Linklaters team sets pace with benchmark BOC issuance

ALinklaters team of Hong Kong-based lawyers has helped push through a benchmark issuance of offshore preference shares for Bank of China (BOC) that created a number of firsts and set records, including the biggest international regulatory capital issuance by a PRC bank.

“The BOC offshore preference shares creates an important new product class for PRC banks to boost their capital positions. Its project codename, 领跑, was very appropriate – it was a pacesetter in all respects,” William Liu, one of the lead partners in the issuance, told China Business Law Journal. The Linklaters team was led by Liu and partners Teresa Ma and Andrew Malcolm, with support from managing associate Terence Lau.

Aside from being the first issuance of additional tier 1 Capital (AT1) by a PRC bank, the transaction was also the first issuance of preference shares by a PRC company. “Under PRC law, AT1 needs to be structured in the form of an equity security (preference share) as there is uncertainty around the validity of perpetual debt securities,” Liu said. “But as the relevant PRC laws for preference shares only set out key principles, we had to work very closely with BOC, PRC counsel and the PRC and Hong Kong regulators to work through the detailed technical requirements, and the necessary board and shareholder approvals.”