From www.fdi.gov.cnArticle 1 These provisions are formulated hereby pursuant to the Company Law of the People’s Republic of China, the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, the Law of the People’s Republic of China on Chinese-Foreign Contractual Joint Ventures, the Law of the People’s Republic on Foreign-capital Enterprises and other pertinent laws and regulations to promote the healthy development of enterprises with foreign investment, protect the legitimate rights and interests of investors, and maintain social and economic order.

Article 2 “Alteration of investors” equities in enterprises with foreign investment as used in these Provisions refers to alteration of investors of Sino-foreign equity joint ventures, Chinese-foreign contractual joint ventures, enterprises with foreign investment set up on the territory of the People’s Republic of China (hereinafter referred to as the enterprise) or their shares (hereinafter referred to as equities) of investment in the enterprise (including terms of cooperation they provide). It will include, but will not limit to, the following major factors leading to alteration of investors’s equities in enterprises with foreign investment: (more…)

Posted by Vincent Cheung from www.pathtochina.com 

Decree of the the Ministry of Foreign Trade and Economic Cooperation, the State Administration of Taxation, the State Administration for Industry and Commerce and the State Administration of Foreign Exchange[2003] No.3The Interim Provisions on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (hereinafter referred to as the “Provisions”), reviewed and adopted at the First Ministry Meeting of the Ministry of Foreign Trade and Economic Cooperation of the People’s Republic of China on January 2, 2003, is hereby published and will come into force on April 12, 2003.

Article 1 The Provisions are formulated in accordance with the laws and administrative regulations governing foreign investment enterprises and other relevant laws and administrative regulations to promote and regulate foreign investors’ investment in China introduce advanced technologies and management experience from abroad, improve the utilization of foreign investment, rationalize the allocation of resources, ensure employment and safeguard fair competition and national economic security.

Article 2 For the purpose of the Provisions, mergers and acquisitions of a domestic enterprise by foreign investors shall mean that foreign investors, by agreement, purchase equity interest from shareholders of domestic enterprise with no foreign investment (hereinafter referred to as the “Domestic Company”) or subscribe to the increase in the registered capital of the Domestic Company with the result that such Domestic Company changes into a foreign investment enterprise (hereinafter referred to as “Equity Merger and Acquisition”); or the foreign investors establish a foreign investment enterprise and then, through such enterprise, purchase the assets of a domestic (more…)

By Vincent Cheung  from www.pathtochina.com

 After 13 years’ of drafting and revising, China’s first anti-monopoly legislation, which requires foreign mergers and acquisitions or foreign capital investing in domestic companies’ operations in other forms to go through national security checks, is most likely to be passed next week, and if passed by the standing committee of China’s National People’s Congress, China’s parliament., it will come into effect on August 1, 2008. The draft bill, aiming to protect fair competition, prevent and examine monopolistic behaviors and maintain a regulated marketplace, was first drafted in 1994. As a matter of fact, due to the law’s tolerance towards the domestic monopolistic enterprises, because “they are beneficial to national economic development or in the interest of the public”, most of people focus a great deal of attention on the foreign purchases mergers and acquisitions issue. Official figures state that foreign mergers and acquisitions merely accounted for 5% of all forms of foreign direct investment in China prior to 2004.The figure has sharply risen to 11% in 2004 took a huge leap upward to close to 20% by 2005. In recently years, over 200 applications for mergers and acquisitions of Chinese companies are submitted, however, there are few actions taken by the government to prevent foreign companies’ purchases of local companies, except for the controversial case of Carlyle Group’s acquisition of XCMG. China is becoming more selective about foreign investment as the policy makers’ growing concern that excessive foreign investment would make

China’s economy run out of control. The officials complain that some sales of local companies give away state assets way too cheaply and concede too much control to foreign firms.  (more…)