Attached files
| file | filename |
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| EX-23.1 - Bohai Pharmaceuticals Group, Inc. | v186844_ex23-1.htm |
| EX-23.3 - Bohai Pharmaceuticals Group, Inc. | v186844_ex23-3.htm |
| S-1/A - S-1/A - Bohai Pharmaceuticals Group, Inc. | v186844_s1a.htm |
Exhibit 99.7
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
December
31, 2009
Chance
High International Limited
P.O. Box
957, Offshore Incorporations Centre,
Road
Town, Tortola
British
Virgin Island
Re: Corporate structures and
related issues of Chance High International Limited and its
affiliates
Dear
Sir/Madam:
We are a
firm of lawyers qualified to practice and practicing in the People’s Republic of
China (“China” or the “PRC”), and we have acted as Chinese Legal Counsel to
Chance High International Limited (“Chance High”), a company
incorporated under the laws of British Virgin Islands, along with its
subsidiary, Yantai Shencaojishi Pharmaceuticals Co., Ltd., a wholly foreign
owned enterprise under the laws of China (the “WFOE”), and its affiliate, Yantai
Bohai Pharmaceuticals Group Co., Ltd., a limited liability company under the
laws of China (“Bohai”).
We have
been requested by the Chance High to render an opinion with respect to (i) the
legality of the ownership structure of the WFOE and Bohai; and (ii) the validity
and enforceability of certain Contractual Arrangements (as defined below) among
the entities identified herein. Chance High, WFOE and Bohai are sometimes
hereinafter collectively referred to as the “Companies”.
For the
purpose of giving this opinion, we have examined the following documents
(collectively the “Documents”):
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(a)
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Copies
of the chartered documents of Chance High, WFOE and Bohai, including their
most current Business Licenses, Certificates of Approval and Articles of
Association of the WFOE and
Bohai;
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(b)
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Copies
of the executed General Meeting Resolutions of the Bohai authorizing
respective contractual arrangement structure with WFOE;
and
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1
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
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(c)
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The
government records of the WFOE and the Bohai on file and available for
inspection at the Companies Registry of the PRC maintained by the State
Administration for Industry and Commerce as of the issuance date of this
Opinion.
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We have
reviewed such other documents and made such enquiries as to questions of law as
we have deemed necessary in order to render the opinion set forth
below.
A company
search conducted in the Companies Registry of the PRC is limited in respect to
the information it produces. Further, a company search does not determine
conclusively whether or not an order has been made or a resolution has been
passed for the winding up of a company or for the appointment of a liquidator or
other person to control the assets of a company, as notice of such matters might
not be filed immediately and, once filed, might not appear immediately on a
company’s public file. Moreover, a company search carried out in the
PRC is unlikely to reveal any information as to any such procedure initiated by
a company in any other jurisdiction.
For the
purpose of this opinion we have assumed:
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(a)
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the
genuineness of all signatures and seals, the conformity to originals of
all Documents purporting to be copies of originals and the authenticity of
the originals of such Documents;
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(b)
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all
the obligations under the Documents of each party thereto other than the
Companies are legal, valid and binding on that party in accordance with
the terms;
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(c)
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the
due compliance with all matters (including, without limitation, the
obtaining of necessary consents, licenses and approvals, and the making of
necessary fillings and registrations) required under any laws other than
the laws of the PRC and compliance with the provisions of such laws as are
applicable to the Documents and the parties thereto and the legality,
validity and enforceability of the Documents under such
laws;
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(d)
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that
such Documents containing resolutions of directors and
members/shareholders, respectively, or extracts of minutes of meetings of
the directors and meetings of the members/shareholders, respectively,
accurately and genuinely represent proceedings of meetings of the
directors and/or the members/shareholders, respectively, of which adequate
notice was either given or waived, and any necessary quorum present
throughout;
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2
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
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(e)
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the
accuracy and completeness of all factual representations (if any) made in
the Documents;
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(f)
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that
insofar as any obligation under the Documents is to be performed in any
jurisdiction outside the PRC, its performance will not be illegal or
unenforceable by virtue of the law of that
jurisdiction;
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(g)
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that
the information disclosed by the company searches referred to above is
accurate and complete as at the time of this opinion and conforms to
records maintained by the company and that, in the case of each company
search, such search did not fail to disclose any information which had
been filed with or delivered to the Companies Registry of the PRC but had
not been processed at the time when the search was conducted;
and
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(h)
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that
there has been no change in the information contained in the latest annual
tax return of the Companies as of the issuance date of this
opinion.
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We have
made no investigation on and expressed no opinion in relation to the laws of any
country or territory other than the PRC. This opinion is limited to and is given
on the basis of the current law and practice in the PRC and is to be construed
in accordance with, and is governed by, the laws of the PRC.
Based
upon and subject to the foregoing and further subject to the qualifications set
forth below, we are of the opinion that as at the date hereof:
A. CORPORATE STRUCTURE (Exhibit A):
1. Chance
High (Exhibit
B)
Chance
High International Limited (“Chance High”) was incorporated on July 2, 2009,
under the laws of British Virgin Islands, with its registration number of
1537862, and its registered address at P.O. Box 957, Offshore Incorporations
Centre, Road Town, Tortola, British Virgin Island.
At the
date of its incorporation, TAN Shaohua, a citizen of Singapore, owned 100% of
the Chance High.
QU
Hongwei and TAN Shaohua have been the directors of the Chance High.
On
November 26, 2009, TAN Shaohua transferred his shares, and the Chance High
International Limited issued additional shares to fourteen shareholders. As the
result of the transfer and new issuance of shares, Glory Period Limited, a BVI
company, WANG Shulian, LIU Shaocui, JIA Peicai, ZHANG Jingxin, LIANG
Jianxin, YU Bohai, AN Zhongnan, XU Xiaosheng, DONG Qin, LI Yanzhi, FU Wei, WANG
Zhizhen as well as Portswealth Holdings Ltd, another BVI company, currently own
67.939%, 4.94%, 3.7%, 1.23%, 1.23%, 1.23%, 2.47%, 1.23%, 1.23%, 0.617%, 3.086%,
3.7%, 3.7% and 3.7% of Chance High International Limited,
respectively.
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
Glory
Period Limited, the principal shareholder of Chance High, was incorporated on
October 15, 2009 under the laws of British Virgin Islands, with its registration
number of 1552095. TAN Shaohua, a citizen of Singapore, currently owns 100% of
Glory Period Limited.
2. WFOE
(Exhibit
C)
Yantai
Shencaojishi Pharmaceuticals Co., Ltd. (“WFOE”) was established on November 23,
2009 under the laws of China, with its registered office at Tianzheng Road,
Laishan District, Yantai City, Shandong Province, China.
Chance
High currently owns 100% of the WFOE.
The
registered capital of the WFOE is USD $10,000,000. According to the approval
from Chinese government, 50% of the registered capital (USD$5,000,000) is
required to be injected within 90 days after its incorporation, the balance will
be payable within two years from the date of its incorporation.
Since its
incorporation, QU Hongwei has been the executive director of the
WFOE.
3. Bohai
(Exhibit
D)
(a) The
Establishment of Bohai
Yantai
Bohai Pharmaceuticals Group Co., Ltd. (“Bohai”) was incorporated as a limited
liability company on July 8, 2004, under the laws of China.
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
As of its
incorporation, the name of Bohai was Yantai Bohai Mechanic and
Electric
Co., Ltd. Bohai changed its name into Yantai Bohai Pharmaceuticals Group
Co., Ltd. on October 11, 2004.
The
registered capital of Bohai is RMB 20 million which, according to the Capital
Verification Report issued by Yantai Jinyu Certified Public Accountants Co.,
Ltd. dated as of July 2, 2004, has been fully paid by its then shareholders,
namely Daxin Pharmaceuticals Holding Co., Ltd. and WEN Zhenjie.
(b)
Registered Address:
Bohai was
incorporated with the registered address at No.9, Daxin Road, Zhifu District,
Yantai City, Shandong Province, China.
(c)
Ownership:
QU
Hongwei, WANG Jianwei and LIANG Lu currently own 90%, 5% and 5% of Bohai,
respectively.
(d)
Management:
QU
Hongwei is the current Executive Director and the current General Manager of
Bohai.
B. CONTRACTUAL
ARRANGEMENTS (Exhibit E)
On
December 7, 2009, Bohai and its owners entered into a set of contractual
arrangements (collectively the “Contractual Arrangements”) with the WFOE. The
relationship between the WFOE on the one hand, and Bohai and its three owners on
the other hand, are governed by the Contractual Arrangements as
follows:
The
“Contractual Arrangements” are comprised of a series of agreements, including:
(1) a Consulting
Services Agreement, through which the WFOE has the right to advise,
consult, manage and operate Bohai (the “Operating Entity”), and collect and own
all of the net profits of the Operating Entity; (2) an Operating Agreement,
through which the WFOE has the right to recommend director candidates and
appoint the senior executives of the Operating Entity, approve any transactions
that may materially affect the assets, liabilities, rights or operations of the
Operating Entity, and guarantee the contractual performance by the Operating
Entity of any agreements with third parties, in exchange for a pledge by the
Operating Entity of its accounts receivable and assets; (3) a Proxy Agreement,
under which the three owners of the Operating Entity have vested their
collective voting control over the Operating Entity to the WFOE and will only
transfer their respective equity interests in the Operating Entity to the WFOE
or its designee(s); (4) an Option Agreement,
under which the owners of the Operating Entity have granted the WOFE the
irrevocable right and option to acquire all of their equity interests in the
Operating Entity; and (5) an Equity Pledge
Agreement, under which the owners of the Operating Entity have pledged
all of their rights, titles and interests in the Operating Entity to the WFOE to
guarantee the Operating Entity’s performance of its obligations under the
Consulting Services Agreement.
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
C.
M&A Rule, SAFE Notice 75 & 106 Compliance and related
issues
1. M&A Rules
Compliance
On August
8, 2006, six PRC regulatory agencies, including the State Administration for
Foreign Exchange (“SAFE”), Ministry of Commerce (“MOC”) and the China Securities
Regulatory Commission (“CSRC”), promulgated the Rules on Acquisition of Domestic
Enterprises by Foreign Investors (“M&A Rules” or “Circular 10”), a new
regulation with respect to the mergers and acquisitions of domestic enterprises
by foreign investors that became effective on September 8, 2006.
M&A
Rules mainly governs the foreign investors’ acquisition of Chinese domestic
enterprises, including a) the acquisition of the equities of domestic
non-foreign-funded enterprises by foreign investors; b) the subscription of the
increased capital of a domestic company by foreign investors; and c) the
incorporation of a foreign-funded enterprise by foreign investors by purchasing
the operating assets of a domestic enterprise.
Since
Chance High’s incorporation of the WFOE is a foreign direct investment (“FDI”)
in nature, rather than a foreign investor’s acquisition of a domestic Chinese
company, the local counterpart of Ministry of Commerce (“MOC”) approved the
WFOE’s establishment based upon other PRC regulations, M & A Rules,
therefore, is not applicable in WFOE as well as its contractual arrangement with
Bohai.
2. SAFE Notice 75 & 106
Compliance
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
On
October 21, 2005, China’s State Administration for Foreign Exchange (“SAFE”)
issued “The circular of the State Administration of foreign exchange concerning
relevant issues on the foreign exchange administration of raising funds through
Overseas Special Purpose Vehicles and investing back in China by domestic
residents" (“Notice 75”). This Notice requires the owners of any Chinese
companies to obtain SAFE’s approval before establishing any offshore holding
company structure for foreign financing as well as subsequent acquisition
matters in China.
On May
31, 2007, SAFE issued another notice known as "Notice 106", to implement Notice
75.
None of
the owners of Bohai, QU Hongwei, WANG Jianwei and LIANG Lu, has owned
any shares of offshore companies, including Chance High, Glory Period Limited as
well as Portswealth Holdings Ltd, these three PRC citizens, therefore, is not
subject to SAFE’s registration and approval under Notice 75 and
106.
According
to Annex 1 to Notice 106, SAFE registration is not required where a Chinese
resident acquires shares of a foreign company without being its majority
shareholder.
Chance
High’s current twelve PRC shareholders, WANG Shulian, LIU Shaocui, JIA Peicai,
ZHANG Jingxin, LIANG Jianxin, YU Bohai, AN Zhongnan, XU Xiaosheng, DONG Qin, LI
Yanzhi, FU Wei and WANG Zhizhen, collective owned 28.4% of this offshore
company, none of them either collectively or individually owns the majority
shares of the Chance High, none of these PRC residents, therefore, is required
to register at SAFE under Notice 75 and 106.
We have
reviewed two Option Agreements between QU Hongwei and TAN Shaohua dated July 2,
2009 and December 7, 2009. QU Hongwei will be required to register at
SAFE when he receives shares either of Chance High or of Glory Period Limited
under Section 2 of Notice 75: and Annex to Notice 106.
D. CONCLUSION
Each WFOE and Bohai has been a business entity duly established, validly existing and in good standing under the laws of the PRC. Each of the
WFOE and Bohai has the requisite corporate power to own, lease and operate its
properties, to enter into
contracts and to conduct
its business. Each of the WFOE and Bohai is qualified to do business in
the respective jurisdiction of its
establishment.
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Citigroup
Tower, 14 Floor,
33
Hua Yuan Shi Qiao Road
Pudong,
Shanghai, China
200120
Tel:
8621-6105-9000
Fax:
8621-6105-9100
www.allbrightlaw.com
|
Under PRC
laws, each of WFOE and Bohai is an independent
business entity, not exposed to the liabilities incurred by another
entity.
The
execution, delivery and performance of the aforesaid Contractual Arrangements,
as may be amended and restated, by WFOE, Bohai as well as its owners, and the
consummation of the transactions contemplated thereby: (a) do not and will not
result in a violation of, or constitute a default under (i) the respective
organizational and/or governing documents of the WFOE and Bohai, (ii) any other
agreements, notes, leases, mortgages, deeds or other instrument to which any of
the WFOE and Bohai is a party to or by which any of such entities is bound or
affected by, or (iii) any applicable law, rule or regulation of the PRC; and (b)
do not and will not result in or require the creation of any lien, security
interest or other charge or encumbrance (other than pursuant to the Contractual
Arrangements) upon or with respect to the respective properties under the
organizational and/or governing documents of these business entities. The
execution and delivery of aforesaid Contractual Agreements will not result in a
violation of, or constitute a default under, nor will it affect the validity or
enforceability of, the Contractual Arrangements.
No
authorization, approval, consent, filing or other order of any PRC governmental
body, regulatory agency, self-regulatory organization, stock exchange or market,
court or any third party is required to be obtained by any one of the WFOE,
Bohai and their respective owners, or all of them, in order to enter into and
perform their respective obligations under the Contractual Arrangements, as may
be amended and restated, or to exercise any rights and remedies under any of the
Contractual Arrangements, as may be amended and restated.
The Contractual Arrangements constitute valid and
binding obligations of the parties to such agreements. Each of the Contractual
Arrangements, and the rights and obligations of the parties thereto, are
enforceable and valid under the laws of China.
E.
CERTAIN LIMITATIONS AND QUALIFICATIONS
The
opinions expressed hereinabove are based on documents furnished by Bohai and its
owners, and our interpretation of those on the basis of the published and
publicly available laws and regulations of the PRC which in our experience are
applicable. We note, however, that laws and the regulations in China have been
subject to substantial and frequent revisions in recent years. We cannot assure
that any future interpretations of Chinese laws and regulations by relevant
authorities, administrative pronouncements, or court decisions, or future
positions taken by these authorities, would not adversely impact or affect the
opinions set forth in this letter. This opinion letter has been
prepared solely for your use of reference and may not be quoted in whole or in
part or otherwise referred to in any documents, or disclosed to any third party,
or filed with or furnished to any governmental agency, or other party, without
the express prior written consent of this firm.
Sincerely
yours,
AllBright
Law Offices
/s/ Steve
Zhu
Steve
Zhu
Attorney
at Law/Senior Partner
Direct
line: (021)-61059116
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