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 【通知】：苏州10月25日中国公司海外融资上市研讨会——会议议程和内容（三号通知） |
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【通知】：苏州10月25日中国公司海外融资上市研讨会——会议议程和内容（三号通知） -- 安普若 - (856 Byte) 2005-10-22 周六, 09:36 (4156 reads) |
佳程之客
[博客]
[个人文集]
头衔: 海归中尉
加入时间: 2005/09/03
文章: 44
来自: 美国
海归分: 4954
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作者：佳程之客 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
China Repealing VC Regulations
China’s foreign exchange regulators prepare to reopen the gates to VC investment.
October 19, 2005
It may soon be safe for VCs to go back into Chinese waters.
New legislation, approved and issued Monday to local government offices by key Chinese regulators, has entrepreneurs, venture capitalists, and private equity investors breathing a collective sigh of relief.
Two new regulations reviewed by China’s Ministry of Commerce (MOFCOM) and State Administration of Foreign Exchange (SAFE) will terminate two notices issued by SAFE in January and April of this year.
Those notices, generally referred to as SAFE Circulars 11 and 29, have severely curtailed VC investment in China since their promulgation (see Investors Rethink China Exit).
According to a survey by Beijing-based VC research firm Zero2IPO, venture investment in China topped $1.2 billion in 2004. But it was down in the first half of 2005 by 8.1 percent from the first half of 2004, and down 13.8 percent from the second half of 2004.
‘It was a pressure valve, and they had to address it.’
-Rocky Lee,
Lovells
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Venture firms anticipate a quick turnaround in this decline once the new regulations are formally issued next week, according to Jasmine Lin, deputy secretary general of the China Venture Capital Association (CVCA).
“We lobbied [SAFE] to get the new circulars to replace 11 and 29,” she said. “The new circulars will accommodate the VC investment model for China to a great extent.” She declined to comment on the details of the final document until they are publicly released.
“It’s a great development for the industry,” said Lawrence Tse, partner at Shanghai-based Gobi Ventures. “When these regulations come out, most significantly, it will make the procedure for structuring companies much simpler.”
Closing Offshore Loopholes
The two notices that the new regulations will supersede were intended to close loopholes that allowed “round-tripping” of money.
Under this practice, PRC residents set up offshore companies. In turn, these offshore companies invested in wholly foreign-owned enterprises in China, thereby benefiting from favorable tax policies for foreign-invested enterprises.
The original circulars required all PRC residents to apply to SAFE for approval before setting up such structures. This onerous process was made more difficult by SAFE’s apparent reluctance to grant approvals after the promulgation of the circulars.
But because complex structures of this type have been used by all Chinese companies that have either listed or been acquired internationally, the SAFE circulars had the effect of cutting or halting VC and private equity investments in Chinese companies.
Overseas investors bought in at the offshore company, usually based in the Cayman Islands or other tax havens. This entity was the one that either listed or was acquired.
Drafts of the new regulations circulated earlier this month among law firms, industry groups, and financial institutions. They still require PRC residents who own, either directly or indirectly, offshore “special purpose companies” to register with SAFE.
Significantly, the new regulations now require only registration with that body, and not approval. Approval is expected to revert to MOFCOM, which has traditionally overseen wholly owned foreign enterprises in China.
“[The original SAFE Circulars 11 and 29] were ridiculous circulars to begin with, and they didn’t take into account what VC and private equity were doing,” said David Zhang, vice president of WI Harper Group in Beijing.
“They were issued without the approval of other ministries and were very broad,” he added. “They really restricted our venture investments. … They were well-intended, but not only were they poorly written, but they covered a macro-area of the investment community.”
Share-Swap Impact
One of the new draft regulations, known as “Measures Concerning the Merger or Acquisition of Domestic Enterprises by Foreign Investors via Equity Exchanges,” directly addresses the share-swaps that some Chinese-owned companies have used to convert themselves into wholly foreign-owned enterprises before a public offering or an acquisition.
The significance of singling out and providing a clear, legal channel for share-swap agreements is that they give a clear window into the intent of the original SAFE circulars, according to a recently issued Lovells bulletin on the new draft regulations.
The “‘catch-all language’ [of the notices] failed to specify who was the real target of the crackdown, i.e., ‘the bad guys,’” said the Lovells bulletin. “It seems to be the case that overseas listing candidates are now being classified as in the camp of the ‘good guys,’ who can be allowed to pass through the regulatory net.”
Handel Lee, managing partner at the Beijing law firm King & Wood, was upbeat about the share-swap measures.
“In terms of structuring and financing, this will open the floodgates,” he said. “We’ll see a significant increase in the acquisition of companies in China. Before, it was only possible to do so in cash, but share-swaps are the way it’s done everywhere else.”
Strenuous lobbying efforts by the CVCA may have played a role in SAFE’s decision to back off, but objections by Chinese officials may have proven more decisive.
Chinese and western legal experts speculate that MOFCOM may have objected to SAFE’s assumption of a gate-keeping role. Objections also may have come from the Ministry of Science and Technology, which has actively supported venture capital as a means of stimulating technological innovation.
“Everyone’s been on SAFE’s back,” said Rocky Lee, a technology, media, and telecommunications lawyer at Lovells in Beijing. “It was a pressure valve, and they had to address it. But SAFE got what they wanted. They raised their profile, and the issues that mattered to them have been addressed.”
Cautious Optimism
To be sure, uncertainties remain. The versions of the regulations now being circulated are not expected to undergo any substantial alteration before they are officially issued. So far, they are technically only drafts.
Questions remain on how the terms of the new regulations will be implemented. Legal experts caution founders and investors that Chinese authorities will retain a great deal of administrative discretion.
But these caveats haven’t dampened the mood of investors, who believe it’s high time that SAFE backed down, and are elated to see the clouds parting.
“I’m glad this thing will be resolved soon,” said Mr. Zhang. “It’s been expected for a while. It’s definitely a good thing for us and a good thing for the venture community.”
作者：佳程之客 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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