Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • CapitaLand Limited
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • Bank of America Merrill Lynch
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek Holdings
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • China Ocean Shipping Group Company (COSCO)
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • Royal Ahold (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • Nishimura & Asahi (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Mannheimer Swartling (Stockholm)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Rolf Watter
  • Bär & Karrer AG (Zürich)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

Monthly Archives: June 2014

CHINESE UPDATE: China Eases Controls On Cross-Border Security Transactions

Editors’ Note: This paper was contributed by Rachel Eng, Managing Partner of WongPartnership and a member of XBMA’s Legal Roundtable. Joseph He and Gerry Gan, partners and joint heads of WongPartnership’s China Practice, authored this article.

Highlights:

  • On 19 May 2014, the PRC State Administration of Foreign Exchange (“SAFE”) introduced a more streamlined administrative regime for the giving of cross-border security.
  • The validity of any cross-border security agreement is no longer subject to the prior approval, registration, and filing with SAFE, as well as other SAFE administrative requirements.
  • For certain types of securities, the security agreement must be registered with SAFE after execution. In some cases, registration/filing whether pre- or post-execution, is not required.
  • Banking and non-banking financial institutions in the PRC may provide cross-border security under a NBWD structure so long as they have been approved to engage in the business of providing security.

Main Article:
On 19 May 2014, the PRC State Administration of Foreign Exchange (“SAFE”) promulgated the Notice Regarding Administration of Foreign Exchange for Cross- Border Security (Hui Fa [2014] No. 29) (“Notice 29”). Notice 29 introduced a more streamlined administrative regime for the giving of cross-border security, and came into force on 1 June 2014.

It also annulled 12 existing regulations issued by SAFE, including:

  • the Implementation Measures on the Administration of External Security Provided by Onshore Entities ([97] Hui Zheng Fa Zhi No. 10); and
  • the Circular on Issues Concerning the Administration of External Security Provided by Onshore Entities (Hui Fa [2010] No. 39).

Executive Summary of Notice 29

Three categories of cross-border security

Regulatory requirements differ according to the type of cross- border security, of which there are three categories:

  • The security provider is a PRC entity, and the lender and the borrower are non-PRC entities (“Nei Bao Wai Dai” or “NBWD”);
  • The security provider is a non-PRC entity, and the lender and the borrower are PRC entities (“Wai Bao Nei Dai” or “WBND”); and
  • Any other type of cross-border security structure (for example, the security provider and the borrower are PRC entities and the lender is a non-PRC entity).

Salient provisions of Notice 29

The salient provisions of Notice 29 are summarised as follows:

  •  The validity of any cross-border security agreement is no longer subject to the prior approval, registration, and filing with SAFE, as well as other SAFE administrative requirements.
  • The previous system of pre-approved annual quotas by SAFE for NBWD and WBND has been removed.
  • For NBWD and WBND, the security agreement must be registered with SAFE after execution. For other types of cross-border security structures, registration / filing whether pre- or post-execution, is generally not required.
  • Other than certain specified cases, such as offshore bond issues, the previous requirement for an affiliated relationship between the security provider and the borrower, as well as the asset to debt ratio requirement imposed on the borrower have been abolished.
  • Individuals have been expressly permitted to be security providers for a NBWD structure. This arrangement will be regulated by reference to the rules applicable to non- banking institutions.
  • SAFE approval for the enforcement of security is abolished.

Nei Bao Wai Dai
Banking and non-banking financial institutions may provide cross- border security under a NBWD structure so long as they have been approved to engage in the business of providing security. This requirement does not apply to non-financial institutions.

SAFE approval not required

The security agreement may be executed without having to obtain prior approval from SAFE. However, it must be registered post-execution.

Restrictions on fund use

Funds borrowed pursuant to the offshore loan agreement may only be used for the borrower’s normal business operations. In addition, the funds cannot be repatriated back to China by way of loan, equity investment or securities investment, or by any other means, whether directly or indirectly unless specifically approved by SAFE.

Enforcement of the security

Upon the enforcement of the security, a foreign debt arises by way of subrogation as between the PRC security provider and the non-PRC borrower. This foreign debt claim must be registered with SAFE. In addition, until and unless the non-PRC borrower has discharged this foreign debt claim owed to the security provider, the security provider cannot enter into any additional new NBWD cross-border security transactions without SAFE’s approval.

Wai Bao Nei Dai

Requirements for WBND transactions

Subject to the following requirements (applicable to banking and non-banking financial institutions as well as non-financial institutions), a WBND cross-border security agreement may be entered into without prior SAFE approval:

  •  The borrower must be a non-financial institution registered and operating in China;
  • The lender must be a financial institution registered and operating in China;
  • The secured loan must be a loan (in RMB or a foreign currency) extended or committed by a financial institution in China (excluding entrustment loans); and
  • The security arrangement must be in line with applicable PRC and offshore laws.

Lifting of certain prior requirements

PRC domestic-funded entities are no longer subject to the WBND quotas and Foreign Invested Enterprises are not subject to the borrowing gap (between the total investment and the registered capital) when accepting offshore security. The PRC lender must report the WBND data to SAFE via the capital account information system.

Enforcement of the security

Upon enforcement of the NBWD security, the PRC lender (i.e., the financial institution) may receive the proceeds from the enforcement directly from the non-PRC security provider. As the enforcement of the security will give rise to a foreign debt owed by the PRC borrower to the non-PRC security provider, the borrower will need to register and file this foreign debt with SAFE. SAFE will check compliance on the WBND upon registration.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

Canadian Update: B.C. Securities Commission Takes Hybrid Approach to Cease Trading Augusta’s Rights Plan

Editors’ Note: This article was submitted by I. Berl Nadler, a partner at Davies Ward Phillips & Vineberg LLP and a leading Canadian corporate lawyer who has been involved in numerous high-profile financing transactions and acquisitions worldwide on behalf of multinational corporate clients. This update is provided by Davies Ward partners Kevin Thomson, Peter Hong and Gilles Comeau.

Main Article:

On May 2, 2014, the British Columbia Securities Commission (the “BCSC“) determined to allow the shareholder rights plan of Augusta Resource Corporation (“Augusta“) to remain in effect for at least 156 days after the announcement of the unsolicited offer by HudBay Minerals Inc. (“HudBay“) to acquire the shares of Augusta. The BCSC order was issued at a hearing held shortly after the continuance of the rights plan was approved by the shareholders of Augusta.

HudBay, which holds approximately 16% of the Augusta shares, waived the minimum tender condition under its offer during the initial bid period. The board of directors of Augusta is utilizing the rights plan to prevent HudBay from acquiring a minority blocking position while Augusta is completing permitting for its Rosemont copper project and pursuing a strategic alternatives process. Augusta has committed to waiving or terminating its rights plan to permit any bid to proceed if at least a majority of the Augusta shares, excluding shares held by the bidder, are tendered to the bid, provided that the bidder publicly announces that fact and extends its bid for at least 10 business days.

Augusta’s shareholders were provided with the opportunity to vote on the continuance of the rights plan in the face of HudBay’s offer at a shareholders’ meeting held on May 2, 2014, three days prior to what was stated to be the “final” expiry of HudBay’s offer. At that meeting, 94.0% of the votes cast were in favour of a resolution to approve the continuance of the rights plan until the next annual meeting of shareholders in 2015, with 73.8% of the outstanding shares voted on the resolution, in each case excluding the shares held by HudBay.

The BCSC ordered that Augusta’s rights plan not be cease traded unless HudBay extends its offer to July 16, 2014, and HudBay provides a 10-day extension of its offer if it takes up any shares thereunder. If these conditions are satisfied by HudBay, Augusta’s rights plan will be cease traded on July 15, 2014.

On May 5, 2014, HudBay amended its offer to extend the expiry date until May 16, 2014. HudBay will have to extend its offer for two additional months in order to satisfy the conditions imposed by the BCSC.

The reasons for the BCSC’s decision have not yet been released, and will be highly anticipated in light of the divergent approaches taken in the past by the securities regulators in Ontario and Alberta, on the one hand, and British Columbia, on the other hand, regarding the impact of shareholder support for a rights plan obtained in the face of a hostile bid, and the subsequent proposal of National Instrument 62-105 by the Canadian Securities Administrators.

In Pulse Data Inc. and Neo Material Technologies Inc., the Alberta Securities Commission and the Ontario Securities Commission, respectively, allowed rights plans adopted by target boards to stand where overwhelming shareholder support for the plans was obtained in the face of those hostile bids. In Lions Gate Entertainment Corp., two members of the three person panel of the BCSC expressed reservations regarding the decisions in Pulse Data and Neo Material based on their apparent departure from the principles that shareholders ultimately must have the opportunity to decide whether to tender to a take-over bid, and that target boards cannot “just say no” to unsolicited offers. Our discussion of these decisions can be found here.

Following these decisions, the Canadian Securities Administrators proposed National Instrument 62-105, setting out a new regime for the regulation of shareholder rights plans in Canada. The proposed rule would shift decision making regarding rights plans from securities regulators to shareholders, to allow a rights plan adopted by a target board to stay in place, provided shareholder approval is obtained within specified periods. Our discussion of the proposed rule can be found here.

In the Augusta matter, the BCSC clearly has given weight to the outcome of Augusta’s shareholder vote, given that the length of time that Augusta’s rights plan has been permitted to remain in force is significantly longer than the 45 to 70 days following the announcement of a hostile bid that typically has been afforded by the Canadian securities regulatory authorities. The BCSC, however, did not go so far as to give full effect to Augusta’s shareholder vote, which called for the continuance of the rights plan until the next annual meeting of shareholders in 2015.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

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