1. Legal service dynamics of Yang Chunbao's lawyer team

1. Yang Chunbao's lawyer team participated in the discussion of the first pilot plan for private equity venture capital funds to allocate shares in kind to investors

Recently, the pilot plan of Shanghai Linli Investment Partnership (Limited Partnership) to distribute shares in kind to its limited partners was approved in principle by the CSRC, becoming the first pilot program of the CSRC to carry out the distribution of shares in kind to investors by private equity venture capital funds. Yang Chunbao's team of lawyers was honored to participate in the discussion of the first pilot program.

2. Yang Chunbao's team of lawyers provided legal services for the Pudong Leading District Industrial Development Fund Investment Fund of Funds

The Pudong Leading Area Industrial Development Fund is the first fund of funds invested and established by Pudong New Area since the release of the "Opinions of the Central Committee of the Communist Party of China and the State Council on Supporting the High-level Reform and Opening up of Pudong New Area to Build a Leading Area for Socialist Modernization". The first phase of the leading industrial development fund is invested by Pudong New Area with 5 billion yuan. It will attract leading industry funds to settle down by participating in sub-funds and continue to increase investment in key industries in Pudong. It is expected to leverage 100 billion yuan of social capital to participate in leading District construction.

Entrusted by Shanghai Pudong Investment Holdings (Group) Co., Ltd., the sponsor of the industry development fund in the leading area, Yang Chunbao's team of lawyers conducted legal due diligence on the shortlisted managers of an industry leading fund of funds, and provided legal services such as review and revision of limited partnership agreements.

2. Various notices and announcements of the Fund Industry Association

The Asset Management Association of China (hereinafter referred to as the "Association") announced on October 28, 2022 that the existing 10 private equity fund managers including Shenzhen Simple Capital Management Co., Ltd. cannot continue to meet the requirements for manager registration, and the Association will The registration of private equity fund managers of these 10 institutions shall be cancelled, and the above circumstances shall be entered into the database of integrity files of the capital market.

3. Regulatory dynamics

1. The China Securities Regulatory Commission agrees in principle to carry out a pilot program for private equity venture capital funds to distribute shares in kind to investors

The CSRC approves in principle the application of Shanghai Linli Investment Partnership (Limited Partnership) for the pilot application of stock allocation in kind. The applicant will, in accordance with relevant laws and regulations and the requirements of the CSRC on the pilot program of private equity fund allocation of stocks in kind, perform corresponding procedures and information disclosure obligations, and allocate stocks to investors in a timely manner. Other eligible private equity venture capital funds are also in the process of actively and orderly advancing the pilot applications for physical distribution of stocks. In the next step, the China Securities Regulatory Commission will promote the orderly development of the pilot program of physical distribution of stocks for private equity venture capital funds, summarize and evaluate the pilot situation in a timely manner, gradually expand the scope of the pilot program, and continue to improve the exit mechanism for private equity venture capital funds.

2. Supplementary Notice of Hainan Provincial Local Financial Supervision and Administration on Matters Concerning Foreign-invested Equity Investment Enterprises

On October 27, 2022, the Hainan Provincial Local Financial Supervision and Administration Bureau issued a notice stating that in accordance with the "Interim Measures of Hainan Province on Carrying out Domestic Equity Investment of Qualified Foreign Limited Partners (QFLP)" (Qiong Jin Jian Han [2020] No. 186) It is stipulated that for foreign-invested equity investment enterprises established in Hainan Province that only involve raising funds overseas, the province does not have mandatory requirements for their filing with the Asset Management Association of China. Banks can support such enterprises in cross-border fund settlement and other businesses, and conduct follow-up fund supervision. Other requirements remain unchanged in accordance with the current system.

4. Typical Cases

1. As for the "Investment Memorandum" signed between Private Fund A and the controlling shareholder of the target company, if it cannot be proved that the "Investment Memorandum" is the true expression of the target company's intention or has been ratified by the target company after the fact, it should only be used in the case of Private Fund A and the target company. Legal binding between the controlling shareholders of the target company; if private equity fund A indirectly invests in the target company through private equity fund B, its investment income can only be obtained after private equity fund B disposes of the remaining assets and its investment gains and losses in the target company are clarified to be honored later

Case: Contract dispute between Beijing Heguang Jiaying Investment Center (Limited Partnership) and Shi Wenyong [(2022) Jing 01 Min Zhong No. 46]

Main facts: Jinxin Center is a private equity fund established in June 2015, and its manager is Jinxin Rongda Company. In May 2016, Jinxin Rongda Company, Heguang Jiaying Center and other parties signed the Jinxin Center Partnership Agreement, and agreed that the purpose of the partnership is to subscribe for the equity of Feiliu Company, and all partners entrust the general partner Jinxin Rongda Company as the executive partner. , the other partners are limited partners. In the same month, Heguang Jiaying Center paid the investment funds to Jinxin Center. Shi Wenyong is the controlling shareholder of Feiliu Company. In August 2017, Heguang Jiaying Center authorized Chen Zuotao and Shi Wenyong to sign the "Investment Memorandum", and agreed that in May 2016, Heguang Jiaying Center participated in the "Feitian" project (ie Feiliu's IPO project) through the Jinxin Center, and the actual Contributed 164.8 million yuan, the project was cancelled in November 2016 for some reason. In June 2017, Jinxin Center transferred some of its assets to a third party, and returned a total of 145.1 million yuan to Heguang Jiaying Center in July and August 2017. For the part that has not been recovered from the actual investment of Heguang Jiaying Center, Shi Wenyong will lend it to Heguang Jiaying Center in the form of an interest-free loan. Shi Wenyong agrees that within 5 working days (no later than 40 working days from the date of signing this memorandum) after disposing of the remaining assets in the Jinxin Center, the settlement and the investment in Guangjiaying Center will be settled according to the annualized 20% of the project principal and the actual number of days of use. income. The actual withdrawal amount of Guangjiaying Center in Jinxin Center and the interest-free loan provided by Shi Wenyong can be used for settlement and investment income due to Guangjiaying Center, and Shi Wenyong will make up the difference on this basis. In August 2017, Wuhan Bangqiaorui Software Development Co., Ltd. transferred RMB 19.7 million to Luojia Company. Both Heguang Jiaying Center and Shi Wenyong recognized that Shi Wenyong fulfilled the interest-free loan obligation under the Investment Memorandum. Heguang Jiaying Center filed a lawsuit with the court of first instance, requesting Shi Wenyong to repay the amount due from the investment and the investment income. The court of first instance rejected all of its claims, and Heguang Jiaying Center refused to accept it and appealed.

Judgment opinion: The court of second instance held that the Investment Memorandum was a statement of the true intentions of Shi Wenyong and Heguang Jiaying Center, and did not violate the mandatory provisions of laws and administrative regulations, so it should be legal and valid. In addition, since Shi Wenyong did not provide evidence to prove that the "Investment Memorandum" was Feiliu's true expression of intent or Feiliu's post-event ratification, therefore, the "Investment Memorandum" is only legally binding between Heguang Jiaying Center and Shi Wenyong. There is no omission of necessary parties. Regarding whether Shi Wenyong's payment terms for the payment of investment income under the "Investment Memorandum" are fulfilled, first, the purpose of signing the "Investment Memorandum" is to negotiate and arrange the future exit plan of Heguang Jiaying Center; secondly, Heguang Jiaying Center only Participated in the transaction at the level of fund investment (i.e. joining Jinxin Center), but did not directly participate in the transaction at the level of equity investment of Feiliu Company, and the investment that Heguang Jiaying Center has withdrawn was settled through Jinxin Center. In addition, under the arrangement of Shi Wenyong, Heguang Jiaying Center has actually recovered all the investment funds of 164.8 million yuan; thirdly, according to the "Investment Memorandum", the investment income of Heguang Jiaying Center should be disposed of after the fund disposes of the remaining assets. , The investment profit and loss of the "Feitian" project will be realized after it is clarified. At present, Harmony Jiaying Center has not presented evidence to prove that the above conditions have been fulfilled. Therefore, Harmony Jiaying Center requires Shi Wenyong to pay the investment income. There are no facts and laws. in accordance with. To sum up, the "Investment Memorandum" belongs to Shi Wenyong's personal commitment to invest in the "Feitian" project of Heguang Jiaying Center. The fulfillment of this commitment depends on the completion of the liquidation of the entire investment project at the fund level. At present, the payment terms stipulated in the Investment Memorandum have not been fulfilled, and the appeal request of Heguang Jiaying Center cannot be established and should be rejected.

2. As far as contractual private equity funds are concerned, if they need to indirectly invest in the target company through a special purpose vehicle (ie SPV) due to the needs of the target IPO, and the gambling obligor stipulated in the relevant fund contract does not expressly refuse To perform the repurchase obligation to the changed investment entity (ie SPV), the gambling obligor has no right to claim that it does not need to perform the repurchase obligation only because of the change of the investment entity

Case: Contract dispute between Wang Shuangyi and Beijing Yinhe Dingshun Investment Center (Limited Partnership) [(2022) Jing 01 Min Zhong No. 2204]

Main facts: In June 2015, Yinhe Dingfa Company signed the Galaxy Dingshun No. 1 Investment Fund Contract with Chen Xian and others, and agreed to establish the Galaxy Dingshun No. 1 contractual investment fund. The fund manager was Galaxy Dingfa Company. During the investment period, the fund can only invest in the equity of Shuangshunda Company. In the same month, Yinhe Dingfa Company and Wang Shuangyi signed the "Specific Equity Repurchase Agreement" and agreed that if Yinhe Dingshun No. 1 Investment Fund's investment in the equity of Shuangshunda Company could not be realized on time according to the investment period of the fund contract or Shuangshun When Da Company terminates the process of entering the capital market such as A-share IPO or listing on the New Third Board, Wang Shuangyi will perform the repurchase obligation and pay the repurchase price to Yinhe Dingfa Company. The repurchase price consists of three parts: the investment principal, the investment premium and the taxes paid by Galaxy Dingfa. If the repurchasing party fails to perform the repurchase obligation as agreed and fails to pay the repurchase payment in time, it shall pay a penalty of 3/10,000 of the unpaid amount to Yinhe Dingfa Company for each overdue day. Subsequently, Yinhe Dingfa Company paid the investment funds from the fund account. Because Galaxy Dingfa Company held the corresponding capital contribution of Shuangshunda Company on behalf of Galaxy Dingshun No. 1 Investment Fund, it is very likely to affect the listing of Shuangshunda Company. The company indirectly holds shares, and Yinhe Dingfa Company will transfer the corresponding equity to Yinhe Dingshun Center. As of June 30, 2017, Shuangshunda has not formally submitted a listing application to the China Securities Regulatory Commission. Galaxy Dingshun Center then filed a petition with the court of first instance, ordering Wang Shuangyi to pay the share repurchase price, investment premium and liquidated damages. The court of first instance upheld the appeal of Yinhe Dingshun Center, and Wang Shuangyi appealed against it.

Judgment's opinion: The court of second instance held that, first of all, the "Special Equity Repurchase Agreement" signed by Yinhe Dingfa Company and Wang Shuangyi was the investor's intention to protect its investment rights and interests and the actual controller of the invested company Shuangshunda Company Wang Wang. According to the agreement reached by Double One, the repurchase agreement does not violate the mandatory provisions on the validity of national laws and regulations, and shall be deemed valid. Later, in order to meet the listing needs of Shuangshunda Company, all parties agreed that Galaxy Dingfa Company will transfer the shares of Shuangshunda Company held by it on behalf of the fund to Galaxy Dingshun Center, and Galaxy Dingshun Center will indirectly represent the fund share holders. Shareholding, on the one hand, the source of investment funds is still "Galaxy Dingshun No. 1 Investment Fund", on the other hand, there is no increase or substantial change in the actual ownership of the subject equity involved in the case. Secondly, the evidence shows that after the repurchase conditions were fulfilled, the two parties continued to communicate on the repurchase matter, and there is no evidence that Wang Shuangyi made a clear defense on the grounds that he did not have the repurchase obligation, and refused to perform to Galaxy Dingshun Center. Buyback obligations. In summary, the relevant evidence presented by Galaxy Dingshun Center has formed a complete chain of evidence, proving that Wang Shuangyi has a repurchase obligation to Galaxy Dingshun Center based on his commitment in the "Specific Equity Repurchase Agreement". The court of second instance finally rejected Wang Shuangyi's appeal and upheld the original judgment.

3. The shareholders meeting of the target company has not made a capital increase resolution, and the target company has not carried out the capital increase procedure and handled the corresponding equity change registration, which will not cause the relevant capital increase agreement to be invalid. It is deemed that the investor’s shareholder status has been recognized on the day, and the private equity fund as the investor has the right to require the original shareholder of the target company to undertake the obligation of equity repurchase when the target company fails to meet the performance commitment according to the agreement on capital increase and share expansion.

Case: Dispute over equity transfer between Gansu Daxiang Energy Technology Co., Ltd. and Guopeng Investment Management Co., Ltd. [(2022) Jing 03 Min Zhong No. 5462]

Main facts: In September 2017, Guanhui Century Company (manager of Genesis Fund 2) (Party A, investor) and Shanghai Daxiang Company (Party B, shareholder of the target company), Gansu Daxiang Company (Party C, The target company) signed the "Capital Increase and Share Expansion Agreement", stipulating that Party A would increase the capital of the target company, and agreed that if the audited net profit of the target company in 2018 was lower than the agreed performance target, Party B should complete the equity within the time limit required by Party A. For repurchase, the repurchase price is the actual investment principal corresponding to the equity ratio requested by Party A to be repurchased and the investment income calculated at an annualized rate of 10%. Party C assumes joint and several guarantee responsibility for Party B's performance of the repurchase obligation. In September 2017, Chuangshi Fund 2 paid investment funds to Gansu Elephant Company. Since then, Gansu Elephant Company failed to achieve the promised profits in 2018 as agreed in the "Agreement on Capital Increase and Share Expansion". Guopeng Investment Company then sued the court of first instance, requesting Shanghai Elephant Company to pay the Chuangshi No. 2 Fund managed by Guopeng Investment Company. For equity repurchase, investment income and liquidated damages, Gansu Elephant Company shall be jointly and severally liable for the payment obligations of Shanghai Elephant Company. The court of first instance upheld part of the petition of Guopeng Investment Company (rejected the petition of Gansu Elephant Company to be jointly and severally liable for the payment obligations of Shanghai Elephant Company), and Shanghai Elephant Company and Gansu Elephant Company appealed against it.

Judgment opinion: The court of second instance held that the focus of the dispute in this case is: 1. Whether the Agreement on Capital Increase and Share Expansion is valid; 2. Whether Shanghai Elephant Company should perform the repurchase obligation. Regarding dispute focus 1, although Shanghai Elephant Company and Gansu Elephant Company claimed that Gansu Elephant Company did not make a resolution of the shareholders' meeting for capital increase, nor did it carry out the capital increase procedure and shareholder change registration, this did not make the agreement itself invalid. Except for the invalidity of the agreement on the joint and several liability of Gansu Elephant Company, all other contents are the true expressions of the parties concerned, which do not violate the validity provisions of laws and administrative regulations, and are legal and valid. Regarding the second point of dispute, although Shanghai Daxiang Company and Gansu Daxiang Company appealed that the investor did not hold the equity of Gansu Daxiang Company, was not a shareholder of Gansu Daxiang Company, and did not meet the preconditions for repurchase, but according to the agreement , it is the obligation of Gansu Daxiang Company to register the investor as a company shareholder and go through the industrial and commercial registration, and regardless of whether the shareholder change registration is carried out, Gansu Daxiang Company and Shanghai Daxiang Company are deemed to have been recognized on the date when the investor’s capital contribution is received. Therefore, the equity repurchase is essentially the commitment and obligation of Shanghai Elephant Company to return the investment funds and compensate the investment income when Gansu Elephant Company fails to achieve the agreed performance targets. Shanghai Elephant Company shall fulfill. To sum up, the court of second instance finally rejected the appeals of Shanghai Elephant Company and Gansu Elephant Company and upheld the original judgment.

4. Under the circumstance that the fund investor knows and agrees in advance that different funds managed by the fund manager have the same investment target, even if the investment target is a shareholder of the fund manager, it cannot be directly determined that the manager has transferred benefits through connected transactions; According to the principle of judicial modesty, judicial power should not intervene excessively in the consideration arrangement of equity investment. In the absence of evidence to prove that there is an illegal transaction, it cannot be deduced from the investment results that the previous investment behavior was improper.

Case: Deng Ling, He Zhili and other contract disputes [(2021) Yue 0391 Min Chu No. 7359]

Main facts: In May 2016, Deng Ling signed the "Funder Bona Equity Investment Phase II Investment Fund Fund Contract" and "Subscription Risk Statement" with Bona Fangde and Caixin Securities, in which Deng Ling was the investor and Bona Fangde was the investor. As the manager, Caixin Securities is a comprehensive custodian service provider. In the "Investor Risk Tolerance Questionnaire" section, Deng Ling signed the signature at the sign-off place, but the answers to the various survey questions were left blank; the "Investor Risk Tolerance Survey" attached to the fund contract submitted by Bona Fonder The tick part of the answers to the various survey questions on the Questionnaire is ticked. In July 2016, Deng Ling paid the investment funds to the private equity fund clearing account through bank transfer. In the same year, Bona Fangde increased its capital in Fangde Zhilian four times with the Fangde Bona Equity Investment Phase II Investment Fund under its management, and finally held a 31.18% stake in Fangde Zhilian.

Fang Dezhi contacted one of Bona Fangde's shareholders. Deng Ling claimed that in the process of raising, investing, managing and operating the private equity fund involved in Bona Fangde, it seriously violated relevant laws and contractual stipulations, and that Bona Fangde and the target company Fangde Zhilian carried out interest transfer through affiliated transactions, As an investor, he filed a lawsuit with the court on the grounds that he has not received any investment income so far, requesting the termination of the Fund Contract of Fangde Bona Equity Investment Phase II Investment Fund, and Bona Fangde should compensate Deng Ling for the principal and interest. The court of first instance rejected Deng Ling's petition and appealed against it.

Judgment opinion: The court held that, with regard to the validity of the fund contract, first of all, as a person with full capacity for civil conduct, Deng Ling should be able to recognize and understand the legal consequences of signing the blank questionnaire. Germany has fulfilled the obligations of investor questionnaire assessment and risk warning, notification and explanation; secondly, Bonafonte has obtained the qualification of fund manager before the operation of the involved fund, so the fund contract is true and valid. As to whether Deng Ling has the right to claim the termination of the contract, that is, whether Bonafonte has serious breach of contract. First of all, the two fund contracts involved in the case clearly stipulated that the funds used by the two funds to invest in the equity of Fangdezhilian accounted for no less than 98% of the total assets of the fund. The situation of value-added and share expansion is informed and agreed; secondly, Fangde Zhilian holds the equity of Bonafangde, the shareholding information is public information, and Bonafangde also announced the target company in the contract of the second phase of the fund The website of the fund manager should not determine that the investment transaction between the two companies is an improper transaction because the fund manager has not separately disclosed the relationship between the two companies; thirdly, in the field of equity investment, equity trading is not entirely based on the net assets of the company. , in the case where Deng Ling did not have sufficient evidence to prove the existence of illegal transactions, according to the principle of judicial modesty, the judicial power should maintain a prudent attitude and should not intervene excessively. Therefore, this court will not judge this, but it cannot be based on investment. As a result, it is inappropriate to infer the previous investment behavior; finally, there is no evidence that Bonafonte has violated regulations and failed to fulfill its prudential obligations, information disclosure or failure to fulfill the obligations of managers. To sum up, in the process of performing the contract, Bona Fonder did have some behaviors that violated the contract, but it was not enough to achieve the situation that the purpose of the contract could not be achieved, nor did it meet the conditions for the termination of the contract. Accordingly, the court of second instance rejected Deng Ling's appeal and upheld the original judgment.