On April 2, the China Business Law Journal announced the winners of the Deals of the year 2024 awards. Two transactions organized by King&Capital were awarded the Deals of the year 2024 award after examining the importance, complexity, innovation and size of each project.
Huadian International's $2.1 billion infrastructure REITs
Huadian International issued a Haitong-Huatai-Huadian International-Yuhua Cogeneration Energy Infrastructure Investment Asset-Backed Special Plan (REITs) on the SSE in December 2023, with an issuance size of RMB 2.14 billion.
The project was the first infrastructure REITs in Hebei Province, and Huadian International used the infrastructure of its thermal power projects as the underlying assets, supported by future cash flows such as electricity sales revenue, and completed the establishment and issuance of the REITs on the SSE through a structured transaction arrangement.
King&Capital Law Firm acted as legal advisor to Huadian International.
Liability Dispute for Misrepresentation of LeTV Securities
The LeEco securities misrepresentation case shook China's capital market.2021 The China Securities Regulatory Commission (CSRC) fined LeEco and its de facto controller, Jia Yueting, 240 million yuan each for 10 consecutive years of financial falsification and fraudulent issuance. Letvision was also delisted as a result. Thousands of investors who suffered heavy losses launched a class action lawsuit against LeEco, executives and intermediaries, demanding 6.3 billion yuan in compensation.
The case was the first securities representative litigation case accepted by the Beijing Financial Court since its establishment. After nearly 20 hearings, the court issued a first-instance judgment in September 2023, ordering LeEco to pay approximately 2 billion yuan in compensation to the plaintiff investors and apportioning liability to other intermediaries.
Notably, the case became the first misrepresentation case in China in which the sponsors did not assume full joint and several liability. The sponsors, Zhongtai Securities and Zhongde Securities, were not required to bear any liability. Ping An Securities, the lead underwriter of LeEco's IPO, was found to be jointly and severally liable with LeEco to the extent of 10% of investor losses. The court deducted 40% for systemic risk, taking into account factors such as the attenuation effect of IPO information, the hidden nature of the financial fraud in question, and the historical limitations of the sponsor's due diligence techniques. The five accounting firms were also jointly and severally liable for damages in the range of 0.5% to 1.5%.
The executives represented by King&Capital, on the other hand, betrayed 0.5% of the compensation amount for failing to fulfill their duty of diligence. This figure is much lower than the 5% to 20% liability imposed on directors and supervisors in the CombiMed securities misrepresentation case.
The case is in the second trial stage.
King&Capital Law Firm is representing one of the executives of Lesco.
About the Business Law
China Business Law Journal is the leading bilingual legal media in the international market, providing practical legal advice and in-depth analysis to corporate lawyers and Chinese and foreign lawyers engaged in cross-border investment in China.
