Uncertainties in Implementing a Multiple-Class Share Structure Under the PRC Corporate Law and Possible Mitigation Strategies
(2010) 31(9) Company Lawyer 280-90
11 Pages Posted: 29 Sep 2013
Date Written: September 28, 2013
Abstract
Financing new investment projects becomes one of the most challenging tasks in advancing economy in the economic downturn, and private equity is fulfilling a gap-filling role. Private equity investment is often executed in the form of private placement, the purchase and acquisition of preference shares by the investors from the portfolio companies. In this article, the main characteristics of the Chinese corporate law regime will be discussed to see whether a multiple-class share structure and issuance of preference shares can be implemented by China-incorporated private companies as their counterparts in other common law jurisdictions usually do. A “contracting out” approach as the major mitigation strategy will be discussed.
Keywords: Multiple-Class Share Structure, Chinese Company Law, Mitigation Strategies
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