Requirements for Chinese Companies to Complete a Successful Case to Go Public in the United States

Taking a Chinese company public in the U.S. has several pre-requisities that do not apply to taking U.S.-based companies public.

In order to have a successful United States going public case involving a Chinese company, the Chinese company must satisfy requirements in the following four areas BEFORE we formally accept them as a client and start drafting SEC filing documents:

• AUDIT
• MD&A
• TRANSACTION STRUCTURE: COMPLIANCE WITH CHINESE LAW
• ENGLISH-SPEAKING AND WRITING ABILITY

AUDIT
The single most significant impediment to a successful case is securing an audit done by a U.S. based PCAOB SEC qualified firm with experience auditing Chinese companies filing registration statements with the SEC. The audit must be for at least two years, but will have to be for three years if the company has more than $25 million in annual revenues. However, if the company has not been in business two or three years, that is still OK. The audit would be for such shorter period of time that the company had been in business.

This audit firm must confirm to us in writing that an audit meeting SEC requirements can be done before we take any other action on the case.

We can help identify qualified U.S. audit firms.

MD&A
Along the same lines, there's a section of the SEC filings called MD&A: Management's Discussion and Analysis of Financial Condition and Results of Operations. The Chinese company must have available someone who speaks English and knows U.S. accounting and SEC disclosure requirements for MD&A and can prepare this section in accordance with SEC requirements.

The U.S. audit firm must also confirm to us in writing that they have met the person who will be preparing MD&A and that he/she can properly and timely perform this duty.

We must be advised of the name and contact information for this MD&A person and confirm the auditor's conclusion ourselves.

We can help locate persons to perform this task.

TRANSACTION STRUCTURE: COMPLIANCE WITH CHINESE LAW
We will need to know the exact structure of the proposed transactions and of the company that will be filing with the SEC. We will need an opinion of an English speaking Chinese attorney that the proposed structure fully complies with Chinese law and that all requirements of Chinese law for any SEC filing to be made in the U.S. have been fully met.

We work with Beijing lawyer Andy Gu who advises us on these matters. His website is here: http://www.yingkelawyers.com

ENGLISH-SPEAKING AND WRITING ABILITY
The Chinese company must have someone who is able to communicate with us both orally and in writing in English so we can obtain the information we need to draft the SEC filing and respond to SEC questions.

Example of a successful Chinese company SEC filing we prepared: Shanghai Yutong Pharma, Inc. -  Trading Symbol: SYUP.OB

TIME IN BUSINESS; REVENUE; ASSETS ARE NOT REQUIREMENTS
These are NOT requirements. The company can be a new company with no or nominal assets and no or nominal revenue and still complete a successful case IF it can do all the four things listed above.

After you have reviewed this information, please contact us to determine the optimum manner to proceed on your prospective Chinese company going public case.