CONFIDENTIAL
c) provide an incentive or need for the partners to get involved
in the management;
d)
fulfil a need for risk capital; and
e) provide the Guangdong partner with the opportunity to earn
returns which might otherwise have to be transferred to
Peking.
The reasons for UK and Hong Kong interests being interested in equity are
likely to be limited to:
a)
its helping to ensure security of supply of electricity;
b)
its providing a useful lever to obtain major sales of UK
capital equipment and initial fuel supply; and, from this to
c) its helping UK interests to gaining additional nuclear power
station experience.
The purpose of this note is to consider the implications for UK interests
of contributing "equity" to the proposed Guangdong Nuclear Power Station.
This subject cannot be fully evaluated without at the same time considering
the risks that would be involved in such a project, particularly those which
could not be offset in the various contractual arrangements. This note
assumes that there will be certain risks, as yet undefined and unquantified which will remain the responsibility of the promoters of the project and
these are referred to as "promoters' risks",
The next section summarises the principal features attaching to equity as it is understood in the West and specifically in the United Kingdom; it is
followed in Section 3 by a brief note on Hong Kong law and in section 4a review
of the Chinese joint venture law which was published in 1979. Section 5 provides some comments.
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