Private Equity & Venture Capital
Pamir Law Group advises Private Equity (PE) and Venture Capital (VC) funds of all sizes as well as companies at every stage of growth, ranging from the start-up to the company on the verge of IPO in Silicon Valley-style financings throughout Greater China.
We have successfully closed numerous deals involving Silicon Valley-style venture capital structures (Series A, B & C preferred stock automatically converting to common stock at IPO) for U.S. companies as well as companies incorporated in tax haven jurisdictions (such as the Cayman Islands, British Virgin Islands, American Samoa, etc.) with operations throughout Greater China.
Our experience in Venture Capital and Private Equity transactions encompasses all aspects of a transaction, from structuring and negotiating initial terms to closing the deal, both on the investor-side and company-side.
Corporate Structure and Initial Capitalization
- Advise on corporate structure and jurisdiction of incorporation to maximize economic benefit and tax optimization for shareholders.
- Form company (and subsidiaries if needed) in the jurisdiction of choice and assist with annual returns and filings.
- Advise on company capitalization structure, including differentiating rights among shareholders using preferred share structures and use of stock incentive or phantom stock plans to incentivize employees.
- Tailored preparation and revisions of the company charter documents such as articles of association, memorandum of association to the specific terms required by investors or as needed to protect the rights of our clients.
- Advise regarding possible exit strategies and how such possibilities may impact the terms of investment.
Term Sheets and Terms of Investment
- Advise on transaction structure to maximize economic benefit and minimize tax impact, taking into account the parties’ specific financial, commercial and legal limitations.
- Counsel on typical Venture Capital deal investment terms, such as conversion, weighted-average and full ratchet anti-dilution, liquidation preferences and redemption.
- Advise on methods of investment, such as straight share purchases, convertible notes and bridge loans and stock warrant structures.
- Advise on financing terms and assist company clients to obtain appropriate financing.
- Advise on specific legal restraints applicable to each deal, such as relevant securities or stock exchange regulations, fair trade/antitrust issues, foreign investment approvals, corporate procedural issues, and how these variables may impact the timing and structure of the transaction.
- Negotiate and draft confidentiality and exclusivity agreements for the parties’ preliminary examination of the deal.
- Negotiate deal terms and draft term sheets, letters of intent, memoranda of understanding or framework agreements.
For the company:
- Advise on appropriate documentation to provide in response to due diligence requests.
- Prepare data room and counsel on data room procedures for due diligence.
- Counsel companies on responses to due diligence inquiries.
- Prepare due diligence requests.
- Perform due diligence review of legal documents and advise on important legal and commercial due diligence issues.
- Prepare in-depth due diligence report based on review and provide translations of significant corporate documents where necessary.
- Assist and advise on interviews of target company’s key management and departments.
- Liaise and coordinate with client’s financial due diligence team.
- Obtain credit searches, background checks of target company, key executives and major shareholders where necessary.
- Advise on “deal breakers” and “key value drivers” found during due diligence.
- Counsel on how to balance the different interests of stakeholders within the company (founders, institutional and strategic shareholders, management, employees, passive shareholders, etc.) versus the needs of the investor’s stakeholders (investment committee, general partner, financing sources, etc.) to close the deal.
- Negotiate and draft definitive agreement—share purchase agreement, convertible note purchase agreement, etc.
- Negotiate and draft ancillary agreements, such as investor rights agreement, right of first refusal and co-sale agreement, shareholders agreement, escrow agreements, stock warrants and side agreements particular to the transaction.
- Negotiate and draft employment agreements with founders and key employees.
- Negotiate and draft founders stock purchase agreement or other agreements restricting founders stock.
- Advise on commercial impact of specific deal terms, such as representations and warranties, indemnification, pre-closing and post-closing covenants, termination conditions
- Negotiate and draft stock incentive plans, phantom stock option plans, stock appreciation right plans, employee stock purchase plans and bonus plans
- Draft amendments to memorandum and articles of association (or other charter document) to implement capital structure and shareholding preferences set out in the term sheet
- Draft board and shareholder resolutions; advise on board appointment and board and shareholder meeting issues in respect of incoming investment
- Advise on and negotiate escrow terms and draft escrow agreements.
- Recommend and coordinate transaction with escrow agent.
- Review and counsel on indemnification claims and facilitate payment of claims out of escrow fund.
Foreign Investment and Other Special Approval
- Prepare applications for foreign investment approval from the Investment Commission of the Taiwan Ministry of Economic Affairs or other required special approvals in the relevant jurisdiction.
- Respond to inquires from the Investment Commission (or other governmental agency) and submit supplemental documentation.
- Facilitate capital injection verification and payment of securities transaction tax, as may be required by Taiwanese or other relevant governmental entities.
- Liaise with local PRC legal counsels to establish Wholly Foreign Owned Enterprises (WFOEs).
- On behalf of clients, manage and interface with PRC legal counsels filing applications for COFTEC approval for foreign direct investments in China.
- Provide clients with or assist clients with obtaining necessary reference letters and financial or official documents necessary for China applications.
- Oversee satisfaction of closing conditions and pre-closing covenants, such as board of directors changes, shareholders and board of director meetings, tendering of shares or proxies and other deal-specific conditions.
- Verification of stock certificates to be transferred and proper endorsements and chops.
- Arrange for transfer agent services, where necessary.
- Facilitate capital verification upon receipt of purchase funds and payment of securities transaction taxes, as may be required.
- Arrange for filing of amended memorandum and articles of association and coordinate with registered agent.