Meaning
Legal procedure for seizing and selling equity in a Chinese domestic company when the owner is a foreign entity. Courts manage cross border share enforcement by coordinating with the State Administration for Market Regulation.
Jurisdictional Hurdle
Service of process must reach the offshore defendant through international treaties or diplomatic channels. Foreign laws regarding cross border share enforcement often clash with the registration requirements found in the People’s Republic of China. When the case involves a company in a country without a bilateral treaty, the court relies on the principle of reciprocity.
Valuation Standard
Appraisal of the shares requires an independent firm recognized by the presiding court. If cross border share enforcement involves a private company, the valuation often follows the net asset method or a discounted cash flow analysis. Market fluctuations during the appraisal period may require the court to adjust the base price before the auction begins.
Regulatory Approval
Transferring the equity to a successful bidder necessitates updates to the foreign investment filing. Successful cross border share enforcement ends with the court issuing a ruling that instructs the market regulator to change the name of the shareholder. Foreign exchange controls apply to the proceeds of the sale if they are to be remitted out of the country.
