New HK head for OMM

Posted on 2012/05/18 by chinalegalcareer

News from ALB

O’Melveny & Myers’ capital markets specialist David Johnson has relocated to the firm’s Hong Kong office from Century City, California owing to his appointment as the new head of O’Melveny’s Hong Kong branch.

 

Johnson was formerly the global head of O’Melveny’s Transactions department, which develops and implements the firm’s worldwide strategy.  In recent years, he has represented issuers and deal managers on numerous prominent U.S. initial public offerings of China-based companies, including Shanda Interactive Entertainment, ATA Inc, and Focus Media.

 

His practice encompasses working with corporations, financial institutions, and investment funds on a variety of capital market offerings, capital formations, strategic advice and restructurings. Notable clients include Bank of America Merrill Lynch, Toyota Motor Credit Corp and Lions Gate Entertainment.

 

“The firm’s practice in Asia is one of our proudest achievements. Very few international firms can match the level of our offerings across China, Japan, India, Korea, Singapore, and Southeast Asia, and now with our new associated office, Indonesia,” Johnson said in a firm statement. “I am excited to continue my work with our great team here in Asia, but now located in Hong Kong. I am looking forward to being even more involved in the great work we do for clients in the region.”

 

Commenting on Johnson’s move and new role, the chair of O’Melveny, Bradley J. Butwin said: “Expanding our Hong Kong office capabilities and strengthening our capital markets practice are key components of our larger plans for growing O’Melveny’s presence in Asia, and we are fortunate to have Dave Johnson leading those efforts. His experience in helping clients with a broad range of corporate finance transactions and serving as a boardroom-level adviser will be important to increasing the breadth of offerings to our clients in Hong Kong and globally.”

 

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Dewey’s Hong Kong team to join DLA Piper

Posted on 2012/05/18 by chinalegalcareer

News from The Lawyer

Dewey & LeBoeuf’s Hong Kong team is set to join DLA Piper as the firm’s office in the city prepares to wind down.

Hong Kong managing partner and corporate lawyer Heng Loong Cheong has quit the embattled US firm alongside local partner Sheng Wu, who focuses on insurance.

Joyce Chan, the principal of Hong Kong-based Joyce Sze Ho Chan & Co – with which Dewey formed an association last year – is also set to join DLA Piper alongside associate Angela Cheung. However, the pair have not formalised the move because they are still in the process of notifying the Law Society of Hong Kong that the association is ending.

It is understood that Cheong and Wu have already handed in their resignation. Cheong is tied to Dewey for eight weeks while he works on the office’s wind-down, but is currently negotiating to reduce the period allocated for closing down the base from eight weeks to three weeks, enabling him to join DLA Piper sooner.

A team of support staff including secretaries are also set to follow the Dewey lawyers to DLA Piper.

The move follows DLA Piper’s hire of Silicon Valley-based Dewey corporate partner Paul Chen, who used to head Dewey’s Hong Kong office.

More than 100 partners have left Dewey since the start of 2012, with the latest high-profile exit seeing Washington DC chief and insurance partner Charles Landgraf, the last remaining member of the US firm’s so-called office of the chairman, join Arnold & Porter.

The firm has now effectively shut its New York headquarters (16 May 2012), while the Polish office exited this week to join Greenberg Traurig as the Italian team spun off to form a new firm (15 May 2012).

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Clifford Chance’s Charlton charged over drink driving

Posted on 2012/05/18 by chinalegalcareer

News from The Lawyer

Clifford Chance’s Asia managing partner Peter Charlton has been charged with drink driving offences and will appear in court in June.

The charges are related to a road accident that took place in Hong Kong in March (16 March 2012). Around midnight on Thursday 9 March, Charlton was driving a Jaguar sports car after having consumed more than three times the legal limit of alcohol. His car crossed into the oncoming traffic lane of a road in Hong Kong’s Mid-Levels district and caused a head-on collision with a taxi. No one was seriously injured in the accident, but Charlton was arrested for drink driving and was released on bail pending further enquiries.

In a statement issued by the Hong Kong Police Force today, a spokesperson said: “Enquiries into the traffic accident were concluded. A 56-year-old man was charged on May 16 with one count each of ‘driving motor vehicle with alcohol concentration in breath over prescribed limit’ and ‘careless driving’ and would appear at Eastern Magistrates’ courts in June.”

 

The breath test results by the police showed that Charlton’s breath contained 70mg of alcohol per 100ml of breath, three times the legal limit of 22mg per 100ml of breath.

Hong Kong has strict laws against drink driving, which is a criminal offence. Under Hong Kong’s Road Traffic Ordinance, the general maximum penalties for drink driving include a fine of up to HK$25,000 (£2020), imprisonment for up to three years and disqualification from driving for up to two years.

Charlton was elected to the Asia managing partner role in 2008 (8 September 2008) and relocated to Hong Kong from London, where he served as the firm’s global corporate head. Charlton currently holds a Hong Kong practising license and is dual-qualified in Hong Kong and England and Wales.

Clifford Chance did not respond in time to comment.

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China Resources Gas buys rival for $238 mln

Posted on 2012/05/18 by chinalegalcareer

News from ALB

China Resources Gas Group (CR Gas) has acquired AEI China Gas for US$237.7 million. CR Gas is now expected to acquire the entire issued share capital of AEI China Gas from AEI Asia.

 

The acquisition enables CR Gas to expand its downstream city gas operations in mainland China. It has 73 city gas projects in 16 provinces. AEI China Gas operates 28 city gas projects, eight gas stations and four midstream gas transmission pipeline projects throughout China.

 

Hong Kong-listed CR Gas is controlled by state conglomerate China Resources Holdings.

 

The executive director of CR Gas, Ken Ong, said in a statement: “The acquisition is part of the ongoing expansion strategy of the group, with the aim of becoming the market leader in the downstream city gas industry in the foreseeable future.”

 

Advising CR Gas on Hong Kong and international law aspects was a Hong Kong-based King & Wood Mallesons team led by partners Raymond Wong and Sophia Wang. The acquirer’s Singapore counsel was Colin Ng & Partners, where Ong Wei Jin led the team. CR Gas’ PRC and Cayman Islands counsels were Allbright Law Offices and Walkers, respectively. Clifford Chance acted for AEI Asia.

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Hong Kong phooey

Posted on 2012/05/15 by chinalegalcareer

News from The Lawyer

Salans says it never really was in HK, but it’s still there anyway. Are you following this?

Salans is a big fan of Shanghai. So much so that the firm, which last month closed its Beijing office, has stealthily shut down its Hong Kong
base too. For strategic or economic reasons it is quite normal for firms to close offices, but in this case the firm is claiming that, despite shutting up shop in Hong Kong, nothing has really changed.

“It’s misleading to say that we’ve closed our Hong Kong office,” a spokesperson said, confusingly. “Our Hong Kong office was mostly staffed by local association firm Pang & Co and we’ll continue to offer clients Hong Kong law advice by cooperation with Pang & Co. Technically, nothing’s changed.”
So in other words, the firm has never actually been there? Pang & Co’s founder and managing partner Benny Pang revealed the other side of the story.

In April 2009, Salans opened in Hong Kong and entered into an association with Pang & Co. At its height, there was only one lawyer on the Salans side – arbitration partner Darren Fitzgerald, who Salans recruited from Bird & Bird in 2010. Two years later, he resigned.

“We decided to join Salans’ international platform in the hope of working on more cross-border transactions and having better access to emerging markets,” said Pang. “But the association didn’t make it happen. After three years, we recognised that it wasn’t the right platform and initiated a discussion with Salans to terminate the association on good terms.

“Salans is a great firm and has great lawyers, but everyone seems busy with their own work. It’s an issue of collaboration.”

The Salans case is not a standalone example. In the past 18 months a large number of firms have entered Hong Kong through similar arrangements and there is no lack of frustrated people in the local offices of international firms.

Nevertheless, more international firms are clamouring to enter Hong Kong via this model: Pang has had six phonecalls from suitors since TheLawyer.com broke the news of Salans’ Hong Kong closure. Perhaps those firms will learn from Salans’ mistakes and adopt a different approach to staffing Hong Kong.

Still, if Salans was never really there in the first place, it looks like the spokesperson was right to say that nothing’s changed.

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Ropes & Gray prepares to offer Hong Kong law advice with local hires

Posted on 2012/05/15 by chinalegalcareer

News from The Lawyer

Ropes & Gray has hired two Hong Kong partners in preparation for the launch of its Hong Kong law practice on 28 May.

Julian Chung and Gary Li join from Norton Rose and Paul Weiss Rifkind Wharton & Garrison, where they were a partner and counsel respectively.

Chung, who is dual-qualified in Hong Kong and England and Wales, focuses on equity capital markets and M&A transactions. He has been a partner in Norton Rose’s Hong Kong office since 2005 after a short stint at US firm Perkins Coie, which closed its Hong Kong office in March 2005 (13 December 2004). Prior to joining Perkins Coie in 2003, he was a founding partner of Chao & Chung, a specialist corporate finance and advisory firm in Hong Kong established in 1994.

Li is admitted to practise law in New York and is experienced in China-related corporate work. He joined Paul Weiss’s New York office in 2001 and in 2007 transferred to Hong Kong, where he has been a member of the corporate and China practice groups. He was promoted to counsel in 2011.

The new partner appointments come after the firm’s Hong Kong office received approval from the Hong Kong Law Society to convert into a Hong Kong solicitors’ firm, which can offer Hong Kong law advice.

“The launch of our Hong Kong law practice is a direct response to our clients’ request,” said Hong Kong partner Michael Nicklin. “Over the past four years, the Hong Kong office has acted on a number of large transactions for our global and regional clients, who have told us that they want us to increase our capabilities in Hong Kong.

“We’ve adopted a slightly different strategy from other US firms. We’ve been growing organically and building up our practice on existing global client relationships. There’s been an increasing level of work in the past 12 months and we’re responding to it.”

Ropes & Gray’s Hong Kong office opened in 2008 and currently has seven partners and 22 lawyers. The firm is expecting to open its fourth Asia office, in Seoul, later this year, subject to regulatory approval.

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King & Wood China partner quits in row over US citizenship

Posted on 2012/05/15 by chinalegalcareer

News from The Lawyer

King & Wood Mallesons Shanghai capital markets partner Stanley Cha has left the firm amid accusations that he was illegally practising PRC law.

He is being investigated by the Beijing Bureau of Justice after being accused of not disclosing the fact that he is a US rather than Chinese citizen. The law only permits Chinese nationals to qualify as PRC lawyers and practise PRC law.

It was first reported by Chinese publication First Financial Daily in January this year that Cha, who at the time served as an independent director of Chinese company Beijing Enlight Media, had resigned from that position after allegations surfaced that he had hidden his real nationality in the company’s disclosure documents.

Beijing Enlight Media went public on the Shenzhen Stock Exchange in August 2011. In its prospectus, information about the company’s independent directors stated that Cha was a Chinese citizen without permanent residence in any other country and was a partner at King & Wood (now King & Wood Mallesons) in Shanghai.

Cha joined King & Wood from Shanghai firm Llinks in 2006. Prior to Llinks, Cha practised for four years at a couple of New York firms. Before that, he was the general counsel of Chinese internet company Sohu.com, which listed on Nasdaq in 2000. He is dual-qualified in the PRC and New York.

According to local media reports Cha took US citizenship in September 2001. The PRC does not recognise dual nationality for any Chinese national and under the country’s Nationality Law any Chinese national who has taken foreign citizenship of their own free will automatically loses their Chinese nationality.

On 20 March, the Beijing Bureau of Justice, the regulatory body of the capital’s legal profession, initiated an investigation in Cha’s case. The investigation process is currently ongoing. It is understood that Cha’s profile was taken off King & Wood’s website in mid-April.

There is no precedent in China for such cases involving lawyers, but it is possible that Cha could be charged with fraud.

Since taking US citizenship in 2001, Cha has issued a significant number of legal opinions and advised on a large number of Chinese companies’ domestic IPOs and listings. If he is convicted of fraud, it would mean these documents would become invalid, although is unclear how the Chinese government would remedy such a situation.

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OMM, Simpson Thacher star in News Corp investment in Chinese film company

Posted on 2012/05/14 by chinalegalcareer

News from ALB

China-based film company Bona Film Group (Bona) has received a 19.9 percent strategic minority stake investment from U.S. media conglomerate News Corp.

 

News Corp acquired the equity stake directly from Bona’s founder, chairman and CEO, Dong Yu.

 

Bona is a film distributor and vertically integrated film company engaged in film distribution, film production, film exhibition and talent representation in China.

 

“We are thrilled to receive this strategic investment from News Corporation,” said Yu in a statement from his company. “As one of the leading film distributors in China, we are committed to bringing the best quality Chinese films to broad audiences around the world. News Corporation’s extensive global reach, investment and distribution will help accelerate our strategy to expand our global footprint.”

 

In separate transactions, Yu acquired one million Bona ordinary shares from SIG China Investments One, one million Bona ordinary shares from Matrix Partners China Funds, and 1.5 million Bona ordinary shares from Sequoia Funds.

 

Representing News Corp was an O’Melveny & Myers team led by Beijing-based partners Nathan Bush and Larry Sussman, and Menlo Park-based partner Sam Zucker and Century City-based partner Steve Scharf. Bona was advised by a Hong Kong-based Simpson Thacher & Bartlett team led by partner Chris Lin.

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OMM helps China Agritech score rare victory in U.S. suit

Posted on 2012/05/14 by chinalegalcareer

News from ALB

On May 3, China Agritech successfully defeated a motion for class certification in a shareholder action filed in the U.S. This is the first court order denying class certification in a proposed securities class action against a China-based U.S.-listed company.

 

“Defeating a motion for class certification is very rarely accomplished in the U.S. courts,” says Bingna Guo, a Beijing-based O’Melveny & Myers partner who was part of the team that assisted China Agritech on its victory. “Instead of facing the challenges of potentially thousands of plaintiffs, China Agritech is now only facing challenges from four individual plaintiffs.”

 

She notes now the potential remedies the plaintiffs can ask for is substantially reduced and its client now faces a much more simplified case.

 

China Agritech’s legal team, which was led by O’Melveny partners Guo, Los Angeles-based Seth Aronson and New York-based Abby Ruzdin, persuaded the court that the plaintiffs were not entitled to class certification because they failed to prove that China Agritech’s stock traded in an efficient market – which is a prerequisite for maintaining a securities fraud class action for damages.

 

Guo says that with the recent heightened scrutiny by the U.S. securities regulator on China-based U.S.-listed companies, “this case shows that fighting against class certification is a tactic that Chinese companies facing securities litigations need to seriously consider.”

 

China Agritech was sued in February 2011 by Theodore Dean and other shareholders (the plaintiffs), alleging violations of several provisions in U.S. securities laws.

 

The plaintiffs’ attempt to certify the class to proceed with the lawsuit as a class action was defeated. The court denied their class certification for failure to prove that the stock traded in an efficient market, which is essential to invoke the fraud on the market presumption.

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China orders Big Four auditors to restructure

Posted on 2012/05/14 by chinalegalcareer

News from ALB

The world’s top four accounting firms will have to bring in Chinese citizens to run their operations in China and end the dominance of foreign partners under new rules announced by the Finance Ministry on Thursday.

 

The Big Four auditors – Deloitte Touche Tohmatsu, Pricewaterhousecoopers, Ernst & Young and KPMG – must start to convert their practices this August and comply with all the new rules by the end of 2017.

 

The rules require them to “localise” their operations so that they are led by Chinese citizens and dominated by accountants holding China’s accountancy qualifications.

 

The changes come at a difficult time for the Big Four, grappling with the fall-out from a string of accounting scandals at Chinese companies listed in the U.S. that has left investors questioning the quality of auditing in China.

 

On Wednesday, U.S. securities regulators charged Deloitte’s China practice for refusing to provide audit work papers related to a U.S-listed Chinese company under investigation for accounting fraud.

 

The new rules will force the proportion of foreign partners at the Big Four to be a maximum of 40 percent when the structure is adopted in August this year, and fall to under 20 percent by 2017.

 

This is likely to come as a relief to the firms, as there had been concerns that China could force them to convert more quickly to Chinese-dominated practices.

 

“This is an excellent compromise China is providing for a transition for the transfer of power from the expatriate partners to the local partners,” said Paul Gillis, Professor of Accounting at Peking University and author of the China Accounting Blog.

 

“If the firms handle this responsibly, it allows them a period of time to further develop their local partners for senior management responsibilities,” he added.

 

Tougher though, will be the requirement that each of the Big Four’s senior partner be a Chinese citizen. All are currently led by foreigners.

 

None of the accounting firms immediately responded to requests for comment.

 

The foreign joint venture arrangements currently used by the Big Four were signed 20 years ago and allowed foreign-qualified accountants to dominate their China practices.

 

Since then, the firms have come to dominate the country’s accounting industry, having won much of the lucrative work to audit the books of state-owned enterprises when they first listed.

 

In 2010, their audit practices, excluding their consultancy businesses, had combined revenue of more than 9.5 billion yuan ($1.5 billion), according to the Chinese Institute of CPAs (CICPA).

 

However, their market share has slipped in recent years to about 70 percent of the revenue among the top-10 auditors, down from 85 percent in 2006.

 

Including consulting, the four firms say they each employ around 10,000 people in mainland China, Hong Kong and Taiwan.

 

Singapore’s accounting industry went through similar changes in the 1980s, as did Hong Kong’s in the late 1990s. In those cases the local partners used their enhanced voting power to force out many foreign partners.

 

“I’m hoping China will have a smoother path than was seen before but human nature being what it is, I think that’s unlikely,” said Gillis.

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