Category: RMB Fund

New Safe Harbors for Fixed Re-Sale Price Arrangement under NDRC Guidance of Automobile Anti-Monopoly?

Since 2014, continuous anti-monopoly enforcement by the Chinese Development and Reform Committee (“NDRC”) in the scale of hundreds of million RMB has raised serious compliance concern among foreign investors, particularly those in the area of trading and distribution. Among others, the landmark enforcement against Mercedes Benz reached the unprecedented amount of RMB 350 million.

Most of such enforcement targeted the very common commercial arrangement that fix or restrict the minimum re-sell price of the distributor to a third party (“Vertical Pricing Restriction”). Vertical Pricing Restriction is explicitly prohibited under Article 14 of PRC Anti-Monopoly Law, unless the exemptions exemptions under Article 15 of PRC Anti-Monopoly Law may apply (“Article 15 Exemptions”).

What If Your Contracting Party Is PRC Government?

Not everyone in small business will have the opportunity to have a contract with the local government. However, this is rather common for foreign direct investment (“FDI”) with relatively large size to have a so-called “cooperation agreement” with the local PRC government.

Typical contractual provisions in this type of contract normally provide for the commitment of the local PRC government (“Government”), including without limitation:

Chinese “Deep Rock” Subordination of Shareholder Loan?

–A Brief Comment on Precednet Case Published by the PRC Supreme People’s Court (2015) regarding Shagang v. Kaitian

On 31 March, the PRC Supreme People’s Court (“SPC”) published 4 precedent cases with binding effect. Among others, the enforcement objection case between Shagang and Kaitian was considered the first PRC case borrowing the “Deep Rock Doctrine”, a U.S. equitable subordination doctrine well established in the Taylor v Standard Gas & Electric Company (1939) case holding that claims, as creditors, upon an insolvent subsidiary company by controlling shareholders or other insiders (such as managers or directors) shall be deemed to receive the same treatment as shares of stock owned by the said insider, and thus shall be subordinated to the claims of all other creditors.

The Chinese Case Law System

–A Brief Comment on Notice of the Supreme People’s Court on Issuing the Provisions on Case Guidance

It has been conventional wisdom that PRC is a codified and civil law jurisdiction where the cases already ruled by the court is not binding and precedent effect upon the later case. In that sense, legal practitioners can only rely upon the general and vague black and white statutes and thus give rise to unbridled judicial discretion for possible corruption.

Comments on 2015 Version of CIETAC

Chinese International Economic and Trade Arbitration Commission (“CIETAC”), probably one of the busiest arbitration administration institution all over the world, has promulgated its new version of arbitration rules on 2015. (“2015 Rules”)

Compared to the 2012 version of CIETAC arbitration rules, there are more than 20 changes in the text and 3 in the appendix of the 2015 Rules. Among others, such revisions aim to alter the structure of CIETAC by employing functional division between the Secretariat – providing public service under Art 19 of the Charter of CIETAC, and the Arbitration Court – replacing the Secretariat in administering cases. In the meantime, the new 2015 Rules also take steps to embrace existing practices in international arbitration practice.

巴菲特谈伯克希尔投资生涯-50年的总结

In the Beginning

一切的开始

On May 6, 1964, Berkshire Hathaway, then run by a man named Seabury Stanton, sent a letter to its shareholders offering to buy 225,000 shares of its stock for $11.375 per share. I had expected the letter; I was surprised by the price.

1964年5月6日,当时由 Seabury Stanton经营的伯克希尔哈撒韦向股东发出了一封信,提出以11.375美元/股的价格购买225,000股伯克希尔的股票。我猜到了这个信件,但却为价格感到惊讶。

Overseas investments

Overseas investments made through an RMB Fund are subject to approval requirements established by various Chinese authorities.

1. Approval by the National Development and Reform Commission (“NDRC”)

Before an agreement is executed, an offer is made and application for approval is submitted to the relevant approval authorities of the host country (region) in connection with the overseas investment, the RMB Fund is required to obtain advance approval from the NDRC for the investment. For overseas tendering or acquisition projects, if the investment amount reaches USD 100 million or above, prior to bidding for or taking any formal business actions on an overseas investment, the RMB Fund shall submit to NDRC a written “Information Report”, stating the investor’s basic information, background concerning the investment project, location of the investment, the industry in which the investment will be made, projected scale of investment and construction, and the time schedule. NDRC will issue a confirmation letter within 7 business days after they have received the Information Report. If the investor makes necessary outlays or expenses, denominated in foreign currency, during the early stages of the transaction (including performance security, and guarantees), the investor shall apply to NDRC for ratification.

What is a FIP?

Foreign Invested Partnership Enterprise (“FIP”) is a strategic structure devised as a tool to benefit the PE/VC industries, making the Chinese marketplace and its vast Chinese Yuan-Renminbi (“RMB”) liquidity far more accessible to foreign investors or fund managers. Under FIP’s new measures, foreign entities or individuals in their capacity as general partner of a fund are able to source investment in foreign currencies in tandem with sourcing RMB already onshore in the PRC for their fund. Furthermore, the FIP provides that non-Chinese enterprises and/or individuals may set up a FIP on their own, or include Chinese individuals and/or companies and become partners of a FIP. Previously such an arrangement was limited to Joint Ventures.