Core Principle - The primary principle is to avoid being classified as a "reverse takeover," which would require the company to meet IPO standards if significant asset changes occur within 36 months after control change [3] Methods for Debt Separation - Common methods for separating shell company liabilities include: 1. **Debt Transfer and Waiver**: Transfer specific debts to original shareholders or related parties, and negotiate waivers from creditors [8] 2. **Asset Swap**: Issue shares to acquire assets while simultaneously divesting bad assets [5] 3. **Special Purpose Vehicle (SPV)**: Isolate liabilities in a subsidiary and sell that subsidiary [6] 4. **Bankruptcy or Debt Restructuring**: Applicable for severely insolvent shell companies [7] 5. **Cash Acquisition**: Direct cash purchase of the shell company's existing business, allowing original shareholders to take on liabilities [9] Typical Buy Shell and Separation Process - The typical process consists of four stages: 1. Pre-Due Diligence and Negotiation 2. Structuring and Signing 3. Execution and Completion 4. Resumption and Post-Deal [10] Recommendations for Buyers - It is advisable for buyers to seek a "clean shell," where the original shareholders have already divested most assets and liabilities [10] - If self-separation is necessary, hiring a team familiar with Hong Kong listing rules and using the SPV method is recommended [10] Standard Operating Procedures - Key steps include: 1. Financial audit by a reputable firm to clarify all liabilities and risks [11] 2. Legal review to ensure compliance with listing rules [11] 3. Drafting a separation plan based on due diligence results [11] 4. Board and shareholder approval for asset sales and debt assumption [11] 5. Communication with creditors for necessary waivers [11] 6. Legal transfer of assets or liabilities [11] 7. Submission of resumption application to the exchange post-separation [11]