Circular of the General Office of State Council on Establishing the Security Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors
Circular of the General Office of State Council on Establishing the Security Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors
Circular of the General Office of State Council on Establishing the Security Review System for Merger and Acquisition of Domestic Enterprises by Foreign Investors
Guo Ban Fa [2011] No. 6
February 3, 2011
To people's government of all provinces, autonomous regions and municipalities directly under the Central Government and all ministries and commissions of and institutions directly under the State Council:
In recent years, with in-depth development of economic globalization and further expansion of China's opening up to the outside world, investment by foreign investors in the form of merger and acquisition ("M&A") has increased gradually, which promotes the diversification of ways for China to use foreign funds and plays an active role in optimizing resource allocation, pushing forward technological progress, raising enterprises' management level and in other respects. For the purposes of guiding M&A of domestic enterprises by foreign investors to develop in an orderly manner and maintaining national security, upon consent of the State Council, relevant issues on establishment of the security review system for foreign investors' M&A of domestic enterprises (hereinafter referred to as the "M&A Security Review") are notified hereby as follows:
I. Scope of M&A Security Review
1. The scope of M&A Security Review is as follows: foreign investors' M&A of domestic military industry enterprises and military industry support enterprises, enterprises around key and sensitive military facilities, and other units which have impact on national defense security; and foreign investors' M&A of domestic enterprises, which have impact on the national security , in fields of important agricultural products, important energy and resources, important infrastructure, important transport service, key technology and major equipment manufacturing, etc and such M&A may result in foreign investors' acquirement of actual control over the enterprises.
2. Foreign investors' M&A of domestic enterprises refers to the following circumstances:
(1) Foreign investors purchase equities of domestic non-foreign funded enterprises or subscribe for capital increased by domestic non-foreign funded enterprises, which make such domestic enterprises to become foreign-invested enterprises.
(2) Foreign investors purchase equities of Chinese parties to domestic foreign-funded enterprises, or subscribe for capital increased by domestic foreign-invested enterprises.
(3) Foreign investors establish foreign-invested enterprises and purchase by agreement domestic enterprises' assets through such foreign-invested enterprises and operate these assets, or purchase equities of domestic enterprises through such foreign-invested enterprises; and
(4) Foreign investors directly purchase assets of domestic enterprises and establish foreign-invested enterprises based on such assets to operate such assets.
3.
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