Pre-IPO restructuring for a tech company targeting Hong Kong listing

Client Background

The client is an enterprise-grade SaaS company founded eight years ago, headquartered in Shenzhen, with cumulative funding exceeding USD 300 million and a valuation of approximately USD 1.5 billion. The company plans to list on the Main Board of the Hong Kong Stock Exchange within the next 18 months. However, due to the relatively complex VIE structure adopted during early funding rounds, and core intellectual property being dispersed across multiple offshore entities, the pre-listing compliance rectification workload is enormous.

Core Challenges

The project faced three core challenges: first, the company's VIE structure involved multiple agreements among the WFOE, domestic operating company, and founders, with some agreements containing conflicting clauses and legal defects; second, the company's core technology patents and software copyrights were registered under the Cayman holding company, while according to HKEX listing rules, core intellectual property should belong to the listing entity or domestic operating entity; finally, the company had undergone multiple funding rounds in its history, with shareholder registers and option pool management being rather chaotic.

Restructuring Plan

Winson Consulting, together with the client's listing sponsor and domestic and overseas lawyers, formulated a 12-month restructuring plan.

The first step was VIE structure cleanup and optimization. We conducted a comprehensive review of existing control agreements, identified seven potential legal risk points, and negotiated and executed supplementary agreements with all parties, clarifying the WFOE's control rights over the domestic operating company and profit transfer mechanisms.

The second step was intellectual property repatriation. Through cross-border technology license termination and domestic re-application, core patents and software copyrights were transferred from the Cayman company to the Shenzhen operating entity. The entire process involved coordination with patent offices in China, the United States, and the European Union, taking six months to complete.

The third step was equity structure streamlining. We assisted the company in completing the digital reconstruction of shareholder registers, clearing up historical nominee shareholding issues, and processing confirmation and exercise arrangements for all option holders.

Key Results

• The legal compliance of the VIE structure was comprehensively rectified, receiving recognition from the sponsor and issuer's lawyers

• All core intellectual property was repatriated to the domestic operating entity, meeting HKEX disclosure requirements

• Shareholder structure was clarified, with a 100% resolution rate for historical legacy issues

• After restructuring completion, the company successfully entered the HKEX listing hearing queue