cnpupdate - Colin Ng and Partners

50 Raffles Place #29-00,Singapore Land Tower, Singapore 048623Tel: (65) 6323-8383 • Fax Line: (65) 6323-8282Website: http://www.cnplaw.comOctober/November 2003CNPUPDATEAN UPDATE FOR OUR CLIENTS AND FRIENDSListing of PRC Companies in SingaporeAs of October, over 40 companies have listed on the Singapore Exchange this year.Taking into account those companies which have lodged preliminary prospectuseswith the Monetary Authority of Singapore to-date, a total of about 50 new companiesare expected to be listed on the Singapore Exchange this year, of which more than10 either originate from PRC or derive the bulk of their earnings from businessoperations there.The Greater China Practice Group from CNP provides a brief guide on important issues to consider forPRC companies are looking for a listing in Singapore. (This is an excerpt of the article. For the completearticle, please visit our website, www.cnplaw.com)Approval from the China Securities Regulatory Commission (CSRC)Under current PRC law, a PRC company that wishes to list directly on the SingaporeExchange is required to obtain an approval from the CSRC. However, if the equityinterests of the PRC company (the Company) is held by a Singapore or offshorecompany, the listing of the Company would not in general require approval. This isbecause the requirement to obtain a “no objection letter” from the CSRC was abolishedin April this year. If the shareholders of the Company include PRC companies whetherpursuant to a restructuring exercise or otherwise, then approval may be required. If theshareholders of the Company include only PRC individuals but not PRC companies, thenthe position taken by several PRC lawyers is that no CSRC approval would be required.New PRC laws on mergers and acquisitions (M&A)In an acquisition of a PRC company, the PRC M&A laws contained in the TentativeProvisions on the Acquisition of Domestic Enterprises by Foreign Investors (Provisions)would apply. The Provisions, which came into effect on 12 April 2003, cover both shareand asset acquisitions and have introduced various new provisions. For example, underthe Provisions, a formal appraisal is now required in respect of all transfers of equity/assets in PRC companies made pursuant to an equity/assets acquisition by foreigninvestors. The Provisions also govern other aspects of an M&A deal includingconsideration, payment methods and transfer of state-owned assets.Foreign exchange controlsThe consideration for the acquisition of a PRC company may take the form of foreigncurrency, renminbi or shares in the acquiring company or any other company. There aredifferent and specific foreign exchange control requirements governing the payment ofconsideration applicable to these respective forms. For example, if the consideration isin the form of foreign currency, the foreign exchange control authority of the place wherethe transferror of the equity is located will carry out the registration procedures for thereceipt of the foreign currency for the transferor.Effecting equity transfersIn the PRC, there are different forms of companies, such as Limited Liability Company,Company Limited by Shares and Foreign Invested Enterprise. Different provisionsgoverning equity transfer would apply, depending on the type of PRC company involved.Generally, when effecting an equity transfer in a PRC company it is important to ensurethe transfer is approved by/registered with the relevant authority which originallyapproved/registered the establishment of the company. Approvals from relevant PRCauthorities such as the Ministry of Commerce (formerly known as Ministry of ForeignTrade and Economic Cooperation or MOFTEC) are also required. These are in additionto ensuring that the relevant equity transfer agreement is properly executed.Foreign Investment Guidelines Catalogue (Catalogue)Of importance are the investment guidelines contained in the Catalogue which areapplicable to foreign investors acquiring a PRC company. Under the Catalogue,industries in PRC are grouped into 4 categories - Encouraged, Permitted, Restricted andProhibited. It is important to determine which category the PRC company in questionfalls within. For example, the PRC shareholder of a PRC company involved in a restrictedindustry may be required to maintain a controlling interest in the company postacquisition.ConclusionWhile the above points raised may not be exhaustive, we hope that this article has givenyou a flavour of the issues which commonly arise in connection with an IPO of a PRCcompany on the Singapore Exchange.Readers are reminded that the articles, comments and opinions expressed are not intended torepresent or provide legal advice and should not be relied upon. Formal legal advice should be soughtto cater to each reader’s specific needs.From the desk of Colin Ng...CNP Turns15 This Year!On 1st September 1988, Colin Ng &Partners was founded. Tracing and lookingback at our growth from our beginnings onthe 13th floor of Robina House in ShentonWay to the current main office on the 29thfloor Singapore Land Tower, we haveevolved and changed in many ways. Wenow have more than 120 staff and lawyersin five offices across the region. Wecontinue to look forward to a future ofpositive changes and further development.Looking back, we would not have beenable to be what we are without the supportfrom friends and clients. Looking forwardtoo, we will not be able to continue ourgrowth if we do not maintain and grow ourinternal and external support. As a showof our appreciation, we are organising our15th Anniversary Celebrations with a twist- a movie screening of the final instalmentof The Matrix blockbuster trilogy “TheMatrix: Revolutions”. Invited are clients,friends and staff of CNP.The celebrations already have anauspicious start. CNP has won theinaugural CCH Legal Technology Award inthe Best Developer category for the year2003 - an encouraging achievement forour firm and endorsing our increasinginvestment to the use of technology for thedelivery of legal services. We were alsoinvolved in the listing of China FoodIndustries, participated in the InternationalDesign Forum and launched our Chinesewebsite. In addition, we have a number ofseminars coming up. Once again, wethank you for your continued support andhope you enjoy this issue of CNPUpdate.MITA NO. 174/06/2002

THEBACKPAGECNP 15th Anniversary CelebrationsTo celebrate the 15th anniversary of the firm, CNP is organising afun-filled evening for clients and staff on 6th November 2003(Thursday). CNP will be hosting over 800 guests and staff forcocktails and a movie at the Cathay Cineleisure Orchard. Ourintended guests will include senior management and membersfrom various local and multinational corporations and bankinginstitutions. What better way to entertain the guests at this inviteonlyevent - apart from the scrumptious spread of finger-food -than to travel to the future and awaits the human race’s fate with themuch-anticipated final instalment of The Matrix trilogy: “The Matrix: Revolutions”!CNP wins CCH Legal TechnologyAward for ClientNetCNP won the inaugural CCH Legal Technology Awards Singapore, whichrewards and recognises outstanding IT movers and shakers in the legalcommunity. CNP bagged the award in the “Best Developer” category forthe development and implementation of ClientNet, the firm’s in-house webbased software solution for data management and on-line resourcecurrently used by the Credit Management, Conveyancing and IPdepartments. The Best Developer category is open to all law firms thathave developed and implemented an in-house application or solution.With ClientNet’s benefits easily identifiable to users - clients and in-house personnelalike - the award was another mark of recognition for the year-old system. The awardwas given at the Law Society Dinner & Dance on 18th October 2003.CNP launches the Chinese websiteCNP is proud to announce the launch of the firm’s Chinesewebsite (www.cnplaw.com). The site is created for clientsof the firm who have businesses in Greater China andvisitors to the firm’s website who are more familiar withChinese language. More than a mirror site of the existingEnglish web page, the Chinese website houses all thepertinent information on CNP, including latest news at CNP,topical articles as well as insight into CNP, its lawyers, history and areas of practices.CNP, Freehills and Haarmann Hemmelrath ina joint seminar on “Competition Law”Competition issues will become increasingly important forbusinesses in the structuring of their operations andoverseas expansion with globalisation of markets. Most ofthe countries with whom Singapore has close economicties have competition law regimes in place. In Singapore,currently there are sectoral competition frameworksadministered by regulators of the infocomm, media andenergy industries. Singapore intends to enact a generic competition law by January2005. Business executives should begin to gear up to compete in the marketplaceunder a new ball game. CNP has formed a competition law focus group, staffed bylawyers trained in competition law and exposed to competition issues in practice.In conjunction with this new launch, CNP held a joint seminar with Freehills (one of thelargest law firms in Australia) and leading European law firm Haarmann Hemmelrath oncompetition law on 22 October 2003 at The Oriental, Singapore. The three-hourseminar and cocktail session saw the Principal Economist of the Market AnalysisDivision of the Ministry of Trade & Industry Dr. Robert Ian McEwin and speakers fromthe three firms sharing the basic concepts and principles of competition law commonin most jurisdictions. The event was well attended by legal counsels, managers anddirectors from local and multinational companies and financial institutions.If you would like information on any article or if you would like to receive this publicationvia email, please do not hesitate to contact our Corporate Affairs Executive, Ms Thin Lei Winat Tel: 6349 8727 or Email: lwthin@cnplaw.com.If you receive our regular newsletters but would like to be deleted from our circulation list,please advise Linda Koh at Tel: 6349 8606 or Email: lkoh@cnplaw.com.This newsletter can also be found on our website: www.cnplaw.comChina Food IndustriesLimited IPOWe would like to congratulate China FoodIndustries Limited for its recent public offeringof shares in Singapore and its listing on theOfficial List of the Stock Exchange of SingaporeDealing and Automated Quotation System(SESDAQ). China Food is principally engagedin the business of distribution of food products,pig farming, production and sale of animal feedand production of pork, pig by-products andvariety meats.The public offer consisted of 27 million newshares, of which 2.5 million shares were by wayof public offer and 24.5 million shares were byway of placement, at an offer price of $0.22 foreach share. The net proceeds from the publicoffer amounted to approximately $4.3 million.CNP were the solicitors to the public offer. Thepublic offer was handled by Partner and Co-Head of Corporate Finance, Tan Min-Li andassociates, Chua Kern and Tok Boon Sheng,from our Corporate Finance Group.CNP Participated in InternationalDesign Forum (IDF)The Technology and Intellectual PropertyPractice Groups from Colin Ng & Partnersparticipated in IDF, an IE Singapore eventorganised by Reed Exhibitions, held from 2ndto 4th October 2003. The conference featuressome 20 speakers from 9 countries andincluded design leaders from prestigiouscompanies and institutions such as IBM,Stanford University and 3M. The event had twoother elements: exhibition and fringe activities.CNP was involved in all three.CNP Co-Head of Intellectual Property PracticeGroup and Resident Hong Kong Partner Ai-Leen Lim participated in the Business Panelon the first day of the conference (BusinessPerspective) and shared the legal issuesinvolving the importance of copyrights andpatents for designs. Ai-Leen also addressedthe visiting ASME members on the 3rd October2003. CNP also had a booth where IP/ITlawyers were on hand to advise visitors on IP/IT related matters.Mitigating HR Risks inSingapore Employment SeminarAs more and more businesses go throughrestructuring, decision-makers need to beaware of the relevant legislation governingEmployment. This seminar seeks to arm all HRdecision-makers with the relevant strategiesto secure their businesses against any formof liability and to effectively manage potentialemployment disputes. The Litigation Teamfrom Colin Ng & Partners, led by Head andPartner Samuel Chacko, will be conducting atwo-hour workshop on drafting employmentcontracts and retrenchment letters. Theseminar, organised by JobStreet Businessconferences, one of the largest onlinerecruitment websites in Asia Pacific, will beheld on 3rd December 2003 (Wednesday)at the Amara Hotel from 9:00am to 5:30pm.For more information, please contactHanson Poh at (65) 6827 5600/5601 orregistration@watchtowerasia.com.