IPO and NEEQ, Issue of Legal Opinions of Indian Subsidiary


Initial Public Offer & NEEQ, Issuance of legal opinions of Indian Subsidiary


1. The importance of verification of subsidiaries in India

The issuance of legal opinions by foreign lawyers against (planned) listed companies and (planned) new third board companies' main overseas affiliates has become a routine verification method. As the China Securities Regulatory Commission and the nationwide share transfer system become more stringent in review, it is relatively safe for (planned) listed companies and (planned) new third-board companies to hire foreign lawyers to issue legal opinions on overseas entities.


In recent years, as the political and economic relations between China and India have become better, the "Made in India" and "One Belt One Road" policies have set off an upsurge of Chinese-funded enterprises investing in India. 

For Chinese-funded enterprises that have landed or intend to land on the capital market in China, in the process of applying for listing or listing on the NEEQ, as well as major issues such as listed companies, NEEQ companies’ annual reports, major asset restructuring, etc. The legal opinion of the subsidiary or other major related parties of the company in India is very important.


2. Scope of legal opinions issued by Indian lawyers

The process of issuing legal opinions by Indian lawyers involves the verification of many aspects of the main company in India. According to Chinese laws and regulations and the requirements of intermediary agencies for diligence, legal opinions can cover the following:


i. Basic information

Company name, registration number, domicile, directors, date of establishment, share capital, etc.


2. Subject qualification

The company is a legal entity established and legally existing in accordance with local laws. There is no need to terminate in accordance with laws, articles of association or other matters, and it has the right to independently enjoy civil rights and assume civil obligations.


Initial Public Offer


3. Business qualifications

a. Business scope and main business description, whether its previous changes since its establishment comply with local laws, regulations and the company's articles of association.


b. The compliance status of the company's business (whether it has obtained the qualification certificates required to conduct the business and the permission and approval of the local government or competent authority).


4. Ownership structure

a. A description of the company’s equity structure (names or names of shareholders, their respective capital contributions, capital contributions, share types) and the evolution of the company’s equity structure since its establishment.


b. The shareholder's description of the formation process (new establishment or transfer) of the company's capital contribution should cover whether the establishment or transfer procedure is effective, whether sufficient capital contributions or consideration have been paid, and whether all necessary government approval and registration procedures have been completed .


c. Whether the shareholder enjoys this part of the company’s equity in accordance with local laws, and whether he can exercise shareholder rights in accordance with local laws and the company’s articles of association.


d. The burden of the rights of the company’s equity held by shareholders (whether there is a pledge, custody or other third-party rights)


5. Foreign investment

Description of the company's branches and long-term foreign investment


6. Assets

The major assets owned by the company (quantity, model, net value, date of acquisition), the ownership of these assets (whether they are legally owned or leased by the company, and whether there are other third-party rights such as mortgages and guarantees).


7. Employment situation

Whether the company’s number of employees, wage standards, and social insurance payment status are in compliance with local labor and employment laws and regulations.


8. Other business compliance status

Whether the company complies with environmental protection, taxation, foreign exchange and customs supervision requirements, whether it has obtained approval documents from relevant government departments, and please comment on this one by one.


9. Major claims and debts

The company's current loans, loans and external guarantees during the performance period


10. Litigation, arbitration or administrative punishment

Whether there are current or potential lawsuits, arbitrations, government penalties, government investigations or other related procedures against overseas companies. If it exists, please give details.


11. Lawyers' Opinion

Other matters that require lawyers to express opinions on their legal compliance in accordance with local laws and regulations or regulatory requirements.


12. Taxation

According to Indian law, tax registration and other compliance details, as well as whether there are tax litigation, tax authority review details (if any) 


13. Environment

Whether the company’s production or business nature complies with Indian environmental protection laws and regulations; whether there are penalties issued by local authorities (if any)


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