Attached files
| file | filename |
|---|---|
| S-1/A - KINGOLD JEWELRY, INC. | v201747_s1a.htm |
| EX-5.1 - KINGOLD JEWELRY, INC. | v201747_ex5-1.htm |
| EX-23.1 - KINGOLD JEWELRY, INC. | v201747_ex23-1.htm |
| EX-10.15 - KINGOLD JEWELRY, INC. | v201747_ex10-15.htm |
| EX-10.13 - KINGOLD JEWELRY, INC. | v201747_ex10-13.htm |
| EX-10.14 - KINGOLD JEWELRY, INC. | v201747_ex10-14.htm |
| EX-10.18 - KINGOLD JEWELRY, INC. | v201747_ex10-18.htm |
| EX-10.20 - KINGOLD JEWELRY, INC. | v201747_ex10-20.htm |
| EX-10.12 - KINGOLD JEWELRY, INC. | v201747_ex10-12.htm |
| EX-10.16 - KINGOLD JEWELRY, INC. | v201747_ex10-16.htm |
| EX-10.19 - KINGOLD JEWELRY, INC. | v201747_ex10-19.htm |
EXHIBIT 5.2
November
18, 2010
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To:
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Kingold
Jewelry, Inc.
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No.15
Huangpu Science and Technology Park,
Jiang'an
District,
Wuhan,
Hubei Province, PRC 430023
Tel: 86
27 65660703
Rodman
& Renshaw, LLC
1251
Avenue of the Americas, 20th
Floor,
New York,
NY 10020
U.S.A.
Tel: 212
356 0500
Re: Kingold Jewelry, Inc.
Registered Public Offering
Dear
Sirs,
We are
qualified lawyers of the People's Republic of China ("PRC") and as such are
qualified to issue this opinion according to the laws and regulations of the
PRC.
We have
acted as the PRC counsel for Kingold Jewelry, Inc. (“Company”), a Delaware
corporation, in connection with the Company’s Registration Statement on Form S-1
(as so filed and as amended, “Registration Statement”) which was initially filed
with the Securities Exchange Commission (“SEC”) on June 18, 2010, relating to
the proposed registered public offering (“Offering”) of common stock of the
Company. For the purposes of the filing of the Registration Statement
with the SEC, we have been requested to give this opinion on: (a) the legality
of the ownership structure of all of the entities in the PRC which includes
Wuhan Kingold Jewelry Company Limited (“Wuhan Kingold”) and Wuhan Vogue-Show
Jewelry Co., Ltd. (“Vogue-Show”) (collectively “PRC Group Companies”); (b) the
legality, validity and enforceability of certain contractual arrangements among
Vogue-Show, Wuhan Kingold and the shareholders jointly holding 95.83% of the
shares of Wuhan Kingold (“Shareholders of Wuhan Kingold”), pursuant to which the
Company exercises effective control over Wuhan Kingold (“VIE Agreements”); (c)
the validity of the choice of law provision of the Call Option Agreement which
was entered into between Mr. Jia Zhi Hong and Mr. Zhao Bin and Ms. Huo Yong Lin
(also known as “Fok Wing Lam Winnie” in the Registration Statement); (d) the
legality of the transactions and business operations of the PRC Group Companies
as described in the Registration Statement; (e) certain matters relating to the
Underwriting Agreement (“Underwriting Agreement”) which was entered into between
the Company and Rodman & Renshaw, LLC (the “Underwriter”); and
(f) certain other matters as set forth below. Capitalized terms used
but not otherwise defined herein shall have the meanings ascribed thereto in the
Underwriting Agreement.
For the
purposes of this opinion we have examined the originals or certified, conformed
or reproduced copies of all records, agreements, certificates issued by
governmental authorities of the PRC, and other instruments as listed in the
Appendix hereto, which we have deemed relevant or necessary as the basis for the
opinions hereinafter expressed.
In such
examination, we have assumed: (a) the genuineness of all signatures on original
or certified copies and the authenticity of all documents submitted to us as
originals; (b) the conformity to the originals of all documents submitted to us
as certified or reproduced copies; (c) that none of the documents, as they were
presented to us as of the date of this opinion, has been revoked, amended,
varied or supplemented; and (d) that all factual representations made in all
documents are correct in all material respects.
In
rendering this opinion, as to factual matters not directly within our knowledge,
we have relied upon, and have assumed the accuracy, completeness and genuineness
of, oral and written representations made to us by officers and/or
representatives of Wuhan Kingold, Vogue-Show and the Company, and such
certificates of public officials as we have deemed necessary.
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This
opinion is confined to and rendered on the basis of the PRC laws effective as of
the date hereof, except as otherwise stated, and there is no assurance that any
of such laws will not be changed, amended or replaced in the immediate future or
in the longer term with or without retrospective effect. The PRC laws
referred to herein are laws, regulations and rules of the mainland territory of
the PRC that currently are in force on the date of this opinion, except as
otherwise stated. We have not investigated and do not express or
imply any opinion on the laws of any other jurisdiction, and we have assumed
that no such other laws would affect the opinion stated herein.
Based on
the foregoing, and subject to the limitations set forth herein, we are of the
following opinion:
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1.
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Wuhan
Vogue-Show Jewelry Co., Ltd. or “Vogue-Show”, has been duly organized and
is validly existing as a wholly foreign owned enterprise with limited
liability under the PRC laws; Vogue-Show’s business license is in full
force and effect; Vogue-Show has been duly qualified as a foreign invested
enterprise; the registered capital of Vogue-Show is HKD32,000,000, all of
which has been contributed and verified; 100% of the equity interests of
Vogue-Show are owned by Dragon Lead Group Limited (“Dragon Lead”), and to
the best of our knowledge after due inquiry, such equity interests are
free and clear of all liens, encumbrances, equities or claims; and the
articles of association, the business license and other constituent
documents of Vogue-Show comply with the requirements of applicable PRC
laws and are in full force and effect. Vogue-Show has obtained
the following approvals and certificates: (a) Certificate of
Approval for Establishment of Enterprise with Foreign Investment in the
PRC issued by the People’s Government of Wuhan Municipality on February
13, 2009; (b) Business License issued by Wuhan Administration Bureau for
Industry and Commerce on February 16, 2009; (c) Certificate of Foreign
Exchange Registration issued by Hubei Branch of the State Administration
of Foreign Exchange (“SAFE”); (d) Organization Code Certificate issued by
Wuhan Bureau of Quality and Technical Supervision on February 10, 2009;
and (e) Taxation Registration Certificate issued by both Wuhan State and
Local Taxation Bureaus on March 2, 2009. The registered
business scope of Vogue-Show is “production, processing and sales of gold
and silver jewelry, and its technical service, technical training and
management consulting; wholesale, import and export of instruments and
mechanical equipment (business subject to special approval shall be
conducted with licenses)”, which is neither categorized as “restricted
industries” nor as “prohibited industries” for foreign investment in
accordance with the provisions of the PRC Catalogue of Industries for
Guiding Foreign Investment, and complies with the PRC industrial policy
for foreign investment.
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2.
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Wuhan
Kingold Jewelry Co., Ltd. or “Wuhan Kingold” has been duly organized and
is validly existing as a joint stock company limited by shares under the
PRC laws; Wuhan Kingold’s business license is in full force and effect;
the registered capital of Wuhan Kingold is RMB 120,000,000, all of which
has been contributed and verified; 100% of the equity interests of Wuhan
Kingold are owned by 42 PRC individuals and 5 PRC legal entities, and to
the best of our knowledge and after due inquiry, such equity interests are
free and clear of all liens, encumbrances, equities or claims, with the
exception of the equity interest pledged under the Equity Pledge Agreement
entered into by and between the Shareholders of Wuhan Kingold and
Vogue-Show; and the articles of association, the business license and
other constituent documents of Wuhan Kingold comply with the requirements
of applicable PRC laws and are in full force and effect. The
registered business scope of Wuhan Kingold is “production, processing and
sales of platinum jewelry; production, processing, wholesale and retail,
recycling of and exchange new for old gold and silver jewelry, OEM of
gold, platinum and silver products from abroad; agency of gold
transactions; consultation for gold transactions; production, processing,
wholesale and retail of diamond jewelry; processing and sales of gold
chloride; production, processing, wholesale and retail of precious metals;
operation of raw materials, instruments and meters, mechanical equipment
and spare parts needed for R&D and production by the company and its
member enterprises (business period and business scope conforming to the
period and scope as approved in licenses); import and export of goods and
technology, agency for import and export (not including goods or
technology forbidden or restricted for import and export by the State)
(business subject to special approval may be conducted upon
approval)”.
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3.
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Except
as set forth in the Registration Statement, both Vogue-Show and Wuhan
Kingold have full corporate right, power and authority and has all
necessary governmental authorizations of and from, and has made all
necessary declarations and filings with, all governmental agencies to own,
lease, license and use its properties and assets and to conduct its
business and such governmental authorizations contain no burdensome
restrictions or conditions; to the best of our knowledge after due
inquiry, none of the PRC Group Companies has any reason to believe that
any regulatory body is considering modifying, suspending, revoking or not
renewing any such governmental authorizations; and each of the PRC Group
Companies is in compliance with the provisions of all such governmental
authorizations and conducts its business in accordance with, and is not in
violation of, any PRC laws to which it is subject or by which it is bound,
in all material respects.
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4.
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To
our best knowledge after due inquiry, none of the PRC Group Companies is
in violation of or in default under (a) any provision of its articles of
association; (b) any provision of PRC laws or regulations; (c) any
agreement governed by the PRC laws by which it is bound or to which any of
its properties or assets is subject; or (d) any order, decree or
regulation of any governmental body or agency in the PRC having
jurisdiction over it or over any of its properties or assets, except for,
in the case of clauses (b), (c) and (d), such defaults that would not have
a material adverse effect on the PRC Group
Companies.
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5.
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The
discussions in the Registration Statement under the headings: “Prospectus
Summary”, “Risk Factors”, “Business”, and “Certain Relationships and
Related Party Transactions”, include a complete and accurate description
of the agreements among the Company, Vogue-Show, Wuhan Kingold and the
Shareholders of Wuhan Kingold pursuant to which the Company exercises
effective control over Wuhan Kingold through the use of the VIE
Agreements. Each of the PRC Group Companies has the corporate
power and full capacity to enter into and perform its obligations under
each of the VIE Agreements to which it is a party and has taken all
necessary corporate action to authorize the execution, delivery and
performance of, and has authorized, executed and delivered, each of the
VIE Agreements to which it is a party. Each of the shareholders
of Vogue-Show and the Shareholders of Wuhan Kingold has full power and
capacity to enter into and perform its respective obligations under each
of the VIE Agreements to which he/she/it is a party and has taken all
necessary action to authorize the execution, delivery and performance of,
and has authorized, executed and delivered, each of the VIE Agreements to
which he/she/it is a party. The execution, delivery and
performance of the VIE Agreements comply with the provisions of the
respective articles of association of each of the PRC Group Companies and
the PRC laws. The permission of no other corporation or
shareholder(s) will be necessary to authorize such execution, delivery and
performance other than those obtained already. Each of the VIE
Agreements does not contravene, result in a breach or violation of, or
constitute a default under (a) any provisions of applicable PRC laws; (b)
any terms of the articles of association or other constituent documents of
each of the PRC Group Companies; or (c) to the best of our knowledge after
due inquiry, any license, approval and agreement known to us and governed
by the PRC laws to which any of the PRC Group Companies is a party or by
which any of the PRC Group Companies is bound or to which any of their
properties or assets is subject.
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6.
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Each
of the VIE Agreements is, and all of the VIE Agreements taken as a whole
are legal, valid, enforceable and admissible as evidence against the PRC
Group Companies and the shareholder of Vogue-Show and the Shareholders of
Wuhan Kingold under the PRC laws, and constitute(s) valid and legally
binding documents on the parties thereto, and enforceable in accordance
with its terms thereunder and relevant PRC laws. Each of the
VIE Agreements is in proper legal form under the PRC laws for the
enforcement thereof against each of the PRC Group Companies, the
shareholder of Vogue-Show and the Shareholders of Wuhan Kingold without
any further action to be taken in the PRC by any of the PRC Group
Companies or their shareholders other than those already taken; and to
ensure the legality, validity, enforceability or admissibility in evidence
of each of the VIE Agreements in the PRC, all government authorizations
for the execution, delivery, performance and enforcement by each of the
PRC Group Companies and their shareholders in respect of the VIE
Agreements have been obtained as required by the PRC laws. To
the best of our knowledge, we are not aware of any issue, fact or
circumstance which would lead us to believe that the PRC regulatory
authorities would revoke the VIE Agreements. However, if the
VIE Agreements were for any reason determined to be in breach of any
existing or future PRC laws, the relevant regulatory authorities can apply
any or all of the following: (a) impose economic penalties on the PRC
Group Companies; (b) discontinue or restrict the operations of the PRC
Group Companies; (c) impose conditions or requirements in respect of the
VIE Agreements with which the PRC Group Companies may not be able to
comply; (d) require the PRC Group Companies to restructure the relevant
ownership structure or operations; (e) revoke the business licenses and/or
the licenses or certificates of the PRC Group Companies, and/or void the
VIE Agreements; and (f) take other regulatory or enforcement actions that
could adversely affect Company's
business.
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7.
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The
choice of the laws of the State of New York as the governing law of the
Call Option Agreement is a valid choice of governing law under the laws of
the PRC and will be binding on the parties to the Call Option
Agreement.
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8.
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The
ownership structure of the PRC Group Companies created by the VIE
Agreements and the Call Option Agreement does not violate any provisions
of the applicable PRC laws; the transactions conducted in the PRC
involving the PRC Group Companies relating to the establishment of such
ownership structure, in each case, does not violate any provisions of the
applicable PRC laws; to the best of our knowledge after due and reasonable
inquiries, except as set forth in the Registration Statement, each of the
PRC Group Companies’ businesses and operations comply with the PRC laws in
all material respects, and no consent, approval or license other than
those already obtained is required under existing PRC laws for such
ownership structure, businesses and operations. However, if
such ownership structure was for any reason determined to be in breach of
any existing or future PRC laws, the PRC competent authorities may apply
any or all of the following: (a) revoke the business and operating
licenses of the PRC Group Companies; (b) impose fines and penalties on the
operations in the PRC; (c) limit the operating privileges in the PRC; (d)
impose restrictions on the business operations of the PRC Group Companies;
(e) impose additional conditions or requirements with which the PRC Group
Companies may not be able to comply; (f) delay or restrict the
repatriation of overseas proceeds into the PRC; (g) delay or restrict the
PRC Group Companies from distributing dividends; (h) require the PRC Group
Companies to restructure the relevant ownership structure or operations;
and (i) take other actions that could have a material adverse effect on
the Company’s business.
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9.
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Except
as set forth in the Registration Statement, each of the PRC Group
Companies owns or otherwise has the legal right to use, or can acquire on
reasonable terms, its intellectual property rights (“Intellectual Property
Rights”) as currently used or as currently contemplated to be used by the
PRC Group Companies.
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10.
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Except
as set forth in the Registration Statement, to the best of our knowledge
after due and reasonable inquiry, none of the PRC Group Companies is
infringing, misappropriating or violating any intellectual property right
of any third party in the PRC, and no Intellectual Property Rights are
subject to any outstanding decree, order, injunction, judgment or ruling
restricting the use of such Intellectual Property Rights in the PRC that
would impair the validity or enforceability of said Intellectual Property
Rights, nor has the Company or any of the PRC Group Companies received any
notice of any claim of infringement or conflict with any such rights of
others. Except as disclosed in the Registration Statement, each
of the PRC Group Companies has full, valid and clean title to, or
otherwise has the legal right to use, all of the assets currently used
and/or occupied by it, free and clear of all security interest, liens,
encumbrances and third party rights, and has the lawful power and
authority to assume civil liability and has full power and authority to
own, use and lease its assets and to conduct its business operation within
its business scope as described in its business license and as currently
being conducted. Each of the PRC Group Companies has obtained
all the property ownership certificates in relation to the real properties
currently owned and used by it in relation to its
business.
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11.
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No
labor dispute or disturbance involving the employees of the PRC Group
Companies exists, is imminent or threatened, except disputes or
disturbances which would not, individually or in the aggregate, have a
material adverse effect on the PRC Group Companies. As
confirmed by the PRC Group Companies and to the best of our knowledge
after due inquiry, each of the PRC Group Companies has complied in all
material respects with all employment, labor and other similar laws
applicable to the PRC Group Companies and has made all welfare
contributions for its employees as required under the PRC
laws. Each of the PRC Group Companies has entered into a labor
contract with each of its employees, and the labor contracts or employment
agreements entered by each of the PRC Group Companies with its employees
are in compliance with the PRC
laws.
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12.
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As
confirmed by the Company and to the best of our knowledge after due
inquiry, each of the PRC Group Companies has no outstanding guarantees
other than as disclosed in the Registration
Statement.
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13.
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Except
as disclosed in the Registration Statement, Vogue-Show has full power and
authority to effect dividend payments and remittances thereof outside the
PRC in United States dollars free of deduction and without the need to
obtain any consent, approval, authorization, order, registration or
qualification of or with any court or governmental or regulatory agency or
body of or in the PRC; except as described in Registration Statement, all
such dividends and other distributions resulting from profits generated in
tax years beginning from and after the establishment of Vogue-Show, will
be subject to withholding tax at a rate of 10%, unless reduced pursuant to
an applicable bilateral tax treaty and upon the approval of the competent
tax authority of the PRC; as confirmed by the Company and to the best of
our knowledge, none of the PRC Group Companies are currently prohibited,
directly or indirectly, by the PRC laws from distributing any dividend to
its shareholders.
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14.
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Under
the PRC Enterprise Income Tax Law (“EIT Law”) and its implementation rules
and the Circular of the State Administration of Taxation on Issues
Concerning the Identification of China-controlled Overseas-registered
Enterprises as Resident Enterprises on the Basis of the Standard of Actual
Management Organization dated on April 22, 2009 (“SAT Circular 82”), it
remains unclear as to whether SAT Circular 82 is applicable to an offshore
enterprise incorporated or controlled by a PRC individual(s) and how the
PRC tax authorities determine the resident enterprise status of a company
organized under the laws of a foreign (non-PRC) jurisdiction which is
similar to the Company. If the Company is not regarded as a PRC
resident enterprise as defined in the EIT Law, the non-PRC holders of the
shares of the Company who are also not PRC taxpayers as defined in the EIT
Law will not be subject to withholding tax, income tax or any other taxes
or duties imposed by any governmental agency of the PRC in respect to any
payments, dividends or other distributions made on Company
shares.
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15.
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To
the best of our knowledge after due inquiry, all returns, reports or
filings required to have been made in respect of any of the PRC Group
Companies for taxation purposes under the PRC laws have been made by the
PRC Group Companies and are not subject to any dispute with the relevant
tax, revenue or other appropriate authorities; all taxes and other
assessments of a similar nature including any interest, additions to tax
or penalties applicable thereto due or claimed to be due from such
authorities have been paid in full, and none of the PRC Group Companies
has committed any breach of the relevant PRC tax laws and
regulations.
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16.
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Except
as set forth in the Registration Statement, based on our understanding of
current PRC laws, there are no material PRC fees, capital gains,
withholding or other taxes that are or will become applicable to the PRC
Group Companies as a consequence of completion of the
Offering.
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17.
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To
the best of our knowledge after due inquiry, except for those matters of
non-compliance which would not have a material adverse effect on the
results of operations or the financial condition of the Company and each
of the PRC Group Companies and except as described in the Registration
Statement, each of the PRC Group Companies (a) is in compliance with all
PRC environmental protection laws, orders, rules and regulations; and (b)
has obtained all permits, licenses or other approvals required of it under
such applicable PRC environmental protection laws, orders, rules or
regulations to conduct its businesses, as described in the Registration
Statement.
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18.
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Except
as set forth in the Registration Statement, to the best of our knowledge
after due and reasonable inquiry, there are no legal, arbitration or
governmental proceedings in progress or pending or threatened in the PRC,
to which the Company or either of the PRC Group Companies is a party or of
which any property of either of the PRC Group Companies is
subject.
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19.
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Any
assets contributed into Wuhan Kingold by any of its current or former
shareholders as the registered capital of Wuhan Kingold and any assets
otherwise transferred or sold to Wuhan Kingold by any of its current or
former shareholders were originally acquired and obtained by such
shareholders in compliance with all applicable PRC Laws then in effect when such
shareholders obtained said assets; and any such assets, together
with any shares acquired by any shareholders in Wuhan Kingold by
contributing such assets into Wuhan Kingold are free and clear of, and
shall not be subject to any claims, allegations, investigations and
proceedings arising from any transfer or disposal of state-owned assets in
violation of any applicable PRC Laws then in effect when such assets
were obtained and contribution of said assets occurred. For
purposes of this paragraph only, "PRC Laws" refers to any and all
effective laws, regulations, statutes, rules, decrees, notices and Supreme
Court judicial interpretations in the PRC then in effect when the above
transactions occurred. In making this opinion, we have relied
solely on the representations made to us by Mr. Jia Zhi Hong with respect
to the asset transfers and the relevant transaction documents provided to
us, as set forth on Schedule A.
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20.
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On
August 8, 2006, six PRC regulatory agencies, namely, the PRC Ministry of
Commerce (“MOFCOM”), the State Assets Supervision and Administration
Commission, the State Administration for Taxation, the State
Administration for Industry and Commerce, the China Securities Regulatory
Commission (“CSRC”), and the State Administration of Foreign Exchange
(“SAFE”), jointly adopted the Regulations on Mergers and Acquisitions of
Domestic Enterprises by Foreign Investors (“M&A Rules”), which became
effective on September 8, 2006 and was amended on June 22,
2009. The M&A Rules purport, among other things, to require
offshore special purpose vehicles or “SPVs”, formed for overseas listing
purposes through acquisition of PRC domestic companies and controlled
directly or indirectly by PRC companies or individuals, to obtain the
approval of MOFCOM for the acquisitions and to obtain the approval of the
CSRC prior to publicly listing their securities on an overseas stock
exchange. On September 21, 2006, pursuant to the M&A Rules
and other PRC laws, the CSRC, on its official website, promulgated
relevant guidance with respect to the issues of listing and trading of
domestic enterprises’ securities on overseas stock exchanges, including a
list of application materials with respect to the listing on overseas
stock exchanges by SPVs. Based on our understanding of the PRC
laws, regulations, rules and Circulars, we believe that neither MOFCOM nor
CSRC approval is required in the context of this
Offering. Nonetheless, there are substantial uncertainties
regarding the interpretation, application and enforcement of the M&A
Rules, and the CSRC has yet to promulgate any written provisions or to
formally declare or state whether the overseas listing of a PRC-related
company structured similar to the Company is subject to the approval of
the CSRC. If such an ownership structure created by the VIE
Agreements, the Call Option and this Offering was for any reason
determined to be in breach of any existing or future PRC laws by MOFCOM,
or other PRC regulatory agencies, the relevant regulatory agencies may
apply any or all of the following: (a) impose fines and penalties on the
PRC Group Companies’ operations in the PRC; (b) limit the PRC Group
Companies’ operating privileges in the PRC; (c) delay or restrict the
repatriation of overseas proceeds into the PRC; (d) require restructuring
of the PRC Group Companies’ ownership structure or operations; and (e)
take other actions that could have a material adverse effect on the
Company.
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21.
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Except
as set forth in the Registration Statement, no stamp tax, transfer taxes,
duties, capital gains, income, withholding or other taxes are payable by
or on behalf of the Underwriter to the government of the PRC or to any
political subdivision or taxing authority thereof or therein in connection
with (a) the execution and delivery of the Underwriting Agreement; (b) the
sale and delivery by the Company of its shares to or for the account of
the Underwriter; (c) the sale and delivery outside the PRC by the
Underwriter of Company shares to the purchasers thereof in the manner
contemplated in the Underwriting Agreement; or (d) the consummation of any
other transaction contemplated in the Underwriting
Agreement.
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22.
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As
of the date of this opinion, Mr. Jia Zhi Hong and Mr. Zhao Bin who are PRC
residents have respectively filed the registration of foreign exchange for
overseas investment with the Hubei Branch of SAFE for their indirectly
holding shares in the Company, in accordance with the provisions of the
Circular of State Administration of Foreign Exchange on Relevant Issues
concerning Foreign Exchange Administration for Domestic Residents to
Engage in Financing and Inbound Investment via Overseas Special Purpose
Companies (“SAFE Circular No. 75”). It should be noted that the
relevant shareholders shall process the modification registration and
filing for substantial capital change of the SPVs, if any, in accordance
with the relevant provisions of SAFE Circular No. 75, after the closing of
the Offering.
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23.
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On
December 17, 2009, the Call Option Agreement was entered into by and
between Mr. Jia Zhi Hong, Mr. Zhao Bin and Ms. Huo Yong Lin who is a Hong
Kong passport holder. The Operating Rules on the Foreign Exchange
Administration of the Involvement of Domestic Individuals in the Employee
Stock Ownership Plans and Share Option Schemes of Overseas Listed
Companies, promulgated by SAFE on March 28, 2007 ("SAFE Circular 78")
covers the involvement of domestic individuals in share option
schemes. However, SAFE Circular 78 only applies to the share
option schemes of overseas listed companies, as opposed to unlisted
overseas companies. In addition, SAFE Circular 78 does not
expressly cover indirect ownership interest in an overseas listed company
by a share option scheme. Based on our understanding of current
PRC laws, as Mr. Jia Zhi Hong and Mr. Zhao Bin will jointly acquire 100%
of the shares of Famous Grow, one of the shareholders of the Company,
rather than the shares of the Company itself, it is not necessary for Mr.
Jia Zhi Hong or Mr. Zhao Bin to register the Call Option Agreement with
the competent local SAFE under Circular 78 either before or after the Call
Option is exercised. Furthermore, said Call Option Agreement
has been disclosed in the Business Plan which was submitted to the
Hubei Branch of SAFE when Mr. Jia Zhi Hong and Mr. Zhao Bin filed the
registration of foreign exchange for their overseas investment with the
same SAFE branch.
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24.
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As
a matter of the PRC laws, none of the PRC Group Companies or their
properties, assets or revenues has any right of immunity, on any grounds,
from any legal action, suit or proceeding, from the giving of any relief
in any such legal action, from setoff or counterclaim, from the
jurisdiction of any court, from service of process, attachment upon or
prior to judgment, or attachment in aid of execution of judgment, or from
execution of a judgment, or other legal process or proceeding for the
giving of any relief with respect to their respective obligations,
liabilities or any other matter under or arising out of or in connection
with the transactions contemplated by the Underwriting
Agreement.
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25.
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The
sale of the Company shares, the compliance by the Company with all of the
provisions of the Underwriting Agreement and the consummation of the
transactions contemplated thereby do not result in any violation of the
provisions of the articles of association, business license or any other
constituent documents of any of the PRC Group Companies or any applicable
statute, court order, rule or regulation of the
PRC.
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26.
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Except
as set forth in the Registration Statement, based on our understanding of
current PRC laws, as of the date of this opinion, there is no restriction
under the PRC laws which will prohibit the Company from transferring the
net proceeds to be received by the Company from the Offering to the PRC
Group Companies by way of capital increase or shareholder loan subject to
the approvals, registration or filings that may be required by any
governmental agency having jurisdiction over any of the PRC Group
Companies or any of its properties; after such net proceeds have been
injected into the PRC Group Companies, the application of the net proceeds
by the PRC Group Companies as contemplated in the Registration Statement
(including any transfer to and application of proceeds by any PRC Group
Companies) will not contravene any provision of the PRC laws and will not
result in any violation of the provision of the articles of association,
or other constituent documents or business license of any PRC Group
Companies.
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27.
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No
authorization of any governmental agency of the PRC is required for the
consummation of the transactions contemplated by the Underwriting
Agreement, other than those already
obtained.
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28.
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The
choice of the laws of the State of New York as the governing law of the
Underwriting Agreement is a valid choice of law under the laws of the
PRC. However, there is uncertainty as to whether the courts of
the PRC would: (a) recognize or enforce judgments of any courts of the
United States, federal or state, obtained against the Company or directors
or officers of the Company predicated upon the civil liability provisions
of the securities laws of the United States or of any state in the United
States; or (b) entertain original actions brought in each respective
jurisdiction against the Company or directors or officers of the Company
predicated upon the securities laws of the United States or any state in
the United States. The PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of the PRC Civil
Procedures Law based either on treaties between the PRC and the country
where the judgment is made or on reciprocity between
jurisdictions.
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29.
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The
statements in the Registration Statement under the headings: “Prospectus
Summary”, “Risk Factors”, “Business” and “Certain Relationships and
Related Party Transactions” insofar as such statements constitute
summaries of the laws or regulations of the PRC or documents governed by
the PRC laws as of the date hereof, fairly present the information called
for with respect to such legal matters and documents and fairly summarize
matters referred to therein.
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30.
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The
entry into, and performance or enforcement of the Underwriting Agreement
in accordance with its terms will not subject the Underwriter to any
requirement to be licensed or otherwise qualified to do business in the
PRC, nor will the Underwriter be deemed to be a resident, domiciled,
carrying on business, subject to taxation through an establishment, or
place in the PRC, or in breach of any laws or regulations in the PRC by
reason of entry into, performance or enforcement of the Underwriting
Agreement or any transaction contemplated by the Registration
Statement.
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31.
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There
are no reporting obligations under the PRC laws on non-PRC resident
holders of the shares of the Company to be sold in the
Offering. As a matter of the PRC laws, no holder of the shares
of the Company who is not a PRC resident will be subject to any personal
liability, or subject to a requirement to be licensed or otherwise
qualified to do business or be deemed domiciled or resident in the PRC, by
virtue only of holding such shares. There are no limitations
under the PRC laws on the rights of holders of shares of the Company, who
are not PRC residents, to hold, vote or transfer their securities nor any
statutory pre-emptive rights or transfer restrictions applicable to the
shares.
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7
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32.
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Except
as set forth in the Registration Statement, none of the PRC Group
Companies has taken any action nor has had any steps taken, nor has legal
or administrative proceedings been commenced or threatened for the winding
up, dissolution or liquidation of any of the PRC Group Companies, nor has
there been any suspension, withdrawal, revocation or cancellation of any
of their respective business
licenses.
|
This
opinion relates to the PRC laws in effect on the date hereof, except as
otherwise stated, and there is no assurance that any of such laws will not be
changed, amended or replaced in the immediate future or in the longer term with
or without retrospective effect.
This
opinion is rendered only with respect to the PRC laws and we have made no
investigations in any other jurisdiction and no opinion is expressed or implied
as to the laws of any other jurisdiction.
This
opinion is issued for the purpose of filing the Registration Statement with the
SEC and is in connection with the transactions set forth in the Registration
Statement. This opinion may not be relied upon for any other purpose
without our prior written consent. However, this opinion may be
relied upon by persons entitled to rely on it pursuant to applicable provisions
of U.S. securities laws and any contractual obligations of the Company in
connection with this Offering and filing of the Registration Statement,
including DLA Piper LLP (US) and Cyruli Shanks Hart & Zizmor,
LLP, U.S. counsel to the Company, and Kramer Levin Naftalis & Frankel
LLP, U.S. counsel to the Underwriter, in rendering opinions or other assurances
to the Underwriter in connection with the Offering.
We
confirm that we have reviewed and approved all statement in the Registration
Statement regarding our opinions rendered herein.
We
hereby consent to the use of this opinion in, and the filing hereof as an
exhibit to, the above-mentioned Registration Statement and to the reference to
this firm under the caption “Legal Matters” in the prospectus that is part of
the Registration Statement. In giving such consent, we do not thereby
admit that we fall within the category of the person whose consent is required
under Section 7 of the U.S. Securities Act of 1933, as amended, or the
regulations promulgated thereunder.
Yours
Sincerely,
| /s/ Grandall Legal Group (Beijing) |
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Grandall Legal Group
(Beijing)
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http://www.grandall.com.cn
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Schedule
A：
|
1.
|
Asset
Appraisal Report issued by Wuhan Jingbo Asset Appraisal Firm, dated June
11, 2003;
|
|
2.
|
Verification
Report issued by Hubei Weiye Accounting Firm Co., Ltd., dated June 11,
2003;
|
|
3.
|
Asset
Appraisal Report issued by Hubei Zhongruihengxin Asset Appraisal Co.,
Ltd., dated December 10, 2004;
|
|
4.
|
Verification
Report issued by Hubei Tianli Accounting Firm, dated December 18,
2004;
|
|
5.
|
Equipment
Purchase Contract between Jia Zhihong and Xiamen Ximei Jewelry Co.,
Ltd.;
|
|
6.
|
Equipment
Purchase Contract between Jia Zhihong，Xue Suyue
and Xiamen Ximei Jewelry Co., Ltd.;
|
|
7.
|
Basic
information of Xiamen Ximei Jewelry Co., Ltd. from Xiamen Administration
of Industry and Commerce;
|
|
8.
|
Invoices
issued by Xiamen Ximei Jewelry Co., Ltd. on the payment by Mr. Zhihong
Jia;
|
|
9.
|
Invoices
issued by Xiamen Ximei Jewelry Co., Ltd. on the payment by Mr. Zhihong Jia
and Xue;
|
|
10.
|
T/T
Receipts issued by the Hubei Branch of Bank of China concerning the
payment of Mr. Zhihong Jia to Xiamen Ximei Jewelry Co.,
Ltd.;
|
|
11.
|
Approval
of the Establishment of Hubei Gold King Jewelry Accessories Industry Co.,
Ltd. issued by the Hubei Branch of the People’s Bank of China, dated
December 14, 1994;
|
|
12.
|
Approval
of the Establishment of Hubei Zhicheng Biological Engineering Joint-Stock
Company Limited issued by Hubei Commission for Restructuring Economy,
dated April 18, 2000;
|
|
13.
|
Approval
of the JV Contract, AOA and Directors of Hubei Gold King Jewelry
Accessories Industry Co., Ltd. issued by Wuhan Foreign Investment Office,
dated February 25, 1994;
|
|
14.
|
Enterprise
information of Hubei Gold King Jewelry Accessories Industry Co., Ltd. from
Wuhan Administration of Industry and
Commerce;
|
|
15.
|
Enterprise
information of Wuhan Zhicheng Economics Development Co., Ltd. from Wuhan
Administration of Industry and
Commerce;
|
|
16.
|
Basic
information of Hubei Gold King Jewelry Accessories Industry Co., Ltd. from
Wuhan Administration of Industry and
Commerce;
|
|
17.
|
Business
License of Wuhan Hongte Trading Development Co.,
Ltd.;
|
|
18.
|
Approval
on the Transfer of the Shares of Hubei Gold King Jewelry Accessories
Industry Co., Ltd. issued by the Wuhan Branch of the People’s Bank of
China, dated Novemver, 2001;
|
|
19.
|
Approval
on the Transfer of the Shares of Hubei Gold King Jewelry Accessories
Industry Co., Ltd. issued by Wuhan Foreign Investment Office, dated
November 12, 2001;
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http://www.grandall.com.cn
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9
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20.
|
Receipt
of payment/transfer for the shares of Hubei Gold King Jewelry Accessories
Industry Co., Ltd.;
|
|
21.
|
Share
Transfer Contract between Hubei Gold King Jewelry Accessories Factory and
Hubei Zhicheng Biological Engineering Joint-Stock Company
Limited;
|
|
22.
|
Approval
of the Establishment of Asset Appraisal of Hubei Gold King Jewelry
Accessories Industry Co., Ltd. issued by Hubei Department of Finance,
dated September 14, 2001;
|
|
23.
|
Examination
Opinion on the Evaluation of the Transfer of the Shares of Hubei Gold King
Jewelry Accessories Industry Co., Ltd. issued by Hubei Department of
Finance, dated October 15, 2001;
|
|
24.
|
Asset
Appraisal Report issued by Hubei Jingjiang Asset Appraisal Co., Ltd.,
dated September 26, 2001;
|
|
25.
|
Description
of Mr. Zhihong Jia’ funding source;
|
|
26.
|
Records
concerning Mr. Zhihong Jia's stock
trades;
|
|
27.
|
Pedestrian
Bridge Contract between Yichang Urban and Rural Construction Commission,
Wuhan Hongte Trading Development Co., Ltd. and Yichang Jian Industry
Development Co., Ltd.;
|
|
28.
|
Certificate
of Approval for Establishment of Enterprises with Foreign Investment in
the PRC, regarding Yichang Zhicheng Entertainment Co.,
Ltd.;
|
|
29.
|
Share
Transfer Agreement between Yichang Zhicheng Entertainment Co., Ltd. and
Hong Kong Changxinghao Co., Ltd.;
|
|
30.
|
Approval
of the Transfer of the Shares of Yichang Zhicheng Entertainment Co., Ltd.
and Change of the Directors issued by Yichang Foreign Economics and Trade
Commission, dated May 13, 1995.
|
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