Analysis And Precaution Of Backdoor Listing Legal Risks Of China

With the development of domestic market-oriented economy as well as theadvancement of security market, the phenomenon of backdoor listing is growing witheach passing day.As a special mode for merge and acquisition of a corporation(M&AC),back door listing,which is another way for an corporation to pursueself-development and an advanced capital operating form for business expansion hasalways been an concentrated topic among the capital market as it has opened up anconvenient door for those which is in good operating performance but in dire need ofcapital to develop and can not afford the IPO standard. However, there aretremendous potential legal risks of back door listing we can not ignore while catchingsight on the advantages as it is not an simple issue of M&AC, but is relevant tothe acquisition and the onerous procedures of resource and business integration afterit.There are cumbersome issues should be resolved and can lead to lose when anylink gets in trouble. In the domestic capital market, the phenomenon of backdoorlisting has existed for a long history and achieved some developments to some extent.In practice, many enterprises drop in a dilemma as many enterprises lack of riskawareness and fail to deal with the related problems which should have entered thecapital market through back-door listing. Therefore, the author holds that it isnecessary to make further research on the legal risk of back-door listing and thereason behind it, seek for the corresponding preventive measures, and strive to play a guiding role in the practice of the back-door listing.The first part of this paper briefly introduced the related concepts anddevelopments of back door listing, and further analyzed the necessities of the studyabout the legal risks of it with the reality of our country.The second part analyzed the legal risk confronting the stage of shell companypurchase, including the legal risk of high costs, potential liabilities, disputes ofacquisition,the legal risk to get the control power of the shell as well as the legal riskof losing control after the transaction.The third part mainly aimed at the legal risk analysis of the restructuring stageafter control power of the shell company has been acquired, including resourcesintegration and restructuring failure which may lead to second risks of rendering toshell again.The fourth part made a research on the preventive measures of legal risk of backdoor listing from the angel of enterprise and the perfect aspect of relevant legalsystem and put forward the corresponding solutions.The fifth part forms the relevant conclusions of this paper.