By Guy Coltman Partner, Carey Olsen
Following the decision of the Hong Stock Exchange to approve Jersey as a jurisdiction of incorporation for admission to the Exchange, the first Chinese business held through a Jersey company has been listed successfully.
West China Cement Limited (WCC), a leading cement producer in the Shaanxi province of China and recognised in 2009 by Forbes magazine as one of 'Asia's 200 Best Companies with a Market Capitalization Under US$1billion', completed its global offering and listing on the Hong Kong Stock Exchange (HKEx) on 23 August 2010.
The global offering, which comprised of a Hong Kong public offering and an international placing, was substantially oversubscribed and raised approximately HK$1,280 million. WCC de-listed from AIM in conjunction with its admission to the HKEx. Carey Olsen advised WCC on the Jersey legal aspects of the transaction, which went smoothly from a Jersey perspective, with no material Jersey issues.
While Jersey and Hong Kong company law are largely based on English company law, where there are differences between the two, the HKEx will expect any issues to be bridged by way of amendments to a Jersey company's articles of association (its key constitutional document). To all intents and purposes, the protections and control afforded to shareholders and the company's internal management will therefore largely reflect the norm under Hong Kong law and will be in line with market expectations.
The WCC listing is a landmark transaction for Jersey. Typically, Jersey companies are mainly used for listing on the London market (both Main Market and AIM), as has been seen by the recent successful listing on AIM of Asia Ceramics Holdings plc. However, listings of Jersey companies have also been made on Euronext, NASDAQ, the Australian Stock Exchange and other exchanges both in Europe and North America. The ability to list in Hong Kong, together with the advantages of using Jersey companies to list on the London market (Takeover Code application, CREST settlement, no stamp duty, tax neutrality and a flexible yet recognised company law regime), now opens the possibility of dual listings on those markets on a basis that is not open to many other competitor jurisdictions.
The WCC listing follows on from an increase in activity in the Initial Public Offering (IPO) market, which has directly affected business levels in Jersey. Carey Olsen, along with other law firms, is experiencing an increase in transactions in this sector across a variety of markets. The pick-up in global equity markets has led to increased appetite, from a low base, for IPOs from which Jersey has benefitted. Jersey therefore continues to be a popular jurisdiction in which to incorporate listing vehicles - a trend which it is hoped will continue in the Greater China market going forward.
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