February 28, Wednesday, New York.
Lin Shicheng When we arrived at the hotel, it was half past seven in the evening.
It was already dark in Manhattan, but the Suite on the south side of Central Park was brightly lit.
Zhao Chen was sitting in the middle of the sofa, with several documents spread out on the coffee table in front of him.
Zhang Qingxue is sitting on his left, with the laptop open and a complex picture of Fund Flow on the screen.
Su Wantang was sitting by the window, holding a cup of tea in his hand, listening quietly.
Lin Shicheng placed Briefcase on the coffee table and pulled out a thick stack of documents.
He wore a dark blue suit and tie today, which was much more formal than the day of the interview.
"Mr. Zhao, the legal team has been formed.
There are four people in total - I am responsible for overall coordination, a Securities Law partner, a tax expert, and a cross-border capital compliance specialist.
The confidentiality agreement has been fully signed, and the liquidated damages clause is set at 50 million US Dollar according to your requirements."
Zhao Chen nodded.
The liquidated damages of 50 million US Dollar means that anyone who leaks information will face compensation that is enough to bankrupt him.
This money is not to make anyone afraid, but to let everyone know that nothing can go wrong in this matter.
"Lawyer Lin, sit down." Zhao Chen pointed to the sofa opposite, "Let's deal with the funds first."
Lin Shicheng sat down and opened the top document.
"Mr. Zhao, I spent two days going through the account paths of Era Vanguard and Fund Flow.
Frankly speaking, the structure is very solid. Cayman Islands's SPV, Hong Kong's Offshore Account, and there are two layers of trust in between.
If you hadn't taken the initiative to tell me, outsiders wouldn't have been able to find out about you."
Zhao Chen did not answer the call.
He knew that these structures took Zhang Qingxue several months to build, and that each layer had independent legal entities and different jurisdictions.
This is not to do bad things, but to protect one's privacy under the legal premise.
Lin Shicheng turned to the second page and his expression became more serious.
"But--there are a few small problems that need to be dealt with."
Zhao Chen looked at him.
Lin Shicheng said, "First, part of the funds cleared by Bitcoin flowed through the Private Bank account of Singapore.
The KYC record of this account is not complete enough. If the Singapore Monetary Authority strengthens its scrutiny in the future, this account may be flagged.
I suggest you cancel this account and transfer the funds to the SPV of Cayman Islands."
Zhang Qingxue nodded beside him and wrote this down in his notebook.
Lin Shicheng continued:
"Second, Era Vanguard is registered in Cayman Islands, but the actual controller is you.
According to the law of Cayman Islands, there is no problem.
But if Era Vanguard wants to invest on a large scale in United States in the future, the SEC may require disclosure of Ultimate Beneficial Owner.
We have to prepare for this in advance."
Zhao Chen asked, "What preparations?"
Lin Shicheng said, "Two options. The first is voluntary disclosure. Register Era Vanguard's Ultimate Beneficial Owner in the SEC's system.
The advantage is compliance, the disadvantage is that your name will appear in public documents.
The second method is to continue isolation through a multi-layer architecture. Set up another layer of trust to disperse Control to multiple Offshore Entity.
The advantage is that privacy protection is stronger, but the disadvantage is that the operation cost is high, and if the SEC is serious, it can still be found."
Zhao Chen thought for a while and asked, "What impact will it have if it is disclosed voluntarily?"
Lin Shicheng said:
"The impact is not big. You are legal funds and legal investments, and the SEC will not treat you differently just because you are a China person.
But your name will appear in public documents. If the media wants to check it in the future, they can find it."
Zhao Chen was silent for a few seconds. Then he shook his head:
"Not disclosed for now. Use multi-layer architecture to continue isolation. Cost is not an issue, privacy is the first priority."
Lin Shicheng nodded. "Understood. Then I will go back and design the architecture plan and try to complete it within two weeks."
Zhao Chen said, "Yes."
Lin Shicheng turned to the third page and his expression became more relaxed.
"The third question is not a problem, it just needs to be confirmed. The Tesla stocks currently held by Era Vanguard were purchased through the brokerage account of Goldman Sachs.
This account is compliant, but there is one thing - if the shareholding ratio exceeds 10% in the future, a 13D form needs to be submitted to the SEC instead of the previous 13G.
The disclosure requirements of 13D are more stringent, and you need to explain the investment purpose, source of funds, and whether there is any intention to control the company."
Zhao Chen said, "What is my current shareholding ratio?"
Zhang Qingxue replied, "9 million shares, accounting for 5.36% of the total share capital."
Zhao Chen asked, "What if I want to increase my holdings to 15 million shares?"
Lin Shicheng thought for a while:
"15 million shares, accounting for 8.93% of the total share capital. If it is less than 10%, there is no need to submit 13D, just continue to use 13G.
But there is one thing - if your shareholding ratio exceeds 10% and you are Ultimate Beneficial Owner of the fund, the SEC may require you to disclose more information.
So I suggest keeping the shareholding ratio below 10%."
Zhao Chen's fingers tapped lightly on the armrest of the sofa twice.
Below 10%.
15 million shares, 8.93%, just below 10%.
He had already thought about this number.
"One more thing."
Lin Shicheng pulled out a piece of paper from the bottom of the document, with a regulation from United States Securities and Exchange Commission printed on it.
"Regarding the upper limit for funds to buy Tesla. United States The law does not set an upper limit for foreign investors to buy United States Listed Company stocks.
As long as the source of funds is legal and transactions are compliant, you can buy any ratio.
But there is one thing - if the shareholding ratio exceeds 5%, it needs to be disclosed.
If it exceeds 10%, the disclosure requirements are more stringent. If it exceeds 30%, a general tender offer may be required."
Zhao Chen smiled, "30%? I didn't want to buy that much."
Lin Shicheng also laughed:
"That's no problem. There are no legal obstacles. You can continue to increase your holdings, as long as you operate within the compliance framework."
Zhao Chen nodded.
Lin Shicheng's answer made the last stone fall in his heart.
There is no problem with capital compliance, there is no upper limit on shareholding increase, and the shareholding ratio is controlled below 10% without additional disclosure.
All that's left is execution.
Lin Shicheng closed the document and looked at Zhao Chen: "Mr. Zhao, I have another suggestion."
Zhao Chen Waiting for him to continue.
Lin Shicheng said, "The 9 million shares of Tesla currently held by Era Vanguard were purchased in January.
If you continue to increase your holdings now, you need to pay attention to one thing - short-term trading restrictions.
According to United States Securities Law, if insiders holding more than 10% of the shares buy and sell within six months, the profits must be handed over to the company.
But your current shareholding is 5.36%, which is less than 10%, so this rule does not apply. If you hold more than 10% in the future, you need to pay attention."
Zhao Chen thought for a while, "In other words, as long as I don't exceed 10%, I can buy and sell freely?"
Lin Shicheng nodded. "Yes. If it does not exceed 10%, you are an ordinary institutional investor and are not subject to short-term trading restrictions.
If it exceeds 10%, it becomes an 'insider' and needs to abide by stricter rules.
Therefore, I suggest that the shareholding ratio be controlled at around 9.9%, leaving a little margin of safety."
Zhao Chen smiled, "Lawyer Lin, your suggestion is very practical."
Lin Shicheng also laughed, "As a lawyer, you help clients avoid risks.
It's not about taking advantage of loopholes, it's about maximizing the operating space within the limits allowed by the rules."
Compliance issues have always been Zhao Chen's biggest concern. Now that they are resolved, he can free his hands and stir up trouble in Wall Street's capital market.