Partner Yingxi Fu-Tomlinson Discusses Recent Private Equity Court Rulings in Asian Venture Capital Journal
As seen in Asian Venture Capital Journal’s “Chinese Courts Threaten PE Protection”
Asian Venture Capital Journal recently wrote on a significant Chinese court ruling that questioned the amount of down-side protection afforded to private equity funds. The specific case at hand concerned private equity firm Suzhou Industrial Park Haifu Investment, which sued its portfolio company Gansu Shiheng after it failed to meet net profit guarantees. The court dismissed the claim and did not grant the compensation the plaintiff sought, declaring the net profit provision invalid. This ruling places China even further behind in getting its investor protection practices up to speed with its growing capital markets. Many such customs utilized internationally to protect investors, including issuance of preferred shares and ratchet clauses, are not allowed in China.
So how does one provide such protection in China? “In China, investors would have to look for protection through a contractual agreement with founders and other shareholders. However from an enforcement perspective, a shareholder agreement and a statutorily provided structure are somewhat different species.” said Kaye Scholer Partner Yingxi-Fu Tomlinson, a corporate attorney based in Shanghai.
Also of Interest
- Bloomberg Business: Moriarty Returns for “Taking Stock” ETFs & Bitcoin Podcast September 22, 2016 • Media Mentions
- O’Keefe Featured in the Daily Journal on the 2016 Proxy Season September 15, 2016 • Media Mentions
- Pro Bono Team Advances CodeEd’s Comp Sci Efforts for Coeds September 14, 2016 • Client Successes
- SEC Proposes Exhibit Hyperlink Requirements September 8, 2016 • Client Alerts
- Consumer Products: Adapting to Innovation Fall 2016 • Reports / Newsletters
- ILS and Zinsser Analytic Shareholders Sell to Gardner Denver Medical September 2, 2016 • Client Successes
- Kaye Scholer Secures Dismissal of Merger-Related Class Action Against Baltic Trading September 1, 2016 • Client Successes
- Kaye Scholer Advises Veracen on Merger of Equals with Turner Investments August 31, 2016 • Client Successes
- Doing Deals with Competitors: Beware of Taking Minority Equity Stakes or Board Seats August 24, 2016 • Articles