The Legal Environment of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors in China
|關鍵字:||外資;併購;中國境內企業;反壟斷;foreign investors;mergers and acquisitions;domestic enterprises in China;antitrust|
Since 1978, China has experienced a period of transformation for more than 30 years. With China’s entry into the WTO and the expiration of the 5-year transition period at the end of 2006, China has reached its peak in market-oriented transformation. Mergers and Acquisitions are the short cut for foreign investors to rapidly gain market shares and to grasp the initiative of market competition. While the M&A activities have a profound history in the western developed world and the operation of relevant systems has attained its maturity, for a long time China has lacked clear rules of M&A activities for market participants to follow. In respond to the booming of M&A conducted by foreign investors, China has promulgated, announced or amended crucial laws since 2006, including the Regulations on the Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, Antitrust Law, Company Law, Securities Law, Property Law, Enterprise Income Tax Law, and Labour Contract Law, that have revolutionary impact on the legal environment when foreign investors implement M&A investments in China. To fully understand the legal environment coloured with the Chinese characteristics will be a key to the success to an investment project. Hence, this study analyzes legal issues and risks pertaining to the pursuit of an M&A investment in China from a foreign investor’s point of view. Target enterprises discussed in this study are mainly domestic companies in China that are neither state-owned, listed companies nor financial institutions. This study covers 7 chapters; an overview of the transformation of the general China economic system and M&A legal system followed by analysis of specific legal issues and risks that a typical M&A investment would encounter. Specifically, Chapter 2 focuses on the development of foreign investors’ M&A activities under China’s unique economic and legal systems. Chapter 3 discusses the definition of parties involved in the M&A activities. Once the parties are confirmed, Chapter 4 analyzes method of an M&A investment available to foreign investors. Chapters 5 and 6 emphasize special topics for M&A in China. Namely, Chapter 5 discusses the approvals and controls over M&A by foreign investors in China; Chapter 6 further discusses detailed legal issues when implementing an M&A project, such as payment of consideration and tax.