ANNOUNCEMENT 25 Aug 2011In August 2011, the government of China announced changed rules for foreign investors.
NUMBER OF INTERVENTIONS
On 25 August 2011, the Chinese Ministry of Commerce announced Notice NO.57 (2011), releasing a document called Provisions on Implementing the Security Review System for Merger and Acquisition of Local Enterprises by Foreign Investors ('Provisions'), which provides detailed guidance for reviewing acquisition of domestic enterprises by foreign investors. These Provisions come into effect on 1 September 2011.
These Provisions provide detailed guidance for M&A security review and stipulate clear requirements for foreign investors when under the M&A security review, including documents submitting requirements and detailed procedure. Particularly, in accordance with these Provisions, when deciding a transaction is subject to M&A security review shall be judged from the essential content and actual impact; and no foreign investor may circumvent M&A security review by means, including but without limitation of nominee shareholding, trust, multi-level investment, leasing, lending, contractual control and offshore transaction.
On 12 February 2011, the State Council released the Notice on Establishing System of Security Review on Merger and Acquisition of Local Companies by Foreign Investors (Guo Ban Fa '2011' NO. 6), announcing to set a system for national security review on M&A of local companies by foreign investors. Till now, there is no reported M&A transaction under this M&A security review.