{"id":125926,"date":"2026-01-09T09:59:59","date_gmt":"2026-01-09T09:59:59","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=125926"},"modified":"2026-04-13T14:14:05","modified_gmt":"2026-04-13T14:14:05","slug":"china-acquisition-finance","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/china-acquisition-finance\/","title":{"rendered":"China: Acquisition Finance"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-125926","comparative_guide","type-comparative_guide","status-publish","hentry","guides-acquisition-finance","jurisdictions-china"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Anli Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/04\/Anli-Partners.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Anli Partners<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2026\/04\/Anli-Partners.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Acquisition Finance laws and regulations applicable in China<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the trends impacting acquisition finance in your jurisdiction and what have been the effects of those trends? Please consider the impact of recent economic cycles, Covid-19, developments relating to sanctions, and any environmental, social, and governance (\u201cESG\u201d) issues.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquisition finance market of the People\u2019s Republic of China (PRC) has exhibited resilience through 2025, characterized by its distinct monetary policy, geopolitical restructuring and cross-border capital expansion.<\/p>\n<p>While US and European central banks maintained elevated rates (with the expectation to further bring the rate down), the People\u2019s Bank of China (PBOC) takes the steps further to support economic growth. The one-year benchmark lending rate (i.e., the Loan Prime Rate) fell to a historic low of 3.0%. Hence, in the past year, a clear trend has emerged with leading offshore borrowers (e.g., manufacturers) increasingly seeking low-cost cross-border RMB financing from PRC banks. This shift is primarily driven by the desire to refinance high-cost foreign currency-denominated loans and to facilitate acquisition transactions within the PRC market.<\/p>\n<p>Notably, multinational corporations are executing strategic ring-fencing through carve-out financings. The strategy involves selling majority stakes in PRC subsidiaries to domestic partners. Landmark transactions include Starbucks\u2019 USD 4 billion joint venture with Boyu Capital and the PAG-led consortium\u2019s RMB 60 billion strategic investments in Wanda Commercial Management.<\/p>\n<p>PRC banks are also expanding the lending to offshore, particularly along Belt and Road corridors. It is reported that the Belt and Road activity reached USD 124 billion in the first half of 2025 in combined construction contracts and investments.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please advise of any recent legal, tax, regulatory or other developments (including any reforms) that will impact foreign or domestic lenders (both bank and non-bank lenders) in the acquisition finance market in your jurisdiction.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The PRC regulatory landscape for acquisition finance underwent substantial reforms that substantially expand acquisition financing capacity, enhance structural flexibility and market liquidity.<\/p>\n<p>On 20 August 2025, the National Financial Regulatory Administration (NFRA) issued draft Measures for Administration of Mergers and Acquisitions Loans of Commercial Banks (the \u201cDraft M&amp;A Loan Measures\u201d), comprehensively revising the 2015 Guidelines to adapt the framework to contemporary market conditions. The proposed rules expand banks\u2019 lending scope to cover minority equity acquisitions for the first time, while previously, only controlling-stake takeovers qualified for acquisition financing. Under the new Draft M&amp;A Loan Measures, existing shareholders holding 20% or more may leverage acquisition financing to increase their stakes, provided each transaction adds a minimum 5% position.<\/p>\n<p>The leverage limits have also been recalibrated, and the controlling acquisition loans may not exceed 70% (increased from the previous 60% ceiling) of transaction consideration and expenses. Further, a March 2025 pilot program for technology-sector transactions permits heightened leverage of up to 80% with tenors extended to 10 years. However, note that the public consultation period closed on 20 September 2025, with the measures remaining in draft form as of December 2025.<\/p>\n<p>In respect of the cross-border financings, the PBOC and State Administration of Foreign Exchange (SAFE) increased the foreign debt borrowing quota (referred to as the \u201cmacro-prudential quota\u201d) for corporate borrowers to 3.5 times of their net assets offshore. This adjustment materially expands the cross-border financing capacity.<\/p>\n<p>Finally, the Administrative Measures for Syndicated Loan Business issued by NFRA (the \u201cSyndicated Loan Measures\u201d), effective 1 November 2024, modernized the secondary loan transfer regime. The sole lead bank\u2019s minimum retention requirement decreased from 20% to 15%, and its minimum distribution ratio fell from 50% to 30%. Also importantly, partial secondary market sell-downs are now permitted post-drawdown, which was previously unavailable as partial loan transfers were prohibited. These reforms align domestic syndication with international market practice, and should be able to facilitate the genuine secondary trading, improved liquidity, and enhance participation by the willing lenders.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please highlight any specific high level issues or concerns in your jurisdiction that should be considered in respect of structuring or documenting a typical acquisition financing.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Offshore loans extending to PRC borrower or offshore subsidiaries controlled by PRC individual or entities with tenors exceeding one year require, as one of the conditions precedent, approval and registration with the National Development and Reform Commission (NDRC) pursuant to the Administrative Measures on Approval and Registration of Mid-Term and Long-Term Foreign Debts of Enterprises taking effect on 10 February 2023.<\/p>\n<p>For cross-border financing, additional consideration is needed in terms of taking credit enhancement. In particular, guarantee\/security constitutes \u201cNei Bao Wai Dai (NBWD)\u201d (i.e., domestic guarantee\/security for offshore loans) require registration with the SAFE. Before accepting the registration, the SAFE will conduct a merit review, assessing the offshore borrower\u2019s ability to service debt and the likelihood of enforcement. While unregistered guarantee\/security remain valid, enforcement proceeds may face remittance delays or blocks if the SAFE registration has not been completed.<\/p>\n<p>Another point to note is that NBWD may also trigger NDRC approval and registration requirements (which is subject to case-by-case analysis) despite that fact that the borrowing entity is not controlled by PRC individual or entities. The rationale is that NDRC requires visibility and is focusing on regulating debt obligations ultimately tied to PRC assets or cash flow generated from PRC business operations to monitor the potential scale of cross-border fund movement.<\/p>\n<p>In response to the above, bridge loan facilities not exceeding one year could be served as interim funding, particularly in acquisition finance and large-scale corporate transactions. Such facilities provide funds certainty and mitigate the timing uncertainty for regulatory approval. However, the Draft M&amp;A Loan Measures contain a controversial clause prohibiting PRC banks to extend new loans to refinance existing acquisition loans. That said, if this provision is retained in the final adopted regulations as proposed, the bridge loan approach will no longer be available.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In your jurisdiction, due to current market conditions, are there any emerging documentary features or practices or existing documentary provisions\/features which borrowers or lenders are adjusting or innovating their interpretation of, or documentary approach to?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>PRC acquisition finance documentation is evolving rapidly in response to regulatory liberalisation and market developments.<\/p>\n<p>First, following the promulgation of the Syndicated Loan Measures, the China Banking Association (CBA) (i.e., the principal banking industry self-regulated organization) was tasked with updating its 2017 syndicated loan model forms to incorporate, among other, the new transfer mechanics and tiered syndicate structures. CBA has released the updated version on 18 December 2025.<\/p>\n<p>In cross-border financing, PRC banks, which have traditionally insisted on their own proprietary template or CBA recommended forms for syndicated loans, are increasingly accepting APLMA-compliant documentation to accommodate the asks from offshore borrowers as banks are getting familiar with the international standards.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has there been a prevalence of \u201cequity bidding\u201d in acquisition financing (i.e., signing the acquisition agreement prior to securing financing) with the expectation of securing financing shortly thereafter? If in the US, would Xerox language be included in the acquisition agreement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Equity bidding is not a prevalent feature of PRC acquisition finance. Market practice instead relies on bank commitment letters and protections of certain funds clause in the facilities agreement.<\/p>\n<p>PRC banks have no particular obstacles to commitment letters before the acquisition agreement is signed, which could give sellers sufficient comfort on the bidder\u2019s funding capacity. Banks are also increasingly prepared to provide commitments on a certain funds basis limiting drawstop events to a narrow set of conditions.<\/p>\n<p>\u201cXerox\u201d language or other lender protections will rarely be included in the acquisition documents. In the PRC context, lenders are not contracting parties to acquisition agreements, and accordingly the seller typically has no legal standing against the lenders under PRC laws given the doctrine of privity of contract.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any notable trends in the use of certain financing structures (e.g., private credit vs syndicated vs high yield vs holdco vs mezzanine vs preferred, etc.) in your jurisdiction for acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Commercial banks dominate the PRC bank loan market in terms of acquisition financing. Private credit funds and alternative lenders remain a small segment due to regulatory restrictions.<\/p>\n<p>Compared to Europe market, e.g., where private credit-led unitranche financings dominate mid-market leveraged deals, the PRC market remains bank-centric. Smaller deals lean on bilateral bank loans, while larger ones use syndicated loans or bonds.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Has the use of technology (e.g., e-signatures, digital platforms for syndication, document automation, AI, etc.) impacted the documentation or execution of acquisition financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Technology has not yet materially transformed the documentation or execution of acquisition financings in the PRC, despite a legal framework that permits electronic signatures.<\/p>\n<p>In practice, PRC banks continue to rely heavily on wet-ink signatures and physical company chops, with onsite signing ceremonies remaining the norm for significant financing transactions. Concerns regarding authenticity verification and the established cultural practice of chop-based execution remains prevalent.<\/p>\n<p>Another reason is that, in terms of security perfection, local registries (e.g., for property mortgages and equity pledges) typically require physical documents, wet-ink signatures, and the paper application with company chop to complete the registrations of the security.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the legal and regulatory requirements for banks and non-banks to be authorised to provide financing to, and to benefit from security provided by, entities established in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Commercial banks, including domestic PRC banks and foreign banks locally incorporated or established with local branches, are the primary authorized lenders in the PRC. They operate under licenses granted by the NFRA. Foreign banks without a PRC presence do not require a specific license to lend cross-border into the PRC, provided that the borrower complies with foreign debt quota requirements and (to the extent necessary) obtains NDRC approval or completes SAFE registrations.<\/p>\n<p>Non-bank entities face significant restrictions. The lending activity is highly regulated, and generally those entities are prohibited from engaging in direct lending as a business.<\/p>\n<p>Both banks and non-banks may legally benefit from security provided by PRC entities. In practice, however, local administrative barriers persist. For example, some local real estate registries may hesitate to register mortgages in favor of foreign lenders, reflecting residual influence from now repealed rules requiring that only PRC licensed financial institutions could be mortgagees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which govern the advance of loan proceeds into, or the repayment of principal, interest or fees from, your jurisdiction in a foreign currency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No specific license is required for foreign lenders to lend foreign currency denominated loans into the PRC. While the loan proceeds can be denominated in foreign currency, the circulation and settlement of foreign currency within the PRC are strictly limited to specific scenarios, primarily for cross-border trade transactions. As a result, borrowers need to convert foreign currency loan proceeds into RMB.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws or regulations which limit the ability of foreign entities to acquire assets in your jurisdiction or for lenders to finance the acquisition of assets in your jurisdiction? Please include any restrictions on the use of proceeds.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign investment is generally managed through a negative list system. The 2024 edition contains 29 restricted areas, with manufacturing sector restrictions fully removed. Acquisitions in restricted sectors require approval from the relevant sector-specific regulators. In addition, investments in military, defence-related sectors, or conferring actual control in sensitive sectors including critical technologies, infrastructure and financial services require national security review, which must be completed before closing. Customary merger control, antitrust and cybersecurity requirement may also apply.<\/p>\n<p>Under PRC laws, parties are free to negotiate and agree on the loan purpose to the extent permitted by the relevant regulations and subject to the customary anti-corruption, AML and CTF requirements aligned with the international standards.<\/p>\n<p>For cross-border loans extended by PRC banks to offshore borrowers, according to the notice jointly issued by the PBOC and SAFE, the loan proceeds cannot be applied towards securities investment, transactions with fictitious backgrounds, speculative or arbitrage transactions, repayment of offshore debts under secured or guaranteed by PRC assets or obligors, or repatriation to the PRC.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What does the security package typically consist of in acquisition financing transactions in your jurisdiction and are there any additional security assets available to lenders?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In acquisition financing transactions, the security package typically consists of pledges over equity interests in both the borrower and the target company. Depending on the target\u2019s business and asset profile, lenders frequently may enjoy benefits from additional security.\u00a0 For example, in the real estate sector, financing often combines onshore RMB facilities from PRC banks with offshore US facilities arranged by international banks (customarily the affiliates of the onshore banks), where equity pledge and mortgage over real property are the most common types of security interests.<\/p>\n<p>Under PRC law, a broad range of asset categories that can secure loan financings, including:<\/p>\n<ul>\n<li>Real property, including buildings and their land use rights. Mortgages must cover both the building and underlying land use rights.<\/li>\n<li>Shares in listed or un-listed companies and equity interests in limited liability companies can be pledged.<\/li>\n<li>Accounts receivable can be pledged.<\/li>\n<li>Bank accounts (in essence, the deposits therein) could be subject to pledge if the conditions under the PRC Civil Code are complied with.<\/li>\n<li>Manufacturing equipment, raw materials, and inventory can be pledged (to the extent can be delivered to the secured parties in possession) or can be subject to the mortgage covering existing and future assets.<\/li>\n<li>IP rights including trademarks, patents, and copyrights can be pledged.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the law of your jurisdiction permit (i) floating charges or any other universal security interest and (ii) security over future assets or for future obligations?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Debenture or blanket security interests over all assets in common law jurisdictions are not available in the PRC, while the PRC Civil Code allows for pledges to be created over both current and anticipated receivables. This enables lenders and pledgors to agree on securing receivables that may not yet have arisen when the pledge is established. However, these future receivables must be clearly identifiable, so that the receivables subject to the pledge upon enforcement can be determined.<\/p>\n<p>the PRC Civil Code also allows mortgagors to create mortgage over its machinery, equipment, raw materials, semi-manufactured products as well as finished products, both currently owned and to be owned in the future. The mortgagor may freely dispose of these circulating assets in ordinary business until crystallisation (i.e., on default, insolvency, or agreed trigger).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do security documents have to (by law) include a cap on liabilities? If so, how is this usually calculated\/agreed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under PRC law, there is no general statutory requirement that security documents must include a cap on the secured liabilities.<\/p>\n<p>However, under the PRC Civil Code, as well as the related judicial interpretations, maximum amount guarantee\/security arrangements are permitted to secure recurring obligations within a specified period. Such amount could be limited by a pre-agreed ceiling determined by the parties, referred to as the \u201cmaximum amount\u201d, which caps the total liability to be assumed by the guarantors or security providers. There is no established market consensus as to how the cap is agreed or calculated, and the parties will consider, among others, the creditworthy of the obligors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the formalities for taking and perfecting security in your jurisdiction and the associated costs and timing? If these requirements are different for different asset classes, please outline the main points to note for each of these briefly.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under PRC laws, the general proposition is that security interests must be registered to take legal effect. Meanwhile, the PRC does not operate a unified registration system, meaning that various types of security interests will be filed and registered with different authorities depending on the asset involved. Below please find the registration for common types of security registrations:<\/p>\n<ul>\n<li>Mortgage over real property needs to be registered with real estate administration authorities at the location where the property is situated.<\/li>\n<li>Pledge over shares of a listed company can be registered with the China Securities Depository and Clearing Corporation, and pledge over equity interests in limited liability companies shall be registered with local branches of the State Administration of Market Regulation.<\/li>\n<li>Pledge over accounts receivable can be registered on the PBOC Unified Registration and Publicity System for Movable Property Financing of the Credit Reference Centre (PBOC Registration System).<\/li>\n<li>Pledge over bank accounts does not require registration. However, according to the Judicial Interpretation of the Supreme People&#8217;s Court regarding the Taking of Security, the pledge is only valid if the account is designated to be an account subject to security and is effectively controlled by the secured parties (or its designated agent).<\/li>\n<li>Movable asset mortgage (including inventory, etc.) can be registered on the PBOC Registration System.<\/li>\n<li>Security over IP rights involve different authorities, including: (1) China National Intellectual Property Administration administers trademark rights and patent rights pledge registration; and (2) copyrights will be registered with the Copyright Protection Centre of China.<\/li>\n<\/ul>\n<p>Failure to complete the registration may render the security interests vulnerable to third-party claims and will make the security generally unenforceable. Registered security interests have priority over unregistered ones with priority among registered interests determined by registration time. In insolvency proceedings, creditors holding unregistered security interests will rank as unsecured creditors.<\/p>\n<p>Registration costs and expenses for foreign debt filings and security perfection are typically nominal and are typically borne by the borrowers.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limitations, restrictions or prohibitions on downstream, upstream and cross-stream guarantees in your jurisdiction? Please also provide a brief description of any potential mitigants or solutions to these limitations, restrictions or prohibitions.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Both upstream and downstream guarantees and security arrangements are generally permissible under PRC laws, provided that such transactions are duly authorized in accordance with the constitutional documents of the guarantors or security providers and subject to the compliance of certain legal requirements (e.g., financial assistance). However, certain entities face heightened restrictions, including:<\/p>\n<ul>\n<li>SOEs operate under the oversight of the State-owned Assets Supervision and Administration Commission (<strong>SASAC<\/strong>) which limits guarantee ratios and debt-to-equity levels. Recent SASAC regulations limit guarantee to unrelated third parties, ensuring financial resources remain within state-controlled structures.<\/li>\n<li>Listing companies may provide guarantee or security but may have to comply with the applicable disclosure or approval requirements.<\/li>\n<li>State organs and certain public institutions (e.g., schools and hospitals, etc.) are barred from providing guarantees under the<em> PRC Civil Code<\/em>.<\/li>\n<\/ul>\n<p>See discussion related to NBWD transactions in Question 3 and financial assistance issues in Question 17 respectively.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable costs, consents or restrictions associated with providing security for, or guaranteeing, acquisition financing in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>See discussion related to mortgage granted in favour of foreign lenders in Question 8. See also discussions around financial assistance below.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible for a company to give financial assistance (by entering into a guarantee, providing security in respect of acquisition debt or providing any other form of financial assistance) to another company within the group for the purpose of acquiring shares in (i) itself, (ii) a sister company and\/or (iii) a parent company? If there are restrictions on  granting financial assistance, please specify the extent to which such restrictions will affect the amount that can be guaranteed and\/or secured.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under PRC laws, financial assistance rules differ between listed and the other companies. Specifically, a PRC listed company is prohibited from providing financial assistance to the acquirer, but non-public companies were not previously to be subject to this outright ban. However, the amended PRC Company Law, effective from 1 July 2024, takes a further step by explicitly prohibiting joint stock companies from providing financial assistance intended to facilitate share acquisitions, unless the assistance is aimed at implementing employee stock ownership plans or if it is deemed beneficial to the company and approved by the shareholders\u2019 meeting or the board of directors. Moreover, the total financial assistance granted under these exceptions must not exceed 10% of the company\u2019s issued share capital. However, the amendments do not clarify detailed procedural requirements, which are anticipated to be further defined through future judicial interpretations or listing rules.<\/p>\n<p>While there is no general requirement for a \u201ccorporate benefit test\u201d under PRC laws, providing guarantee or granting security must be duly authorized in accordance with the constitutional documents. Notably, the PRC Company Law imposes a voting restriction on connected shareholders, requiring the shareholders abstaining from voting on the resolution approving the security to their creditors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are any financial assistance issues in your jurisdiction, is there a procedure available that will have the effect of making the proposed financial assistance possible (and if so, please briefly describe the procedure and how long it will take)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>See discussions in Question 17.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If there are financial assistance issues in your jurisdiction, is it possible to give guarantees and\/or security for debt that is not pure acquisition debt (e.g. refinancing debt) and if so it is necessary or strongly desirable that the different types of debt be clearly identifiable and\/or segregated (e.g. by tranching)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The treatment of guarantees\/security for refinancing debt in the context of financial assistance remains unsettled under PRC law. The language in the PRC Company Law does not explicitly address subsequent refinancing, and a conservative reading suggests refinancing could be construed as falling within the prohibition as its ultimate purpose traces back to the original acquisition. However, please take note of the refinancing restriction in the Draft M&amp;A Loan Measures as discussed in Question 3.<\/p>\n<p>Therefore, clear segregation of acquisition loan from other facilities (e.g., for working capital and other purposes) through tranching is necessary to take guarantees and\/or security.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction recognise the concept of a security trustee or security agent for the purposes of holding security, enforcing the rights of the lenders and applying the proceeds of enforcement? If not, is there any other way in which the lenders can claim and share security without each lender individually enforcing its rights (e.g. the concept of parallel debt)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The concept of trustee is rarely used in the PRC syndication loan market. Unlike common law jurisdictions, where administrative agents, collateral agents and trustees often owe fiduciary duties to lenders, PRC laws do not explicitly impose such responsibilities on agents. These roles are alternatively governed primarily by contracts instead of statutes.<\/p>\n<p>In syndicated loans or multi-investor financings, a facility agent is typically appointed to act on behalf of and for the benefit of the lenders. The agent\u2019s duties include coordinating drawdown requests, distributing principal and interest payments, managing communications between parties, and facilitating loan transfers or assignments. However, the agent cannot exercise discretionary powers beyond the matters agreed in the agreement unless otherwise instructed by the majority or all lenders pursuant to the terms thereof. Similarly, a security agent may be appointed to hold security interests on behalf of lenders under security documents. The security agent\u2019s responsibilities may include perfecting security interests, maintaining records and enforcing collateral upon default.<\/p>\n<p>Under PRC laws, there is no statutory or otherwise recognized equivalent of the common law concept of parallel debt.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction have significant restrictions on the role of a security agent (e.g. if the security agent in respect of local security or assets is a foreign entity)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The PRC does not impose significant nationality-based restrictions on foreign entities acting as security agents.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please provide the main differences and considerations between bank loan financing and high yield bond\/note financing for acquisition purposes in your jurisdiction, and how do they affect the structuring and documentation of the transaction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Choosing between bank loans and debt securities for raising funds involves weighing different advantages and challenges taking into account the regulatory environment, market prospects and economic conditions globally and locally in the PRC.<\/p>\n<p>Bank loans remain the dominant form of debt financing. Their key advantage lies in lighter regulatory oversight compared to bonds. Bank loans also provide more flexibility in terms and generally have shorter maturities.<\/p>\n<p>In contrast, bonds provide access to a wider investor base, such as pension funds and insurance companies, allowing for larger funding amounts and longer maturities. This enables them particularly suitable for infrastructure and capital-intensive projects. However, issuing debt securities involves multiple authorities and the issuers are required to navigate various regulations, including quotas and approvals especially for cross-border transactions, which could be time-consuming and burdensome.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Describe the loan transfer mechanisms that exist in your jurisdiction and how the benefit of the associated security package can be transferred.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Loan transfers in the PRC are effected primarily through assignment of claims or assumption of debts. Assignment of claims requires a written assignment agreement between assignor and assignee, together with written notification to the debtor (without which the assignment is ineffective against the debtor). Assumption of debts requires the creditor&#8217;s consent, absent which it is invalid. For syndicated loan transfers, banks should follow the requirements under the Syndicated Loan Measures.<\/p>\n<p>If the security agent (i.e., beneficiary on record) transfers the loans, the best practice is for the new agent to enter into the security document and complete the amendment or new registration of the security.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the rules governing the priority of competing security interests in your jurisdiction? What methods of subordination are used in your jurisdiction and can the priority be contractually varied? Will contractual subordination provisions survive the insolvency of a borrower incorporated in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Registered security interests have priority over unregistered ones with priority among registered interests determined by registration time. In insolvency proceedings, creditors holding unregistered security interests will rank as unsecured creditors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a concept of \u201cequitable subordination\u201d in your jurisdiction whereby loans provided by a shareholder (as a creditor) to a company incorporated in your jurisdiction are subordinated by law upon insolvency of that company in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>PRC law does not have specific legislation expressly recognising equitable subordination. However, contractual subordination arrangements agreed among senior creditors, junior creditors, and the debtor are generally enforceable under PRC law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does your jurisdiction generally (i) recognise and enforce clauses regarding choice of a foreign law as the governing law of the contract, the submission to a foreign jurisdiction and a waiver of immunity and (ii) enforce foreign judgments?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In cross-border financing involving PRC entities or security, a split governing law approach is common in the market. The facility agreement and intercreditor agreement may be governed by foreign law (typically Hong Kong or English law), while security documents for onshore assets (e.g., real properties or equity interests in a PRC company) will adopt PRC law.<\/p>\n<p>PRC courts generally recognise and enforce foreign governing law if the transaction has any \u201cforeign element\u201d, such as the involvement of offshore parties or assets (e.g., the lenders are incorporated or established offshore). This general rule will be subject to limited exceptions, including that the choice of foreign governing law must not violate public order of the PRC.<\/p>\n<p>The Foreign State Immunity Law, effective 1 January 2024, expressly recognises contractual waivers of foreign state immunity. It permits express waiver of immunity from enforcement in written agreements<\/p>\n<p>Since 2015, China has adopted a substantially friendly stance toward foreign judgment enforcement, with successful recognition of judgments from the United States, Singapore and South Korea. Although China is not party to any international convention or multilateral treaty, it has concluded bilateral judicial assistance treaties with various countries containing provisions on recognizing and enforcing civil and commercial judgments. Separately, judgments from Hong Kong, Macao, and Taiwan are governed by special arrangements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the requirements, procedures, methods and restrictions relating to the enforcement of collateral by secured lenders in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The applicable requirements, procedures, and restrictions will vary depending on the specific type of security involved. As a general principle, however, enforcement of security requires prior service of a notice of default declaring the acceleration of the loans.<\/p>\n<p>In a typical onshore\/offshore PRC acquisition financing, pledge over equity interests (Equity Pledge) and mortgage over real property (Property Mortgage) are the most common types of security interests.<\/p>\n<p>When an event of default occurs, the secured parties, usually acting through the security agent, may enforce the Equity Pledge in two ways:<\/p>\n<p><strong>Consensual enforcement<\/strong><\/p>\n<p>With cooperation from the pledgor and the company (whose equity interests are subject to security), the security agent may either take over the pledged equity in consideration of discharging the secured liabilities (effectively converting the equity into repayment by reaching an agreement with the pledgor), or sell the pledged equity to a third party and apply the sale proceeds towards the repayment. This approach relies on heavily on collaboration among all parties involved.<\/p>\n<p><strong>Court enforcement<\/strong><\/p>\n<p>If cooperation from the parties is not forthcoming, the security agent has to initiate legal proceedings in a PRC court. Through the court, enforcement can be carried out by auctioning the pledged equity publicly, conducting a private sale, or taking direct possession of the equity under judicial authority.<\/p>\n<p>Similar to the enforcement approaches for the Equity Pledge, the enforcement of Property Mortgage in the PRC can be conducted either through a consensual sale or a judicial sale administrated by court. In each case, the secured parties will have priority over all junior secured creditors and unsecured creditors with respect to the sale proceeds of the property.<\/p>\n<p>Since judicial sale approach involves lengthy court processes, consensual enforcement approach is generally preferred, as it avoids the excessive time and cost involved in enforcing the mortgages through the PRC courts.<\/p>\n<p>In cross-border financing, lenders should also consider, on a case-by-case basis, the channels and options for the fund repatriation of the enforcement proceeds from the PRC to settle the offshore debts.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the insolvency or other rescue\/reorganisation procedures in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The insolvency regime of the PRC is governed by the Enterprise Bankruptcy Law (the \u201cBankruptcy Law\u201d), effective 1 June 2007. The Bankruptcy Law establishes three procedures, i.e., bankruptcy (leading to winding-up), reorganisation and compromise (both enabling recovery).<\/p>\n<p>On 12 September 2025, the Standing Committee of the National People\u2019s Congress released a draft revision to the Enterprise Bankruptcy Law (the \u201cDraft Revision\u201d) for public consultation, adding or modifying more than 160 provisions to improve market exit mechanisms. As such, the regime will change substantially if the Draft Revision is enacted.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does entry into any insolvency or other process in your jurisdiction prevent or delay secured lenders from accelerating their loans or enforcing their security in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Entry into bankruptcy proceedings does not automatically prevent secured lenders to exercise their rights, but it can materially delay enforcement depending on the procedure, particularly in a court-accepted reorganisation.<\/p>\n<p>Once the PRC court accepts an insolvency filing, enforcement proceedings against the debtor\u2019s assets are generally required to be suspended, and creditors are channelled into the collective process (typically through claim filing and bankruptcy administrator-led process). In a reorganisation, secured lenders\u2019 enforcement of security over specific debtor property is expressly stayed during the whole period. A secured lender may apply to the court to resume enforcement if the collateral may be damaged or its value may materially diminish.<\/p>\n<p>in bankruptcy and compromise procedures, secured lenders are generally not subject to the same stay and are entitled to priority repayment from the proceeds of their collateral, although enforcement is commonly coordinated through the bankruptcy process.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In what order are creditors paid on an insolvency in your jurisdiction and are there any creditors that will take priority to secured creditors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under the Bankruptcy Law, the assets (not subject to any security) are distributed in the following order, provided that if the proceeds are insufficient to pay out a class in full, that class shares pro rata:<\/p>\n<ul>\n<li>bankruptcy expenses and debts for common benefit (including administrator fees and costs incurred to preserve or continue operations);<\/li>\n<li>employment related claims (e.g., wages, social security and medical benefits);<\/li>\n<li>other social insurance contributions and taxes; and<\/li>\n<li>unsecured claims.<\/li>\n<\/ul>\n<p>In the Draft Revision, however, the priority of claims has been restructured as follows:<\/p>\n<ul>\n<li>claims for personal injury compensation (other than punitive penalties);<\/li>\n<li>liabilities associated with goods or services essential for consumers\u2019 sustenance;<\/li>\n<li>employee salaries and social insurance;<\/li>\n<li>tax; and<\/li>\n<li>general unsecured claims.<\/li>\n<\/ul>\n<p>The Revision Draft also introduces a framework for subordinated debts, including loans provided by family members to the individual debtor, interest accruing post-bankruptcy acceptance, subordinated bonds, punitive damages, and claims from unfair transactions with affiliated parties. While the secured lenders would still retain priority over their collateral, the ranking of claims of unsecured creditors would be affected by this revised order of priority.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any hardening periods or transactions voidable upon insolvency in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>PRC law does not recognize the term of \u201chardening period?. Instead, the Bankruptcy Law provides for a \u201crisk period\u201d during which certain transactions or security grants may be challenged and potentially invalidated.<\/p>\n<p>The Bankruptcy Law sets out certain circumstances that render a transaction entered into or a security granted by the company (within one year or 6 months prior to the date the court accepts the bankruptcy application) as either voidable or void.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other notable risks or concerns for secured lenders in enforcing their rights under a loan or collateral agreement (whether in an insolvency or restructuring context or otherwise)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>PRC law generally does not permit \u201cself-help\u201d enforcement mechanisms such as receiver sales, which are available in common law jurisdictions. Security must be enforced through a court-supervised auction or sale. This judicial oversight requirement, while providing debtor protections, may also constrain lenders\u2019 flexibility and recovery economics.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please detail any taxes, duties, charges or related considerations which are relevant for lenders making loans to (or taking security and guarantees from) entities in your jurisdiction in the context of acquisition finance, including if any withholding tax is applicable on payments (interest and fees) to lenders and at what rate.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Stamp duty is imposed by PRC tax authorities on both lenders and borrowers at a rate of 0.05% of the committed loan facility amount.<\/p>\n<p>Offshore lenders without PRC presence face 10% (subject to preferential rate under tax treaties) withholding tax on interest and other income received from onshore borrowers. Interest is also subject to 6% VAT plus local surcharges.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other tax issues that foreign lenders should be aware of when lending into your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>PRC law imposes no other material taxes or levies, while the foreign lenders are advised to take note of the relevant treaty relief, as it is typically conditioned on the lenders qualifying as the \u201cbeneficial owner\u201d of the income. As a result, lenders commonly expect borrowers to deliver tax forms and supporting evidence to mitigate withholding risk and to preserve treaty rates where available. Customary tax gross-up and tax indemnity clauses will also be in place to mitigate the risks.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the regulatory framework by which an acquisition of a public company in your jurisdiction is effected?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquisition of a PRC-listed company is highly regulated and is governed by a codified takeover regime. Such acquisition is supervised primarily by the principal securities regulator China Securities Regulatory Commission (CSRC).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key milestones in the timetable (e.g. announcement, posting of documentation, meetings, court hearings, effective dates, provision of consideration, withdrawal conditions)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquisition can be made through an agreement or tender offer, while the latter is most commonly implemented through a public tender offer.<\/p>\n<p>The tender offer process comprises the following key milestones: (1) preparatory stage, including preparation by the offeror of tender offer report and issuance of brief announcement on the summary of such report; (2) public announcement of tender offer report; (3) target board discharge of fiduciary duties; (4) shareholder acceptance; (5) completion of the share purchase; (6) within 3 trading days post-expiration of the offer period, securities firm handles the settlement and the offeror announces results; (7) if listing conditions are not met, shares are delisted and remaining shareholders may sell to offeror; (8) target announces final results within 15 days after offer period expires.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the technical minimum acceptance condition required by the regulatory framework? Is there a squeeze out procedure for minority hold outs?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The PRC regulatory framework does not impose a minimum acceptance condition requiring the offeror to obtain a specific percentage of acceptances for the tender offer to proceed. Instead, regulations focus on mandatory offer thresholds. If an offeror acquires shares by tender offer, the shares to be acquired shall not be lower than 5% of the target\u2019s issued shares.<\/p>\n<p>There is no statutory squeeze-out mechanism that allows an offeror to compel minority shareholders to sell following a takeover offer. Nonetheless, where a tender offer results in the target no longer meeting listing conditions and delisting follows, remaining shareholders are given a right to sell to the offeror within a reasonable period specified in the tender offer report.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">At what level of acceptance can the bidder (i) pass special resolutions, (ii) de-list the target, (iii) effect any squeeze out, and (iv) cause target to grant upstream guarantees and security in respect of the acquisition financing?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>PRC law does not tie these thresholds to acceptances of a takeover offer. Instead, it relies on corporate voting thresholds and mandatory bid rules. Specifically:<\/p>\n<ol>\n<li>the thresholds depend on the stipulations in the articles of associations;<\/li>\n<li>voluntary delisting requires a special resolution (two-thirds majority) of the shareholder;<\/li>\n<li>statutory squeeze-out is not available; and<\/li>\n<li>subject to financial assistance restrictions, providing guarantee\/security require shareholder approval with voting exclusions for interested parties in accordance the articles of associations, and two-thirds majority will be required if cumulative guarantee\/security amount exceeds 30% of latest audited total assets.<\/li>\n<\/ol>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a requirement for a cash confirmation and how is this provided, by who, and when?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no PRC rule prescribing a particular financing method for a takeover offer. However, the offeror is required to disclose in the offer document both the funding source and the arrangements that support funding certainty. The offeror\u2019s financial adviser must also provide an opinion covering, among others, the source of the offer funds and its legitimacy, and whether the offeror has pledged the acquired shares to banks or other financial institutions to raise the relevant financing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What conditions to completion are permitted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>If the takeover offer is subject to regulatory approvals (e.g., merger control, foreign investment clearance or state-owned assets administration), the offeror must include a note to that effect in the tender offer summary and may only announce the offer after obtaining the relevant approvals. If an approval is denied, the offeror must announce the cancellation of the offer within two business days of receiving the rejection notice and notify the target company. Financing-out conditions are generally not permitted.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">6590<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/125926","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=125926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}