【正文】 make an additional payment several years after the closing if the venture achieves a specified earning target and there has been no material breach of representations and warranties by the seller. In addition to careful drafting to minimize the risk of gamesmanship in defining the financial targets and calculations of earnout payments, special consideration needs to be given to creating a mechanism that is enforceable and practical under PRC law. If an earnout is treated as part of the purchase consideration, then it will be subject to the same payment deadline applicable to the purchase price, which is within a year following the issuance of the new business license of the target. Consequently, it is necessary to craft the earnout language artfully to make sure that any additional payment, in the eyes of regulatory authorities, judges, and arbitrators, does not constitute payment of a portion of the purchase price. For instance, a buyer could instead agree to pay a consulting fee to the seller if certain liabilities are not triggered within two years of the closing. However, the seller may be wary of the tax implications of such an Another option is a buyback arrangement, where the buyer can request that the seller repurchase the equity interests originally sold to the buyer at a fixed price upon the occurrence of specified events, such as the pany39。s bank borrowings, and the same assets might have been used multiple times for making (registered) capital contributions in different panies. The buyer also needs to be extremely careful if substantial assets of a target pany were bought from the bankruptcy auction of a stateowned enterprise. If the process was not properly supervised by the court and the case was not effectively closed, the sale could risk being overturned because of a flawed auction process. Finally, prospective buyers must be vigilant and vigorous in title search and verification. Many stateowned enterprises, and sometimes even privately owned panies, may use or claim to own land officially labeled as allocated land, which is provided by the government at nominal cost (or no cost at all) but cannot be sold, transferred, mortgaged, or otherwise disposed of. A marketable title, or granted landuse right, must be obtained before such land can be sold or transferred, which could require the payment of significant land premiums to the land bureau. Assessing Liabilities Contingent and offbalancesheet liabilities may present another serious area of risk for buyers of Chinese panies. Typical areas of potentially significant liability exposure include tax, employment, legacy problems, and environmental issues. Tax due diligence should be an integral part of any buyer39。s regulatory environment is still rated among the top concerns for . panies, according to a recent survey by the USChina Business Foreign panies investing in China have to deal with the ambiguity of the law and the contradictory views of different government agencies and officials. These conditions frequently result from a bination of everchanging laws and regulations and formal and informal implementation rules. For instance, a government official with approval authority may have his own interpretation of the law and may assure an investor or its counsel that his approach is correct, while officials in another government agency suggested otherwise. Unanticipated hidden rules, which can be created by both governmental and quasigovernmental agencies, can also present challenges. For instance, a property registration center2 may employ local unpublicized procedures that require share purchase agreements or equity transfer agreements to be in a prescribed form. Avoiding these land mines doesn39。A transactions include regulatory restrictions on mercial enterprise, governmental approvals that are required in connection with purchases and sales of businesses, confirmation of title to assets, assessment of potential liabilities, and structure of purchase price and other amounts potentially payable to the seller. Circumstances in China that tend to make these matters challenging include a legal and regulatory system that is in a state of flux, unavailability and unreliability of public records, unfamiliar customs and practices, a sellers39。A Transactions 28 November 2020 Article by Lefan Gong Against the backdrop of China39。A transactions 出處：