ISSUE 5.10
Top 10 IP firms in China/HK Meet the firms at the vanguard of IP protection 谁是王者？
Investing in Middle East A partnership blooming in spite of global climate 全球经济风暴无碍中国-中东合作
China carbon congress Why carbon trading is more than just hot air 碳交易：不止是概念
CHINA
M&A Why it’s all happening here
兼并收购
并购交易为何盛行 DEALS ROUNDUP LATERAL MOVES IN-HOUSE VIEW REGULATORY UPDATES UK, US REPORTS
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EDITORIAL >>
Market turmoil drives consolidation
S
eptember was a very eventful month in the global market. First, Lehman Brothers filed for bankruptcy, then Merrill Lynch was sold to Bank of America, following AIG’s financial crisis. International law firms and some leading domestic firms are worrying about how their businesses will be affected as Wall Street tumbles. Meanwhile, the world’s legal profession has seen another collapse of a major US firm – 119-year-old Heller Ehrman – after Coudert Brothers closed its doors in 2005. But it is not all bad news. The crash of the investment banks is having a positive effect on the quantum of work available for a number of UK-based firms. Linklaters, in particular, should see a healthy round of billing, given that they are acting on the UK end of the Lehman Brothers debacle. Lovells is also at the sharp end of the latest windfall of work, with the firm acting for the Financial Services Authority over the Lehman collapse. Heller Erhman’s pain of being on the brink of dissolution has also translated into another’s gain, as many rival firms are interested in picking up large parts of Heller’s offices and practice groups. In the Greater China region, Heller has three offices – in Beijing, Shanghai and Hong Kong. The firm’s former Asia regional managing shareholder, Nick Seddon, jumped ship to Eversheds to execute the UK firm’s expansion in Hong Kong. A few weeks before that, Proskauer Rose appointed two partners from Heller’s Beijing office, including Joseph Cha, former head of Beijing office, to secure its longawaited Asia launch. Heller’s dissolution was announced after failing to reach a merger agreement with firms including Baker & McKenzie and Mayer Brown, but its breakup was not so surprising to the US legal community. It was one of three firms on the Am Law 100 in 2007 to report a decrease in revenue, and overseas expansion saw the firm suffering a rising debt burden. Although Heller’s fall will not have meaningful impacts on domestic firms or companies, there is a valuable lesson to be learnt: even a firm with an over-100year-history is not immune to economic trends and, to survive, a law firm must be not only busy, but profitable. Recent years have seen many domestic firms increase the number of their practice areas, sizes and offices. However, to stay competitive and succeed in the modern business climate, firms need to adopt proven business and management techniques to achieve profitability. Although the bottom line remains quality client service, that must now be matched by a business-like approach to management and profitability.
The crash of the investment banks is having a positive effect on the quantum of work available for a number of UK-based firms
2
IN THE FIRST PERSON “If the local company’s shares aren’t already located in an offshore entity, the process is going to be more difficult” Christopher Bickley, partner at Conyers Dill & Pearman’s Hong Kong office, predicts that a change in the rules will have an impact on the ability of local companies to list overseas (p44)
“Opportunities that weren’t previously available overseas have now been thrown up by the downturn. The protectionism previously exercised by the West has also been lowered by the need to seek outside interests. This has led to a very active inbound and outbound M&A flow for the country” Roger Denny, Clifford Chance’s head of M&A – China, says the global downturn has increased local interest in acquisitions and that M&A activity has resumed normal levels after a quiet two-month period before and during the Olympics (p28)
CHINA
ISSUE 5.10
CONTENTS >>
contents
ALB CHINA ISSUE 5.10
28
10 38
COVER STORY 28 M&A Despite the global credit-crunch crisis, China’s M&A market has continued its upward surge and record deal volumes are turning investors’ eyes towards the nation
ANALYSIS
REGULARS
UPDATES
10 CDM in China An overview of CDM in China and the China Carbon Congress 2008 – the first large international carbon market conference focusing on China
6
20 International tax Azure Tax
13
China’s investment into Middle East firms State-owned enterprises and local companies in China are stepping up their expansion into the Middle East as both nations see the benefits of partnership
FEATURES 36 Post-event coverage: ALB In-house Legal Summit Hong Kong 2008 A comprehensive summary of issues discussed by industry professionals at the annual gathering 38 Top 10 IP firms in China and Hong Kong ALB China chronicles the rise of China in the IP stakes and identifies some of the best practitioners 44 Offshore financial centres Global financial turmoil has not stifled the desire for emerging investment opportunities, and boutique offshore law firms reap the benefits
4
44
17
NEWS • King & Wood takes on New York • Beijing Bairui sets up in Shenzhen • CSR gains momentum in corporations • Pillsbury expands China operations through Thelen raid • Ministry of Railways issuance of corporate bonds • Telefonica acquires stake in China Netcom • China Merchants Securities launches IPO • Monster Worldwide takes over ChinaHR Holdings Ltd • Credit Suisse – New City Corporation refinancing UK report
21 Insurance Grandall Legal Group (Beijing) 22 Shanghai Llinks Law Offices 23 Singapore Loo & partners 24 Regulatory Paul Weiss 25 Regulatory Tahota
PROFILES
19 US report
15 Lifang & Partners
52 Sign off
32 Jun He 46 Harneys
ALB ISSUE 5.10
NEWS | deals >>
Client: AllianceBernstein
deals in brief
Lead lawyers: Raymond Li, Phoebus Chu, and Benny Pang
• Spanish telco Telefonica acquired a 5% stake in China Netcom through Alliance Bernstein
Firm: Commerce & Finance Client: Enric Energy Equipment Holdings Lead lawyers: Xiaojing Han and Andrew Ning Cherry Chan,
• The deal furthers Clifford Chance Telefonica's overall stake, which is now 9.9% and will a give it a leading stake in the imminent merger of China Netcom and China Unicom
| CHINA | ► ENRIC ENERGY EQUIPMENT HOLDINGS LTD–CHINA INTERNATIONAL MARINE CONTAINERS (GROUP) CO ACQUISITION US$1.2bn
| CHINA | ► MINISTRY OF RAILWAYS ISSUANCE OF CORPORATE BONDS US$2.9bn Firm: Xinhe Law Firm Client: Ministry of Railways of China Lead lawyers: Xie Henghua, Wen Guanyin Firm: Zhonglun Client: Underwriters Lead lawyers: Ye Beicheng, Zheng Xiaojin • China's Ministry of Railways, which acts as a corporation in the debt market, has issued RMB20bn (US$2.9bn) of corporate bonds. The ministry has applied to the National Development and Reform Commission to issue RMB80bn of bonds this year, with the first issue comprising a RMB15bn 10-year tranche and a RMB5bn 15-year tranche
| CHINA | ► TELEFONICA–CHINA NETCOM STAKE ACQUISITION US$1.6bn Firm: Clifford Chance Client: Telefonica Lead lawyer: Cherry Chan Firm: Freshfields Bruckhaus Deringer
Firm: Morrison & Foerster Client: Deutsche Bank and China Merchant Securities (HK) Lead lawyers: Xiaohu Ma, Tien-Yo Chao and Raymond Oh Firm: Jun He Client: Deutsche Bank and China Merchant Securities (HK) Lead lawyer: Teresa De Firm: Paul Hastings Client: Enric Energy Equipment Holdings
• Hong Kong Stock Exchange-listed Enric Energy Equipment Holdings Ltd. is making an US$1.2bn acquisition from its major shareholder, China International Marine Containers (Group) Co. Ltd. and certain European shareholders, of their entire interests in certain tank and storage equipment businesses based in China and Europe. Deutsche Bank and China Merchant Securities (HK) are joint financial advisors to Enric • The transaction will be considered a reverse takeover of a Hong Kong listed entity and will involve a new deemed listing application under the Hong Kong Stock Exchange rules
| CHINA | ► CHINA MERCHANTS SECURITIES IPO US$735m Firm: Grandall Legal Group Client: China Merchants Securities Lead lawyers: Zhang Jingqian, Wang Xiaodong and Wang Caizhang
“The deal was complex, as it comprised two tranches of shares, the acquisition of the second tranche dependant on the successful completion of China Unicom” CHERRY CHAN, CLIFFORD CHANCE
• The railways ministry sold RMB60bn of bonds in 2007, the single largest approval obtained for corporate bond issuance so far • Underwriters for the bond issuance included CITIC Securities, BOC International, China International Capital Corporation, China Jianyin Investment Securities, Guotai Junan Securities and Essence Securities
6
ISSUE 5.10
NEWS | deals >>
• China Merchants Securities has been approved to sell 358.55 million new A shares in an initial public offering (IPO), equivalent to 10% of its total share capital • It is expected to raise US$735m from the IPO
| CHINA | ► CHINA MEDICAL TECHNOLOGIES INC–MOLECULAR DIAGNOSTICS TECHNOLOGIES LIMITED ACQUISITION US$345m Firm: Morrison & Foerster Client: China Medical Technologies Inc Lead lawyer: Paul Boltz Firm: Global Law Offices Lead lawyer: Hai Huang
Paul Boltz, Morrison & Foerster
► YOUR MONTH AT A GLANCE Firm
Jurisdiction
Deal name
Allen & Overy
China
Bank of China–La Compagnie Financiere Edmond de Rothschild stake acquisition
342
Appleby
Hong Kong
Swire Pacific Limited medium note term programme
3,000
Baker & McKenzie
China
Monster Worldwide–ChinaHR Holdings Ltd Acquisition
Cassels Brock & Blackwell
China/Canada
China Petroleum & Chemical–Tanganyika Oil acquisition
Cleary Gottlieb Steen & Hamilton
Hong Kong
Shanda bond offering and share purchase
Clifford Chance
China/Spain
Telefonica–China Netcom stake acquisition
Davis Polk & Wardwell
Hong Kong
Shanda bond offering and share purchase
175
Finance
Freshfields Bruckhaus Deringer
China
Bank of China–La Compagnie Financiere Edmond de Rothschild stake acquisition
342
M&A
China
AllianceBernstein–China Netcom stake disposal
Hong Kong
PetroChina–China National Petroleum stake acquisition
972
Equity market, M&A
Hong Kong/Canada
Sky Gain Holdings–Dynasty Gaming reverse takeover
105
M&A
China
Zhuzhou CSR Times Electric
15
Equity, M&A
Mallesons Stephen Jaques
China/Australia
Hunan Valin Steel Tube & Wire Joint Stock–Golden West Resources investment
26
M&A, equity market, FDI
Morrison & Foerster
China
Enric Energy Equipment Holdings Ltd–China International Marine Containers (Group) Co Acquisition
China
Slaughter and May
Firm: K&L Gates Client: Molecular Diagnostics Technologies Ltd Lead lawyer: Navin Aggarwal • Beijing-based China Medical Technologies Inc (CMED) develops, manufactures and markets advanced in-vitro diagnostic products announce acquisition agreement with Molecular Diagnostics Technologies Ltd to purchase its biosensor system for the detection of human papillomavirus which causes cervical cancer and sexually transmitted disorders • CMED will pay US$345m in cash for the acquisition • Molecular Diagnostics Technologies Ltd is a privately held Hong Kong and PRC based company. No regulatory approvals were needed for the acquisition
| CHINA | ► MONSTER WORLDWIDE– CHINAHR HOLDINGS LTD ACQUISITION US$174m Firm: Baker & McKenzie Client: Monster Worldwide Leading lawyer: Howard Wu Firm: Morrison & Foerster Client: ChinaHR Holdings www.legalbusinessonline.com
Value (US$m)
Deal type M&A
Finance
174
M&A
1,800
M&A
175
1,600
Undisclosed
Finance
Equity market, M&A
Finance
1,200
M&A
China Medical Technologies Inc–Molecular Diagnostics Technologies Limited Acquisition
345
M&A
Hong Kong
HAECO–Sichuan Airlines JV
146
Finance
Stikeman Elliott
China/Canada
China Petroleum & Chemical–Tanganyika Oil acquisition
1,800
M&A
Vinson & Elkins
China/Canada
China Petroleum & Chemical–Tanganyika Oil acquisition
1,800
M&A
Weiheng
China
Huaneng New Energy’s CDM Projects
Xinhe
China
Ministry of Railways bonds issuance
Yulchon
China
SiliconFile Technologies–Hynix Semiconductor share sale
Zhonglun
China
Ministry of Railways bonds issuance
2,900
Debt market
Stamford Law
Singapore
Mitsubishi UFJ Financial Group Acquisition of 21% equity stake in Morgan Stanley Financial Group
9,000
M&A
Undisclosed 2,900 20
Carbon trading Debt market Finance
Does your firm’s deal information appear in this table? Please contact
alb@keymedia.com.au
61 2 8437 4700
7
NEWS | deals >>
Leading lawyers: Steve Toronto and Paul Boltz Firm: Global Law Office Client: ChinaHR Holdings Leading lawyer: George Niu
a JV to expand the BHA Aero Composites Parts Co • The JV project, BHA, is located in Tianjin and specialises in producing structures and interior parts for the aerospace industry Steve Toronto, Morrison & Foerster
• NASDAQ-listed Monster Worldwide paid US$174m in cash for the remaining 55% stake in ChinaHR Holdings, the leading online recruiting and employment operator in the republic • China represents one of the fastest growing recruitment markets in the world, with an estimated 6.4 million new jobs created in the first half of 2008. To support its nationwide recruiting portal, ChinaHR operates 12 offices across the country’s major markets, including Beijing, Shanghai, Guangzhou and Shenzhen
► CREDIT SUISSE–NEW CITY CORPORATION REFINANCING US$120m
US$26m Firm: Mallesons Stephen Jaques Client: Hunan Valin Steel Tube & Wire Joint Stock Lead lawyers: David Olsson, David Perks, John Shi, Louis Chiam
David Olsson, Mallesons
Firm: Lavan Legal Client: Golden West Resources
“The deal was another example of a major Chinese company entering into a mutually beneficial relationship with an Australian mining company to gain access to iron ore reserves, and at the same time give the Australian company additional capital to enable it to expand its operations” DAVID OLSSON, MALLESONS STEPHEN JAQUES
► BANK OF CHINA–LA COMPAGNIE FINANCIERE EDMOND DE ROTHSCHILD STAKE ACQUISITION US$342m Firm: Allen & Overy Client: Bank of China Lead lawyers: Michael Liu, Cathy Yeung Firm: Freshfields Bruckhaus Deringer Client: La Compagnie Financiere Edmond de Rothschild Lead lawyer: Teresa Ko • Bank of China acquired a 20% stake in La Compagnie Financiere Edmond de Rothschild • The French fund management company and Bank of China will establish an asset management and private banking venture, to sell Rothchild’s products to the Chinese market though the Bank
| CHINA/CANADA | ► CHINA PETROLEUM & CHEMICAL CORP– TANGANYIKA OIL ACQUISITION Firm: Cassels Brock & Blackwell Client: Tanganyika Oil Co
Firm: Zhonglun Law Firm and Troutman Sanders Client: New City Corporation • King & Wood represented Credit Suisse in New City Corporation's refinancing of a 2.1m square metre facility in Shanghai
| CHINA | ► BOEING–CHINA AVIATION INDUSTRY CORPORATION JV US$21m Firm: Mallesons Stephen Jaques Client: Boeing
Firm: Stikeman Elliott, Vinson & Elkins Client: China Petroleum & Chemical Corporation • Tanganyika, a Canada-based petroleum company, definitively agreed to be acquired by China Petroleum & Chemical Corporation, (CPCC) an integrated energy and chemical company • Both boards approved the merger at a price of $30.74 a share, offering a premium of 21.1%. Tanganyika Oil’s financial advisor is Scotia Capital and CPCC’s is Lehman Brothers
| CHINA/LUXEMBOURG |
Lead lawyer: John Shi
8
► HUNAN VALIN STEEL TUBE & WIRE JOINT STOCK–GOLDEN WEST RESOURCES INVESTMENT
| CHINA/FRANCE |
US$1.8bn
Firm: King & Wood Client: Credit Suisse Lead lawyer: Jack Wang
• Boeing and China Aviation Industry Corporation entered into
• Deals adds to Mallesons’ portfolio advising Chinese steel companies, also advising Sinosteel in acquisition of Midwest
| CHINA/AUSTRALIA |
• Hunan Valin will acquire an 11.4% stake in iron ore explorer Golden West Resources
| CHINA |
• The transaction is under review by Australia's Foreign Investment Review Board and the Hunan Provincial Government
John Shi, Mallesons
► CHINA INTERNATIONAL MARINE CONTAINERS– TGE GAS ACQUISITION US$30m Firm: DLA Piper ISSUE 5.10
NEWS | deals >>
Client: CMIC Lead lawyer: Tejinder Mahil Firm: Simmons and Simmons Cologne office Client: TGE GAS Lead lawyer: Ulrich Brauer • China International Marine Containers (CIMC) acquired 60% of shares in TGE Gas Investment SA (TGE SA), giving CIMC access to TGE Gas Engineering, a wholly owned subsidiary of TGE SA • DLA Piper prepared and executed the due diligence, drafted contracts and advised on the upcoming restructuring measures
| HONG KONG | ► SHANDA BOND OFFERING AND SHARE PURCHASE
raised just under US$1.5bn in a dual IPO in Hong Kong and Shanghai • CSR intends to use the net proceeds to enhance production equipment and facilities, expand capacity and make acquisitions overseas • GE Equity, GE's global private equity team, invested in connection with the IPO
“GE is an important client of the firm and we are delighted to have had the opportunity to advise GE Equity on this transaction” MAURICE HOO, PAUL HASTINGS
US$175m Firm: Cleary Gottlieb Steen & Hamilton Client: Goldman Sachs, JP Morgan Securities Lead lawyers: David W Hirsch, Robert K Williams Firm: David Polk & Wardwell Client: Shanda Interactive Lead lawyer: James C Lin • Davis Polk & Wardwell advised Shanda Interactive Entertainment Limited on its Rule 144A offering • Goldman Sachs and JP Morgan Securities were initial purchasers of the notes • In connection with the offering, Shanda also entered into a US$175m accelerated share repurchase agreement with Goldman, Sachs & Co
| HONG KONG | ► CHINA SOUTHERN RAILROAD IPO US$533m
| ASIA/SINGAPORE | ► MITSUBISHI UFJ FINANCIAL GROUP–MORGAN STANLEY ACQUISITION US$9bn Firm: Stamford Law Client: Mitsubishi UFJ Financial Group Lead lawyers: Lee Suet Fern and Elizabeth Kong • Mitsubishi UFJ Financial Group acquisition of a 21% equity stake in Morgan Stanley on a fully diluted basis • Deal comprises of an acquisition of 9.9% of Morgan Stanley's common stock on a primary basis at a price of US$25.25 per share for a total of US$3bn, and an acquisition of US$6bn of perpetual noncumulative convertible preferred stock with a 10% dividend and a conversion price of US$31.25 per share • Stamford Law advised on antitrust and regulatory issues in Singapore
Firm: Paul, Hastings, Janofsky & Walker Client: China Southern Railroad Lead lawyers: Maurice Hoo, Connie Cheung Firm: Herbert Smith Client: Underwriters Lead lawyers: John Moore, Tom Chau • China's largest train manufacturer, China Southern Railroad (CSR) www.legalbusinessonline.com
9
NEWS | analysis >>
► CARBON TRADING – TERMS DEFINED
ANALYSIS
Carbon trading warms up
O
10
n a late summer day in Sanya, hundreds of people gathered together at a Sheraton resort, not to enjoy a tropical holiday but to share their interest and expertise in carbon trading. The people were the delegates and guest speakers attending the threeday China Carbon Congress 2008, the first large international carbon market conference focusing on China. The event provided an opportunity for domestic lawyers to learn from and network with leading international carbon traders, brokers, funds managers, CDM project developers and legal experts in environmental law, climate change and emissions trading. “China is the world’s second largest emitter of greenhouse gas, so there is tremendous potential in its carbon trading market,” said Wang Jihong, partner of V&T Law Firm, who attended the conference. “The conference is a great platform to get information from and to establish relationships with sellers, buyers and international service providers. It motivates us to start up our carbon trading practice.” Participants from many different countries and sectors met, exchanged their experiences and knowledge about the market, and explored future opportunities for cooperation.
More than just hot air Many CDM projects and carbon trades have taken place in China since 2005, but recent developments in the legal framework and marketplace may turn a new page in China’s involvement in mitigating climate change. In addition to the promulgation of the Circular Economy Law and the establishment of environment and energy exchanges in Beijing and Shanghai, the newly unveiled Tianjin Climate Exchange is another recent development. The most important feature of the Tianjin Climate Exchange, co-founded by the Chicago Climate Exchange (CCX), is that it offers auctions of registered and issued certified emission reductions (CERs). Launched in 2003, CCX is a pioneering global platform for carbon trading and is the world’s only active voluntary, legally binding integrated
While terms such as ‘carbon funds’ and ‘CDMs’ might sound confusing, they’re part of the new vernacular of carbon trading, which is increasingly in vogue. Carbon funds: The World Bank manages nine carbon funds and facilities comprised of public and private participants. These funds are public or publicprivate partnerships managed by the World Bank as trustee. They operate much like closed-end mutual funds. Carbon funds purchase greenhouse gas emission reductions from projects in the developing world or in countries with economies in transition and pay upon delivery of those emission reductions. The emission reductions can be used against obligations under the Kyoto Protocol or for other regulated or voluntary greenhouse gas emission reduction regimes. All emission reduction credits are purchased on behalf of the public and private sector participants in the funds. Certified emission reductions (CERs): A unit of greenhouse gas emission reductions issued pursuant to the Clean Development Mechanism of the Kyoto Protocol, measured in metric tons of carbon dioxide equivalent. Clean Development Mechanism (CDM): The mechanism provided by Article 12 of the Kyoto Protocol, designed to assist developing countries in achieving sustainable development by permitting industrialized countries to finance projects for reducing greenhouse gas emission in developing countries and receive credit for doing so. Emission Reductions Purchase Agreement (ERPA): An agreement that governs the purchase and sale of emission reductions. Source: World Bank Carbon Finance Unit
trading system aimed at reducing emissions of all six major greenhouse gases. The Tianjin Climate Exchange is set to become a pioneer in emissions trading in China. Local law firms agree that the establishment of the exchange will be beneficial to local sellers as they will have fair access to pricing information in the international emissions trading market, which will be helpful to many domestic enterprises aiming to meet voluntary emission reduction targets. Firms are also finding the field to be a lucrative source of income. “Many clients have realised that emissions trading is an opportunity
“It’s a new industry, a new market, and a new opportunity for lawyers. We expect to see a large volume of emissions trading work in the long term” LIU WEI, GRANDALL LEGAL GROUP ISSUE 5.10
NEWS | analysis >>
World’s largest CDM markets ► BY NUMBER OF REGISTERED CDM PROJECTS 289
358
106 269
145
► BY EXPECTED ANNUAL CERS FROM REGISTERED CDM PROJECTS Brazil – 12.43% China – 23.05% India – 30.68% Mexico – 9.08% Others – 24.76% Total : 1167
Brazil – 8.70% China – 52.03% India – 13.93% Mexico – 3.32% Republic of Korea – 6.54% Others – 15.48%
Source: United Nations Framework Convention on Climate Change Figures current as of 22 September 2008
to generate income, but they need to be more familiar with how it works, potential risks and the international rules,” said Liu Wei, executive partner of Grandall Legal Group in Shanghai. “And there’s a lot of major work yet to de done in terms of designing and implementing the domestic emission trading scheme.” Liu and a team of Grandall lawyers have participated in a number of environmental projects, including the high-profile CDM agreement between Shandong Dongyue and Nippon Steel and Mitsubishi. Now Liu is actively assisting the Shanghai Environment Exchange to work out many issues ► EXAMPLES OF CDM PROJECTS IN CHINA Project name
Type Project location Project development status Estimated annual reductions Foreign partners
Project developer Project owner Project name
Type Project location Investment value Project development status Estimated annual reductions Foreign partners
Project developer
Project owner
Shandong Dongyue HFC23 Decomposition project GHGs Reduction HFC-23 Decomposition Project Shandong Received CERs Issuance 11,489,090 CERs (tco2e) 10,110,000 (tco2e) Mitsubishi Corporation, Nippon Steel Corporation and Natsource Europe Limited Tsinghua University Shandong Dongyue Chemical Co., Ltd BFG-fired Power Generation Project in Baosteel Co Ltd. Converter Gas Recovery and Utilization Project Shanghai Euro60m Approved 1,401,589 (tco2e) Arreon Carbon UK Limited (UK) and Credit Suisse International (UK) Arreon Carbon UK Limited (UK) and Credit Suisse International (UK) Baosteel Co. Ltd. Source: www.ccchina.gov.cn
www.legalbusinessonline.com
related to exchange environmentrelated technologies and trade emission reductions. “It’s a new industry, a new market, and a new opportunity for lawyers. We expect to see a large volume of emissions trading work in the long term,” said Liu. Although a number of local firms, including AllBright, Grandall, Huatang and East Associates have been involved in CDM and carbon trading to various degrees, they have yet to set up a stand-alone climate change and emissions trading practice. As most of the carbon credit buyers are from Europe, and because most of the transactions are structured within the EU system, international lawyers have a more important role to play than their local counterparts. Consequently the emissions trading market in China is currently dominated by international firms.
Post-2012 issues Carbon trading in China has grown tremendously over the past few years, and the CDM regime presents new business opportunities for many industries such as energy and mining, steel and cement. According to World Bank statistics, the world market for trading greenhouse gas emissions doubled last year to about US$70bn, and the 269 projects hosted in China are expected to supply over 50% of world’s CERs under the mechanism. China, undoubtedly, has a significant role to play in carbon trading. However, post-2012 issues may create some uncertainty about whether the market’s huge potential can be brought into play. “The prospects for China to be a continuing source of CDM and carbon trading projects remain high. The viability of what types of projects are
carried out in China will depend very much on what happens after 2012,” said Beatrice Schaffrath, partner at Baker & McKenzie in Beijing and a member of the firm’s global environment and climate change practice groups. The firm is one of the leading players in the global carbon and climate change sector and has been busy for many years with carbon transactions. “There are still some issues to be resolved on how the regime agreed under the Kyoto Protocol continues after 2012, and whether there are new structures, considerations or new types of projects that could be approved and added to the roster.” said Schaffrath. Nevertheless, many of her clients are well advanced in their thinking and her firm is actively helping clients prepare for the road ahead. Beatrice pointed out that a number of players are already looking to diversify their interests in this area in anticipation of some uncertainty that might be generated around and after 2012 and that her firm’s practice is not completely tied to the 2012 issues. “There are a range of possibilities regardless of what happens in 2012, as the Chinese government has made public and open recognition of the need for further development in environmentally friendly and clean technologies. So investors in this industry are incentivised to seek other types of projects to invest in if there’s uncertainty under the CDM regime,” Schaffrath said. ALB
碳交易升温 在
三亚的一个夏末之日，几百位来宾云集喜 来登酒店，此行并非为了度假，而是来交 流他们对碳交易的兴趣和专业经验。 这些人就是参加为期三天的“2008年中国碳市场 国际峰会”的代表和嘉宾讲者，这是第一次以中国
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NEWS | analysis >>
“There are a range of possibilities regardless of what happens in 2012, as the Chinese government has made public and open recognition of the need for further development in environmentally friendly and clean technologies” BEATRICE SCHAFFRATH, BAKER & MCKENZIE 为焦点的大型国际碳市场会议。此次活动让国内 的律师们有机会在家门口结交知名的国际碳交易 商、经纪人、基金经理、CDM项目开发者，以 及环境法规、气候变化和排放交易方面的法律专 家，并向他们讨教经验。 出席会议的万商天勤律师事务所合伙人王霁虹 表示：“中国是世界上第二大温室气体排放国， 国内的碳交易市场拥有巨大潜力。这次会议提供 了一个绝佳的平台，可以从卖方、买方和国际服 务提供商那里获取信息，并与他们建立关系，激 发我们着手开办碳交易业务。” 与王律师一样，来自不同国家和领域的与会者 们这里会面，相互交流市场经验与知识，寻求未 来合作的机遇。
碳交易：不止是概念
自从2005年以来，中国已经有了许多CDM项目和碳 交易，而近期随着法规制度和市场体系的发展，中 国参与缓解气候变化的进程掀开了新篇章。 继《循环经济法》颁布和京沪两地设立环境能 源交易所后，日前揭牌的天津排放权交易所是近 期发展中又一个令人瞩目的亮点。 天津排放权交易所由美国芝加哥气候交易所 （CCX）等多方共同设立，主要为已登记和颁发 的经核证减排量（CER）提供拍卖服务。 芝加哥气候交易所建于2003年，是全球领先的 气候交易平台，也是世界唯一的自愿性参与所有 六种主要温室气体减排量交易并且具有法律约束 力的综合交易系统。因此，天津排放权交易所也 将成为中国排放量交易的先驱。 国内律师事务所都认同该交易所的成立将惠及 国内的卖方，因为他们将能准确掌握国际排放量 交易市场的价格信息，同时也能帮助许多国内企 业实现自愿减排的目标。这些律师事务所也日益 意识到这是一个丰厚的收入来源。 上海国浩律师集团事务所的执行合伙人刘维表 示：“许多客户都意识到排放交易是一个创收机 遇，但他们还需深入了解其运作机制、潜在风险 和国际规则。国内的排放交易方案在设计和实施 上还有诸多重要的工作要做。” 刘律师率领国浩律师团队参与了包括山东东岳与 日本新日铁和三菱公司之间的CDM协议在内的多个 环境项目。目前，他正协助上海环境交易所处理交 易环境技术和减排量交易方面的诸多问题。 刘律师表示：“对律师来说，这是一个新的行 业、新的市场和新的机遇。长期来看，我们预料 将会有大量的排放交易业务。”
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尽管国内有众多律师事务所如锦天成、国浩、华 堂、天达等均已不同程度的涉足CDM和碳交易，但 却尚未建立单独的气候交易和排放量交易业务。由 于大部分碳信用额买家都来自欧洲，而大多数交易 的结构又是根据欧盟制度设计的，所以国际律师发 挥的作用远比中国同行重要，目前主导中国排放量 交易市场的还是国际律师事务所。
2012年后的问题
中国的碳交易在过去几年迅速增长，CDM制度给能 源、采矿、钢铁、水泥等众多行业带来了新商机。 据世界银行统计，世界市场的温室气体排放量 交易比去年翻了一番，达到约700亿美元，已有 269个项目在中国安家落户，预计将给全球提供 一半以上的经核证减排量（CER）。 毫无疑问，中国在碳交易中扮演着重要角色。 然而，2012年后的问题却让人怀疑这个市场的巨 大潜力能否得到释放。 Baker & McKenzie驻北京的合伙人Beatrice Schaffrath表示：“中国仍有光明的前景来为CDM
和碳交易项目注入源源不断的动力。至于在中 国部署的各类项目的可行性，很大程度上要取 决于2012年以后的势态。” Schaffrath是Baker & McKenzie全球环境和气候变化业务团队的成 员。Baker & McKenzie是全球碳交易和气候变化 领域的领导者之一，已从事多年的碳交易。 Schaffrath表示：“《京都议定书》议定的制度 在2012年后如何延续，是否会有新的结构、考虑 因素或新的项目类型被批准并载入协议，在这些 方面仍有一些问题需要解决。” 不管怎样，Schaffrath的许多客户都把眼光放得 更长远，而她的事务所也正积极帮助客户筹划未 来。她说，有鉴于2012年前后的不确定因素，许 多客户都意识到在这个领域要做到多管齐下，而 事务所也并没有整天忙于2012年的问题。 Schaffrath表示：“不管2012年如何，一切皆有 可能发生，因为中国政府已经公开承认了进一步 发展环保清洁技术的必要性。所以，纵使CDM 制度前景未明，业内投资者也大可物色其他类型 的项目进行投资。”
ISSUE 5.10
NEWS | analysis >>
ANALYSIS
Rising dragon embraces allies in Middle East
S
tate-owned enterprises (SOEs) as well as local companies have been making strategic forays into the Middle East, as the country searches for resources in a region where economic power is being consolidated. The good news for lawyers is that local and international firms may be able to look forward to more and higher value deals in a variety of practice areas.
Satisfying mutual needs The growing friendship between China and the Middle East is evolving because of mutual needs. As the country searches for stable and secure supplies of energy to maintain its economy, Middle East sovereign wealth funds are looking for investment opportunities for their petrodollars. The country is the world's second biggest consumer of crude oil, after the US, and this fact alone provides a major platform for sizeable trade with the Gulf. The Gulf and China have several things in common. First, a civil law legal system. Secondly, both regions are flush with excess liquidity. Thirdly, certain economic sectors are complementary.
According to the UAE’s Minister for Economy and Planning, Sheikha Lubna Al Qasimi, the Gulf nations are anticipating a 20% spike in trade with the country this year, with the total to pass US$17bn. Initiatives to invest in the Middle East were largely spurred by the country’s need to secure raw materials and natural resources to sustain its economic growth. Now many non-SOEs have also taken an interest in the region as it is another big export market to be tapped. Both countries are succeeding in complementary sectors of their economies. For example, the country’s ambition to move up the value chain by producing high-end products such as cranes meets the demand for construction machinery needed by the UAE to develop its infrastructure. This demand has certainly helped drive up the demand for the country’s machines and promoted fast export growth for the crane market. For the first half of this year, China’s crane industry recorded sales of 13,250 units, up 32.41% year-on-year, while the sales of engineering cranes reached RMB15.2bn, an increase of 93.25% over a year ago.
► JORDAN
► IRAN
What: US$30m joint venture between China’s Hebei Zhongxing Automobile and Jordan’s Ayass Motors When: 2007
What: US$2bn When: 2007
Does this mean that local and international firms may be able to look forward to more and higher value deals in a variety of practice areas? “This will happen only for the big deals, and more for those that are inbound rather than outbound. This is because many local businessmen are making the personal connections themselves, and may not involve local lawyers when they invest in the Middle East. But when the deal is inbound, local lawyers are a must,” said Gavin Wang, a banking and finance and M&A partner with Run Ming Law Office. He said the number of large deals is increasing. In just one year, the firm has handled three major deals from the Middle East compared to previously, when they were “few and far in between”. One recent aviationrelated transaction handled by Wang was worth US$80m. The bonds between the Mainland and the Middle East will continue to solidify amidst the global financial crisis, which has deemed Western markets risky targets for investment. The current economic downturns in the US and Europe have affected manufacturing sectors as they suffer
► SAUDI ARABIA What: Sinopec, ExxonMobil and Saudi Aramco seal a US$5bn joint venture to refine Saudi heavy crude in Fujian When: 2005
► QATAR ► UAE ► IRAQ What: US$3bn oil service contract deal between the Chinese National Petroleum Company and Northern Oil Company When: 2008
www.legalbusinessonline.com
What: First Eastern Investment Group and Dubai International Capital to launch of a fund that will invest in Chinese companies and list them on Dubai securities markets When: 2008
What: CNOOC inked deal with Qatargas to import two million tons of LNG per year from Qatargas. PetroChina signed a deal in Beijing with Qatargas and Shell under which the firm will buy three million tonnes of Qatari LNG per year for 25 years When: 2008
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NEWS | analysis >>
► CHINA STRIKES ITS FIRST IRAQI DEAL Where Westerners did not tread on the basis of political prejudice, this country has boldly filled the void. Take for example the recent US$3bn oil service contract deal with Iraq. The Iraqi cabinet approved the contract to develop and produce the al-Adrab oil field between the Northern Oil Company and the Chinese National Petroleum Company (CNPC) in a deal that was originally in 1997. The Iraqi government expects to earn about US$55bn over the next 20 years from deal. The revenue estimate is based on an average price of oil of US$100 per barrel and a production cost of about US$4 per barrel. This is the first major oil contract with a foreign firm for Iraq and potentially heralds the movement of other energy contracts that have been pending in the Middle East since 2002. Thomson Reuters figures reveal that CNPC wanted to acquire a US$50m stake in Oman’s Mazoon Petrogas. In Iran, oil giant Sinopec Group signed a gas deal worth US$2bn where Iran would be paid as much as US$100bn over 25 years for liquefied natural gas and oil and a 51% stake in Iran’s Yadavaran oil fields.
weakened demand for exports to the Western regions. But with Hong Kong positioning itself as one of the Mainland’s economic gateways and with developing Islamic capital markets and structured finance for investment and deals, the two-way flow is likely to strengthen. This may be the catalyst behind the approach by several international firms to bolster a local presence here and in the Middle East. Last year, the China Investment Corporation sovereign wealth fund, a fi rst for the country, was established and funded with an initial capital injection of US$200bn. The current crisis in the market could see deeper levels of cooperation between China and the Middle East, especially while these two areas still retain a high level of liquidity. An indication of this trend is in the
figures: the volume of trade between the country and UAE alone rose 42% last year to US$20.4bn.
Two-way traffic The flow is going both ways. Recently, the Abu Dhabi Investment House announced a US$1.5bn private equity fund to invest in real estate and manufacturing here with local partners. China Harbour Engineering picked up a US$40.8m contract to develop Ajman Marina, a huge residential and commercial development on the coast of Ajman, the smallest of the seven Emirates. Iran, for example, is tapping the country’s experience in heavy crude oil extraction and local companies are getting contracts to build dams and shipyards and develop ports and airports there. In the financial markets, the Hang Seng launched an Islamic China Offshore Index Fund off the Dow Jones Islamic Market Index in November last year to tap and draw Gulf wealth through Hong Kong. In 2005, the Kuwait China Investment Co set up the Kuwait China Investment Company to facilitate capital flows between the Middle East and Asia, with a particular focus on China. This was later followed by Jade Value Partners, a private equity fund that offer investors exposure to private equity funds operating in the Mainland. “There are certainly more and more interactions both ways. Chinese investors are looking to the Middle East just as Middle Eastern sovereign wealth funds are looking to Asia. Hong Kong is establishing Islamic financial institutions to manage Shariacompliant financial products. Clearly this is an indication of where the money is moving,” Said Nick Bryans, Ashurst’s managing partner in Dubai.
Arbitration to gain prominence Deals will be struck, but some may just fall through. James Kwan, an energy and infrastructure partner at Simmons & Simmons who specialises in arbitration, sees precious opportunities in the synergy that exists between Asia (particularly China and Hong Kong) and the Middle East. “There is a lot of work here in Dubai as more investments are flowing between Asia and the Middle East. Dubai is setting the pace for arbitration in the Middle East, and this is crucial as it instills confidence in investors – that they can resolve any dispute that arises in a fair and impartial manner,” said Kwan. Kwan represents the emerging hybrid of lawyers who bridge Asia (particularly China and Hong Kong) and the Middle East. He is on the arbitration panel of the China International Economic and Trade Arbitration Commission and an honorary member of the Dubai International Arbitration Centre. “Both China and the Middle East have similar legal structures as they have civil law courts and relatively young jurisdictions. The arbitration centres in these two regions are constantly making improvements in legislation to support their economic growth,” said Kwan. By all accounts, the activity is shifting to the Middle East and China. Both saw a record surge of M&A activity over the last few months. A decade or two ago, these connections might have seemed unlikely. These days, the attraction is strongly embedded by supply and demand, making it a union that is likely to grow even stronger in view of economic imperatives and the geopolitical positioning vis-à-vis the republic’s emergence as a peaceful superpower. ALB
巨龙崛起结盟中东 巨龙崛起结 盟中东 满足相互需要
友
谊的加深源自相互的需要：中国需要稳定可 靠的能源供应以维持经济，而中东的主权财 富基金则要为手中的“石油美元”物色投资机遇。 中国是仅次于美国的全球第二大原油消费国，
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单凭这一点就足以作为与海湾国家进行大规模贸 易的主要理由。 海湾国家与中国有几个相同之处，一是同属民 法法系，二是都有流动资金过剩，三是经济部门 互补，因此可以满足相互需要。
阿联酋经济部长Sheikha Lubna Al Qasimi表 示，海湾国家预料今年与中国的贸易量可望增长 20%，总额突破170亿美元。中国之所以大力投 资中东，主要是因为需要可靠的原材料和自然资 源来维持国内经济增长。如今有不少非国有企业 ISSUE 5.10
NEWS | analysis >>
也对这个地区产生兴趣，因为这是又一个有待发 掘的庞大出口市场。 双方在优势互补的经济领域表现出色。例如， 中国希望向价值链的上游发展，生产像起重机这 样的高端产品，而这刚好契合阿联酋发展基础设 施形成的对建筑机械的大量需求。这无疑有助于 提高中国机械的需求量，促进起重机出口市场的 快速增长。今年上半年，中国起重机行业的销量 达到13,250台，较上年增长32.41%，而工程起 重机的销售额达到人民币152亿元，较上年增长 93.25%。 这是否意味着国内和国际律师事务所可以在广 泛的执业领域寻觅更多高价值的业务？润明律 师事务所的银行与融资及并购业务合伙人王罡表 示：“只有大型交易才有这样的机会，这当中更 多的是进口贸易，而非出口贸易，因为国内许多 商人在中东投资时都是靠自己联系业务，不会聘 请国内律师，但是在进口贸易中，国内律师是必 不可少的。” 他说这类业务正在增加。仅在一年之中，该事 务所就接手了三宗来自中东的重大交易，这在以 前是“十分罕见”的。王罡办理的一项航空类交易， 金额就达8,000万美元。 眼下美国的这场银行业危机，让西方市场成为 人们眼中的高风险投资对象，所以中国与中东的 关系将会继续巩固。席卷欧美的经济严寒削弱了
西方的进口需求，使制造业遭受打击。而香港将 自身定位为中国内地的经济门户之一，同时大力 发展伊斯兰资本市场和结构性融资以促进投资和 贸易，预料这将进一步促进双向往来。 这将促使众多企业展开国际扩张，以巩固在本 地和中东的业务。去年9月成立的中国投资有限 责任公司是中国第一支主权财富基金，其原有资 本达2,000亿美元。 目前的市场危机可加深中国与中东的合作，尤 其是考虑到两地都保持着很大的流动资金。这 种势头从数据中可见一斑：去年（2007年）， 中国与阿联酋的双边贸易量激增42%，达到204 亿美元。
双向往来 互利互惠
中国与中东的贸易往来是双向的。近日，阿布扎 比投资公司宣布设立一项15亿美元的私募基金， 与一位来自中国的合作伙伴共同投资开发国内的 房地产和制造业。中国港湾工程有限责任公司由 此赢得一份4,080万美元的合同，负责开发Ajman Marina的基础设施。Ajman Marina是阿治曼（七 个酋长国之中最小的一个）海岸上一个庞大的住 宅和商业开发区。 中国的重油提炼技术在伊朗有了用武之地，与 此同时，许多中国企业也在伊朗的不同规模项目 中，获得了建造水坝和造船厂、开发港口和机场
的合同。在金融市场上，恒生于去年（2007年） 推出了以“道琼斯伊斯兰市场（DJIM）指数”为目 标的“伊斯兰中国离岸指数基金”，旨在通过香港这 个中国的经济门户来吸引海湾地区的财富。 2005年，Kuwait China Investment Co成立了 Kuwait China Investment Company，旨在促进中 东与亚洲尤其是中国之间的资本流动。随后又推 出Jade Value Partners私募基金，让投资者有机 会投资于那些在中国运作的私募基金。 Ashurst驻迪拜的主管合伙人Nick Bryans表示：“ 双向互动显然在日益增加。当中东的主权财富基 金把目光投向亚洲时，中国投资者也把目光投向 了中东。香港正在建立伊斯兰金融机构来管理符 合伊斯兰教规的金融产品，这显然预示着金钱的 流动方向。”
仲裁受重视
任何交易都有可能成功，也有可能失败。西盟 斯律师事务所的能源和基建业务合伙人James Kwan是一位仲裁专家，他认为亚洲（尤其是中 国和香港）与中东之间的密切合作中蕴藏着宝 贵商机。 Kwan表示：“随着亚洲与中东之间的往来投资越 来越多，迪拜涌现了许多业务机会。迪拜的仲裁 领先于中东，这对投资者的信心至关重要，让他 们能够通过公正公平的方式解决任何争议。”
What is important in the determination of identity or similarity of designs?
I
n the invalidation procedure of design patents, it is crucial to determine the identity or similarity of designs. Subject to the current Chinese Patent Law and the Patent Examination Guidelines, attention needs to be given to the following matters in the determination of identity or similarity of designs.
1. Determination of the design being examined The design should be examined according to the drawings or photographs in the granted design document. Furthermore, according to the Patent Law, designs can only be identical or similar when they exist in products of the same or similar category to another design.
2. Define the scope of the subject of judgment Since the determination of identity or similarity of designs are made from the point of view of a normal consumer of the product incorporating the design being www.legalbusinessonline.com
examined, it is crucial to accurately define the normal consumer. In determining the normal consumer of a certain product, the objective state of use should be taken into account in combination with the specific features of the product.
3. Application of one-to-one comparison as the method of judgment The principle of one-to-one comparison should be followed in the determination of identity or similarity of designs. The Patent Examination Guidelines provide that “in making a judgment of identity or similarity, generally the design being examined shall be compared with only one prior design, rather than with two or more prior designs in combination”(Patent Examination Guidelines, part IV, chapter 5, section 5.2). As for the current Chinese Patent Law, creativity has not yet been applied in examination of designs as a condition for the grant of patent rights; the only condition is that the design
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must possess novelty. China has the world’s most design patent applications and granted design patents, but in order to improve on the overall lack of creativity of the designs, a provision on creativity has been added to the draft amendment of the Patent Law. It provides that “for a person skilled in the art, [the design] shall be apparently different in comparison with a current technology or a combination of current technical features”.
Written by: –, Yongmei, Partner, Lifang & Partners Tel: 8610-64096099-609 Fax: 8610-64096260 E-mail: yongmeiyi@lifanglaw.com Website: www.lifanglaw.com
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NEWS >>
news in brief >> SURGE IN NUMBER OF JUDICIAL TEST TAKERS September is noted by lawyers as the month the national judicial exam is held. This year, new eligibility rules have resulted in a significant increase in the number of applicants taking the exam. In 2007, 294,000 people sat the exam, of which about 58,000 (22.4%) passed and were awarded certificates. This year, 370,000 people sat the exam, an increase of about 76,000 over 2007. Two main factors have driven the increase in this year’s numbers. For the first time, Taiwan residents were eligible to sit the exam, and undergraduates were also allowed to take it. The Ministry of Justice changed the rules to benefit undergraduates and firms. Students who pass the bar exam before graduating may receive more job offers. At the same time, law firms can identify students with bar certificates before making their hiring decisions.
司法考试参考人数激增
9月是律师参加全国司法考试的时间。今年实行新的报名 资格规定，使得报考人数激增。 2007年有294,000人参加考试，其中58,000人（22.4%） 成绩合格并获得证书。今年有370,000人参加考试，较 去年增加76,000余人。 两大因素驱使今年报考人数增加：一是允许台湾居民 报考，二是允许在校大学生报考。 司法部希望通过修改考试规定，使在校大学生和律 师事务所双双获益。法学系的学生如能在毕业前通过考 试，将在日后获得更多的工作机会。与此同时，律师事 务所也能根据资格证书择优录用人才。
LEGAL AID BENEFITS MILLIONS OF CITIZENS Local lawyers have provided legal aid to 2.3 million citizens and handled 1.4 million litigation matters since the country promulgated the regulation on legal aid in 2003, according to Justice Minister Wu Aiying. Legal aid cases numbered 420,000 in 2007, triple the 2002 figure, and lawyers provided consultations to 4 million people last year, 3.3 times the number of consultations provided in 2002. According to the Ministry’s figures, legal aid spending, at various government levels, rose 30% year-on-year over the past five years and reached US$76m in 2007. There were 12,285 full-time legal aid personnel, including 5,927 lawyers, and a total of 76,890 registered volunteers working in 3,259 legal aid organisations at the end of last year. Legal aid clients include mainly migrants, the disabled, women and minors. Funding comes primarily from government appropriations, private donations and the services provided free by lawyers.
法律援助惠及大众
据司法部长吴爱英介绍，我国自2003年引入法律援助 制度以来，各地律师已在近140万件诉讼中向230万公 民提供法律援助。 2007年法律援助案例达到420,000例，是2002年的三倍。 去年有400万人获得律师咨询服务，是2002年的3.3倍。 司法部的数据显示，过往五年各级政府的法律援助开 支以每年30%的速度递增，2007年达到7,600万美元。 截至去年年底，共有12,285名全职法律援助人员，其 中包括5,927名律师和76,890名登记志愿者，在3,259家 法律援助机构工作。 法律援助中心的委托人多为流动人口、残障人士、妇 女和未成年人，其经费主要来自政府拨款和私人捐赠， 此外还有律师提供免费服务。
16
BEIJING
King & Wood sets up shop in M
ultinationals and Chinese companies in the US now have more choices when they shop around for PRC legal services in New York. King & Wood, one of the leading firms in China, has made Madison Avenue in Manhattan the site of its newest office. The new office is headed by Zhao Bing, one of King & Wood’s senior partners. Currently Zhao is joined by two resident partners and two associates. The New York office is the most recent step in King & Wood’s global expansion. The firm already has a presence in Silicon Valley, Hong Kong (in association with Arculli Fong & Ng) and Tokyo (in association with Miyake & Yamazaki). In addition, it formed a strategic alliance with Sydney-based firm Gilbert + Tobin at the end of 2007 to strengthen its position in Australia. The firm’s relationships with a growing number of American companies and law firms, and China’s outbound investment trend, are the factors behind the decision to establish a branch office in New York. The new local presence will allow King & Wood to better serve its American clients and provide international support for clients from its home jurisdiction. According to Bloomberg, in the first half of 2008 overseas investment by Chinese companies more than
doubled over that of the previous year. By September, Chinese outbound investment had already reached US$23bn. King & Wood has seen an increasing number of its domestic Chinese clients invest abroad for both market-seeking and resourceseeking opportunities. However, the new arrival will face competition in New York as a number of PRC firms have already established a presence there. Jun He, King & Wood’s closest rival, opened its New York office in 1994, making it the first PRC firm to expand overseas. Other PRC firms that promote offices in New York include Beijing’s Deheng, Shanghai firm Richard Wang & Co, and Shenzhenbased Guanghe and Shujin. Jun He’s partners are not concerned about the competition King & Wood’s new office will bring. “As PRC firms are increasingly involved in large crossborder transactions, it’s necessary for top-tier PRC firms to establish a presence in important international jurisdictions,” said Kirk Tong, partner with Jun He. ALB
金杜纽约分所开业
享
誉中国的金杜律师事务所日前在曼哈顿的 麦迪逊大街开设纽约分所。如今，美国境 ISSUE 5.10
NEWS >>
uk report Eversheds joins the list of UK firm layoffs Eversheds has joined the increasingly long list of UK firms cutting staff in the wake of the credit crunch. The firm is reportedly on the verge of retrenching as many as 33 lawyers across the firm plus related support staff, and is also said to be shutting down its Norwich office due to the downturn in property work. As ALB recently reported, the redundancy consultation process, launched in September, has been dubbed “Project August”. Those lawyers and support staff who are not made retrenched due to the Norwich office closure will be transferred to the firm’s Cambridge office.
New York 内的跨国公司和中国公司在纽约寻求中国法律服 务时又多了一个选择。 纽约分所的负责人是金杜的资深合伙人赵兵律 师，并有两名常驻合伙人及两名律师。 纽约分所的开业，标志着金杜的全球扩张又 迈出一步。目前，金杜已在硅谷、香港（与夏 佳理方和吴正和律师事务所联营）和东京（与 三宅山崎法律事务所联营）设立分所，2007年 底又与总部位于悉尼的Gilbert + Tobin律师事务 所缔结战略联盟，进一步巩固了金杜在澳大利 亚的运作。 伴随着中国企业对外投资的热潮，金杜与众多 美国企业和律师事务所建立了紧密的业务合作关 系，而纽约分所的开业，将使金杜立足于当地为 美国客户提供更好地服务，同时也为金杜国内的 客户进行海外投资提供更多支持。 来自彭博资讯的资料显示，2008年上半年，中国 企业的海外投资比去年翻一番，截止到今年9月，中 国的对外投资总额已达230亿美元。金杜已有越来越 多的国内客户走出国门开拓市场和发掘资源。 然而，由于纽约已有不少中国的律师事务所， 金杜纽约分所可能会面临一定的竞争。 早在1994年，作为金杜的有力竞争对手之一的 君合律师事务所就率先在纽约设立办事处，迈出 了海外扩张的步伐。其他已在纽约开设分所的中 国律师事务所有北京德恒律师事务所、上海小耘 律师事务所以及深圳的广和律师事务所和信达律 师事务所。 得知金杜在美设立分所，君合律师事务所的合 伙人却不担心来自金杜的竞争。 “随着中国的律师事务所在大型跨国交易之中 有更多参与，国内的顶级事务所当然要在主要的 国际司法地区建立分支机构。” 君合的合伙人佟 珂如是说道。 www.legalbusinessonline.com
Credit crunch fallout continues The impact of the credit crunch is still affecting deal volumes in the UK, according to fresh data on UK M&A published by the Office of National Statistics. The report suggests that the number and value of UK deals for the first half of this year have decreased by around one-quarter compared to the same period a year ago. The figures show a drop 26% in volume and of 24% in value (555 transactions in the first half of 2008, valued at £72.6bn) when compared to same period last year. Q2 2008 showed a further decrease to 240 deals with a value of
£31.8bn, down 39% and 60% respectively from Q2 2007. UK lawyers are loving life Most lawyers are happy go lucky, despite recent increases in workload and having to work an extra day a week, according to data from UK recruitment consultants Badenoch & Clark. The report found that one in five employees claim to have an increased workload, due to firms failing to fill spaces left by departing staff members. Yet, despite the extra work, the research suggests lawyers remain content with their roles and current employers, with 82% of lawyers indicating that are happy in their jobs and 73% of respondents saying they do not plan to change jobs this year. US firms top City trainee retention rates Earlier plans to focus on organic growth in London have paid off for US law firms wanting to ramp up their presence in the City. US firms such as Bingham McCutchen, Cleary Gottlieb Steen & Hamilton, Covington & Burling, Debevoise & Plimpton and Dewey & LeBoeuf are reportedly leading the way on London trainee retention, with the five firms boasting a retention rate of 100% for their qualifying trainees.
¨ ROUNDUP • Allen & Overy has pledged to put litigation growth at the centre of its global strategy and is reportedly aiming to increase the practice’s contribution to global revenue by 50% over the next four years • A study from Deloitte recently revealed a fall in Q1 revenue growth for UK firms from 15.1% last year to just 6.3% on average this year • Bird & Bird has launched four offices in Central and Eastern Europe (Bratislava, Budapest, Prague and Warsaw) in a bid to gain work from new growth markets. Technology and media partner Stephen Kines is leading the initiative • Simmons & Simmons’ 10 international practice group (IPG) heads are now based in the City after corporate chief Damon Le Maitre-George (based in Hong Kong) and information, communications and technology (ICT) head Job Rietkerk stood down this month to focus on practice groups in their respective jurisdictions and were replaced by London-based partners Mark Curtis and Tom Wheadon respectively • The London office of Australian firm Mallesons Stephen Jaques recently poached Robert Hanley, UK managing partner of Minter Ellison – the only other Australian firm with an office in the City • US firm Howrey has rejigged its management and named intellectual property (IP) partner Mark Hodgson as its new London head
17
NEWS >>
news in brief >> HONG KONG, SINGAPORE TOP POLL FOR BEST ASIAN JUDICIAL SYSTEMS Hong Kong and Singapore have the best judicial systems in Asia, according to a survey of expatriate business executives. The survey, conducted by Hong Kong consulting firm PERC, was based on responses from over 1,500 Asia-based executives, taking into account factors such as education standards of lawyers and judges, the transparency and independence of the judicial system, and the protection of IP rights. Japan was also well regarded, while the responses to the Indian, Thai and Chinese systems were lukewarm. Indonesia and Vietnam were regarded as having the worst judicial systems in the region.
香港、新加坡在亚洲司法系统评选中荣膺 最佳
对驻外经理人的调查显示，香港和新加坡的司法系统堪 称亚洲最佳。 是次调查由香港证券及经济风险咨询机构（PERC） 举办，从律师和法官的受教育程度、司法系统的透明度 和独立性、及知识产权保护等方面，访问了1,500余名 在亚洲工作的经理人。 日本也在调查中名列前茅。而对印度、泰国和中国 的评价则不温不火，印度尼西亚和越南的司法系统被 认为是最差。
LINKLATERS, UK FIRMS PICKING UP LEHMAN BROS WORK Investment bank failures are having a positive effect on the work levels of a number of UK-based firms. Linklaters in particular should see a healthy round of billings, given that it is acting not only on the UK aspects of the Lehman Brothers collapse, but also for Lloyds on the HBOS takeover. Lovells is also among firms receiving work, with the firm acting for the Financial Services Authority on the Lehman collapse. And it is not just the restructuring and insolvency teams that are busy. Litigation departments are also gearing up for a predicted surge in work over the coming year, with the UK’s Lord Chancellor telling a litigation conference: “There is going to be litigation on a scale that we have not seen before, that will give rise to a new era for dispute resolution and litigation.”
英国年利达律师事务所 接手雷曼兄弟破产案
投资银行纷纷倒闭让许多英 国律师事务所尝到了甜头。 年利达便是其一，该所在雷 曼兄弟破产案中担任英国一 方的代理，同时还参与了劳 埃德银行收购哈利法克斯银 行的交易，应该能赚得不菲 收入。路伟国际律师事务所 同样是鸿运当头，该所在雷 曼破产案中为英国金融服务 管理局提供顾问服务。 除了负责重组和破产清算 的机构，诉讼机关也在紧锣 密鼓地准备迎接来年的大量 工作。英国皇家大法官在一 次诉讼大会上说道：“即将出 现的诉讼案件规模之大可谓 前所未有，这将开启一个争 议处理和诉讼的新时代。”
18
REGION
CSR high on corporate agenda
T
he likelihood that foreign invested companies will be required by law to adopt corporate social responsibility (CSR) initiatives is increasing, with the government issuing draft guidelines on foreign investor CSR practices. The draft document, known as the Guidelines on Corporate Social Responsibility Compliance for Foreign Invested Enterprises (CSRCFIE), was first issued by the Ministry of Commerce to solicit public opinions during the 12th China International Fair for Investment and Trade held in Xiamen. “The guidelines are wide in scope and encourage foreign invested companies to play an exemplary role in engaging with shareholders to contribute to the economic, social Alastair Da Costa, DLA Piper and environmental development of the PRC,” said Alastair Da Costa, Asia managing director of DLA Piper. “We’ve seen growing interest and concern in this area, which will be risky for corporations to ignore in their business plans.” “For foreign companies looking for a sustainable future in China, CSR
will move from the wings to centre stage,” added Clare Pearson, Asia CSR manager at DLA Piper in Beijing. Pearson also noted that the guidelines are currently voluntary, but it is possible they will become legislation at a later date. Should that happen, lawyers would become more involved in developing and implementing their clients’ CSR strategies. ALB
企业社会责任日益受 重视
随
着政府出台《外商投资企业履行企业社会 责任指引（草案）》（下称“《指引》”） ，外商投资企业依法履行企业社会责任已是势 在必行。 这份文件由商务部公布，将在厦门“第12届中国 国际投资贸易洽谈会”期间咨询公众意见。 “这些指引涉及范围广泛，旨在鼓励外商投资企 业发挥模范作用，与股东一道为中国的经济、社 会和环境发展作出贡献。” DLA Piper亚洲区董事 总经理Alastair Da Costa表示：“我们看到这个领 域正日益受到重视和关注，倘若企业的业务规划 中忽视这一点，那将十分危险。” 身在北京的DLA Piper亚洲区企业社会责任经理 Clare Pearson表示：“对于在中国有长期打算的外国 企业来说，企业社会责任将会幕后走到台前。” Pearson并指，虽然《指引》目前是自愿性的， 但日后很可能出台立法，届时律师们就会更多地 参与企业社会责任策略的制定与实施。
ASIA
International arbitration grows fast
I
nternational arbitration is rapidly growing in Asia as a method of resolving cross-border business disputes. Over the last 10 years, Asian arbitration centres have more than doubled the number of cases heard. In 1985 the number of cases referred to the Hong Kong International Arbitration Centre (HKIAC) was nine. Today, that number is approaching 400. The Singapore International Arbitration Centre has also seen phenomenal growth. According to Steven Lim, special counsel in the International Arbitration and Dispute Resolution practice group at Baker Botts,
arbitration in the energy, construction and commercial/joint-venture sectors has contributed significantly to this growth in Asia. ALB
国际仲裁发展迅速
国
际仲裁作为一种解决跨国商业纠纷的手段， 在亚洲呈现迅速发展之势。过往十年，亚洲 各大仲裁中心聆讯的案件已增加一倍有余。1985 年，香港国际仲裁中心（HKIAC）仅接到9宗案 件，如今已飙升至近400宗。新加坡国际仲裁中 心同样如此。 贝克博茨律师事务所(Baker Botts)负责国际仲裁 和争议解决业务的专职律师Steven Lim表示，在亚 洲，能源、建筑和商业/合资领域的仲裁是促成这 种增长的主要原因。 ISSUE 5.10
NEWS >>
SHENZHEN
Beijing Bairui opens in Shenzhen
W
hen expanding into the south, many firms choose to set up offices in Guangdong’s capital city Guangzhou. But Beijing-based Bairui has decided to enter into the lucrative southern market through a different route, by establishing a branch office in Shenzhen, eyeing the city’s proximity to Hong Kong and its high-quality companies. Three lawyers are currently spearheading the Shenzhen initiative. The firm is looking to launch the new office, which is located in Union Plaza, one of the landmark buildings in Shenzhen’s CBD, in October. Bairui plans to grow the office to a team of over 30 lawyers and partners. The Shenzhen practice will focus on intellectual property, corporate, tax planning, funds, real estate and dispute resolution. ALB
北京百瑞深圳分所开业
us report Fried Frank retrenches staff Fried Frank is the latest US law firm to slash staff – but this time the credit crunch is not to blame. The layoffs, which affect almost 10% of the firm’s total of 730 global support staff, are part of a two-year efficiency review, according to the firm, and will primarily affect floating secretaries, part-time assistants, and paralegals and library personnel in the New York and Washington DC offices of the US firm. None of the firm’s 650 lawyers are currently facing redundancy – for now.
Eight partners, six of whom are in the equity, have chosen to stay at Taylor Wessing France.
Taylor Wessing partner exodus Taylor Wessing France has lost 12 non-equity partners, after the group resigned to join US firm Nixon Peabody. The two firms are involved in ongoing New York legal battles after Nixon Peabody allegedly violated a non-disclosure agreement that the firms would not poach staff if merger talks fell apart.
Thelen Reid and Nixon Peabody may join forces There has been widespread speculation that Thelen Reid Brown Raysman & Steiner and Nixon Peabody are in merger talks, with a possible agreement pending. Although neither firm would confirm the reports, Nixon Peabody has demonstrated an interest in international growth by its recent recruitment of an eight-partner team from Taylor Wessing France.
Heller moves on to Mayer Brown Heller Erhman seems to have bounced back quickly from botched merger plans with Baker & McKenzie. Reports are circulating that the US firm is in merger talks with Mayer Brown, although the firm has made no official comment to support or deny the rumors. Other possible merger candidates are thought to have included Winston & Strawn and Proskauer Rose.
许
多向华南拓展的律师事务所都会选择把办 事处设在广东的省会广州，而北京百瑞律 师事务所却是另辟蹊径，在毗邻香港又有众多 优质企业的深圳开设分所，取道深圳进入利润 丰厚的华南市场。 深圳分所现有三名律师，于10月开业，办公地 点设在深圳中央商务区的地标之一联合广场。深 圳分所的目标是逐步建立起一支有30多名律师及 合伙人的团队，主要业务领域为知识产权、企业 事务、税务规划、基金、房地产及争议处理。
¨ ROUNDUP • Michael Lyle will soon replace David Berz as managing partner of the Weil Gotshal & Manges DC office • Baker & McKenzie is doing well, despite the collapse of merger talks with Heller Erhman. The firm recently reported revenues of US$2.19bn for the year to the end of June, up from US$1.83bn last year • Cadwalader Wickersham & Taft has taken advantage of the developing covered bond market in the US and launched a transatlantic covered bond practice group made up of 12 partners across the firm’s London, New York and Charlotte offices • DLA Piper’s US operations will receive steady leadership until at least 2013 with the recent re-election of joint chief executive Lee Miller to serve another four years in the position • US powerhouses Shearman & Sterling and Sullivan & Cromwell recently bagged top roles on insurance giant Allianz’s € 9.8bn (£7.9bn) sale of Dresdner Bank to German rival Commerzbank • A study of 165 US firms by Citi Private Bank recently revealed that, while expense growth has remained high at most US firms, revenue growth over the first half of 2008 fell to its weakest point in seven years, with profits per equity partner (PEP) decreasing by 9.1% over the period • Recent reports suggest that sitting chair Arthur Culvahouse, currently completing his second four-year term, is tipped to win out over the other four candidates competing for the chair of O’Melveny & Myers
www.legalbusinessonline.com
19
NEWS >>
SHANGHAI
UPDATE >>
International Tax
Pillsbury raids Thelen’s China practice
New UK Tax Chamber replaces Commissioners Hearings
P
T
he new UK Tax Chamber has been made possible, by the UK Tribunals, Courts and Enforcement Act 2007. The Act creates a two tier structure with a First-tier and Upper Tribunal. Individual tribunal jurisdictions doing similar work will be brought together into this simplified two tier system. The new system is headed by Lord Justice Carnwath as Senior President. HMRC was formed in April 2005, following the merger of the UK Inland Revenue and HM Customs and Excise. The new department is responsible for enforcing and administering the payment of both direct and indirect taxes, and in this context it was inconsistent to maintain four separate tax tribunals (the General Commissioners, the Special Commissioners, the VAT & Duties Tribunal and the Section 702/706 Tribunal) and three different sets of legal Rules for those tribunals.
What will the new system look like? In short, the new system will have its own judiciary, Rules of Procedure and a new location for processing direct tax appeals. It will be independent of HMRC, who currently control listing and other aspects of case management.
The Judiciary The Commissioners and their clerks have given years, and in some cases decades, of service and their commitment and dedication are apparent to all who meet them. However, it is also clear that the time has come for a fairly compensated and independently appointed judiciary to deal with tax appeals, and which reflects the diversity of the community. To assist the existing tax judiciary when the Tribunals Service takes on responsibility for direct tax appeals, the Judicial Appointments Commission has recruited 18 legal Members, four of whom will be full time, and 75 non-legal Member positions. The new judiciary will be recruited by early 2009, so that they can be trained fully in time for the launch in April 2009.
Onward appeals An appeal from the First-tier will be to the Upper Tribunal, which is a superior court of record akin to the High Court. Appeal to the Upper Tribunal will be on a point of law only, and with permission of the First-tier or the Upper Tribunal. The exception to this will be those extremely rare cases which start in the Upper Tribunal, where onward appeals will be to the Court of Appeal or the Court of Sessions in Scotland.
Conclusion Despite all of the changes, it is hoped to retain the best features of the current system of UK tax appeals in the new system: for example, local access to hearings, with a network of 130 hearing centres across the country, and the facility to use privately hired venues. The new judiciary are being recruited from a wide geographical area so that local business knowledge is still a key part of the system. By Debbie Annells, Managing Director, AzureTax Ltd, Chartered Tax Advisers Suite 1010, 10/F Lippo Centre, Tower Two, 89 Queensway, Hong Kong www.azuretax.com, a member of AzureTax Group (Tel) +852 2123 9339 (direct line), (Main Line) +852 2123 9370, (Fax) +852 2122 9209 Registered with the Chartered Institute of Taxation for purposes of anti money laundering legislation.
20
Debbie Annells
illsbury is the latest firm to expand its China practice, acquiring Thelen’s entire China practice group of around 20 attorneys, including Shanghai-based partners Thomas Shoesmith and Meg Utterback. “From day one [since the Shanghai office opened], we knew we would need a much larger presence to achieve long-term success in China,” said Pillsbury vice chair Steve Huttler, who oversees the firm’s international offices. “When this opportunity presented itself, we found it an ideal solution, particularly when we [saw] that the team’s unique business model and capabilities would translate well into other international markets.” Thomas Shoesmith, the former head of Thelen’s Shanghai office, will be heading Pillsbury’s new Shanghai office, while current Pillsbury Shanghai managing partner Joseph Chan will remain lead firm representative and local section leader of the corporate and securities practice. Pillsbury’s chair, Jim Rishwain, expects the joining of the new China group to bring many new clients to Pillsbury. Pillsbury’s Shanghai office was opened a year ago, while Thelen set up its Shanghai office in late 2006.
HONG KONG
Eversheds snaps up Nick
L
ondon-headquartered international firm Eversheds has gained a heavyweight partner in the region, Nick Seddon, from US west coast firm Heller Ehrman, which dissolved following failed merger talks with Baker & McKenzie and Mayer Brown. Eversheds opened its first Asian office in Shanghai, and hired Peter Corne from Linklaters to establish and grow the firm’s Nick Seddon, Eversheds practice in Asia. Adhering to its Shanghai model, Eversheds has appointed Seddon to be in charge of opening Eversheds in Hong Kong, and, later, Singapore. Seddon’s experience in managing businesses for growth, particularly when he was at the helm of DLA Piper in Asia, makes him an ideal candidate to build a presence for the firm in Hong Kong. “The importance of Hong Kong as a worldwide centre for finance and trade is such that, as an international law firm, we need to have a presence in the area, particularly to further our growth in Asia,” said Bryan Hughes, chief executive designate of Eversheds. “Hong Kong provides a crucial gateway into China, and its liberal economic climate attracts business from across the globe. “It’s the most popular Asian location for companies to base their Asia-Pacific or international headquarters – a reason in itself for establishing a strong presence in this important market.” ISSUE 5.10
NEWS >>
It is unclear whether the raid is a sign that Thelen is going down the same track as Heller, but Thelen has reportedly been unable to merge with another firm and has been suffering a slew of partner defections in the US. ALB
必百瑞收购思瑞在华业务 必
百瑞律师事务所日前收购了思瑞律师事务所在中国的全部业务团 队，约有20名律师，当中包括上海合伙人Thomas Shoesmith和 Meg Utterback，藉此扩大在华业务。 必百瑞主管全球办事处的副总裁Steve Huttler表示：“从[上海分所开业的]第 一天起，我们就知道要在中国长盛不衰，就必须做大规模。当这个机会来临 时，我们觉得它真是再理想不过，特别是当我们意识到这支团队独特的业务 模式和实力将会有效地转化应用于其他国际市场。” 原思瑞律师事务所上海分所负责人Thomas Shoesmith，将出任必百瑞新的 上海分所负责人，而现任必百瑞上海分所主管合伙人陈永坚，将继续担任该 所的首席代表，以及企业和证券事务部的本地负责人。 必百瑞总裁Jim Rishwain期望新的中国团队的加入会为必百瑞带来更多 新客户。 必百瑞上海分所成立于一年前，而思瑞则是在2006年底设立上海分所。目 前还看不出这次收购是否预示着思瑞将会步海陆国际律师事务所的后尘，但 是有报道称，思瑞未能与另一律师事务所实现合并，而美国合伙人的大量流 失也给思瑞带来了不小打击。
Seddon for growth in Asia Before joining Eversheds, Seddon had been Heller Ehrman’s Asia regional managing shareholder for only a few months. Just weeks before his departure, Joseph Cha and Ying Li, former partners of Heller’s Beijing office, joined Proskauer Rose, to help build a practice in Hong Kong and Beijing. ALB
安永实延揽施登加速亚洲拓展
总
部位于伦敦的安永实律师事务所近日获施登(Nick Seddon)加盟出任亚 洲区合伙人。施登此前效力于美国西海岸的海陆国际律师事务所，但 该所因与贝克‧麦坚时(Baker & McKenzie)和美亚博国际法律事务所(Mayer Brown)的合并谈判告吹，已经濒临解散。 安永实于2006年在上海设立办事处，自此涉足亚洲市场。在从年利达律师 事务所延聘来的Peter Corne帮助下，安永实建立了首个亚洲办事处，该办事 处自成立以来实现了持续发展。 遵循上海的业务模式，安永实委任施登负责在香港及稍后在新加坡设立 分所。 施登擅长管理业务发展，他曾任欧华亚洲区主管，堪称是为安永实掌管香 港业务的理想人选。 安永实的候任首席执行官Bryan Hughes表示：“香港是重要的国际金融贸 易中心，作为一家国际性律师事务所，我们必须在此占有一席之地，从而 促进我们的亚洲业务进一步发展。” 他并指：“香港是通向中国的门户，其倡导自由的经济环境吸引着世界各地 的企业。在亚洲，许多公司都把香港作为设立亚太或国际总部的首选，这足 以说明为什么要大力进驻这个重要的市场。” 加盟安永实前，施登曾任海陆的亚洲区主管合伙人，但为时只有短短 数月。 就在施登离开海陆几周前，原海陆北京办事处的合伙人Joseph Cha和Ying Li加入了普士高，以帮助普士高筹建香港和北京的业务。
www.legalbusinessonline.com
UPDATE >>
Insurance CIRC strengthen the board of directors system of insurance companies
J
uly 8, 2008, China Insurance Regulatory Commission (CIRC) promulgated the Guidelines on the Operation of the Board of Directors of Insurance Companies (hereafter refers to the Guidelines) whose provisions are, comparing with the Guiding Opinion on Regulating the Corporate Governance of Insurance Companies promulgated in 2006, more specific in many aspects such as the qualification of directors, the operation of the board of directors and its professional committee, secretary and assistant institutions of the board of directors, corporate governance report, etc. The Guidelines, together with the Interim Measures for the regulation of Insurance Companies’ Independent Directors and the Interim Measures for the regulation of Affiliate Transaction of Insurance Companies, composes the primary system of the board of directors of insurance companies.
The points of Guidelines state as below: First, the Guidelines explicitly stipulates the procedures and contents of due diligence evaluation of directors, and requires the board of directors to submit a due diligence report of directors to the general assembly of shareholders and the board of supervisors each year; meanwhile, in order to timely know the situation of remuneration, and to guide the administration on the remuneration of directors and managers thereof, the Guidelines requires the insurance company to disclose relevant information to CIRC in its corporate governance report. Second, the Guidelines focus on the meetings rules of the board of directors. It regulates the whole process of the meetings of the board of directors, including the convening and presiding, proposal and notice, record and its preservation, etc., and explicitly stipulates the qualifications and duties of directors and the secretary of the board of directors. Third, the Guidelines brings into outside supervision by stipulating the supervision of CIRC, the report of the meetings, the attendance of observers as non-voting delegates and the report of the corporate governance, etc. The purpose of the Guidelines lies in, through specifying relevant rules, enhancing the construction of the board of directors, regulating the operation of the board of directors, improving the decision-making quality of the board of directors and promoting the corporate governance of insurance companies. With the improvement of regulation of the insurance companies in China, CIRC issued more and more specific regulations and rules on insurance company. Presently speaking, the prevention of risk is emphasized as regulatory focus by CIRC at the background of the financial crisis in US. Therefore the corporate governance of the insurance company, including the board of directors, has become the vital field for CIRC. Zhan Hao, Managing Partner Grandall Legal Group Beijing Office Tel: 010-65890699 Fax: 010-65176801 E-mail: zhanhao@grandall.com.cn Web: www.grandall.com.cn
Zhan Hao
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Shanghai 关于在上海设立股权投资企业的相关事项
上
海市金融服务办公室、上海市工商行政管理局、上海市国 税局、上海市地税局于2008年8月11日联合发布了《关于 本市股权投资企业工商登记等事项的通知》(以下简称”《通 知》”), 对在上海（以下简称”本市”）设立股权投资企业的相 关事宜做出了规定。
鼓励在本市发展股权投资企业 《通知》要求本市的金融服务、工商、税务等部门要共同努力形成有利于 股权投资企业集聚和健康有序发展的市场环境, 鼓励符合条件的境内外各类 主体, 参与本市股权投资企业的发展。
在本市设立股权投资企业的条件 1. 投资设立股权投资企业的主体 根据《通知》规定, 国家法律、行政法规规定的境内自然人、法人和其 他组织, 以及国外、境外的自然人、法人和其他组织, 可以作为股权投资 企业和股权投资管理企业的投资者。 2. 股权投资企业的形式 根据《通知》规定, 在本市从事股权投资和股权投资管理的企业应当以 公司或合伙的形式设立。 3. 股权投资企业的资本要求 (1). 股权投资企业的资本及股东(合伙人)人数要求 股权投资企业, 不论组织形式如何, 其注册资本均不得低于人民币1 亿元, 且出资方式仅限于货币形式。其中, 单个自然人(合伙人)的出 资额应不低于人民币500万元。 以有限公司、合伙形式成立的, 股东、合伙人人数应不多于50人; 以 非上市股份有限公司形式设立的, 股东人数应不多于200人。 (2). 股权投资管理企业的资本要求 股权投资管理企业以股份有限公司形式设立的, 注册资本应不低于 人民币500万元; 以有限责任公司形式设立的, 注册资本应不低于人 民币100万元。 从《通知》中可以看到, 为鼓励股权投资企业在本市的发展, 对于股权投 资企业的性质、形式和投资者有着比较开放和宽松的规定。符合条件和法 律规定的境内外投资者, 都可以多种组织形式设立股 权投资企业。同时, 鉴于股权投资行业的高风险, 对股 权投资企业的注册资本规定较高的要求。 我们注意到, 其中对于境外投资者只有“符合法律法 规规定”的描述, 并无特别限制。可以认为, 《通知》 已为股权投资企业的外资准入获得突破时的登记程序 留下了余地, 但这是否意味着上海在该领域的外资准 入会有所突破, 还需要进一步关注。 俞卫锋: david.yu@llinkslaw.com 张明: ming.zhang@llinkslaw.com Llinks Law Offices 通力律师事务所 Shanghai 21F, South Tower, Shanghai Stock Exchange Building, 528 Pudong Road South Shanghai 200120 PRC Tel: (86 21) 6881 8100 Fax: (86 21) 6881 6880
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俞卫锋
REGION
SOEs see Australia as land of opportunity for acquisitions
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tate-owned enterprises increasingly find Australian resources companies attractive takeover targets, according to Australian law firms. Deacons partner Ian McCubbin said that the firm’s crossborder M&A work between China and Australia has doubled over the past 12 months. Half of the M&A revenue is from cross-border deals with Chinese state-owned enterprises and most of these have taken place in the resources sector. “Last year we didn’t think we could possibly increase our M&A workflow to the extent that it did, but we did, and expect a 50% increase in cross-border M&A deals with China this year,” he said. McCubbin said cross-border transactions could be internally funded or debt financed, and acquirers would face fewer barriers in obtaining debt financing from Chinese banks that are currently in a “strong position”. Over the past five years, several state-owned enterprises have tried to make hostile takeover bids but only Sinosteel’s US$1.2bn bid for Midwest has been successful. McCubbin believes that this takeover marks a new era of Chinese investment strategies. “It’s been an evolutionary process for Chinese companies to become more open. There have been difficulties in that these companies are state enterprises trying to become increasingly commercial, but have less flexible decision-making processes compared to a Western corporations,” he said. Given increased client demand from Chinese companies for legal services in Australia, MMLC Group, a specialist international law and consulting firm with its main office in Beijing, has announced a plan to venture into Australia. The firm’s founder, Matthew Murphy, will be leading the expansion and the firm is looking at some big name laterals. ALB
国企瞄准澳大利亚寻觅并购机遇
来 张明
自澳大利亚多家律师事务所的消息称，越来越多的国企都把澳大利亚 的资源类公司视为有吸引力的收购目标。 的近律师事务所合伙人Ian McCubbin表示，过往12个月，该所承接的中澳 跨国并购交易业务量翻了一番。在并购业务收入中，来自中国国有企业的跨 国交易占据半壁江山，其中绝大多数都发生在资源领域。 ISSUE 5.10
NEWS >>
他说：“去年我们没有想到并购业务量会增长到如此地步，结果大出所料， 今年我们估计与中国有关的跨国并购交易量会再增长50%。” McCubbin表示，跨国交易可以自筹资金，也可以债务融资。因为中国各大 银行如今“实力雄厚”，收购方从银行获得债务融资几乎没有什么困难。 过往五年曾有多家国企试图发起敌意收购，可直到最近才有中钢集团收购 Midwest（12亿美元）大功告成。 McCubbin认为，这次收购开启了中国企业投资战略的新篇章。他说：“中 国企业开放思维是一个渐进的过程。这当中有不少困难，因为这些公司都 是国有企业，虽然它们想方设法要提高商业化程度，但是其决策过程却不 如西方企业那么灵活。” MMLC集团是一家专业的国际法律和顾问机构，其主要办事处设于北京。 有鉴于中国公司对澳大利亚法律服务的需求日益增长，该集团已宣布进驻澳 大利亚市场的计划。创办人Matthew Murphy将领导MMLC的业务扩张，并将 目光对准了多位大名鼎鼎的业内专才。
CHINA
Thomson Reuters boosts Westlaw China offering
A
s the country’s legal and regulatory framework becomes increasingly sophisticated, Thomson Reuters Legal has ramped up its China legal information services by launching a new version of Westlaw China – an online legal database and powerful legal search engine customised for legal professionals in China. Westlaw China was first launched in May this year. The new product is an improved and updated version that incorporates user feedback from the first version. According to Stephen Yao, CEO of Thomson Reuters Legal (China), one of the most important features of the latest version is the inclusion of legal practice areas such as M&A and company laws. “M&A is the core practice area of many law firms in China today. The revamped Westlaw China website provides legal professionals with the function of a unique intelligent identification system, which can link to laws and regulations or cases relating to M&A and company laws ,” said Yao. One competitive advantage of Westlaw China is its mass translation of legal documents, proofread entirely by legal professionals who are native English speakers. The updated version is one of the best choices for international legal practitioners and domestic lawyers who have concern on China laws and regulations. ALB
汤姆森路透推出新版万律 随
着中国的法律和监管框架日益完善，汤姆森路透法律信息集团 (Thomson Reuters Legal)加大力度提供中国的法律信息服务，并于近 日推出新版万律(Westlaw China)。万律是一个在线法律数据库，是为中国的 法律专业人士量身定做的功能强大的法律检索平台。 万律于今年五月首次面世，而新产品则是根据用户对第1版的反馈作出重 大改进后推出的更新版本。据汤姆森路透法律信息集团中国区首席执行官 姚颂柏介绍，新版本的主要特点之一是纳入了并购、公司法等广为关注的 法律实务专题。 姚颂柏表示：“并购是如今国内许多律师事务所的核心业务。更新后的万律 网站为法律界人士提供了一个独特的智能识别系统，可供查阅与并购和公司 法有关的法律法规或案例。” 万律的另一显著优势是大量法律法规的英语译文，译文经法律专家对照英 语与母语一一校对。万律是关注中国法律法规信息的国际法律服务工作者和 国内律师的一个最优选择。
www.legalbusinessonline.com
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Singapore 报业控股、新交所及富时集团推出中国TOP指数 008年7月7日，新加坡报业集团（SPH）、新交所（SGX）及富 时集团（FTSE）联合推出富时海峡时报指数系列（FTSE ST Index Series）的一个新指数 —— 富时海峡时报中国TOP指 数（FTSE ST China Top Index）（“中国TOP指数”）。 中国TOP指数是个可交易的指数，它追踪在新加坡交易所挂牌交易 的20只最大型中国股（该20支中国股名单在新交所网站有具体公布）。 这些公司必须至少30％股权由中国政府、企业或公民持有；或，其至少 50％的营业收入必须来自中国。 其第二个条件，即至少半数营业收入来自中国，是个新的条件，它是要 让无法进入现有的富时海峡时报中国指数（FTSE ST China Index，简 称中国指数）的公司，能够被包括在新的中国TOP指数里面。这类公司 包括中国金属（Ferrochina）、徐福记（Hsu Fu Chi International）以及 仁恒置地（Yanlord Land Group）。 报业控股的海峡时报财经主任刘意庆指出“中国TOP指数是应中国和 各地的机构投资者和基金经理的需求而设立的指数” ，并表示“我们承诺 使富时海峡时报指数系列成为新加坡股市一个更全面的指标，这是我们 为此所作的努力的一部分。” 中国指数和中国TOP指数都带来许多机会，可创造以它们为母股的挂 牌基金、备兑产品和其他衍生产品；并且成分股较多（50只）的中国指数， 将继续是新加坡挂牌上市的中资企业（龙筹股）的市场指标。 中国指数和中国TOP指数的成份股，都是按有关公司在2008年6月20 日的市值选出。凡符合自由流通（free float）比率以及流通性（liquidity） 要求的，都将被列入为指数股，正如在2008年1月10日推出的其他富时 海峡时报指数系列的指数以及改革后的海峡指数 的情况那样。 这两个指数均可在富时集团、新华财经公司、 报业控股、新交所等众多网站找到相关报道或提 供的实时数据。
2
锺振裕 企業融资部經理 Ph: (65) 6322-2232 Fax: (65) 6534-0833 E-mail: geraldcheong@loopartners.com.sg
锺振裕
吳艷娟 企業事務部法律顧問 Ph: (86) 15901669188 Fax: (65) 6534-0833 E-mail: wuyanjuan@loopartners.com.sg
俊昭法律事務所 88 Amoy Street, Level Three Singapore 069907
吳艷娟
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BEIJING
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Slaughter and May moves
Regulatory China Issues Filing Standards for Business Concentrations
O
n August 3, 2008, two days after China’s AntiMonopoly Law (the “AML”) came into effect, the State Council determined the thresholds above which business concentrations must be reported to the AntiMonopoly Bureau of the Ministry of Commerce (“MOFCOM”) under the AML. This rule has been eagerly awaited: from now on, mergers, acquisitions and other transactions through which one undertaking obtains control over another – both inside and outside China – are subject to a new government procedure, if the thresholds are exceeded. Under the State Council Provisions of Filing Standards for Concentrations of Operators (the “Provisions”), any of the following two tests triggers the reporting obligation under the AML: during the fiscal year preceding the concentration, the (aggregate) worldwide turnover of all enterprises participating in the transaction exceeded RMB 10 billion and the turnover within China of at least two participating enterprises individually exceeded RMB 400 million; or during the fiscal year preceding the concentration, the (aggregate) turnover within China of all participating enterprises exceeded RMB 2 billion and the turnover within China of at least two participating enterprises individually exceeded RMB 400 million. The Provisions do not specify how turnover should be calculated, and therefore some key determinations will need to be made by the Anti-Monopoly Bureau. When deciding whether a filing is required, parties should assume that turnover is calculated by consolidating the party to the transaction and its subsidiaries. However, it is not yet clear how MOFCOM will define “subsidiary” for this purpose and whether the turnover of parent and other affiliated companies needs to be included as well. Even when the thresholds are not met, the Provisions authorize the Anti-Monopoly Bureau to conduct investigations if “the facts and evidence collected in accordance with prescribed procedures show that such concentration has or may have the effect of excluding or restricting competition.” Again, it is not yet clear what these procedures are and how the Anti-Monopoly Bureau will exercise this power. As many global transactions are between corporations with substantial operations in China, MOFCOM has the potential of becoming one of the anti-trust regulators that can make or break deals hatched in another continent, like its counterparts in the United States and the European Union. But it will take time and experience for MOFCOM and practitioners to figure out when a mandatory filing is required, whether voluntary filings are advisable and how anti-monopoly review under the AML will affect the shape and timing of deals.
M
agic Circle firm Slaughter and May has announced plans to apply for a licence to set up an office in Beijing and colocate there with two of its ‘best friend’ firms, De Brauw Blackstone Westbroek of the Netherlands and Uría Menéndez of Spain. Co-location has proven successful in Brussels, where Slaughter and May shares office space with four of its best friends – George Goulding, Slaughter and May Bonelli Erede Pappalardo, Bredin Prat, Hengeler Mueller and Uría Menéndez. George Goulding, the firm’s partner in Hong Kong, will relocate to Beijing and head the new office once the licence is granted. Goulding said it is the right time for the firm to expand its Asia presence: “The decision to expand into Beijing has been made based on the evolution of the relationship with our best friends, the evolution of the market and the evolution of our PRC practice.” The firm has participated in an increasing number of large cross-border transactions involving Chinese companies. Recent deal highlights include advising China Resources Logic on its acquisition of China Resources Gas, CITIC Group on its sale of shares of CITIC Canada Energy Limited to JSC KazMunaiGas Exploration Production, and the underwriters on the US$1.5bn IPO of Alibaba.com The Uría Menéndez office will be headed by partner Juan Martín Perrotto and will be staffed by at least three senior lawyers. In addition to servicing European clients in China, the new office also intends to advise on Chinese investments in the most attractive European and Latin American economies. As some of these best friend firms have offices in the same cities, such as London and Brussels, there is inevitably some level of competition between them. However, Slaughter and May is confident that rivalry will not be a problem.
By Hans-Günther Herrmann, counsel Paul, Weiss Rifkind, Wharton & Garrison Hong Kong Club Building, 12th Floor 3A Chater Road, Central, Hong Kong Email: hherrmann@paulweiss.com Ph: (852) 2846-0331
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Hans-Günther Herrmann
ISSUE 5.10
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into Beijing with friends “What we have to gain by working together and supporting each other is vastly more important and significant than the occasional job here and there, where we are competitors,” said Goulding. The firms will need to apply separately for licences and will have separate Beijing operations. All expect to launch in Beijing in 2009. Slaughter and May has long-standing working relationships with several leading local firms, including Jun He, Haiwen & Partners and King & Wood. ALB
司力达与伙伴携手进驻北京
享
有“神奇圈”事务所美誉的司力达律师事务所日前宣布，准备申请牌照在 北京设立办事处，并与两家伙伴事务所—荷兰的De Brauw Blackstone Westbroek和西班牙的Uría Menéndez联合办公。 在布鲁塞尔，司力达与四家伙伴事务所Bonelli Erede Pappalardo、Bredin Prat、Hengeler Mueller和Uría Menéndez共用办公场所，这种联合办公的业 务模式十分成功。 等到获发牌照后，司力达的香港合伙人George Goulding将调往北京出任新 办事处负责人。他认为司力达拓展亚洲业务正当其时：“决定向北京拓展，是 顺应我们与伙伴的关系发展、市场发展和我们的中国业务发展之势。” 司力达参与涉及中国企业的大型跨国交易越来越多，像近期就为华润励致 收购华润燃气、中信集团向JSC KazMunaiGas Exploration Production出售 CITIC Canada Energy Limited的股权、及阿里巴巴总额达15亿美元的IPO的 承销商，提供过顾问服务。 Uría Menéndez办事处负责人将由合伙人Juan Martín Perrotto出任，并聘 请至少3名资深律师。除了为在华的欧洲客户提供服务，新办事处还将为中 国企业投资于最富吸引力的欧洲和拉美经济体出谋划策。 由于这些伙伴事务所已在伦敦、布鲁塞尔等地开设了同城办事处，彼此之 间难免会有竞争，不过司力达相信竞争不会是问题。 Goulding表示：“我们从联合办公与相互支持中得到的好处，远比我们作为 竞争对手到处争夺来得重要。” 这些事务所需要单独申请牌照，而它们在北京的运营也是各自独立，预料 2009年将会全部进驻北京。 司力达与国内多家领先的事务所如君合律师事务所、海问律师事务所和金 杜律师事务所等建有长期合作。
Regulatory Limitations of anti-monopoly law of the PRC from the perspective of object
T
he First Intellectual Property Lawyer Forum and All China Lawyers Association 2008 were held on 21 and 22 September, 2008. Tahota’s attorney Sean Shen submitted an essay to the meeting entitled, “Comparisons of Legislative Purposes and Adjusted Objects of Anti-trust Law among EU, United States, Great Britain and China”, which illustrated the similarities and differences of legislative purposes of anti-trust law of the counties and regions above, and focused on the limitation of anti-monopoly law of China. Thirteen years has witnessed the legislation of Anti-trust Law of the People’s Republic of China, which finally came into effect on 1 August, 2008. Article 1 of the law provides that “this Law is enacted for the purpose of preventing and restraining monopolistic conducts, protecting fair competition in the market, enhancing economic efficiency, safeguarding the interests of consumers and social and public interest, promoting the healthy development of the socialist market economy”. This provision indicates a multi-purpose of legislation, that is, to restrain monopoly, to protect competition and to safeguard the interests of the public, competitors and other subjects. Meanwhile, this law insists a moderate intervention to neutral monopoly, as well as a comprehensive and flexible protection towards diversified and changeful competition. Furthermore, the law strikes a balance between efficiency and safety. Legislators took consideration of the present situation of China to some extent, and highlighted the western experience in this issue. Yet the written purposes demonstrated some limitations and weaknesses as follows: Firstly, the expression of Article 1 confuses legal interest with the embodiment of legal interest. In accordance with jurisprudence, social and public interest is one part of legal interest of anti-trust law, which was embodied with interests of consumers and that of operators. Thus the concept of interests of consumers and that of social and public interest are not on the same level, and it is not precise to put these two concepts together according to Article 1. Secondly, it fails to promote unification of the market, which should have been one of the purposes of anti-monopoly law. China is weathering area block and market division which leads to a necessary and urgent call for round regulations on these fields. But it is unfortunate to not see that in Article 2. Thirdly, as the shortest anti-monopoly law of the world in content, it only provides principles and lacks specific implementing rules. This leaves room for guesswork on a practical level, and a unifying institution for enforcement is urgently called for. Arguments to objects of anti-monopoly law taking place in countries and regions (similar to what happened in 1890) indicate some basic knowledge of competition law: it neither exists in a vacuum nor is it static in nature. Competition law belongs to social and economic policy and reflects a top priority of an era. Similarly, as the spotlight of China’s economy moves forward, anti-monopoly law of China will continue. Sean Shen Founder of Tahota Beijing Law Firm; executive partner, Members of All China Lawyers Association Intellectual Property Law Committee; deputy director of Beijing Lawyers Association Competition Law Committee Mobile Phone: 139 1111 3857 E-mail:seanshen@tahota.com
www.legalbusinessonline.com
Sean Shen
25
NEWS | appointments >>
► LATERAL HIRES Name
Leaving
Going to
Practice
Location
Joseph Cha
Heller Ehrman
Proskauer Rose
Private equity
Beijing/Hong Kong
Ying Li
Heller Ehrman
Proskauer Rose
China practice
Beijing/Hong Kong
Fabiola Maria Suwanto
Perkins Coie
Bryan Cave
Estate planning and trust matters
Shanghai
Dawn Zhang
Faegre & Benson
Greenberg Traurig
Corporate & securities
Shanghai
Elaine Chen
Mayer Brown JSM
Clifford Chance
Commercial litigation
Nick Seddon
Heller Ehrman
Eversheds
Hong Kong Hong Kong
► RELOCATIONS Firm
Partner
From
To
Jincheng Tongda & Neal
James Liu
Beijing
Shanghai
Freshfields
Heiner Braun
Frankfurt
Shanghai
Proskauer Rose
Yuval Tal
New York
Hong Kong
various
JT&N
JT&N expands international practice Jincheng Tongda & Neal (JT&N) has added five new partners and opened its second office in Beijing, as the result of its recent merger with NEED International. The firm has also appointed senior partner James Liu as the managing partner in its Shanghai office. The five new partners include Lan Lan, S Sam Li, Nancy Murphy, Wang Zhaohui and Li Jinghong. All five have international experience and had practised at NEED International before joining the firm. Lan Lan, the founder of NEED International, is now a senior partner in the newly merged firm. She held the position of general manager of John Hancock Life Insurance Company (China) before establishing NEED International. S Sam Li had served as chief IP and legal counsel of the Asia-Pacific region for Rohm and Haas, a leading American specialty materials company. Nancy Murphy (Meng Fei), a member of the New York Bar, has practised with Shearman & Sterling and Skadden. Senior partner James Liu, who has been promoted to managing partner of the firm’s Shanghai branch, is expected to strengthen the firm’s offering with regards to inbound foreign investments, private equity and venture capital investment as well as M&A in the Yangtze River Delta region. JT&N’s second Beijing office is located in Oriental Plaza, in addition to its headquarters in Hua Xia Building. The new office houses the IP department and part of the international department of the firm.
金诚同达拓展国际业务 金诚同达律师事务所（下称“金诚同达”）近期与
26
NEED International合并，新增五位合伙人，并在北 京设立第二家办事处。 资深合伙人刘金志被任命为上海分所的主管合 伙人。 新加入的五位合伙人是蓝岚、李森、孟斐、王朝晖 和李京红。他们均有国际经验，在加盟金诚同达前效 力于NEED International。 蓝岚，NEED International创办人，现为新合并 事务所的资深合伙人，在创办NEED International 前曾任John Hancock Life Insurance Company (China)总经理。 李森，曾任美国著名特殊材料公司罗门哈斯 (Rohm and Haas)亚太区知识产权和法律总顾问。 孟斐，现为纽约大律师公会（New York Bar）会 员，曾在Shearman & Sterling和Skadden任职。 资深合伙人刘金志，升任上海分所主管合伙人，将 率领该所加强长三角地区的外商在华投资、私募基 金、风险创业投资和企业并购方面的业务。 金诚同达的第二家北京分所位于华夏大厦总部附 近的东方广场，作为知识产权部和国际部部分律师 的新办公区。
Heller Ehrman
Proskauer Rose
Heller’s pain translates to Proskauer’s gain Two partners in Heller Ehrman’s Beijing office will be joining a rival US firm. Joseph Cha, the former head of Heller’s Beijing office and the firm’s Asian private equity and fund formation practice, Ying Li and Ying Li, former partner at Heller who led the firm’s China business practice, have both joined Proskauer Rose as partners.
The departure of Cha and Li has left Heller Ehrman’s Beijing office partnerless and drifting into uncharted waters, while the addition of Cha and Li to Proskauer Rose’s partnership will facilitate the firm’s plan to expand into Asia. Proskauer expects to set up an office in Hong Kong within one month and in Beijing within six months to a year, subject to licence approval. Once the Hong Kong office is opened, Yuval Tal, a New York corporate partner who is an integral part of Proskauer’s Lodging & Gaming Practice, will become resident partner in the new office. All three partners will lead the firm’s entry into the region and help serve its clients as they build their businesses in China. “The Chinese and Pacific Rim economies are expanding at a robust rate, with projections showing that business activity in the area being likely to equal and even surpass that of the US and the EU in the not-too-distant future,” said Allen I Fagin, chairman of Proskauer. “This has not been lost on our clients, who also are expanding into Asia. It is essential that we be there too, not only to meet their needs but to capitalise on the many other opportunities available to us.” The firm’s Asia practice will mainly focus on three areas: lodging and gaming – a booming sector across the region; sports law – another growth industry as symbolised by the Beijing Olympics and the increasing globalisation of the world’s sports leagues; and investment funds – as private equity, hedge and sovereign wealth vehicles search out and capitalise on the multitude of opportunities in the region. Following the departure of Li and Cha, Heller Ehrman’s Asia regional managing shareholder Nick Seddon has also left the firm to join Eversheds, where he will be responsible for opening a Hong Kong office (see p20).
海陆忍痛割爱普士高喜获良才 美国海陆国际律师事务所北京办事处的两位合伙人 已转投美国的竞争对手麾下。 原海陆驻北京办事处主管、负责亚洲私募股本和 基金设立业务的Joseph Cha，以及曾任海陆合伙人 并负责中国业务的Ying Li（图），均以合伙人身份加 盟普士高。 Cha和Li的离去使海陆的北京办事处群龙无首，前 途未卜。而对普士高来说，此二人的加入可谓如虎添 翼，将有助该所实施进军亚洲的计划。 获发牌照后，普士高预料在一个月内就会开设香港 办事处，在半年到一年内开设北京办事处。香港办事 处开业后，Yuval Tal将出任常驻合伙人。Yuval Tal 现为纽约公司合伙人，负责该所的酒店和博彩业务。 这三位合伙人将率领香港分所进驻区内，为客户投 资于中国提供服务。 普士高主席Allen I. Fagin表示：“中国和环太平洋 经济体正在高速扩张，可以预见，当地的商业活动 将在不久的将来赶上甚至超过美国和欧盟。有鉴于 此，我们的客户也在向亚洲拓展。我们必须迎头赶 上，不仅要满足他们的需求，更要把握住许多其它 的机遇。” 普士高的亚洲业务集中在三方面：酒店和博彩业— 这是区内一个蓬勃兴起的领域；体育法律—北京奥 运会和世界各大体育联盟的全球化，足以说明这是又 ISSUE 5.10
NEWS | appointments >>
一个高增长的行业；投资基金—区内有众多机遇吸 引着各路私募基金、对冲基金和主权财富基金。 步Li和Cha的后尘，海陆亚洲区管理合伙人施登也 离开海陆，转投安永实律师事务所，他将负责筹办香 港办事处（见第XX页新闻）。
Perkins Coie
Bryan Cave
Bryan Cave hires principal from Perkins Coie Fabiola Maria Suwanto has joined Bryan Cave as principal in Shanghai, a move that the firm hopes to take advantage of, given Suwanto’s inner circle connections with the who’s who of Asia. She was formerly Fabiola Maria a partner with Perkins Coie’s Suwanto Shanghai office. “Many high net worth individuals and families turn to Fabiola Suwanto as their trusted advisor,” said Evan Chuck, managing partner of Bryan Cave’s Shanghai office. “She speaks their language – literally and culturally – and that ability will enhance our services to our clients as well as our international estate planning capabilities in general.” Suwanto is Indonesian Chinese and grew up in Singapore. She is fluent in Mandarin Chinese, Cantonese Chinese and Indonesian and is licensed to practise in California and Hong Kong. Her practice focuses on assisting expatriates in China, Hong Kong, Indonesia, Japan, Singapore, Taiwan and Thailand with their international estate planning and estate and trust matters. Her clients include high net worth US citizens or green-card holders living abroad, US citizens married to foreign nationals and Asian families and individuals with assets and beneficiaries in several jurisdictions, including the US.
cases, Mayer Brown JSM has further bolstered its capabilities in restructuring, bankruptcy and insolvency in Asia with the relocation of John Marsden to Hong Kong. Marsden, together with Steven Miller from the firm’s Bangkok office, will co-head the firm’s highly regarded restructuring, bankruptcy and insolvency practice in Asia. Marsden specialises in corporate restructuring and has advised on large scale and complex restructurings and insolvency cases including Moulin Group, Forefront International and the Asia Pulp and Paper. He was also the lead partner for the divestment by Bank of China (Hong Kong) of a US$2bn portfolio of non-performing loans. He has been based in JSM’s Shanghai office for three years. “In addition to cross-border insolvency cases, we also foresee a rise of distressed debt specialists and failed brokerages and funds, along with the re-emergence of fraud and financial irregularity as issues,” said Marsden.
孖士打加强破产业务 随着跨国破产案件日益增多，孖士打(Mayer Brown JSM)已将John Marsden调往香港，旨在进一步加 强该所在亚洲处理重组、破产和资不抵债案件的实 力。Marsden将与来自曼谷分所的Steven Miller一 道，共同负责孖士打高度重视的亚洲地区重组、破产 和资不抵债业务。 Marsden是企业重组方面的专家，曾在Moulin Group、福方国际控股、亚洲浆纸业有限公司等大 规模而又错综复杂的重组及资不抵债案件中担任顾 问，在中银香港出售20亿美元不良贷款组合的交易 中任牵头合伙人。他已在孖士打上海分所工作三年。 Marsden表示：“除了跨国破产案，我们估计随着 欺诈和财务违规等问题的重新抬头，危难债务以及 券商与基金倒闭方面的业务也将增加。”
Faegre & Benson
博凯挖来博钦大将 Fabiola Maria Suwanto加盟博凯成为上海分所负责 人。博凯看重的是Suwanto与亚洲名流们的密切关 系。Suwanto原是博钦律师事务所上海分所合伙人。 博凯上海分所管理合伙人Evan Chuck表示：“许 多富有人士和家族都把Fabiola Suwanto当成是值 得信赖的顾问，因为他们谈得来，不论是语言上还是 文化上，这将增强我们的客户服务，全面提升我们的 国际遗产规划实力。” Suwanto是印尼华人，在新加坡长大，能说一口流 利的普通话、粤语和印度尼西亚语，拥有加州和香港 的执业资格。她的执业领域主要是协助身在中国、香 港、印度尼西亚、日本、新加坡、台湾和泰国的外籍 人士，处理国际遗产规划、遗产和信托方面的事宜。 她的客户包括拥有巨额财富的美国公民或移居海 外的绿卡持有者、与外国人士结婚的美国公民，以及 在包括美国在内的多个司法地区设有财产和受益人 的亚洲家族和个人。
Mayer Brown JSM
Mayer Brown JSM to bolster bankruptcy practice In view of the rise in cross-border insolvency www.legalbusinessonline.com
的原设备制造（OEM）跨国公司以2亿美元收购一家 目标公司的笔记本电脑OEM业务的中国律师。
Mayer Brown JSM
Clifford Chance
Clifford Chance appoints new litigation partner Commercial litigator Elaine Chen has joined Clifford Chance as a partner from Johnson Stokes Master (now known as Mayer Brown JSM), where she met top Hong Kong litigator Brian Gilchrist in 1997. Gilchrist Elaine Chen hopped over to Clifford Chance in May 2008. “She and Gilchrist have worked together for over 10 years and have proved that they are a formidable team. Together, they will enable us to develop Clifford Chance’s Hong Kong corporate and tax litigation practice, boosting our regional team and complementing our existing strengths in financial services and regulatory litigation,” said Martin Rogers, head of litigation and dispute resolution with Clifford Chance for Asia.
高伟绅委任新的诉讼合伙人 从事商业诉讼的Elaine Chen律师已离开孖士打律 师事务所（现名为Mayer Brown JSM），以合伙人身 份加入高伟绅律师事务所。1997年，她在孖士打结识 了香港顶级诉讼律师Brian Gilchrist，后者于2008年 5月转投到高伟绅麾下。 高伟绅的亚洲区诉讼和争议处理负责人Martin Rogers表示：“她与Gilchrist共事长达十年之久，堪 称黄金组合。有了他们，将有助高伟绅发展香港的企 业和税务诉讼业务，增强我们的区域团队实力，并与 我们现有的金融服务和监管诉讼服务相辅相成。”
Greenberg Traurig
High flyer joins Greenberg Traurig as partner and shareholder Dawn Zhang has joined Greenberg Traurig’s Shanghai office as a partner in the corporate and securities practice and as a shareholder. She was previously with the Shanghai office of Faegre & Benson. Zhang has extensive experience advising clients on China-related cross-border M&A, restructuring, joint ventures, venture capital and general corporate matters. She was the primary lawyer in China to assist a leading Original Equipment Manufacturing (OEM) multinational corporation in acquiring a target company’s notebook PC OEM business for US$200m.
Dawn Zhang加盟Greenberg Traurig成合 伙人及股东 近日，Dawn Zhang以合伙人及股东身份加入 Greenberg Traurig上海分所，负责企业和证券业 务。在此之前，她在Faegre & Benson的上海分所工 作。Zhang为客户在涉及中国的跨国并购、重组、合 资企业、风险资本和一般公司事务方面提供建议，在 该领域拥有广泛的经验。她也是首位协助一家著名
27
FEATURE | China M&A >>
Made in China: M&A power surges despite
28
ISSUE 5.10
FEATURE | China M&A >>
global credit blink The worldwide legal market is being drawn magnetically towards China as inbound and outbound dealmaking surges despite the global financial crisis. M&A volume involving China has hit record levels in 2008, totalling US$68.8bn for cross-border deals and a massive US$131bn overall
W
hile the rest of the world watches stock prices plunge, a flurry of activity is pushing China’s economy to dizzying heights. ‘Made in China’ is set to be the king of brands in M&A as multimilliondollar deals are made both in and outside the country. According to Thomson Reuters, cross-border M&A activity for the fi rst three quarters of 2008 is up 160% on the same period last year. At September 2007 the volume was US$26.4bn. A year and a global credit crunch later, and that figure has risen to US$68.8bn. China is now the most targeted nation in Asia (excluding Japan) for investment. Total M&A volume, including internal deals, has swollen to US$131bn for the nine months to September 2008. Impact of global financial crisis on M&A “The fi nancial crisis has a lot of implications on M&A, but the effect will not be felt so quickly,” says Xu Ping, an M&A partner at King & Wood. “For inbound deals, there are two types of investments – the fi nancial and the strategic. Financial investments will naturally be affected more as
funds dry up quickly, so the impact will be more direct. We haven’t seen any immediate impact on strategic investments yet.” Lawyers ALB China spoke with say the high activity in outbound M&As is likely to continue as there are multiple opportunities to purchase overseas assets in less politically and economically restrictive environments. “The correction in the market represents both challenges and
opportunities for local investors as the US and European markets are most affected by the global fi nancial crisis,” says Xu, who specialises in foreign direct investment in China, M&A, international arbitration and technology transfer. “This is not to say that China will not be affected. The markets are globally integrated, but it will take a longer time to see the impact on the country.” Other lawyers concur that the fi rst sector that is likely to be affected is manufacturing, as exports shrink due to plummeting demand from China’s trading partners. M&A to rise and rise Gavin Wang, partner at Run Ming Law Office, says M&A activity will
► TOP FIVE CROSS-BORDER M&A DEALS – INBOUND CHINA Date
Status
Target
Acquirer
Rank value (US$)
3/9/2008
Intended
China Huiyuan Juice Group
Atlantic Industries
27/5/2008
Pending
China Construction Bank Corp
Bank of America Corp
$1.86bn
$2.5bn
$1.35bn
9/5/2008
Pending
Fujian Fortune Dragon Group
Jade Green Investments
18/3/2008
Pending
Huaxia Bank Co
Deutsche Bank AG
$552m
7/1/2008
Completed
Heilongjiang Xing An Group
Songzai International Holding Group
$550m
► TOP FIVE CROSS-BORDER M&A DEALS – OUTBOUND CHINA Date
Status
Target
Acquirer
Rank value (US$)
1/2/2008
Completed
Rio Tinto PLC
Shining Prospect
2/6/2008
Pending
China Netcom Group
China Unicom
$14.3bn $7.7bn
7/7/2008
Pending
Awilco Offshore ASA
COSL Norwegian AS
$3.8bn
19/3/2008
Cancelled
Fortis Investments
Ping An Insurance Co of China
$3.3bn
14/3/2008
Completed
Tuas Power
SinoSing Power
$3bn
Source: Thomson Reuters, Third Quarter Preliminary Review, Mergers and Acquisitions
www.legalbusinessonline.com
29
FEATURE | China M&A >>
► LEAGUE TABLE OF LEGAL ADVISORS TO GREATER CHINA M&A
30
Rank
Firm
Value (US$bn)
Deal count
1
Freshfields Bruckhaus Deringer
45
17
2
Linklaters
40
13
3
Sullivan & Cromwell
39
6
4
Skadden
38
7
5
Slaughter and May
30
2
6
Shearman & Sterling
29
1
7
Clifford Chance
25
12
8
Mallesons Stephen Jaques
13
7
9
Ashurst
13
2
10
Simpson Thacher & Bartlett
13
2
continue to increase given that this is an opportunity for state-owned enterprises to take equity in foreign firms. “China’s economy is still growing at a high speed. Local and foreign expansion in and outside the country are still very necessary for profit-making,” he says. “The failure of the markets in the US and UK is temporary compared to the long-term view taken by sovereign wealth and private investors in taking equity in overseas markets. They’re not just fi nancial investors, they’re also strategic investors.” The three industries that have seen M&A volumes more than double in one year are the materials, energy & power and telecommunications sectors. Roger Denny, Clifford Chance’s head of M&A – China, says that the global downturn has increased local interest in acquisitions, and that M&A activity has “bounced back” despite a two-month quiet period before and during the Olympics. “Opportunities that weren’t previously available overseas have now been tossed up by the downturn,” he notes. “The protectionism previously exercised by the West has also been lowered due to the need to seek outside interests. This has led to a very active inbound and outbound M&A flow for the country.” Denny adds that in the last month or so, business has picked up for the fi rm, which is now “busier than its busiest in 2007”. Last year, Clifford Chance advised on US$34.5bn worth of deals in Asia, excluding Japan. This year, it has advised on US$31.7bn worth of deals so far in the same region. Thomson Reuters’ figures show that the fi rm has earned third place in the league table for the number of deals done this year. Clifford Chance’s more notable recent M&A transactions include advising China Oilfield Services Limited on its US$2.5bn acquisition of Norway’s Awilco Offshore ASA, and advising Spanish telecom company Telefonica on its US$1.6bn bid for an increased stake in China Netcom. ISSUE 5.10
FEATURE | China M&A >>
► CHINA CROSS-BORDER ANNOUNCED M&A
1 January – 30 September 2008
$80
900
$70
800
$60
700 600
$50
500
$40
400
$30
300
$20
200
$10
100 0
$0 2003
2004
2005
Inbound (US$bn)
2006 Outbound (US$bn)
may be seduced by the current tremendous drop in asset values, but chances are they are not about to go into a buying frenzy. “It’s likely that local fi rms will be looking at more acquisitions, although the drop in value of recent outbound investments will most likely lead investors to be very cautious before investing large sums of cash overseas,” says Ashworth. ALB China spoke with other M&A lawyers who concur that outbound activity will increase but that local investors will continue to take the
“Opportunities that weren’t previously available overseas have now been tossed up by the downturn. The protectionism previously exercised by the West has also been lowered due to the need to seek outside interests. This has led to a very active inbound and outbound M&A flow for the country” ROGER DENNY, CLIFFORD CHANCE Local industries to stick to longterm strategy The question remains: against the current backdrop, will local companies make more acquisitions? The answer is yes and no. Cash-rich local fi rms www.legalbusinessonline.com
No. of deals
Rank value US$bn
According to Denny, the most active sector in terms of M&A is the fi nancial sector. “Clearly, recent fi nancial turmoil has led directly to a number of deals being done in the fi nancial sector,” he notes. “We anticipate this will broaden out to other sectors as companies and funds without cash or with limited credit requirements seek to strengthen their weighting here.” Freshfields Bruckhaus Deringer has also reported growing success and predicts an increase in both inbound and outbound deals. “The current turmoil will undoubtedly give rise to unique opportunities for M&A, and help to re-align pricing expectations, which had reached rather unrealistic levels prior to the start of the year,” says Robert Ashworth, head of Freshfields’ M&A practice in China. Seung Chong, partner in the M&A practice at White & Case’s Hong Kong office, says, “Overall, we see the current conditions creating a fertile environment for small to medium-sized M&A, with momentum continuing to build into 2009 and beyond.” Chuanjie Zhou, partner at Fangda Partners, agrees. “New investments will no doubt be affected by the current economic climate and a lot of the future deals will depend on private equity initiatives,” he says.
long-term view. This means sticking to acquisitions that deliver longterm profitability and international branding. “The local fi rms have always looked for a strategic fit, not for undervalued assets,” says Denny. “We’ve seen strong strategic
2007
2008 No. of deals
interests in overseas assets in the last several years coming from the government and other corporations that are largely driven by the need to secure new resources.” New resources can include anything from raw materials such as oil and gas to international branding and management knowhow in fi nancial services. “There’s no reason for players with sufficient cash, or access to it, not to continue executing market strategies driven by market share or the acquisition of brand names,” says Seung. “They continue to be active in the consumer, retail, services and heavy industrial sectors where the drivers for these industries remain the same.” More inbound M&As? With the withdrawal of Ping An Insurance’s US$3.3bn purchase of Fortis Investments, the trend for M&A activity may tilt towards an increase in inbound deals. “While we are seeing speculative enquiries, in terms of real deal activity, inbound M&As continue to outstrip outbound ones,” says Seung. According to Thomson Reuters’ fi ndings, although outbound activity surged from US$12.3bn in 2007 to US$49.1bn in 2008, these investments are largely focused in Hong Kong, with US$15.3bn Cont p34 ► 31
Firm Profile FEATURE | China M&A >>
Jun He Law Offices
New Anti-Monopoly Law: Intriguing U Jun He’s PRC antitrust practice group was one of the first among PRC and international firms alike. Over the years we have accumulated tremendous experience in this area and cultivated close working relationships with relevant governmental authorities. We have frequently been consulted by the Ministry of Commerce and other governmental authorities in the drafting and administration of the new Anti-Monopoly Law and related rules and regulations.
O
n August 1, 2008, the AntiMonopoly Law (“AML”) became effective, 11 months after promulgation by the Standing Committee of the Chinese National People’s Congress. Contrary to the general public’s expectations, only limited guidelines and regulations have been issued by the relevant authorities regarding the application of the AML and the roles of those authorities in implementing principles under the AML. Many of the queries and concerns raised by the general public regarding the AML remain uncertain and unresolved.
Roles of Different Governmental Authorities and People’s Courts According to the proposed organisational structure published by the State Council recently, three governmental agencies, the Ministry of Commerce (“MOFCOM”), the National Development and Reform Commission (“NDRC”) and the State Administration for Industry and Commerce (“SAIC”) will be the anti-monopoly enforcement agencies. These bodies will assume different duties under the AML: (i) MOFCOM will be mainly responsible for the review of “concentration of business operators”, (ii) the NDRC will be mainly responsible for “price monopoly” investigations, and (iii) SAIC will be mainly responsible for investigations into “monopoly agreement”, “abuse of dominant market position”, and “abuse of administrative power” (other than price monopoly). Further, the State Council’s Anti-Monopoly Commission has been established to organise, coordinate and direct the anti-monopoly enforcement actions to be taken by MOFCOM, the NDRC and SAIC. As of today, however, there are no detailed guidelines or regulations issued by the NDRC nor the SAIC in respect of
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the interpretations and procedures to be adopted by them for handling the investigations set forth above. Moreover, the AML restates the requirement for a national security investigation, previously required by the Chinese M&A Rules1 of any foreign acquisition concerning national security2. It was reported that ministrylevel joint meetings will be set up by MOFCOM and the NDRC to handle these national security investigations. Therefore, under the current Chinese merger control regime, if a foreign investor intends to acquire equity in or assets of a Chinese enterprise, such acquisition may be subject to three governmental approval procedures: (1) foreign investment approval on industry admittance in accordance with the Catalogue of Industries for Guiding Foreign Investment, (2) anti-monopoly review of the “concentration of business operators”, and/or (3) a national security investigation. As of today, however, there are also no detailed guidelines with respect to the procedures for handling national security investigations. On July 31, 2008, the day before the AML became effective, the PRC Supreme People’s Court circulated an internal directory notice informing the People’s Courts to be prepared to handle civil claims filed under the AML alleging monopolistic conduct. This indicates that the general public has the right to commence litigation proceedings in the People’s Courts if they believe that their interests are adversely affected by monopolistic conduct as stated by the AML.
New Developments on Chinese Merger Control after August 1, 2008 The legislation and practice of merger control anti-monopoly law in China began in 2003 when the Chinese M&A
Rules were promulgated. These rules were amended in 2006 and the Office of Anti-Monopoly Investigation was established by MOFCOM. On March 8, 2007, MOFCOM issued the Guidelines on Anti-Monopoly Filings for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (“Guidelines”), providing detailed guidelines on documents, contents of documents and timelines required for antimonopoly filings. Since the AML became effective, the State Council has promulgated only one implementation regulation, the Regulations of the State Council on the Thresholds of Filing of Concentration of Business Operators, on August 3, 2008 (“Concentration Thresholds Regulations”). The Concentration Thresholds Regulations contain the new thresholds of notification for the “concentration of business operators”3 replacing the thresholds stipulated under the M&A Rules. Notification is required if: (a) for the previous fiscal year, the total global turnover of all participating business operators exceeded RMB10.0 billion, and at least two participating business operators each had a turnover of more than RMB400 million in China; or (b) for the previous fiscal year, the total turnover of all participating business operators in China exceeded RMB2.0 billion, and at least two participating business operators each had a turnover of more than RMB400 million in China. In addition, there are some other changes relating to merger control anti-monopoly filing with MOFCOM after August 1, 2008. For example, MOFCOM will have the regulatory power to impose penalties for any violation of the notification requirements 4. Prior to August 1, 2008, there was no express law relating to penalties for any such violation. MOFCOM’s anti-monopoly ISSUE 5.10
Firm Profile FEATURE | China M&A >>
Jun He Law Offices
g Uncertainties Ahead review period has also changed. The initial review period remains 30 days. The second review period is a 90 day window, running from the date MOFCOM decides to conduct further review. Under certain circumstances, MOFCOM may extend the second review period by up to another 60 days. Other than the above-mentioned changes in notification thresholds and some other changes in merger control anti-monopoly filings with MOFCOM, most of the administrative procedures for merger control anti-monopoly filing (including offshore transactions) will still follow the procedures set out under the Guidelines, unless and until they are replaced by new guidelines or corresponding regulations to be promulgated by MOFCOM or the State Council in the future. Since the AML governs broad areas of “monopolistic conduct”5, it is expected that other guidelines and regulations in respect of the implementation of the AML such as, “price monopoly”, “monopoly agreement”, “abuse of dominant market position”, “abuse of administrative power” and “national security” may be issued in the future.
Queries under the AML Remain Uncertain Given that few written guidelines or regulations have been issued so far and since governmental agencies may adopt wide and flexible interpretations of the AML, most queries regarding the implementation of the AML remain unresolved. Here are some examples: (1) Types of transactions. Although only three circumstances are listed in Article 20 of the AML as transactions that may require a merger control anti-monopoly filing, it is still uncertain whether any other types of transactions, such as the setting up of a joint venture company, may require a merger control antimonopoly filing with MOFCOM. (2) Scope of business operators participating in the concentration. It is uncertain as to whether a seller, who no longer holds any shares in a target company after the merger or acquisition www.legalbusinessonline.com
transaction, shall be regarded as one of the business operators participating in the concentration. (3) Basis for calculating the turnover of business operators. If a business operator belongs to a group, it is also uncertain whether and how the turnover of its affiliates should be consolidated. (4) Definition of “obtaining control or decisive influence” over another business operator. This definition will be important to determine whether a transaction will be deemed a “concentration” under the AML. Article 20 of the AML clearly excludes those transactions where a buyer does not obtain control or decisive influence over the target. However, neither the AML nor the Concentration Thresholds Regulations provide any further definition of “control” or “decisive influence”. Such further definition was stipulated in the draft of the Concentration Thresholds Regulations in March 2008 but was deleted when the Concentration Thresholds Regulations were promulgated.
First Litigation Case and Merger Control Anti-Monopoly Filing Case
September, the case was dismissed by the People’s Court on the grounds that the statutory limitation period had expired. In early September, one of the world’s biggest beverage makers, Coca-Cola, announced its acquisition of shares in the largest fruit juice manufacturer in China, Huiyuan Juice. This transaction aroused concerns about China losing a renowned national brand to a foreign company and possible market monopolisation by such foreign company in the future. It was reported that MOFCOM may hold a hearing for the merger control anti-monopoly filing for this transaction, which is an important precedent case since the AML became effective, and people are adopting a wait and see attitude. Even though there are many uncertainties ahead regarding enforcement of the AML, it is interesting to see different landmark cases (such as anti-monopoly litigation actions against some of the alleged dominant operators in the market) appearing in the near future, which will inform the policies and interpretations to be adopted by different governmental authorities and the courts in China in this regard.
Several days after the AML became effective, it was reported that several companies in Beijing and Shanghai filed claims with the People’s Court in Beijing against the State General Administration of Quality Supervision, Inspection and Quarantine, for engaging in administrating monopolistic behaviour through enforcing the electronic product quality control system. In early
contact details: Janet Hui (xurr@junhe.com) Kirk Ke Tong (tongk@junhe.com) Yu Yongqiang (yuyq@junhe.com) Jun He Law Offices China Resources Building, 26th Floor 8 Jianguomenbei Avenue Beijing, 100005, P. R. China Tel: 8610-8519-1280 Fax: 8610-8519-1350 Website: www.junhe.com
1 The Rules on Mergers with and Acquisitions of Domestic Enterprises by Foreign Investors (“M&A Rules”) were jointly promulgated by the predecessor of MOFCOM, the State Taxation Administration (“STA”), SAIC and the State Administration of Foreign Exchange (“SAFE”) on March 7, 2003 and were jointly amended by MOFCOM, the STA, SAIC, SAFE, the State-Owned Assets Supervision and Administration Commission of State Council and the China Securities Regulatory Commission on August 8, 2006. 2 Under Article 31 of the AML, when a foreign investor participates in a concentration of business operators in which national security is involved, a national security investigation shall be conducted, except for an anti-monopoly review of concentration of business operators. Also, under Article 12 of the Chinese M&A Rules, parties involved in an acquisition concerning the transfer of controlling rights, which has or may have impact on national economic security, shall apply to MOFCOM for examination and approval. 3 The “concentration of business operators” under the AML refers to any of the following circumstances: (1) a merger of business operators; (2) where a business operator acquires control over other business operators by acquiring equity or assets; or (3) where a business operator acquires control over other business operators or is able to exert a decisive influence on other business operators by contract or any other means. 4 Under Article 48 of the AML, if any party implements the proposed concentration in violation of the relevant provisions of the AML, MOFCOM may order them to cease the proposed transaction, dispose of the shares or assets concerned or transfer the business within the prescribed time limit, or adopt other necessary measures to restore the market situation as if the contemplated concentration was never implemented. MOFCOM also has authority to impose a penalty of up to RMB500,000 on violators. 5 The AML applies to monopolistic conduct including “monopoly agreement”, “abuse of dominant market position”, “concentration of business operators”, or any “abuse of administrative power ” to eliminate or restrict competition.
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FEATURE | China M&A >>
►
How will the government treat the Coke-Huiyuan deal vis-a-vis the provisions of the new AML? How will this deal – if permitted by the authorities – set the direction for future M&As in the country? Will the success of this deal create more inbound M&As?
From p31
worth of deals making up a 31% market share of all outbound M&As. Inbound activity also saw a spike, with investments amounting to US$19.7bn this year and posting a 40% growth from last year’s volume. One significant inbound deal is French energy specialist EDF entering into a joint venture with China Guangdong Nuclear Power Company (CGNPC) to construct, operate and maintain two thirdgeneration reactors in Taishan city. About US$45bn in scientific and industrial contracts between the two countries have been inked. The development of nuclear energy will help China manage its power shortages. Grandall Legal Group is representing CGNPC while EDF is represented by Clifford Chance. This deal also points to the purchasing strategy underlining most outbound deals – M&A activities continue to be driven by the need for new materials and resources at all levels. If the growth rate of the economy is to be maintained above 10% per annum, the striking of deals both ways across multiple sectors looks set to continue. The effect of the new antimonopoly law The announcement of Coca-Cola’s ambition to make an all-cash offer of US$2.4bn to purchase China Huiyuan Group Ltd, a Hong Kong-listed company that owns the Huiyuan fruit-juice business, sent waves of excitement and apprehension through the world’s business and legal communities. Given the current liquidity crisis in the markets, as well as the country’s new anti-monopoly law (AML), which came into effect on 1 August 2008, no one can predict with certainty what the outcome will be. The most salient questions are: How will the government treat the Coke-Huiyuan deal vis-a-vis the provisions of the new AML? How will this deal – if permitted by the authorities – set the direction for future M&As in the country? Will the success of this deal create more
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ISSUE 5.10
FEATURE | China M&A >>
inbound M&As in the country as investors look for more profitable places to park their money? Lawyers on the cutting edge of M&A deals in China do not think the new AML will affect transactions negatively. “There were already merger regulations, so anti-monopoly here is not new. Overall, I wouldn’t say it is an extra burden to foreign companies aiming at acquiring local assets and equities,” says Susan Ning, head of the international trade group at King & Wood. Susan Ning, Ning specialises King & Wood in international trade, antitrust and foreign direct investment in China. “On its own, I think the AML will only have marginal impact on M&A activity,” Ashworth says. “The international norm is that only a small percentage of announced transactions are blocked due to anti-trust review. Deals that involve significant industry consolidation will therefore be subject to hurdles, though the ones in this category do not get announced. National security review and local brand protection will continue to feature in view of the AML and M&A.” Some lawyers believe that the new law may even give deal-making in China an added fi llip. “Essentially, the old regime before the AML came into effect already applied merger control elements to M&A deals that had a foreign investment element,” says Seung. “A merger control regime doesn’t in itself limit M&A activities – it provides a framework to work within and around it. Complying with the regime may in fact increase M&A activity as businesses may be required to be disposed of or re-structured.” Even if it falls through, CocaCola’s bid to acquire Huiyuan will be seen as a landmark deal that will set a number of precedents for future cross-border M&As. The authorities will no doubt be examining the transaction closely. www.legalbusinessonline.com
“There were already merger regulations, so antimonopoly here is not new. Overall, I wouldn’t say it is an extra burden to foreign companies aiming at acquiring local assets and equities” SUSAN NING, KING & WOOD “If it fails, it may affect foreign investors’ interest for a short time, but in the long run, it will make the government processes more apparent and make M&A in the country more attractive,” says Wang. Ning, who has handled more than two dozen major anti-trust compliance reviews, says the new AML is based on global practice and is “not China-specific”, although “the lack of implementing rules is a hurdle so far”.
The law was drafted after extensive review of anti-trust laws in the EU and US. National security and local protectionism may still feature strongly in considering M&A deals like the Coca-Cola bid. In any event, both the new law and current global economic conditions will mould all future M&A transactions, as much as the outcomes will continue to shape the country’s legal and economic landscape as it hurtles towards globalisation. ALB 35
FEATURE | In-house Legal Summit >>
ALB In-house Legal Summit: Hong Kong 2008
Two hundred senior in-house counsel met in the Excelsior Hotel to discuss the most pressing issues that they, as lawyers, face. The informative workshops, and lively and entertaining panel discussion as to whether different skill sets are required by in-house and private practice lawyers set the pace
A
s the keynote speaker at the Hong Kong In-house Legal Summit aptly pointed out, the role of the corporate counsel in Asia is in a state of flux. Gone are the days when the crux of an in-house’s role was simply about advising on the law; now, they are expected to be all things to all people. On one day, they may be police or general practitioners, on another, counsellors, mediators or even priests, and, on the worst of days, martyrs or even scapegoats for a variety of ills that may beset their companies from time to time. Yet, at the same time, at no point in history has the role they play assumed such importance. As one in-house counsel told ALB, the days when corporate counsel were quietly ushered away from board and executive meetings are very much in the past. They now move on the same track as CEOs, VPs, directors and the like – and have the stock options to prove it.
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This is evidence of a trend, one that the keynote speaker identified as being the increasing ‘corporatisation’ of Asia’s in-house counsel. This corporatisation was the overarching theme, emphasised in the modules presented to delegates at the In-house Legal Summit Hong Kong. In each of the workshops, in addition to the old gospel of risk management, allocation and compliance being thoroughly covered, areas such as strategic planning and positioning touched on crucial issues such as how to align counsels’ functions so as to serve the broader commercial aims of their employers rather than simply to say ‘no.’ The commercial realities influencing in-house lawyers and the heightened need for business acumen that this entails was identified by all delegates as one of the most pressing concerns influencing their day-to-day work, a concern which the lively panel discussion revealed as being unique to the in-house role. ALB ISSUE 5.10
FEATURE | In-house Legal Summit >>
IN-HOUSE SUMMIT WORKSHOPS IP Issues in Mergers & Acquisitions ONC Lawyers IP assets have been assuming growing importance in M&A transactions of late and with good reason, as more and more companies realise that a welldeveloped and protected IP portfolio equals a higher asking price. Yet not all commercial lawyers Ludwig Ng, are equipped with the Senior Partner knowledge of the intricacies of IP laws. ONC lawyers helped demystify some of the commonly held myths about IP while outlining strategies for success.
Product liability litigation and China’s new anti-monopoly laws Jun He Law Offices Product liability issues will always be important when doing business in the ‘world’s workshop’. Jun He Law Offices stepped delegates through the characteristic Chinese product liability cases, some common cognitive mistakes made by counsel, judicial interpretation, Liu HongHuan, Partner expert testimony and some seminal cases in the area, concluding with the steps manufacturers, businesses and in-house counsel should take to mitigate liability in the case of faulty products. Delegates were stepped through the fine details of administrative liabilities in monopoly actions, the types of monopoly actions prohibited under the new law, the government agencies responsible for official investigation and their purviews, and closed with how the changes affected the role of the corporate lawyer and in-house counsel.
Speakers: Dr Toby Mak and Ludwig Ng
Speakers: Liu Chi and Liu HongHuan
Corporate finance in 2007 amid macroeconomic control Run Ming Law Office
How to avoid litigation: Tips on reviewing commercial contracts ONC Lawyers
Run Ming Law Offices analysed the impact that macroeconomic controls were having on the ability of companies operating in and out of China to raise finance to fund expansion and new projects including asset and project finance. The Liu Yi, presenters discussed executive partner what alternative avenues exist for companies including bond issuances, private equity investments and venture capital funding.
A commercial agreement defines the rights and liabilities of the parties to it. In so far as the drafting process is concerned, potential disputes can be minimised or avoided if the parties are prudent enough to predict what may happen, provide for that contingency and protect himself/herself with Sherman Yan, a remedy – the so-called partner, head of three Ps of drafting. These litigation areas were covered by ONC Lawyers in the context of materials constituting or forming part of the contract, canons of construction of contracts meaning and interpretation of common or standard contractual provisions, and ambiguity and uncertainty of terms.
Speakers: Liu Yi, Gavin Wang and Ron Ma
Speaker: Sherman Yan
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IN-HOUSE SUMMIT SPONSORS Lead sponsor and official airline Qatar Airways One of the world’s most innovative and dynamic airlines, Qatar Airways operates the world’s only dedicated commercial passenger terminals for its First and Business class passengers at Doha International Airport. Paul E Johannes, regional manager The new Doha Greater China International Airport, due to open in 2009, will be managed by Qatar Airways, and is expected to be able to handle up to 50 million passengers once fully operational.
Associate sponsor China Legal Career (CLC) CLC is part of the Mlegal Consulting Group, a major specialist legal recruiting firm based in the United States. CLC has an international network that spans the US, UK and Hong Kong, and Frazer Xia, specialises in placing founder/MD legal professionals for corporations and law firms, including GCs, legal directors, counsels, partners and associates. Focusing on the upper echelons of the legal market, CLC counts Wall Street, Magic Circle and Fortune 500 companies as regular clients.
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FEATURE | IP guide >>
► CHINA Top 10 domestic firms: An, Tian, Zhang & Partners; CCPIT Patent and Trademark Law Office; Chang Tsi & Partners; Hylands; King & Wood; Lifang; Liu, Shen & Associates; Watson & Band; Zhong Lun; Zhongzi Top 5 international firms: Baker & McKenzie; Bird & Bird; Gide Loyrette Nouel; Lovells; Simmons & Simmons
► HONG KONG Top 10 domestic firms: Deacons; Eccles & Lee; Ella Cheong; JSM; Lloyd Wise; Marks & Clerk; Rebecca Lo & Co; Sit, Fung, Kwong & Shum; So Keung Yip & Sin; Wilkinson & Grist Top 5 international firms: Baker & McKenzie; Bird & Bird; Freshfields Bruckhaus Deringer; Jones Day; Lovells
► METHODOLOGY: In preparation for this report, ALB China’s editorial team conducted telephone interviews with and invited submissions from partners and in-house counsel throughout Asia. The recommendations put forward by firms as part of the ALB Law Awards series were also considered. The information gathered was then collated and tallied to produce ALB China’s guide to leading IP firms. Please note that the recommendations of in-house counsel and partners were weighted against the recommendations of firms by a ratio of 2:1. Firms are listed in alphabetical order.
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FEATURE | IP guide >>
China’s leading IP law firms The rise of IP sophistication A country once thought to be ‘weak on IP’ now boasts a complex and sophisticated IP regime, but as ALB China reports, there is still plenty more change to come, and lawyers are leading the charge
T
he importance of IP issues has never been more urgent. Once considered to be lagging behind the US and European IP markets in terms of registration and enforcement, China has quickly caught up. More and more businesses are re-evaluating the prevailing paradigm of ‘IP as a means to end’, after being spurred on by, inter alia, the increased flow of international business coming in and out of the country. They now consider that protecting IP should not be discretionary but, rather, viewed as a commercial necessity – IP is very much an end in itself. It is not just businesses that have been agents for change in this area. The central government has also played a crucial role. The promulgation of domestic laws and regulations, the implementation of IP-related courts and ratification of multilateral conventions, and international agreements that present a much broader attitudinal scope have all assisted those doing business to realise that good IP protection is a
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prerequisite for innovation and foreign investment is at the heart of a nation’s economic competitiveness. If we believe that the government proved pivotal in altering business cultures and practices, then the same must be said of IP lawyers. It would have been almost unthinkable 10 or 15 years ago to suggest that the extent to which a company’s IP portfolio is developed and protected could make or break a multi-billion-dollar M&A. It would be even less likely that IP would have been vested as capital into joint ventures or strategic alliances and even less so to comprise capital market investment. Yet, today, these types of transactions are commonplace, so much so that to dwell on the novelty of them is banal. But this is not to say that mastering these elements alone is the key to success for the region’s lawyers. A common sentiment identified by a number of in-house counsels surveyed was that lawyers need to be proactive rather than reactive when it comes to IP issues.
1. CHINA Top 10 domestic firms » » » » » » » » » »
AN, TIAN, ZHANG & PARTNERS CCPIT PATENT AND TRADEMARK LAW OFFICE CHANG TSI & PARTNERS HYLANDS KING & WOOD LIFANG LIU, SHEN & ASSOCIATES WATSON & BAND ZHONG LUN ZHONGZI
Top 5 international firms » » » » »
BAKER & MCKENZIE BIRD & BIRD GIDE LOYRETTE NOUEL LOVELLS SIMMONS & SIMMONS 39
FEATURE | IP guide >>
2. HONG KONG Top 10 domestic firms » » » » » » » » » »
DEACONS ECCLES & LEE ELLA CHEONG JSM LLOYD WISE MARKS & CLERK REBECCA LO & CO SIT, FUNG, KWONG & SHUM SO KEUNG YIP & SIN WILKINSON & GRIST
Top 5 international firms » » » » »
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BAKER & MCKENZIE BIRD & BIRD FRESHFIELDS BRUCKHAUS DERINGER JONES DAY LOVELLS
“Our IP is our competitive businesses’ advantage, but it is always under threat,” said one inhouse counsel from a multinational IT company. “When we do business in Asia, we just don’t want to know what is happening, we want to know what will happen and how we can manage assets effectively.” As the lists of mainland China and Hong Kong fi rms indicate, international fi rms still maintain an advantage over domestic fi rms, even though restrictions are placed on them in relation to the practise of local law. But there are distinct signs that the tide is turning and that domestic fi rms are beginning to capture a greater market share – the key being local knowledge. “International fi rms can advise on international aspects of transactions and that’s important, yes, but local market knowledge – local legal, cultural and historical knowledge – is arguably more important,” said one general counsel from an Australiabased natural resources company. “Lawyers need to balance the importance of the international with the importance of the domestic,” he said. And this is advice that is certainly relevant to all IP lawyers operating in the country.
CHINA: Getting serious It may have taken an event the scale of the Olympic Games to bring the importance of IP enforcement in China into focus, but lawyers throughout the country have adopted the attitude that it is better late than never, believing that moves such as the promulgation of a national IP strategy are sure signs that the country is committed to keeping its legal infrastructure on the same track as its economic development. But this is only the tip of the iceberg, according to IP lawyers in the country. While governmental endorsement of IP is crucial, the far greater challenge rests with convincing the majority of the country’s companies that IP enforcement is a winnable battle and a commercial necessity. The general mindset for many companies, according to sources close to ALB China, is that they see minimal value in investing the manpower and capital required for a dedicated adherence to IP regulations. “In my experience, many of the companies operating here have trouble seeing the forest [instead of] the trees. Some perceive IP enforcement to be a waste of money.” This attitude prevails in spite of the fact that good IP protection ISSUE 5.10
FEATURE | IP guide >>
attracts FDI, encourages innovation and develops self-owned brands that increase the competitive power of the domestic industry. But the groundswell of enforcement activity that was evident in the lead up to the Beijing Olympics is considered to be catalyst for a change in attitude, particularly the Chinese courts’ willingness to enforce IP protection. Susan Munro, of O’Melveny & Myers’ Shanghai office notes that such moves send a strong signal to the business community as to the utility of protecting IP. “We’re seeing more help from the government and this is extremely important for the country’s economic development. The Beijing and Shanghai IP courts are strong jurisdictions and we are beginning to see some high damages coming out of these courts.” The temptation of high damage awards, it seems, is one that is hard to pass up for most companies, and could see the IP legal services market
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“We’re seeing more help from the government and this is extremely important for the country’s economic development” SUSAN MUNRO, O’MELVENY & MYERS grow exponentially in the short to medium term. While this is an exciting prospect for IP lawyers, profiting through the boom is by no means a fait accompli. While the need to deliver commercially oriented yet pragmatic advice will remain, the key to striking longer term enforcement plans will be the ability of lawyers to deliver streamlined enforcement strategies malleable enough to preempt, or at least predict, the processes of regulatory change.
HONG KONG: Specialists shadowing established players High-end counterfeiting, the flow of fake goods from mainland China and
so-called ‘shadow’ companies continue to remain topical issues in Hong Kong, serving as major impediments to the protection and enforcement of IP rights. Despite the previous degree of transgression, there are signs that the tide may be turning. Hong Kong customs have been extremely active in cracking down on counterfeit syndicates, having already established cooperative agreements with the general administration of customs in Beijing and the customs officials in Guangdong province, both of which have yielded immediate results. The issue of ‘shadow’ companies – companies whose registered names include a trademark belonging to
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lawyers, the decreasing segmentation of the IP legal services market indicates that specialist IP law fi rms are set to challenge the market share held by full-service fi rms.
Regional perspective
another party – also continues to loom large on Hong Kong’s IP landscape, with enforcement litigation often proving costly and detracted. In this regard, the Hong Kong government has announced its plans to amend the Companies Ordinance to assist trademark owners to combat this. But according to sources close to ALB China, even if this does go ahead, judicial discretion as to which ‘shadow’ companies should be struck
42
off the company register will remain. However, judging from the courts’ past interpretations of this provision, there will be difficulties for companies wanting to enforce their IP rights. Yet this has not stopped companies such as Anheuser-Busch, Panasonic, Toshiba and Adidas launching action against companies infringing their trademarks. While these areas alone will provide more than enough work for Hong Kong
Meanwhile in other Asian jurisdictions, law firms of all shapes and sizes are jostling for market supremacy. And while it is still the larger corporate firms that hold the upper hand at the moment, ALB China’s research suggests that the balance of power in the IP legal services market is shifting rapidly in favour of boutique practices. Praised for their ‘hands on’ approach in client care, the region’s in-house lawyers also believe that the flexible approach to IP law offered by these smaller firms is the key to their corporations’ survival in a cut-throat business environment. The rise of specialist IP law firms is seen in lists of leading IP law firms in Asia, succinctly mapped in the annotated illustration opposite. ALB
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► ASIA’S LEADING IP LAW FIRMS ► INDIA
► VIETNAM:
► KOREA
Top 10 firms: Amarchand & Mangaldas & Suresh Shroff & Co; Amarjit & Associates; Anand & Anand; AZB & Partners; Chandrakant M Joshi; FoxMandal Little; K&S Partners; Kan & Krishme; Khaitan & Co; Lex Orbis IP Practice
Top 5 firms: Gintasset IP Law Firm; Investconsult Group; Le & Le; Pham & Associates; Vision & Associates
Top 5 firms: Kim & Chang; Lee International; Shin & Kim; You Me; YP Lee, Mock & Partners
► THAILAND Top 5 firms: Domnern Somgiat & Boonma; LawPlus; Rouse & Co International; Satyapon & Partners; Tileke & Gibbins
► JAPAN
► PHILIPPINES Top 5 firms: Poblador Azada & Bucoy; Quasha Ancheta Peña & Nolasco; Romulo Mabanta Buenaventura Sayoc & De Los Angeles; SyCip Salazar Hernandez & Gatmaitan; Villaraza & Angangco
Top 10 firms: Abe, Ikubo & Katayama; Anderson Mori & Tomotsune; H Okada; Momo-o, Matsuo & Namba; Mori Hamada & Matsumoto; Nakamura & Partners; Nishimura & Asahi; Seiwa Patent & Law; TMI; Yuasa and Hara Top 5 international firms: Baker & McKenzie GJBJ; Foley & Lardner; Hogan & Hartson; Lovells; Morrison & Foerster
► MALAYSIA Top 5 firms: Henry Goh & Co Sdn Bhd; Shearn Delamore & Co; Tay & Partners; Wong & Partners; Wong Jin Yee & Teo
► SINGAPORE Top 5 firms: Amica Law; ATMD; Drew & Napier; Lee & Lee; Rodyk & Davidson
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► INDONESIA Top 5 firms: Am Badar; Amroos & Partners; Biro Oktroi Roosseno; Lubis, Santosa & Maulana; Pacific Patent
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FEATURE | offshore financial centres >>
Setting sail: listing offshore The world’s appetite for emerging market investment opportunities has remained strong, despite capital market volatility. Domestic companies have been meeting some of the IPO demand and secondary listings on foreign exchanges, and central to these transactions are boutique offshore law firms that service the key offshore jurisdictions used to facilitate foreign listings Listing on a foreign exchange – the business case ‘Offshore’ typically connotes tax havens for companies. But, in recent times, using a vehicle incorporated in offshore jurisdictions to list a business on a foreign exchange is a means of accessing investors for companies that operate in emerging markets. This growing trend has resulted in boom times for offshore law firms, with much of the work coming from China. 44
“State-owned enterprises are able to access domestic bank loans with ease. For privately owned companies, however, these loans are not as easy to obtain. As a result, private companies must look to foreign public markets or private equity to access the capital they need in order to grow,” says Xu Ling, Beijing Guantao partner. Christopher Bickley, partner at Conyers Dill & Pearman – Hong Kong offshore, notes: “Tax advantages are a given, but tax alone is not a sufficient
reason to list offshore. You need to find a jurisdiction that is accepted by the capital markets.” Foreign investors want to invest using exchanges with which they are familiar and feel comfortable. The London, New York and Hong Kong markets, in particular, offer political and economic stability, and established legal and regulatory systems. A foreign listing can be completed more quickly using an offshore vehicle. Regulators in offshore jurisdictions are ISSUE 5.10
FEATURE | offshore financial centres >>
no less responsive and a foreign listing can also help a company to develop a platform for international expansion. In contrast, local laws may render rights desired by investors – such as shareholder, management, voting or pre-emptive rights – unenforceable. Similarly, joint ventures cannot be listed on local exchanges, and it is the same for different classes of shares, such as preference shares. Compared to the legal framework offered by offshore jurisdictions and foreign exchanges, the country’s company law may not seem as flexible.
Finding your audience Tailoring a listing to appeal to an appropriate investor base is evidenced by the admission of Beijing-based China Boqi Environmental Solutions Technology to the Tokyo Stock Exchange in August 2007. Advised by Guantao, China Boqi was the first www.legalbusinessonline.com
mainland China-based company to go public on the Tokyo bourse’s first section. The technology at the core of the company was developed in Japan. Naturally, Japanese investors were familiar with it, making Tokyo a natural market for the company. The company’s stock soared 61% on its first day of trading. China Boqi used a Cayman Islands-domiciled company as the listing vehicle, and Guantao and Conyers for advice and services in respect of the corporate structure.
Red-chip listings face hurdles At the time of China Boqi’s listing in Tokyo, neither the creation of the Caymans holding company nor its listing required approval from the country’s securities regulator. However, if the same transaction were being considered today, Xu Ling from Guantao believes that the process would not be as straightforward. Cont p48 ►
“If the local company’s shares are not already located in an offshore entity, the process is going to be more difficult” CHRISTOPHER BICKLEY, CONYERS DILL & PEARMAN
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Firm Profile FEATURE | offshore financial centres >>
Harney Westwood & Riegels
Harneys: An offshore firm with global reach
H
arneys is one of the leading offshore law firms with offices in the British Virgin Islands, the Cayman Islands, Anguilla, London and Hong Kong. Harneys has 56 lawyers globally, and over 200 staff in total.
Addition of a Cayman Practice
Michael Gagie
Harneys recently opened its Cayman Islands office via a merger with Cayman Islands firm CS Gill & Co. Harneys partners Kieron O’Rourke and Tim Clipstone have relocated to Cayman and the firm is building Cayman legal teams for its offices in London and in Hong Kong. “Our intention in providing Cayman advice is to enable us to better serve both existing and potential clients. In Asia, we recognize that clients are using corporate vehicles established in either one or both of BVI and Cayman for particular types of transactions or business/product lines and we believe there is substantial demand from clients for an alternative to existing Cayman law providers in the market,” says Michael Gagie, the head of the Hong Kong office.
Hong Kong Office Harneys has been providing legal services to Asian clients for over 20 years and opened its Hong Kong office in February 2005. Key practice areas for the Hong Kong office include banking & structured finance, corporate, M&A and investment funds services. Since opening, Harneys’ Hong Kong office has experienced good growth in terms of workflow, doubling its revenue last year and will be adding two new lawyers over the coming quarter, according to Gagie. “Having a physical presence in Asia has really benefited our business not only in terms of raising both our profile and share of work in the region, but it has helped us to understand better
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what clients need in this region and we have responded to that.”
Client Services Gagie says that Harneys distinguishes itself from the other firms by providing the same level of excellent client service to all clients, ranging from leading international businesses and banks, to local private companies and individuals. “In Asia, we understand that speed of response, provision of real time advice and competitive pricing are key criteria for clients looking for legal advisers and as a service provider, we work hard to fulfill those expectations for all our clients.” Gagie also believes that his firm’s increased focus on the ‘BRIC’ (Brazil, Russian, India and China) and emerging market economies will, in the longer term, pay dividends both for the firm and its clients wherever they are: “A number of our recently recruited lawyers were targeted by us for their legal and linguistic backgrounds. We are working towards having full service teams of lawyers who themselves come from those jurisdictions which have an increasing demand for offshore services and who understand the local market requirements and conditions. Our recent hire of Chetan Nagadra, a senior Indian lawyer, is a good example of this.”
Harney Westwood & Riegels 1507 The Center 99 Queen's Road Central Central Hong Kong Michael Gagie, Partner Email: michael.gagie@harneys.com Phone: 852 3607 5300
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FEATURE | offshore financial centres >>
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FEATURE | offshore financial centres >> From p45
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This is due to the provisions on M&A of domestic enterprises by foreign investors issued by China’s Ministry of Commerce (MOFCOM) and five other ministries, which came into effect on 8 September 2006. These provisions permit a share exchange between a PRC company and an offshore company (a key part of establishing the listing vehicle), but make it difficult for the offshore vehicle to list on a foreign exchange. In addition to other approvals, the provisions require the listing company to receive pre-approval for the foreign listing from the country’s securities regulator. Furthermore, the pre-approval period is a relatively short 12 months. If the offshore company fails to complete its listing within that time, then the preapproval will expire. Considering the amount of time these transactions take to complete and the delays often caused by market conditions, this time period is considered by local lawyers as extremely short. Bickley predicts that a change in the rules will have an impact on the ability
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of local companies to list overseas: “If a company’s shares are not already located in an offshore entity, the process is going to be more difficult.” Xu Ling, meanwhile, believes that local companies are waiting to see how the rules play out. “It’s a quiet period, but that doesn’t mean that local firms will give up pursuing an offshore listing,” says Ling. However, the restrictions, the time-consuming nature of an offshore listing and the likelihood that any pre-approval period will expire before the listing is completed may result in fewer foreign listings by local companies. A domestic listing of a PRC company may ultimately prove easier and more appropriate once demand improves and the onshore exchanges are able to offer a more attractive price/ earnings multiples. “China is like any other emerging market,” says Marc Yates, partner with Ogier – Jersey. “They really want to build their own structure and get it recognised, but the reality is that it takes time.”
London: LSE, AIM and SFM The Alternative Investment Market (AIM) is a junior market of the London Stock Exchange (LSE) and the most common London exchange for offshore listings. AIM now has over 1,600 members, 20% of which are either
Which offshore jurisdiction? The differing opinions held by offshore law firms about which offshore jurisdictions are preferred by domestic companies tend to reflect each law firm’s strengths, location, history and marketing strategy. However, the differences between each jurisdiction are many, and geography and time zones do matter. Depending on the particular circumstances and objectives of the business seeking a foreign listing, there will be a ‘best fit’ in terms of foreign exchange and offshore vehicles. Companies must rely on their domestic legal, tax and accounting advisors to help them identify the best offshore jurisdiction through which to access their preferred exchange. Globally, the competition between exchanges to attract listings is fierce, particularly between those in the major financial centres – London, New York and Hong Kong. NASDAQ, the New York Stock Exchange (NYSE) and the Singapore Stock Exchange (SGX) have opened offices in Beijing to better enable them to compete against the Hong Kong Stock Exchange (HKEX), reflecting on China as a major source of new listings.
domiciled or have their main business operations outside of the UK. Some 48 Chinese companies are listed on AIM. According to a study from LSE in 2007, 9.6% of AIM companies were incorporated in the Caymans, 9.6% in BVI and 7.8% in Bermuda. Similar numbers of Jersey, Guernsey and Isle of Man companies are listed on AIM. “There is a tendency for PRC companies to look to the AIM market”, says Ling. Companies choosing to list shares on AIM typically use Jersey or Guernsey structures, since BVI and Cayman companies can only list GDRs.
New York: NYSE and NASDAQ Market participants cite several concerns related to listing in the US, such as costs associated with Sarbannes-Oxley compliance and the threat of shareholder class actions. However, the prestige and robust corporate governance offered by a US listing remain attractive to Asian companies. As to which offshore jurisdictions are preferred, Yates believes that the Asia market is more familiar with BVI and Cayman companies. ISSUE 5.10
FEATURE | offshore financial centres >>
As of April 2008, the NYSE Group (which now includes Euronext exchanges) has 52 companies from Greater China listed, including 42 from mainland China, five from Hong Kong and five from Taiwan. The total market capitalisation of the 42 NYSElisted mainland Chinese companies was US$1.5trn. There are about 46 companies from Greater China listed on NASDAQ – the second largest overseas market for the exchange. Walkers recently advised on a US$226m offering and listing of Simcere Pharmaceutical Group’s ADRs on NYSE in April 2007, through a Cayman-incorporated company.
Companies must rely on their domestic legal, tax and accounting advisors to help them identify the best offshore jurisdiction through which to access their preferred exchange
Hong Kong: HKEX HKEX has become a natural choice for local companies, particularly for SOEs. Increasingly, companies that list on the H-Share market are doing so in connection with an A-share listing on the Shanghai Stock Exchange. About 75% of the companies admitted to the HKEX are offshore companies. “It’s a well-travelled path”, says Cont p52 ►
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FEATURE | offshore financial centres >>
For many companies operating within emerging markets, ‘offshore’ now means ‘access to investors’ From p49
►
Bickley. “Investors are familiar with the Hong Kong market.” Traditionally BVI, Bermuda and Cayman companies form part of these offshore structures for Hong Kong. HKEX has special rules for Bermuda and Cayman companies that require, among other things, extra provisions to be included in incorporation documents to bring them up to the standard accepted by the HKEX. Applebys recently advised on the BVI aspects for the IPO of China Power Development, one of the leading independent power producers in China, on HKEX. In the past, NASDAQ was the preferred exchange for domestic technology companies, but a major shift began to occur in 2006 as the NYSE and HKEX began to aggressively court Chinese companies. The decision by B2B portal alibaba. com to list in Hong Kong rather than on NASDAQ was something of
a watershed. The company believed it could achieve a higher valuation because Hong Kong was closer to the operation and investors there better understood Alibaba’s business model. The company raised US$2.7bn and the listing was 251% oversubscribed.
Singapore: SGX and Sesdaq Foreign listings account for approximately one-third of listings on SGX and its junior Sesdaq board, by number and market capitalisation. Approximately 48% of the foreign listings are by Chinese companies. SGX senior executive vice-president and head of markets, Gan Seow Ann, reported that in 2007 new foreign listings accounted for about 70% of the total number of listings on SGX. SGX hopes that by 2012 more than half of its listings will be foreign companies.
Convergence in the offshore market and the future Yates says that his firm’s strategy is based on the convergence that they see happening within the offshore world, as the benefits of each jurisdiction become more homogeneous. “The driver for determining where a structure is located will depend on client factors,” he says. “Convenience, location – of both the business operations and management – and location of their investor base,” he says. Offshore firms that focus on only one jurisdiction recognise the need to broaden their scope. Collas Day, in particular, with its focus on the UK capital markets, is looking to build Jersey and Isle of Man. Offshore firms contacted for this overview reported revenue growth, particularly in relation to work from emerging markets. Cains revealed that its revenues had increased by 33% over the last three years, and that profitability was up 37%, due in a large part to the growth they
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are experiencing in their advising of international AIM admissions. Partner Michael Gagie of Harneys says that, in revenue terms, the firm as a whole had had its “best year ever”, the Hong Kong office’s revenue almost doubling. Cains’ growth is also coming from the east, mainly the emerging markets of India, Kazakhstan and China, which is the rationale behind its recent opening of an office in Singapore. Partner Michael Edwards says: “We realised that you can’t build an Asian practice from Europe. We looked at various locations, including Dubai and Shanghai, but chose Singapore because it’s increasingly being used as a hub for Southeast Asia and it has a very close relationship with India.” Any effect of the domestic regulatory changes is yet to be felt. Market volatility, on the other hand, is already making an impact. Hugh O’Loughlin at Walkers has seen a huge amount of listing activity in the last 12 months, although a few transactions have been delayed. Bickley says: “This year there has been a strong deal flow, but not like last year, which was very hectic. People are taking a bit more time to get their deals done and to get the timing right.” It is possible that strong domestic markets become another threat to offshore business. The realities of the greater transparency and accountability that comes with an offshore listing, including possible personal liability of directors and officers, in addition to the new regulatory hurdles, may make a domestic listing more attractive. This concern was emphasised by Yates. “The issue for local companies when listing abroad is the adoption of the necessary corporate governance regime and the rules that they have to comply with,” he says. “In most cases it’s a step up … some companies may not be ready for that level of regulation and scrutiny.” ALB ISSUE 5.10
FEATURE | offshore financial centres >>
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Sign off >> FoxMandal aims to keep its lawyers little
UK lawyers earning big bucks
I
A
ndian firm FoxMandal Little has launched a new yoga and gymnasium program for staff at its corporate office. The free initiative offers staff the option of either personalised or group yoga classes. Managing partner Som Mandal says the facilities are intended to reduce stress and help employees lead happier lives, in addition to being beneficial to the firm’s bottom line. “The program is set to have a positive effect on employee commitment to work, staff turnover and recruitment, and performance productivity,” he says. The ‘work-life balance’ mantra has been given a good run of late by law firms in Asia. Last month Singapore firm Rajah & Tann created a ‘chill-out’ room for its 600-plus employees fitted out with Nintendo Wii and Microsoft Xbox consoles and a pool table.
Top law firms excel in equality index L
aw firms Clifford Chance, Orrick Herrington & Sutcliffe, Wachtell Lipton Rosen & Katz and White & Case are among 64 firms who have boosted their chances of attracting and retaining top talent by appealing to all employees – regardless of sexual orientation. The top four firms were part of a handful to receive a perfect score in the Human Rights Campaign Foundation’s 2009 Corporate Equality Index, billed as “a report card on lesbian, gay, bisexual and transgender (LGBT) equality in corporate America”. Criteria considered by the foundation included nondiscrimination policies, domesticpartner benefits and diversity training, and firms such as Orrick – which earned the 100% rating for the third consecutive year – earned top scores by encouraging lawyers to participate in minority and LGBT professional associations and actively supporting the LGBT community through a combination of pro bono legal services, financial contributions and volunteerism.
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report by Legal Business recently revealed that 2007 was a good year for UK’s corporate lawyers. According to results, lawyers in the corporate field enjoyed an increase of 14% in profits from the previous year, with the top 100 commercial law firms earning combined revenues of £13.9bn (€17bn). Slaughter and May nabbed first place as the most profitable firm, with a £1.7m profit per equity partner – with Freshfields (£1.4m), Linklaters (£1.2m) and Allen & Overy and Clifford Chance.(£1.1m) following closely.
2008 deal rankings to date ► TOP CHINA A-SHARE IPOs SO FAR 2008 Issue date
Issuer
28/01/2008 26/02/2008
China Coal Energy Co Ltd China Railway Construction Corp Zijin Mining Group Co Ltd Jinduicheng Molybdenum Group China South Locomotive Joyoung Co Ltd Binjiang Real Estate Group Co Guangdong Weihua Corporation Shaanxi Provincial Natural Gas Guangdong Tapai Group Co Ltd
18/04/2008 10/04/2008 6/08/2008 15/05/2008 24/05/2008 5/05/2008 31/07/2008 24/04/2008
Proceeds (US$m) 3,559 3,113 1,429 1,277 955 216 175 172 155 143
Source: Thomson Reuters
► TOP FIRMS FOR DEAL VOLUME – YEAR TO DATE (AS OF 5 SEP 2008) Legal advisor
# of deals
Value (US$m)
1. Skadden, Arps, Slate, Meagher & Flom
137
296,911
2. Latham & Watkins
180
292,436
3. Sullivan & Cromwell
94
255,712
4. Allen & Overy
162
229,472
5. Linklaters
161
196,705
41
191,958
7. Freshfields
196
188,648
8. Clifford Chance
182
180,926
9. Gibson Dunn & Crutcher
82
180,457
10. Weil Gotshal & Manges
78
174,374
25,528
2,209,456
6. Simpson Thacher & Bartlett
Industry total
Source: Thomson Reuters
Billable greeting cards L
awyers in the US now have an alternative to the monotonous greeting cards of old. Leading US legal gift vendor The Billable Hour Company recently added 18 greeting cards and four books to its product range, featuring Law & Disorder cartoons by Australian legal humourist Paul Brennan. The cards – which are print-on-demand – touch on a variety of legal topics and can be customised to include a personal message, logo or signature, and even a colour photo. ISSUE 5.10