Analysis of key trends in domestic acquisitions

The promotion and implementation of the reform of the mixed ownership economy of state-owned enterprises (SOEs), supply-side structural adjustment and private enterprise market integration cannot be dissociated from acquisitions and restructurings.

The main legal issues that enterprises need to pay attention to in the course of an acquisition or restructuring include: first, procedural legal issues associated with acquisitions and restructurings, e.g. whether the internal decision-making procedure and level are legally compliant, whether the decision-making entity is an authorized entity, whether the contractual parties are qualified, whether the necessary announcement procedure has been carried out, and whether the approvals, recordals or registrations involved in the acquisition or restructuring have been completed. Second, substantive legal issues associated with acquisitions and restructurings, e.g. whether title to the target company’s assets is free and clear, and whether there is any major legal obstacle to the transfer of title to the target company’s equity or assets.

These legal issues are common and frequently encountered in the course of an acquisition or restructuring. If these issues are not solved properly, they may result in the failure of acquisition transactions. In practice, these issues can be resolved through technical means such as legal due diligence, adjustment of the transaction structure and revision of transaction documents.

Li Yanli is a partner at Zhong Lun Law Firm. She can be contacted on +86 10 5957 2059 or by email at liyanli@zhonglun.com