The ownership structure, assets, liabilities, tax arrears and contingent liabilities of the target company should be clarified. It is particularly important to note that the contingent liabilities of the target company due to external guarantees are not reflected in the balance sheet. Step 1: Matters needing attention in investigation of the target company: 1. The ownership structure, assets, liabilities, tax arrears and contingent liabilities of the target company shall be ascertained. It is particularly important to note that the contingent liabilities of the target company due to external guarantees are not reflected in the balance sheet. 2. It is also necessary to understand the contents of the articles of association of the target company, and pay special attention to the restrictive clauses on equity transfer in the articles of association. Under normal circumstances, the transferee and the transferor shall jointly hire lawyers, accountants, asset appraisers and other intermediaries to conduct due diligence on the legal status, financial status and important assets of the target company, and take the due diligence report as an annex to the equity transfer contract. Step 2: Matters needing attention in signing the letter of intent for equity transfer between the transferor and the transferee: 1. The letter of intent for equity transfer shall stipulate two special clauses: First, supplementary provisions for effective conditions: this letter of intent shall come into effect after more than half of the other shareholders of the target company agree to this transfer (the conditions stipulated in the company law) and give up the preemptive right, or/and meet the relevant conditions stipulated in the articles of association of the target company; Ii. notification obligation of the transferor: the transferor shall notify other shareholders of the target company within a certain period after signing this letter of intent. 2. Determination of transfer price The methods commonly used in practice to determine equity transfer price are as follows: First, the transfer price is directly based on the transferor's capital contribution in the target company; Second, the transfer price is the product of the target company's book net assets and the transferor's shareholding ratio; Third, the product of the audited net assets of the target company and the transferor's shareholding ratio is the transfer price; Fourth, determine the transfer price through bidding, auction and other bidding transactions. The first and second methods mentioned above are not simple and can only be used in newly established companies. The fourth method can usually determine the market price of equity more accurately, but its disadvantages are complicated procedures and high transaction costs. The third method can only determine the simple static value of the assets such as factory buildings, machinery and equipment of the target company, and cannot reflect the growth and development factors of the company as an organism. On the determination of transfer price. For newly established companies, the first and second methods can be considered to determine equity transfer price; For large companies or companies involving state-owned assets, the fourth method should be adopted; For general companies, both parties to the transaction can determine the transfer price through consultation on the basis of auditing and evaluating the net asset value and referring to the future profit prospects and market risks of the target company. Article 71 of the Company Law stipulates that shareholders of a limited liability company may transfer all or part of their shares to each other. Shareholders' transfer of equity to persons other than shareholders shall be approved by more than half of other shareholders. Shareholders shall notify other shareholders in writing to agree to the transfer of their shares. If other shareholders fail to reply within 30 days from the date of receiving the written notice, they shall be deemed to have agreed to the transfer. If more than half of the other shareholders do not agree to the transfer, the shareholders who do not agree shall purchase the transferred equity; Do not buy, as agreed to transfer. Under the same conditions, other shareholders have the priority to purchase the equity transferred with the consent of shareholders. If two or more shareholders claim to exercise the preemptive right, their respective purchase proportions shall be determined through consultation; If negotiation fails, the preemptive right shall be exercised in accordance with their respective investment proportions at the time of transfer. Where there are other provisions on equity transfer in the articles of association, such provisions shall prevail.
Legal objectivity:
Article 71 of People's Republic of China (PRC) Company Law Shareholders of a limited liability company may transfer all or part of their shares to each other. Shareholders' transfer of equity to persons other than shareholders shall be approved by more than half of other shareholders. Shareholders shall notify other shareholders in writing to agree to the transfer of their shares. If other shareholders fail to reply within 30 days from the date of receiving the written notice, they shall be deemed to have agreed to the transfer. If more than half of the other shareholders do not agree to the transfer, the shareholders who do not agree shall purchase the transferred equity; Do not buy, as agreed to transfer. Under the same conditions, other shareholders have the priority to purchase the equity transferred with the consent of shareholders. If two or more shareholders claim to exercise the preemptive right, their respective purchase proportions shall be determined through consultation; If negotiation fails, the preemptive right shall be exercised in accordance with their respective investment proportions at the time of transfer. Where there are other provisions on equity transfer in the articles of association, such provisions shall prevail.