Anti-dilution Issues in Cross-border M&A Transactions

By David Liu and Nelson Zhou
[email protected]      [email protected]

In cross border M&A transactions, anti-dilution issues often arise in negotiations. As target companies may dilute foreign buyers' equity interests by issuing new shares after the transaction, foreign buyers often seek the protection of anti-dilution rights to maintain their proportionate interest in target companies. However, in structuring such anti-dilution arrangements, foreign buyers face various legal constraints under PRC law when they acquire different types of Chinese target companies.