【文章內容簡介】 t must be signed by all parties 2 ? The FIE submits the application for equity change to the local Foreign Investment Commission (FIC) ? The FIC must reply within 30 days after submission 3 ? Upon approval the FIE must plete all registration procedures at the Administration for Industry and Commerce and other related Governmental bodies within 30 days 1): Foreign Invested Enterprise Backup An equity transfer agreement must cover the following contents Backup Equity transfer agreement ? Name, address and legal representative of both the transferor and the transferee ? Shares and price of the transferred equity ? Date and way of equity transfer ? Right and responsibilities of the transferee ? Consequences in case of violation ? Applicable laws and conflict resolution ? Validation period and termination of the agreement ? Date and place of the agreement singing For Geberit, the bottom line of buyout price could be determined on the basis of financial parison analysis Backup Buyout ? Dismissal fee: USD 250,000 (90% of employees dismissed) ? Audit fee: USD 20,000 ? Buyout price: USD 149,000 ? Dismissal fee: USD 360,000 ? Audit firm: USD 20,000 ? law firm: USD 20,000 ? Tariff return: USD 19,000 ? Total: USD 419,000 Bankruptcy Termination Generally speaking, termination is unfavorable to Chinese partner, however, it can be used in some cases to achieve the foreign partner’s objective very quickly (personal incentive) Explanation Total Criteria Cost ? Employee dismissal fee: USD 100,000 ~ USD 360,0001) ? Audit firm: USD 20,000 ? Tariff return: USD 19,000 ? Personal incentive 139,000~399,000 USD Risk ? Lida is not willing to sell out equity ? Dismissal fee dispute ? Government’s concern on unemployment to ? Negotiation period max 2 months ? Termination period within 4 months Time 3~6 months Integration ? Under current situation, providing Chinese partner agrees, termination can be the most favorable option for Geberit but it’s very hard to reach agreement with Chinese partner without incentive terms ++ 1): Whether to take Lida employees’ service time in Shanghai Lida into account results in different amount of employee dismissal fee Compared to bankruptcy, termination generally has lower cost, shorter execution period and more simple procedure in liquidation Termination Bankruptcy Initiate party ? Joint venture (Board of directors) ? Joint venture (Board of directors) Liquidation procedure ? Regular liquidation ? Bankruptcy liquidation ? Board of directors ? Government ? Court ? Audit firm ? Law firm Liquidation mittee ? Other cost ? Audit firm cost ? Law firm cost ? Other cost Liquidation cost Time ? 3~6 months ? 6~18 months Bankruptcy In view of cost, time, risk and future integration, bankruptcy should be the last choice for Geberit Explanation Total Criteria Risk ? Can’t get government approval ? Lida’s opposition ? Dismissal fee dispute ? Negative press ? Lose everything including: investment loan, account receivable and staffs Time ? 6~18 months (Although the China’s Bankruptcy Law provision that the liquidation should be pleted within 6 months, many cases actually last for more than 1 year 6~18 months Integration ? Complicated process to keep the business running ? To transfer equipment to Daishan or Ningbo could be very difficult Cost ? Employee dismissal fee: USD 100,000 ~ USD 360,0001) ? Audit firm: USD 20,000 ? Law firm: USD 20,000 ? Tariff return: USD 19,000 159,000~419,000 USD 1): Whether to take Lida employees’ service time in Shanghai Lida into account results in different amount of employee dismissal fee Bankruptcy procedure in case of the decision made by board of director 1 ? All the members of BoD1) agree to bankrupt the pany. ? The BoD and the supervising body of the Chinese partners in case of JV agree to dissolve the FIE2) ? The FIE applies to the local Foreign Investment Commission in order to formally begin the liquidation procedure 1): Board of Directors 2): Foreign Invested Enterprise Liquidation procedure 2 3 4 5 6 ? Upon approval the BoD must anize a liquidation mittee within 15 days of the beginning of liquidation ? The FIE must provide written notification of the name and ad