China (PRC)

Screenshot 2020-04-29 at 6.57.13 PMBy Lilian Woo and Wynne Lau, CONYERS

 

On February 27, 2020, China Resources Microelectronics officially launched its initial public offering (IPO) on the SSE Star Market, becoming the first Cayman incorporated company to be listed in Mainland China. It has raised approximately US$614 million, which will primarily be used for investing in 8-inch high-performance sensor and power semiconductor construction projects, and partly for improving product manufacturing and technological innovation capabilities, as well as strengthening forward-looking technology and product research and development capabilities.

Acting as the Cayman Islands and British Virgin Islands legal counsel to China Resources Microelectronics, our firm formed a team led by Lilian Woo, a senior partner with almost 30 years of experience, and Wynne Lau, a newly promoted partner with nearly two decades of experience. The team also consisted of Beverly Cheung (associate) and Rowan Wu (legal manager) as well as paralegals, who worked together to handle this highly significant and ground-breaking project.

China Resources Microelectronics is one of the largest power semiconductor enterprises in China. In the ranking of Chinese semiconductor companies for 2018, China Resources Microelectronics was the only enterprise in the top 10 that mainly operates as an integrated device manufacturer, and was the largest power device enterprise in China.

Screenshot 2020-04-29 at 7.00.46 PM

What is the significance of the China Resources Microelectronics IPO?

First of all, it is the first red-chip structured enterprise in China to directly launch an IPO on the A-share market.

Secondly, it is the first red-chip enterprise listed on the A-share market that operates in the form of a limited company rather than a joint-stock company.

It also represents the first A-share issuer whose par value of shares is in Hong Kong dollars instead of renminbi.

Last but not least, it has set an unprecedented example of a listed enterprise exercising an over-allotment option (commonly known as a greenshoe option) on the SSE Star Market.

Given the multiple “firsts” China Resources Microelectronics has created, there is no precedent for reference when coping with some legal issues. In the face of differences between offshore and PRC laws, the prime task is to assist the client in coordinating different requirements of offshore and onshore jurisdictions, and smoothing out the difficulties in application process so as to ensure a successful listing. Drafting articles of association for the issuer has proved to be one of the biggest challenges as Cayman law is based on the Western common law system. Though it is a Cayman company, the requirements on the rights of, and protection for, its shareholders shall in no way be less stringent than those of the PRC laws and regulations. As such, we have to abandon the standard form of the constitutional documents for Cayman companies and use innovative drafting skills to bridge the gap between the two completely different jurisdictions.

Another challenge faced by the offshore lawyers for China Resources Microelectronics was to conduct due diligence on a vast number of companies within a very short time frame. Unlike a typical due diligence, a different approach was necessary for this listing project. Our legal team conducted extensive due diligence on not only existing subsidiaries of the issuer, but also companies that were once in the group but had subsequently been dissolved. The sheer volume of work made it more difficult and time consuming than a regular IPO in Hong Kong.

 

Screenshot 2019-11-27 at 5.52.12 PM

W: www.conyers.com
T: (852) 2842 9525

E: Lilian.Woo@conyers.com – T: (852) 2842 9588
E: Wynne.Lau@conyers.com – T: (852) 2842 9532

 

Related Articles by Firm
Electronic signatures and virtual meetings — the Bermuda, British Virgin Islands and Cayman Islands legal framework
The introduction globally of travel restrictions and containment measures arising from Covid-19 has significantly disrupted business, including creating logistical issues in closing corporate or financing transactions or holding board and shareholders’ meetings ...
There’s no place to wind-up like home
When entertaining a jurisdictional challenge to wind-up a foreign company with no place of business in Hong Kong, is it a material concern that alternative remedies for unfair prejudice are available at the company’s place of incorporation but not ...
Offshore Separate Portfolio Companies in the Family Office and Private Client World
SPCs and SACs are offshore limited liability companies with an added twist ... Could a SPC/SAC ever take the place of a trust?
Scheme away
Given current financial conditions in the equity markets, opportunities for privatisations abound and schemes of arrangement are all the rage again.
Shareholder rights to requisition a general meeting
Most articles of association of offshore companies listed in Hong Kong have provisions that empower shareholders to requisition a general meeting.
Offshore 2020 — themes and trends
With the first quarter of 2020 behind us, Richard Hall of Conyers Dill & Pearman’s Hong Kong office looks at the themes that are emerging for Bermuda, Cayman and British Virgin Islands entities, both in Hong Kong and globally ...
BVI court issues key decision on recoverability of costs
The decision is welcome guidance and clarification on the recoverability of costs incurred by non-qualified persons employed in BVI firms.
General meetings in the time of Covid-19
How the Hong Kong government’s regulations on group gatherings affect offshore incorporated companies.
Registering private funds with CIMA
All Cayman entities which fall within the definition of “private fund” in the Private Funds Law, 2020 and which are carrying on business on or after February 7, 2020 have until August 7, 2020 ...
Private wealth and estate planning for People’s Republic of China citizens and residents
Driven by an exceptional period of Chinese entrepreneurship in the last decade, high-tech manufacturing, IT and fintech are now key components of the Chinese economy ...
Privy Council confirms that fair value in Cayman merger appraisal is different from fair value in Delaware appraisals
Fair value is to be determined by the Cayman Courts based on the overall scheme of the Companies Law.
What are the recent developments in offshore trusts?
Offshore trusts are used for a variety of different purposes relating to both private wealth and commercial transactions. They depend largely upon the existence of professional trustees able and willing to take on the business of being a trustee ...
Related Articles
Covering Ears to Steal Bells: Ignoring insolvency at risk of liquidation
The closest Chinese equivalent to the English idiom of ‘sticking one’s head in the sand’ is ‘covering one’s ears to steal bells’ ...
JV Compliance Issues during the Transition Period under the new FIL
On 1 January 2020, the Foreign Investment Law of the People’s Republic of China came into force ...
Related Articles by Jurisdiction
The Novel Coronavirus: Anatomy of key employment issues in Mainland China, Hong Kong and The Middle East
Information for employers in Mainland China, Hong Kong and the Middle East.
Anti-trust compliance in exercising patent rights (Part 1)
As the Qualcomm case has come to light and the Provisions of the State Administration for Industry and Commerce on Prohibiting the Abuse of Intellectual Property Rights to Preclude ...
Shanghai clarifies labour dispatch rules
The Shanghai Municipal Human Resources and Social Insurance Bureau and Shanghai Superior People’s Court jointly issued the Meeting Minutes on Application of Law on Labour Dispatch on 31 December 2014.
Latest Articles
Watch again: “Is Covid-19 taking women lawyers’ careers back to the 1950s?”
A second chance to watch….. the opening Women In Law Dialogue Series Webinars: Asia and North America time-friendly (first aired ‘live’ in August 2020) ...
Covering Ears to Steal Bells: Ignoring insolvency at risk of liquidation
The closest Chinese equivalent to the English idiom of ‘sticking one’s head in the sand’ is ‘covering one’s ears to steal bells’ ...