A technology company established Variable Interest Entities several years ago and secured investment from a USD fund at the Cayman entity level. Under the financing agreements, the Cayman company and its founders committed to repurchasing the USD fund’s equity if the company is not listed or acquired within a specified period. When the repurchase deadline expired, the investor demanded the exercise of its repurchase rights.

 After being entrusted with the project, Zhonglun W&D Law Firm immediately organized its team to collaboratively conduct an in-depth study of the transaction documents and materials involved. The team reviewed the legal rules and relevant cases in the Cayman Islands and other common law jurisdictions, and engaged in extensive discussions with the founders regarding the operational, financial, and governance details of the project company. This thorough analysis led to the development of a precise and effective strategy to address the buyback issue. As a result of the team’s rigorous legal argumentation and defense of rights, the investors have withdrawn their claim to exercise the buyback option. 

The enforcement of repurchase rights by offshore investors in Variable Interest Entities involves different legal rules across the Cayman Islands, Hong Kong, and mainland China, as well as intertwined financial, commercial, and operational issues. Leveraging its extensive cross-border transaction experience, the Zhonglun W&D Law Firm earned the client’s trust and delivered exceptional results through its meticulous, efficient, and decisive approach, coupled with a dedicated and professional service attitude.