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Prof Stephen Harder

Anurag Rakshit
Saturday, March 11, 2017


TO: The Board and CEO of MNE Corp.

FROM: Anurag Rakshit

In-House Counsel
Shanghai Office

RE: The analysis of the potential EJV partners within the PRC and the direct acquisition of
ACME Inc., stock interest in Laingchu Co.

This document is to be read in conjunction with the latest Foreign Investment Industrial
Guidance Catalogue released in 2015 by National Development and Reform Commission
(NDRC) in association with the Ministry of Commerce (MOFCOM) in China.

Introduction; laying out all the facts.

1.1 Given the background of your firm, it is very important for us to realize that in the interest of
the parties involved, we will be operating under the jurisdiction of the relevant International
Contracts Law agreed upon at the Geneva Convention et al, Law of the People's Republic of

1.2 Before we delve any deeper into the analysis of your firms position as a potential acquirer
and equity joint venture partner within the People's Republic of China we must understand the
idiosyncrasies of the Chinese Operating System pertaining to Foreign Equity Joint-Venture
Partners. To get a deeper background knowledge of the functioning and the pedigree of Joint-
Ventures in China we must take a brief look at the Law of the People's Republic of China on
Sino-Foreign Equity Joint Ventures. (Doc. no. Order of the President [2001] No.48). Prior to
engaging ourselves in any particular details of your case, I want to make an important note about
a few critical procedural red tapes that must be highlighted to understand the venture. The Article
3 of the Accord, which states that a firm of your stature must be first approved by the approval
authority which is the state foreign economic relations and trade administrative department and
then you must register with the State Administrative Department for Industry and Commerce as
an LLC, in order to obtain a business license before commencing any operations. Given the
important role of the regulatory authorities in the PRC, it is of the utmost importance that you
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understand to follow these procedures to the letter in order to gain state approval.

1.3 [Were not in Kansas anymore extension, a further background into why PRC JV arena is
different and commands different focus as compared to the US/Europe]
Implementing Regulations of the Law of the People's Republic of China on Sino-Foreign
Equity Joint Ventures (Revised in 2014)
Article 4. Conditions of non-approval
Article 11. Contract Particulars
Article 13. Articles of Association particulars

1.4 [Discussing the roles and defining the relationship of NDRC, MOFCOM, SAIC, SAFE and
other regulatory authorities to the PRC and Foreign Companies within China.]
Introduce the Foreign Investment Catalogue
Stipulations that affect MNE breeding crop varieties, edible oil etc

Professional advice based on the analysis of EJV investment partners.

2.1 [Outlining the benefits entitled to MNE Corp. as a foreign investor by the Government of
benefits pertaining to foreign intellectual property (innovation) sharing, Neospore

2.2 [POE LLC]

POE Newseed trademark vs MNE Neospore Trademark
Benefits of having an owner who is a delegate to the CPPCC at the Lianghui
Possible Conflicts

2.3 [CLS, an SOE]

Benefits coming from an SOE
Benefits from a Real Estate
Developer (land)
Possible conflicts

2.4 [WFOE]
why is it a bad idea (overview)
business limitations can only
conduct business with licensed
categories, additional taxes
Possible solutionsFICE v.

2.5 [Strategic comparison, analysis]

based on land
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based on ownership equity

based on regulatory relief

Acquisition of ACME Inc.

3.1 [Consequences pertaining to the EJV Project]

Ownership issues, equity issues, control issues
3.1.1 whether or not to proceed to signing of the binding SPA for the acquisition of the
Acme China business
3.1.2 whether and when in the process - to seek to acquire 15% of the Shang Co
interest in Liangchu Co.
3.1.3 what partnering and governance arrangements to propose for the Project;
3.1.4 whether to request any additional meetings with Chinese government officials.

4.1 [Final judgement and conclusion]