Interesting article from Westlaw Business
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BIG LAW IN CHINA: OFFSHORE PRC TRYST
Full article at : http://currents.westlawbusiness.com/Article.aspx?id=da321b4b-2350-4e5d-a289-1bcdd5d34c69
(Westlaw Business) New York?s biggest and brightest firms have been working overtime to lend their legal expertise across the seven seas. Of interest are their recent dealings on China-focused M&A structured through the Caribbean Islands. These companies, large, small and initially unknown in some cases, are steadily drifting over to U.S. public markets.
For many PRC-based businesses, the Caribbean Islands are a popular place to incorporate, presumably due to favourable company laws rather than the favourable climate. Notable Chinese enterprises that are domiciled in the Caribbean include Macau casino concessionaire Melco Crown Entertainment and Baidu Inc, were both incorporated in the Cayman Islands. A major drawback for these offshore-incorporated enterprises, however, is that they cannot file for an initial public offering in China, where foreign companies still cannot list on public exchanges. As a result, many of these enterprises, armed with American legal counsel, are still turning to U.S. stock markets for capital.
Aside from representing more established Chinese clients, U.S. legal powerhouses have also been doting on smaller clients, some of which are virtually unknown outside of China. Earlier this summer, Douglas Ellenoff and Stuart Neuhauser of Ellenoff Grossman advised FlatWorld Acquisition Corporation, a British Virgin Islands (BVI) SPAC, on a China-related share purchase, as well as the blank check company?s imminent initial public offering in the United States.
According to securities agreements filed with the SEC in October 2010, FlatWorld?s sponsor, a second BVI company by the name of FWAC, purchased approximately 1 million shares of FlatWorld in July 2010. FWAC has further committed to a warrant subscription agreement to purchase 3 million warrants via private placement upon the successful completion of FlatWorld?s U.S. offering. Presently, the SPAC is in the process of filing its listing documents with the SEC. Although an exact date for the offering has not been confirmed, FlatWorld intends to 35 million units at US$10 each: the units will comprise of one ordinary share and one warrant to purchase an additional ordinary share.
