Expertise/Russia–China Practice
Service
Investment from China goes into purchasing a Russian company, an interest, shares or a property complex, or into setting up production and financing projects in Russia.
We are most often instructed by:
The information on this website is provided for information purposes only and does not constitute a public offer.
Timing and fees are indicative and are confirmed when the engagement is agreed.
An investment from China in a Russian asset follows one of two models, and the bulk of the work depends on the choice. Support is provided either to the Chinese investor or to the Russian party to the transaction.
When an existing company or asset is acquired, the investor obtains an interest, shares, individual assets or a property complex. The following are determined: the method of entry, the extent of the risks assumed and the terms on which the consequences of issues identified are borne by the seller or reflected in the price. The bulk of the work lies in analysing the target and reflecting the findings in the documents.
When a project is created, funds go into a new production facility or site or into developing an existing company, or are provided as secured financing. The following are determined: the phasing of the investment, the investor's rights at each stage, security, the procedure for using the funds and the conversion of financing into an equity stake.
The outcome of the service is the work performed within the scope agreed with the client.
Acting for the Chinese company
Challenge
A Chinese and a Russian partner were setting up a joint venture, and they had different legal traditions, expectations regarding management and views on the allocation of control.
What was done
The Chinese company was advised on the ownership structure, the management and exit mechanics, and the alignment of the parties' interests under Chinese and Russian law. The venture was launched on the agreed terms.
Parent company due diligence
Challenge
A Russian buyer was acquiring a Russian company whose parent was a Chinese company. Closing the transaction required due diligence of the Chinese parent company and its connection with the asset being sold.
What was done
Legal due diligence of the Chinese parent company was carried out, covering the group's corporate structure, the chain of ownership of the Russian subsidiary and the legal risks at the intersection of Chinese and Russian law. The acquisition of the Russian company went ahead with a legal picture that was clear to the parties.
Legal due diligence
Challenge
Independent legal due diligence of a Chinese company was required, covering its corporate structure and legal status at the intersection of Chinese and international law.
What was done
An opinion was prepared on the corporate structure, the chain of ownership and the related legal risks. The client obtained a clear legal picture for its further decisions.
Contract review
Challenge
Contracts for the international sale of goods between China and Russia carry risks of divergence in the governing law, delivery terms and dispute resolution mechanisms. Such contracts were reviewed on behalf of the Chinese company.
What was done
The governing law, delivery terms (Incoterms), currency and tax aspects and the dispute resolution procedure were analysed. The risks were identified and eliminated before signing.
For certain industries, categories of investors and ownership structures, approvals and notifications are provided for under the foreign investment control regime. Whether they are needed depends on the ultimate owners, the nature of the asset and the type of activity; this is checked as at the date of the enquiry, before the commercial terms are agreed.
When acquiring a company, the investor takes on its obligations and history. When acquiring assets, the transfer of each item is documented separately, with the consent of counterparties and creditors. The choice is made on the basis of the analysis of the target, which shows which risks are concentrated in the company itself and whether they can be remedied before closing.
The scope depends on the target, the industry and the method of entry. When a company is acquired, the analysis covers the history of changes in participants, obligations, contracts and employment matters; when an asset is acquired, the focus is on title to it and encumbrances. The findings are reflected in the representations and in the mechanisms of indemnity for losses.
The investor's rights are set out in the documents on entry: matters requiring its consent, the appointment of the head of the company and the limits of the head's authority, reporting and the right to information. For an investor who is not permanently present in Russia, the procedure for remote decision-making, including in urgent situations, the language of working documents and the response times for requests are determined.
Yes. Funds are provided in tranches as agreed targets are met, and the consequences of declining further financing are determined at the same time. The investor's rights at each step, the valuation when the stake is increased and security for the funds already provided are agreed in advance.
The exit terms are determined on entry: sale of the stake, restrictions on disposal, valuation, rights in the event of disagreements with other participants, repayment of financing. For an investor from China, the procedure for receiving income and transferring it to China is assessed before the funds are invested.
An hourly rate, a fixed fee or a combined model is used; in some cases part of the fee depends on the outcome achieved. The fee is determined by the time actually spent, the complexity of the matter and the overall timeframe of the project, and is agreed before work begins.
Describe your matter and the circumstances in which it arose. The consultation establishes the possible structure of the work and the scope of legal support required.
