Hi restlessbirdFurther to the UK Laws re Chinese companies. The...

Hi restlessbird

Further to the UK Laws re Chinese companies.

The UK has introduced tough laws regarding Chinese takeovers as the Chinese have previously used the Hanlong takeover modus operandi to acquire assets at below fair market values.


In light of the Hanlong fiasco, Australia should adopt tough laws similar to the ones imposed in the UK. See downloadable attached pdf.

http://www.ashurst.com/doc.aspx?id_Content=6387


Two interesting UK takeover regulations are;

“Cash confirmation
The Takeover Code requires a cash bidder to obtain a
"cash confirmation" from its financial adviser,
confirming before a firm offer announcement can be
made that the bidder has the fu II funding for the bid.
This will require the bidder's financial adviser to
instruct its own lawyers to guide it as to the
requirements for satisfying this obligation. Because
the Takeover Code specifies that the financial adviser
will itself have to provide the money to complete the
bid if the bidder fails to do so and the financial adviser
failed to act responsibly, this is an onerous and
important requirement for financial advisers. In
practice, this means that fully documented and
committed finance must be in place before the
takeover is announced - a requirement which
frequently surprises foreign bidders.”

And

The Takeover Panel want approval from the NDRC before the bid is announced.

“the Takeover Panel does not normally
consider regulatory approvals required by the bidder
for outbound investment, such as the NDRC and SAFE
approvals required by Chinese companies, as being
acceptable for inclusion as objective conditions. This is
broadly speaking because the Takeover Panel assumes
that the grant of these types of outbound approvals
could be influenced by political or nationalist factors
rather than by objective criteria such as analysis of
competition law. As such, these types of approvals
should be obtained in advance of the offer being made
if the bidder wishes to be able to withdraw the offer
should the approvals not be forthcoming. In practice,
this can result in some timing issues since obtaining
these approvals in advance of a transaction may not
be customary in the PRC. For this reason, preconditional
offer structures can be used whereby the
Chinese regulatory approvals are obtained (satisfying
the pre-conditions) before the formal offer is
announced by way of an unconditional firm offer”



In light of the Hanlong debacle, maybe someone should forward the pdf document to ASIC?

Kind regards,

Tongal