Recently, China Securities Regulatory Commission (CSRC) approved the exemption of Lu Guanqiu Sannong Spiritual Support Fund from the obligation of tender offer due to negotiating transfer and control of 40.68% equity of Hebei Chengde Lolo Co., Ltd. (000848) and 48.76% equity of Wanxiang Doneed Co., Ltd. (600371), marking the successful establishment of Lu Guanqiu Sannong Spiritual Support Fund, the largest equity charitable trust in China. Lu Guanqiu Sannong Spiritual Support Fund is not only a great pioneering work of domestic private entrepreneurs in the development of philanthropy in China, but also a major innovation of the trust system in the field of public welfare and charity. Led by lawyer Haibo XU, Senior Partner of JT&N, the securities and financial teams of JT&N in Beijing and Shanghai have provided the full legal services for the project.
Lu Guanqiu Sannong Spiritual Support Fund is a charitable trust established in memory of the outstanding entrepreneur Mr. Guanqiu LU, founder of Wanxiang Group. Following his father’s feelings, Mr. Weiding LU set up and named Lu Guanqiu Sannong Spiritual Support Fund in order to carry forward Guangqiu LU's idea of "disperse of wealth gathers people together and vice versa; wealth should be gained in a proper way and used in a happy manner; and work should be done to benefit others for co-existence, common innovation and sharing". The initial trust property is composed of all equities corresponding to the RMB600 million capital contribution to Wanxiang Sannong Group Co., Ltd., which was awarded by Mr. Weiding LU free of charge.
Weiding LU and his family members have transferred all of their financial interests in Wanxiang Sannong Group Co., Ltd. through the establishment of Lu Guanqiu Sannong Spiritual Support Fund. However, Mr. Weiding LU will continue to act as the actual controller of listed companies under Wanxiang Sannong Group Co., Ltd. According to the provisions of the trust documents, all the trust properties and their proceeds shall be used for charitable purposes. The concept of wealth, career and entrepreneurship inherited by the charitable trust is rare and precious. The free use of the assets of listed companies for the agricultural and charitable undertakings of the state through such an approach or method is also an innovative and effective way for the financial sector to serve the real economy. This process also has fully tested the innovative ability of trusts, law firms and brokers.
Lu Guanqiu Sannong Spiritual Support Fund is jointly established by Wanxiang Trust, JT&N and Caitong Securities. Wanxiang Trust Co., Ltd. acts as the trustee of Lu Guanqiu Sannong Spiritual Support Fund. In establishing the project, we conducted an extensive and in-depth study on the practices of other foreign jurisdictions in the field of family trust and charitable trust, fully took into account the inherent characteristics of the domestic legal system, and based on the fund’s attribute of permanent existence, established an internal governance mechanism featuring decision-making by the board of directors, management by the trustee and supervision by the supervisor in relation to the management, decision-making and iteration and inheritance in respect of the trust property, which has been fully recognized by Mr. Weiding LU. During communication with entrepreneurs, the lawyer team also had a deeper understanding of the inner concerns and feelings of entrepreneurs.
In drafting the fund plan and trust documents, the lawyer team and the trustee’s team, based on repeated research and demonstration, adhering to the wishes and charitable purposes of the founder and in accordance with relevant laws and regulations, drafted core trust documents including the Charter, Articles of Association and Trust Contract. They not only referred to the corporate governance structure, but also fully considered the contractual characteristics of the trust funds to ensure the permanent existence of the charitable trust and the realization of strategic public welfare purposes.
In applying for listing, acquisition and exemption from the obligation of tender offer, due to the involvement in the negotiating transfer of and control over 30% equity of Hebei Chengde Lolo Co., Ltd. and Wanxiang Doneed Co., Ltd. each, Lu Guanqiu Sannong Spiritual Support Fund applied to China Securities Regulatory Commission (CSRC) for exemption from the obligation of tender offer in accordance with Article 62 of the Regulations on the Management of Acquisition of Listed Companies, for which, JT&N issued legal opinions according to law, and made explanations and communications over the key issues concerned by the regulatory authorities. Recently, the application for exemption from the obligation of tender offer has been approved by the CSRC.
JT&N’s lawyers Haibo XU, Lifeng ZHAO, Hanbing DONG and Chengcheng HU provided excellent legal services for the project. Lawyers Xin LU and Han WU, members of the internal audit group of JT&N, provided very important internal audit opinions for the successful establishment of Lu Guanqiu Sannong Spiritual Support Fund during the internal audit of the legal opinions.
Over the years, JT&N has won high praise from its clients for providing customized, comprehensive, strategic and professional legal advisory services in each practice area. The lawyer team led by Haibo XU has rich legal service experience in such financial innovation practice areas as trust, asset management, private placement fund, supply chain finance and asset securitization, and has been highly recognized by its clients, and insiders and outsiders for its professional ability and service level.