I. Background: Technological Leadership but Lack of Channels, Urgent Need for European Partners

In early 2023, a technology enterprise focusing on the R&D of high-efficiency photovoltaic modules (hereinafter referred to as "Company S") sought assistance from our firm. Founded in 2015, this enterprise holds two international patents — the conversion efficiency of its heterojunction photovoltaic modules reaches 26.8%, leading the world. However, its technological advantages have not been translated into market advantages: Company S has long relied on the domestic market, encountered channel bottlenecks when expanding into the European market, lacked understanding of local policies, regulations and business practices, and failed to break through for a long time.

Meanwhile, a German energy group (hereinafter referred to as "Group D") is seeking global partners with high-efficiency photovoltaic technology to accelerate the upgrading of its European photovoltaic power plants. Group D highly recognizes Company S's technology, but as a cross-border investment, it faces many concerns: How to authorize the technology? How to transfer funds cross-border? How to ensure data compliance? After six months of contact, the transaction reached a deadlock.

In February 2023, Company S and Group D jointly entrusted our firm, hoping that we could design a cross-border capital increase plan that not only introduces funds but also deeply binds the cooperation.

II. Challenges: Triple Dilemmas of Foreign Exchange Control + Technology Authorization + Data Compliance

After our firm's team intervened, we quickly sorted out the three core obstacles of this transaction:

2.1 Foreign Exchange Control and Capital Path

Group D plans to invest 20 million euros, but how the funds enter the country and match the usage has become the primary problem. If all funds enter in euro spot exchange, it will face foreign exchange settlement restrictions; if all converted into RMB, it cannot meet Company S's euro payment needs for importing equipment. A dual-currency scheme needs to be designed.

2.2 Technology Authorization and Security Review

Although Company S's photovoltaic technology does not involve sensitive fields such as military industry, it belongs to core new energy technology and needs to pass the Foreign Investment Security Review. At the same time, the two parties have differences on the boundary of technology usage rights — Group D hopes to use it globally, while Company S is worried about technology loss.

2.3 Data Compliance and GDPR

After the investment, the two parties will conduct in-depth collaboration in R&D, production and sales, involving cross-border transmission of employee information, R&D data and customer information. Group D clearly requires compliance with the EU General Data Protection Regulation (GDPR), otherwise it will face the risk of huge fines.

III. Our Firm's Solution: Systematic Design to Solve Problems One by One

Our firm's team, together with local German law firms, domestic accounting firms and cross-border tax consultants, set up a special service group to promote the work systematically from four aspects.

3.1 Dual-Currency Capital Contribution Path: Matching Usage and Compliant Entry

In view of the differences in fund usage, a "RMB + Euro" dual-currency capital contribution scheme is designed:

This scheme not only meets the euro demand for equipment import, but also avoids exchange rate losses and approval delays caused by large-sum foreign exchange settlement. At the same time, through the QFLP pilot channel, RMB funds achieve a closed loop of "fundraising, investment, management and exit", complying with foreign exchange management regulations.

3.2 Security Review and Qualification Verification: Joint Review by German Law Firms to Ensure Compliance

Our firm, together with cooperating German law firms, conducted a comprehensive background check on Group D:

Shareholder Structure: Penetrated to the ultimate beneficial owner to confirm no government background
• Source of Funds: Verified that the 20 million euros are self-owned funds with no sensitive sources
• Investment Intent: Clarified that it is a commercial cooperation and does not involve transferring the technology to a third party after acquisition

On this basis, we assisted Company S in submitting the Foreign Investment Security Review application to the Ministry of Commerce, focusing on explaining that the technology does not involve national security, Group D has no sensitive background, and the technology use is limited to commercial purposes. Finally, it passed the review smoothly.

3.3 Technology Confidentiality Clauses: Limiting Region and Usage to Protect Core Assets

Technology protection is the top concern of Company S. Our firm embedded a special chapter on "Technology Confidentiality and Usage Restrictions" in the capital increase agreement:

Regional Restriction: Group D may only use photovoltaic modules produced with Company S's technology in the European market (EU + UK), and shall not sell or produce them in Asia, the Americas and other regions
• Usage Restriction: Only for Group D's own photovoltaic power plant projects, and shall not be transferred, licensed to others or used for R&D of competitive products
• Technology Isolation: Group D shall establish a technology isolation mechanism, employees who have access to core technology shall sign confidentiality agreements, and Company S reserves the right of on-site audit every year

At the same time, it is agreed that the technology usage fee shall be paid separately at 3% of the sales volume to ensure that Company S can continuously obtain technical benefits.

3.4 GDPR Compliance: Improve Cross-Border Data Mechanism to Avoid Regulatory Risks

In response to EU data compliance requirements, our firm guided Company S to complete the following work:

Data Classification: Distinguish three categories: employee information, R&D data and customer information, and formulate outbound rules respectively
• Standard Contractual Clauses (SCCs): Sign the Standard Contractual Clauses approved by the European Commission with Group D to clarify the protection responsibilities after data outbound
• Privacy Policy Update: Revise employee handbooks and customer agreements to add informed consent clauses for cross-border data transmission
• Data Mapping: Sort out the transmission path from Company S's domestic server to Group D's European data center to ensure full encryption throughout the process

The above work was reviewed and confirmed by cooperating German law firms to ensure compliance with GDPR requirements.

3.5 Two-Way Performance Betting Clauses: Innovative Design to Balance Interests

To balance the long-term interests of both parties, our firm innovatively designed "two-way performance betting clauses":

Positive Incentive: If Company S's products achieve 50 million euros in sales in the European market within three years, Group D shall transfer 2% of the equity (based on the total share capital after capital increase) to the founders of Company S as a reward for exceeding the target
• Reverse Restraint: If the sales volume fails to reach 30 million euros, the founders of Company S shall transfer 1% of the equity to Group D as compensation for performance shortfall
• Middle Range: Between 30 million and 50 million euros, no equity adjustment will be triggered, but the technology usage fee will be paid according to the actual sales volume

This design not only avoids the unfairness of one-way performance betting, but also deeply binds the interests of both parties — Group D has the motivation to help Company S expand the market, and Company S is under pressure to go all out.

IV. Implementation and Landing: Completion of All Procedures in 187 Days

After the scheme was determined, our firm's team followed up the implementation throughout the process and completed all work in 187 days.