Table of contents 1. Legal and tax innovations in France 2. How to prepare well for an IPO in France 3. Offering circulars in France 2

Transcription

1 2 nd nd SINO-FRENCH FINANCIAL FORUM Legal and tax innovations for Chinese investors on French financial markets 北京 2008 年 10 月 17 日 Beijing,October 17, 2008 北京香格里拉饭店 Shangri-La Hotel Beijing 1

2 Table of contents 1. Legal and tax innovations in France 2. How to prepare well for an IPO in France 3. Offering circulars in France 2

3 1. Legal and tax innovations in France 3

4 1.1 Legal innovations 4

5 1. Legal and tax innovations in France Modernisation of French Corporate Law : End of the obligation to translate in French and to register Foreign companies' by-laws Modernisation of issuing regime of preferred shares Development of mid caps: extension of liquidity agreements to companies listed on Alternext Paris 5

6 1. Legal and tax innovations in France French Financial Markets and Corporate Governance : High level of performance of French boards of directors Transparency on security lending before general meeting of shareholders Disclosure of major holdings on Euronext Paris 6

7 1. Legal and tax innovations in France French Financial Markets and Integrity : Short selling under scrutiny AMF enforcement powers increased Conclusion 7

8 1.2 Tax innovations 8

9 1. Legal and tax innovations in France Extension of the special tax regime for company headquarters to financial services groups Elimination of the contribution des institutions financières (special tax on financial institutions) and suppression of the stock-market tax for non-resident investors Reforms of the tax regime of listed real-estate companies and of the levy on non-resident capital gains on immovable properties Renegotiation of the France-China tax treaty : - Main changes to be expected - Possible schedule - Perspective for Chinese investors in France 9

10 1. Legal and tax innovations in France Main feature of France impatriate tax regime : - strict conditions to be fulfilled - limited income tax exemption New regime applicable from January 1st 2008 much more attractive : - scope extended to new categories of impatriates - income tax exemption boosted with a 50 % tax break on foreign sourced passive income - wealth tax exemption introduced France impatriates tax regime now one of the most competitive in Europe 10

11 2. How to prepare well for an IPO in France 11

12 2. How to prepare well for an IPO in France- introduction Preparing well for an IPO means that: - the company should have a crystal clear legal and tax situation; and - the company should comply with the Chinese regulations on Special Purpose Vehicles for indirect listings 12

13 2. How to prepare well for an IPO in France- scope of legal DD The legal DD will be carried out: - On the company (establishment, existence and current status) - On the company s assets (real estate, land use right, intellectual property, etc.) - On the company s products (compliance with regulatory and licensing requirements) - On the company s human resources (compliance with regulatory requirements and labour contracts) - On the company s shareholders (legality of shares/equity held in the company, legitimacy of status of shareholders, etc.) - On the company s operation (all licences, permits, certificates held by the company, litigation/arbitration against the company, administrative procedures involving the company, all material contracts to which the company is a party, etc.) 13

14 2. How to prepare well for an IPO in France- main aspects of the tax DD The tax DD will mainly concern: - complete tax compliance check - tax liability exposure - the validity of any local tax incentives and their possible impact on the balance sheet 14

15 2. How to prepare well for an IPO in France- the key issues which often arise Issues which are most often identified during the legal due diligence process are as follows: - Unclear shareholding structure during the early stages of the company s history: could impact on restructuring and IPO process - Unpaid or underpaid social insurance for employees (or voluntary opt-out): could impact on profitability - Underpaid land premium (but with land use right certificates in place): could impact legality of the land use right - Unclear environmental impact: possible exposure to environmental liability - Tax incentives granted by local authorities : possible financial impact if incentives cancelled 15

16 2. How to prepare well for an IPO in France- role of lawyers The Chinese and French lawyers are not trouble makers but trouble shooters (they will solve the issues identified in the DD), they will: - Work closely with other due diligence teams (financial advisors, auditors, HR advisors, valuers, etc.) - Be prepared for follow-up work (pre-ipo restructuring, drafting of prospectus, etc.) - Be prepared for questions from the stock exchange 16

17 2. How to prepare well for an IPO in France- basics about SPVs Direct listing: Chinese companies list overseas directly but must satisfy strict eligibility requirements Indirect listing (red-chip listing): - Structure involving the establishment of an offshore SPV as listco which is used to acquire Chinese companies. - Structures may also take other forms (for ex: contractual arrangements) - Choose places of incorporation for the SPV that are favoured by both countries 17

18 2. How to prepare well for an IPO in France- administrative procedures MOFCOM and CSRC approval, SAIC registration Approval from MOFCOM for the establishment of an offshore SPV is required Approval from CSRC is also required Pre-registration and final registration with SAIC SAFE registration SAFE Circulars No. 75 and No. 106, foreign exchange registration is required for: Establishment of SPV or injection of assets or shares into SPV Conversion of a foreign entity into an SPV Inbound acquisition by SPV Change of capital structure of a SPV (after IPO) 18

19 4. Offering circulars in France 19

20 4. Offering circulars in France Simple procedure: Preparation of the document directly in English, no translation requirements No control by the regulatory authority since there is no public issue Contents similar but lighter than a prospectus Private control : the listing sponsor will certify the contents of the offering circular to Euronext before the listing Ease of relations with Euronext Paris: quick and efficient team Quick procedure: 1) The listing sponsor and the company draft the offering circular 2) The listing sponsor petitions Euronext and prepares the listing file 3) The offering circular is published on the Alternext and the company s website 10 market days before the listing 4) The listing occurs 20

21 4. Offering circulars in France Mile stones Contents : as close as possible to a real prospectus: Preparation for a future IPO Most chapters will only require minor adaptations Benchmarking: most offering circulars are nowadays drafted on the exact plan of a prospectus: Chinese companies listed on Alternext like China Corn Oil, Ningbo Great Leisure and CNPV French companies like Monceau Fleurs, Adthinkmedia and Cortix Profit estimates and forecasts should be avoided in the offering circular: They require the company to have their statutory auditors certify the forecasts The company will have to publish follow-up information 21

22 Contact details Emmanuel Meril Partner, Representative in China, CMS Bureau Francis Lefebvre DDial: / emmanuel.meril@cms-bfl.com Bruno Zabala Of counsel, Banking & Finance, CMS Bureau Francis Lefebvre DDial: bruno.zabala@cms-bfl.com Stephane Austry Partner, Tax,, CMS Bureau Francis Lefebvre DDial: stephane.austry@cms-bfl.com Jacques Isnard Partner, M & A Corporate,, CMS Bureau Francis Lefebvre DDial: jacques.isnard@cms-bfl.com 22