Taking equity in an FIE
Two M&A specialists present their views on issues to consider when making an equity acquisition in a foreign-invested enterprise.
Issue: June 2011
Keywords (click to search):
FIE
equity
Jingcheng Tongda & Neal
Stephenson Harwood
I am interested in purchasing a considerable stake in a friend’s WFOE. Her business has expanded (both in size and profits) substantially over the last two years and I would like to be a part of its continuing growth. I am wary though of laws governing M&As in China as I am not familiar with them.
What issues should I consider when making an equity acquisition in an FIE?
Domestic perspective
When doing deals in any jurisdiction, a thorough due diligence investigation by experienced professionals is indispensable. As we all know that the Chinese legal and economic systems underwent fundamental changes over the past 30 years, and that the road to a successful acquisition is littered with traps and loopholes, it is mandatory to perform a thorough due diligence investigation prior to the negotiation of definitive agreements when acquiring a foreign-invested enterprise (FIE) in China. Before making a...
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