this case, the court provided explicit guidance for application of laws and elaborated, “whether the request for settlement of patent infringement dispute constituted a warning of infringement in the sense of patent law”, and “whether the request for confirmation of non-infringement was beyond the request for settlement of patent infringement dispute in question”. This case was an important directing precedent for the requests for declaratory judgment on non-infringement of intellectual property.


Tencent sues 4399 for online game trademark infringement

CATEGORIES: Trademark dispute

LEGAL COUNSEL: Grandall Law Firm represented Tencent Computer Systems.

KEY POINTS: In May 2019, Guangzhou Intellectual Property Court made the judgment of second instance on an appeal case concerning a dispute between Tencent and Guangzhou 4399 Information Technology and 4399 Network (collectively referred to as 4399) over trademark infringement and unfair competition. It upheld the judgment of first instance to dismiss all appeals of 4399, and ordered 4399 to cease infringement and compensate Tencent for its economic loss in the amount of RMB5 million.

Tencent obtained the exclusive right to operate the online game “Dungeon and Fighter” in mainland China. It was authorized to use the “DNF” trademark and “Dungeon and Fighter DNF”, and to prevent and crack down on infringement. Tencent found that when a user used the Baidu search engine to search “DNF mobile game” or “Dungeon and Fighter mobile game”, he/she clicked the first search result that contained these key words and was redirected to the download page of “Fighting Hunter”, a mobile game to which 4399 owned the copyright. Tencent claimed that the act of 4399 constituted trademark infringement and unfair competition, and filed a lawsuit against 4399.

In Grandall’s view, this case set a record for ordered compensation for infringement on online game trademarks, and for ordered compensation for trademark infringement during keyword searching. Both the courts of first instance and second instance were innovative in deciding the amount of ordered compensation. Other courts may refer to this case when they hear similar cases.


Claim of Dongying photovaltaic project on typhoon damages

CATEGORIES: Insurance; photovoltaic product

LEGAL COUNSEL: Wincon Law Firm was legal counsel for Dongying Chenghao New Energy, Dongying Chengwei New Energy, Dongying Chenglian New Energy, and Dongying Chenghe Energy (the insureds).

KEY POINTS: The insureds were enterprises engaged in photovoltaic and wind power generation. They designed and built a 92MW photovoltaic power station, which has been in operation since 2017. In March 2018, the insureds bought property all-risk insurance and additional loss of profit insurance with the insurer, Sunshine Insurance Group Qingdao branch.

On 15 August 2018, Typhoon Yagi landed in Dongyin, Shandong province, resulting in extreme weather. Most branches of the photovoltaic power station of the insureds failed, and they suffered a loss of more than 97% of daily power generation, and heavy operating losses. In June 2019, the insurer and the insureds executed a compensation agreement, pursuant to which the insureds would be paid RMB129 million.

Wincon regards this insurance compensation as the largest in the history of the photovoltaic industry in China. The losses caused by the incident were enormous. Representation in this case required knowledge of operation of photovoltaic project, evaluation of power generation facilities, and other professional knowledge.

In the process of loss assessment, the legal team gave reasonable advice from the angle of litigation on how assessment institutions should assess the loss, the specific loss assessment plan, and practical assessment methods.

In addition, the proceeds paid by the insurer covered all losses caused by this insurance accident. Payment of proceeds in the promised time may rapidly help Dongyin Distributed Photovoltaic Project to resume production and fully protect the legitimate rights and interests of the insureds.


Financing for CMPort’s acquisition of Sri Lankan port

CATEGORIES: Financing; M&A

LEGAL COUNSEL: DeHeng Law Offices acted as PRC counsel, Gallant acted as Hong Kong counsel, and Tiruchelvam Associates acted as Sri Lankan counsel in this financing transaction.

KEY POINTS: DeHeng says that the project was a landmark investment of the Belt and Road Initiative (BRI) in Sri Lanka. CMPort signed a concession agreement with the Sri Lankan government and the Sri Lankan Ports Authority for a period of 99 years, and will invest up to US$1.12 billion in Hambantota Port and its maritime-related business after the acquisition is completed.

The financing transaction required a high degree of competence for the law firm in both financing and cross-border M&A, and transaction documentation was complex.


China Commodities City Group JV in Dubai free zone

CATEGORIES: Joint venture

LEGAL COUNSEL: King & Wood Mallesons acted as PRC and Dubai counsel to China Commodities City Group. Winston & Strawn advised Jebel Ali Free Zone’s operator, Jafza.

KEY POINTS: China Commodity City Group, the world’s largest small commodity wholesale market operator, and Dubai-based Jafza set up a joint venture in Jebel Ali Free Zone for AED560 million (US$152.4 million). Jafza is a wholly-owned subsidiary of DP World, the third-largest container terminal operator in the world.

This transaction was selected on the achievements list of The Second Belt and Road Forum for International Co-operation held in April 2019 in Beijing, and the letter of intent for the project was signed under the witness of Sheikh Mohammed bin Rashid al Maktoum, the vice president and prime minister of the United Arab Emirates (UAE), and ruler of the emirate of Dubai.

King & Wood Mallesons says that without prejudice to Jafza’s control of the joint venture, the lawyer team assisted China Commodity City in obtaining the right to nominate the general manager of the JV company and other rights to protect the interests of minority shareholders through innovative transaction structure design, so as to ensure the maximization of the interests of the JV company and achieve the main business objectives.


China Telecommunications invests in the Philippines

CATEGORIES: Joint venture; telecom

LEGAL COUNSEL: Shearman & Sterling acted as international counsel, Villaraza & Angangco acted as Philippine counsel, while WongPartnership acted as Singapore counsel to China Telecommunications. Milbank and Romulo Mabanta Buenaventura Sayoc & de llos Angeles both advised Udenna Corporation on Philippine law.

KEY POINTS: A consortium composed of China Telecommunications and its Philippine partner formed Mindanao Islamic Telephone Company (Mislatel). Mislatel, now known as Dito Telecommunity, became the third-largest telecoms operator in the Philippines through a public tender.

The accession of Mislatel is another milestone in the Philippines’ growing information and communication technology capabilities, which will increase the current network speed from 4.5Mbps to 55Mbps, the Philippines President Rodrigo Duterte said at the telecom operation licence issuance ceremony.

Villaraza & Angangco says that China Telecommunications is a Chinese state-owned company and is subject to nationality requirements. Given the technical, financial, operational and organizational requirements, investment structure was crucial.

Drafting the investment agreement had to balance the commercial intentions of all parties in the transaction with the commercial and political risks. According to Shearman & Sterling, the law firm drafted the equity injection agreement for China Telecommunications to advise on the structure and financing of the joint venture, which amounted to US$5.4 billion.


CRCC gets PPP contract for Nigerian railway, port

CATEGORIES: Construction and infrastructure

LEGAL COUNSEL: Pinsent Masons acted as legal counsel to China Railway Construction Corporation (CRCC).

KEY POINTS: CRCC and the Nigeria government signed a US$3.9 billion public-private partnership (PPP) agreement in October 2019 to build a new railway track from Nigerian capital Abuja to Itaqpe, and to build the Warri Port.

Pinsent Mason says the project contained one of the largest and most costly railways in the world, which was constructed by CRCC and its subsidiaries. It was a milestone for the BRI and China’s railways development, and would have a huge impact on Nigeria’s economy and society. CRCC will operate both rail and sea port to recover the money and pay back the debt, and hand over the facility to Nigeria under a PPP that will last for 30 years.

The structure and agreement of the transaction was complex. Under the terms, Nigeria will hold 15% and CRCC 10% of the shares of the project, while the remaining 75% will be financed by Chinese banks. CRCC will provide Nigeria with a bank performance bond before Nigeria gives a sovereign guarantee for CRCC to be able to borrow from the banks.


Exim Bank financing for China-Laos railway project

CATEGORIES: Financing; construction and infrastructure

LEGAL COUNSEL: JunZeJun Law Offices advised the Export-Import Bank of China, and ZICO Law advised on Laos law.

KEY POINTS: The Export-Import Bank of China provided a US$3.65 billion loan for the BRI China-Laos railway project, which was approved in June 2019. The project, when completed, will create opportunities for the development of Laos and southwestern China.

The transaction and the negotiation were complicated and difficult, and will serve as a reference for future overseas infrastructure investment projects. JunZeJun says the project involved many elements including overseas loans, an overseas guarantee, government loans, capital loans and project loans. The overseas guarantee involved many actions including an equity pledge, asset mortgage and franchise pledge. With the scope of guarantees not being the whole debt, the requirements for guarantee documents were very high, so it was necessary to examine the validity of the loan project and the enforceability of the guarantee.


Greece’s MINOS 50MW solar power project

CATEGORIES: Clean energy

LEGAL COUNSEL: Pinsent Masons acted as legal counsel to the contractor of the engineering, procurement and construction (EPC) project.

KEY POINTS: The multilateral co-operation agreement for the MINOS 50MW solar power project in Greece was successfully signed in November 2019 in the presence of the state leaders of China and Greece. With an investment of about US$300 million, it was the first concentrated solar power (CSP) project in Greece, and the first time China had exported such technology to Europe. Upon completion, the project will provide high-quality clean electricity equivalent to 10% of the local electricity demand annually.

The transaction involved many domestic and foreign parties, and the financing structure was complex. The project was developed by the UK-based Nur Energie. The consortium, composed of China Energy Construction Gezhouba Group International Engineering and Zhejiang Supcon Solar Technology, was the EPC contractor for the project. Greek local company PRENECON participated in the construction of the project, and Industrial and Commercial Bank of China (ICBC) would provide financing support for the project.


Huadian Hong Kong in Indonesian power project

CATEGORIES: Overseas investment insurance; power infrastructure

LEGAL COUNSEL: Dentons and Mataram Partners (Indonesia) advised China Export and Credit Insurance Corporation (Sinosure).

KEY POINTS: China Huadian Hong Kong and Indonesia State-owned coal miner Bukit Asam (PTBA) jointly set up a project company to construct a thermal power project in Indonesia with a total installed capacity of 2×660MW and supercritical coal-fired power generation units. The NDRC approved a total investment of US$1.68 billion.

Sinosure undertook the overseas investment insurance of the project, including exchange restriction, expropriation, war and political riots, and government default risk.

The project extended for a long period of time. The project company, Huadian Bukit Asam Power (HBAP), was established in 2012, and now has completed the signing of the agreement and the archival filing to China’s Ministry of Commerce, and the main project started construction in March 2019.

The transaction imposed big challenges to lawyers and their ability for legal analysis, both in project engineering and overseas investment insurance. Dentons says that due to the large amount of money involved, it was necessary for the law firm to issue legal opinions on the compliance of the project itself, and the interests of the insured, as well as the rights and interests of the insurer, and to provide legal opinions on the insurability and recoverability of the project itself, so as to co-ordinate between the two parties.


Huajin Aramco Petrochemical joint venture

CATEGORIES: Joint venture; oil industry

LEGAL COUNSEL: Jincheng Tongda & Neal and Tiantai Law Firm acted as legal counsel to Panjin Sincen Group and the People’s Government of Panjin Municipality. Zhong Lun W&D Law Firm advised NORINCO Group.

KEY POINTS: The Saudi Arabian Oil Company (Saudi Aramco), together with China’s NORINCO and Panjin Sincen, established a joint venture, Huajin Aramco Petrochemical, which was inaugurated in March 2019. Jincheng Tongda & Neal says the total investment of the project was more than RMB69.5 billion, which was the largest Sino-foreign JV in Liaoning province, and was also included in the national petrochemical industry plan, and the revitalization plan of the old industrial base of northeast China. Saudi Aramco is the world’s largest oil company by proven reserves, and has the world’s largest onshore and offshore oilfields.


International airport project in Pokhara, Nepal

CATEGORIES: Overseas investment

LEGAL COUNSEL: Anli Partners acted as legal counsel to China Airport Construction Group Corporation (CACC).

KEY POINTS: China CAMC Engineering Corporation (CAMC) signed a commercial contract with the Civil Aviation Authority of Nepal in 2014 to build a 4D-class international airport in Nepal’s Pokhara in accordance with International Civil Aviation Organization (ICAO) standards, with CAAC as the designer and the Export-Import Bank of China as financer. Anli Partners says the project was the largest assisted to construct in the country by China, with a value of RMB1.5 billion.

Previously, Nepal’s only international airport was Tribhuvan International Airport in Kathmandu, the nation’s capital.


Joyvio Agriculture Development acquires Australis Seafoods


LEGAL COUNSEL: Grandall Law Firm acted as PRC counsel, Cariola Diez Perez-Cotapos acted as Chile counsel, and Morgan Lewis acted as US counsel to Joyvio Agriculture Development.

KEY POINTS: Joyvio Agriculture, a subsidiary of Legend Holdings, acquired, together with Silk Road Fund, 95.26% of the outstanding shares of Australis Seafoods, a leading salmon company in Chile, through a public offer. Delivered in July 2019, the project knocked down for a final price of US$920 million, making it the largest acquisition in Chile’s salmon industry to date.

The transaction involved the supervision of the relevant securities regulations of the two exchanges, in China and Chile. Grandall Law Firm says that Joyvio Agriculture was an A-share listed company, and the transaction constituted its major asset purchase. At the same time, the underlying company was a public company listed on the Santiago Stock Exchange in Chile.

As an overseas investment, the transaction needed to complete the filing of overseas investment projects by the NDRC and Beijing Municipal Commerce Bureau, and the corresponding foreign exchange registration, as well as antitrust reviews by the antitrust regulators of Chile, the US, Brazil and Russia, in accordance with the local laws and regulations of the main markets of the target company.


Matiari-Lahore transmission line project in Pakistan

CATEGORIES: Overseas investment; power infrastructure

LEGAL COUNSEL: King & Wood Mallesons advised China Electric Power Equipment and Technology (CET). Haidermota BNR & Co (Pakistan) also participated in the project.

KEY POINTS: The Matiari-Lahore HVDC project was closed for financing in February 2019. Upon completion, it will be the longest transmission line in Pakistan. The main agreement of the project was signed in the presence of the prime minister of Pakistan and the Chinese ambassador to Pakistan, with a total investment of US$1.65 billion. Invested, constructed and operated by China’s State Grid subsidiary, CET, the project was set with a transmission capacity of 4,000MW, and will alleviate the power shortage in Punjab province, Pakistan’s most important economic centre, and the capital Islamabad upon completion.

Due to the involvement of multiple parties and the special nature of the assets, the transaction involved land rights and long-term operational risks. King & Wood Mallesons says the firm assisted CET in conducting legal due diligence on the BOOT (build, own, operate, transfer) project, drafting a cross-border investment structure and establishing a platform company in Hong Kong, reviewing and amending project agreements including concession agreements, transmission service agreements and land lease agreements, and proposing creative solutions to these special issues.


State Grid acquires Chilquinta Energía

CATEGORIES: Overseas M&A; power industry

LEGAL COUNSEL: Paul Weiss advised State Grid Corporation of China, and White & Case advised Sempra Energy, the seller.

KEY POINTS: State Grid signed a share purchase agreement with US power company Sempra Energy in October 2019 to acquire 100% of the shares that Sempra owns in Chilquinta Energía, Chile’s third-largest electricity distribution company, for a total of US$2.23 billion. In an open tender, State Grid defeated a number of high-profile bidders, including Italian state-controlled utility Enel.

This transaction was the State Grid’s first entry into the Chilean market. The jurisdictions involved included Chile, Bermuda and Hong Kong. Paul Weiss says the transaction reserved a limited time window, and lawyers from different jurisdictions needed to be fully co-ordinated, from submission, through two rounds of tender offers to final signing. In terms of the legal process, the transaction involved China’s state-owned assets regulation and Chile’s antitrust regulation, and due to the status of State Grid as a state-owned enterprise, a comprehensive and in-depth legal analysis was needed on whether to make Chile’s antitrust declaration.

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