Fundamental Corporate Change Transaction Map

Facts

DragonTech Ltd. is a private manufacturer with two 50 percent shareholders. A listed company wants to acquire DragonTech’s core business. The draft term sheet offers five alternatives: purchase all DragonTech shares, purchase only the factory assets and patents, subscribe for new shares so the listed company becomes DragonTech’s controlling shareholder, absorb DragonTech by statutory merger, or divide DragonTech into a manufacturing company and an IP-holding company before the acquisition.

The listed company’s controlling shareholder also owns 20 percent of a major DragonTech supplier. A foreign fund may co-invest. The listed company may pay with cash, newly issued shares, and convertible bonds. DragonTech has unpaid suppliers, several old purchase contracts, incomplete accounting records, and a board deadlock. One shareholder says that if the sale fails, the company should immediately deregister.

Questions

1. What are the legal differences among a share acquisition, asset acquisition, capital increase, statutory merger, division, and listed-company major asset reorganization?
2. If the statutory merger or division route is chosen, which current Company Law provisions and creditor-protection steps should the team map before signing?
3. Which approvals, disclosures, filings, or reviews may be needed for the listed company, the foreign fund, the possible related-party element, merger control, and any state-owned or regulated assets?
4. If a control block in the listed company is used or transferred as part of the transaction, how should the team analyze shareholding disclosure, the 30 percent tender-offer trigger, agreement acquisition, indirect acquisition, and exemption routes?
5. If the acquisition fails, what facts support judicial dissolution and what must happen before responsible liquidation and deregistration?
6. Who may face liability if DragonTech’s assets, books, unpaid contributions, or creditor notices are mishandled?

Hints

Start with structure, then layer the regimes. Do not skip from “M&A” to signing. Identify the corporate act, current Company Law article map, approval organ, creditor protection issue, listed-company disclosure issue, takeover issue, merger-control issue, foreign-investment issue, conflict issue, and exit fallback.

Discussion Guide

Students should produce a transaction map rather than a single answer. A strong map distinguishes share and asset consequences, explains why merger and division create statutory creditor-protection steps, identifies listed-company takeover and major-reorganization gates, flags the related-party and foreign-investment questions, and then explains why dissolution and liquidation are creditor-facing processes rather than shortcuts to erase a failed deal.