Interim Provisions On Mergers And Acquisitions Of Domestic Enterprises By Foreign Investors

Original Language Title: 外国投资者并购境内企业暂行规定

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Get a Day Pass for only USD$9.99.
(March 7, 2003 foreign trade economic cooperation Department, and national tax General, and national business administration General, and safe makes 2003 3rd, announced) first article to promote and specification foreign investors to China investment, introduced abroad of advanced technology and management experience, improve using foreign of level, achieved resources of reasonable configuration, guarantee employment, and maintenance fair competition and national economic security, according to foreign investment enterprise of legal, and administrative regulations and other related legal, and administrative regulations, developed this provides. Second article this provides by said foreign investors merger territory enterprise, Department refers to foreign investors agreement purchase territory non-foreign investment enterprise (following said "territory company") of shareholders of equity or subscription territory company increased funding, makes the territory company change established for foreign investment enterprise (following said "equity merger"); or, foreign investors established foreign investment enterprise, and through the Enterprise Agreement purchase territory enterprise assets and operation the assets, or, foreign investors agreement purchase territory enterprise assets,
    And to operate the assets of the asset investment of foreign-funded enterprises (hereinafter the "acquisitions").
    Article mergers and acquisitions of domestic enterprises by foreign investors should abide by Chinese laws, administrative regulations and Department rules, follow the principle of fair and reasonable, making compensation and good faith, must not cause excessive concentration, the exclusion or limitation of competition, must not disrupt social and economic order and harm the public interest.
    Fourth article mergers and acquisitions of domestic enterprises by foreign investors, shall comply with Chinese laws, administrative regulations and Department rules and requirements for investor qualification and industrial policies.
    In accordance with foreign investment industry guide directory not allows foreign investors owned business of industry, merger shall not led to foreign investors holds enterprise of all equity; needed by China holding or relative holding of industry, the industry of enterprise was merger Hou, still should by China in enterprise in the accounted for holding or relative holding status; ban foreign investors business of industry, foreign investors shall not merger engaged in the industry of enterprise. Fifth article mergers and acquisitions of domestic enterprises by foreign investors to set up enterprises with foreign investment, should be approved by the approval authority in accordance with this, and the registration administration organ shall register such changes or registration. Foreign investors in foreign-invested enterprise established after the merger of registered capital proportion of not less than 25%. The funded ratio is less than 25% of foreign investors, except otherwise prescribed by laws and administrative regulations, should be set up in accordance with the existing foreign-invested enterprises approval and registration procedures for approval and registration. Approval authority issuing foreign-invested Enterprise approval certificate raises "the proportion of foreign investments is less than 25%" message.
    Registration authority when issuing a foreign investment business license raises "the proportion of foreign investments is less than 25%" message.
    In the sixth article of the provisions the approval authority for People's Republic of China Ministry of foreign trade and economic cooperation (hereinafter "the Ministry"), or a provincial foreign trade and Economic Department (hereinafter "provincial approval authority"), the registration authority for People's Republic of China National Administration for industry and commerce or its authorized local administration for industry and commerce.
    Foreign-funded enterprise established after the merger, according to the provisions of the laws, administrative regulations and Department rules, are to be approved by the Ministry of a particular type of foreign-invested enterprise or industry, provincial approval authority the application documents should be go the Ministry approval, Ministry of law's decision to approve or disapprove.
    Article seventh equity merger and acquisition by foreign investors, succession of foreign-funded enterprise established after the merger of the merged domestic company creditor's rights and debts.
    Asset acquisition by foreign investors, sells assets shall assume its original claims and debts of domestic enterprises. , Mergers and acquisitions of domestic enterprises by foreign investors, creditors and other parties to the merged domestic enterprise creditor's rights and liabilities of the disposal agreement, this Agreement shall not prejudice third party interests and the public interests.
    Disposal of debt agreements shall be submitted to the approval authority. Sale of assets of a domestic enterprise shall sell assets within 10th of resolution, notice to creditors, and above the national provincial newspaper announced.
    Creditors from the date of receiving the notice or announcement in the 10th, and the right to sell the assets of domestic enterprises to provide appropriate security. Eighth article should the parties to a merger with the asset evaluation agencies to the shares to be transferred or intended for sale of assets assessment as a basis for determining the price. Mergers and acquisitions can be agreed by the parties within the territory of China asset evaluation agencies established by law.
    Asset assessment should use internationally accepted methods.
    Mergers and acquisitions of domestic enterprises by foreign investors, leading to the formation of State-owned assets investment equity changes or when the transfer of property right of State-owned assets, should be carried out according to relevant regulations of the State-owned assets management assessment, determine the price.
    Banned in order to significantly lower assessment of price transfer of shares or sell assets, transfers to overseas capital in a disguised form. Nineth mergers and acquisitions of domestic enterprises by foreign investors to set up enterprises with foreign investment, foreign investors from the foreign investment business license issued within 3 months from the date of the transfer of ownership of the shareholders, or the sale of assets of domestic enterprises to pay the full price.
    Need to be extended for special cases, approval by the approving authority should be since foreign investment business license within 6 months from the date of issue to pay the full price of 60% more than 1 years pay the full price and the capital actually paid in proportion to income. Foreign investors ' equity, replenishment of the foreign-funded enterprise established after the merger, investors should be in relation to the change of the enterprises with foreign investment established contracts, articles of Association funding period.
    At once paying investment, investors should be since foreign investment business license issued within 6 months from the date of payment; instalments provided investment, investor capital shall not be less than the first part of their subscribed capital 15%, and should be since foreign investment business license issued within 3 months from the date of payment. Asset acquisition by foreign investors, investors should be established of enterprises with foreign investment contracts, articles of Association funding period.
    Establishment of foreign-invested enterprises, and through the Enterprise Agreement purchases the assets and operations of the asset, and asset price matching part of the investment, investors should be paid as provided in the first paragraph of this article within the time limit to pay; the remainder of funding shall be in accordance with the second paragraph of this article agree payment terms.
    Mergers and acquisitions of domestic enterprises by foreign investors to set up enterprises with foreign investment, foreign investors of the funded ratio is less than 25% investors funded in cash should be since foreign investment business license issued within 3 months from the date of payment; investors, industrial property rights and other contributions in kind should be since foreign investment business license issued within 6 months from the date of payment. As a means of payment of the price shall comply with the relevant provisions of laws and administrative regulations of the State.
    Foreign investors in its disposition of the shares or their legally owned assets as a means of payment, shall be approved by the administration of foreign exchange. Article tenth deal purchases the shareholders ' stake in the company by foreign investors, after the company changed for the foreign investment enterprises established in the territory, the registered capital of foreign-invested enterprises registered capital of the original company, the funded ratio of the foreign investors to buy equity in the share of registered capital.
    Equity of the domestic company to increase capital, registered capital of foreign-invested enterprise established after the merger of the original domestic companies registered capital and replenishment sum; foreign investors with the merged domestic company to other investors, in the assessment on the basis of the firm's assets in the territory, to determine their respective roles in foreign-invested enterprises registered capital contribution proportion. The subscription of the domestic company to increase capital by foreign investors, after the company changed for the foreign investment enterprises established in the territory, the registered capital of foreign-invested enterprises for the territory of the former company's registered capital and replenishment sum.
    Foreign investors and other shareholders of the merged domestic company, assessed on the basis of the firm's assets in the territory, and to determine their respective roles in foreign-invested enterprises registered capital contribution proportion.
    China natural person shareholders equity mergers and acquisitions of domestic companies in the original shareholders of the company for more than a year, upon approval, can continue as a variation of foreign-funded enterprises established after the Chinese investors.
    11th article foreign investors equity merger of, on merger Hou by set foreign investment enterprise should according to following proportion determine investment total of ceiling: (1) registered capital in 2.1 million dollars following of, investment total shall not over registered capital of ten-sevenths; (2) registered capital in 2.1 million dollars above to 5 million dollars of, investment total shall not over registered capital of twice times; (3) registered capital in 5 million dollars above to 12 million dollars of, investment total shall not over registered capital of 2.5 times times;
    (4) the registered capital of more than $ 12 million, and total registered capital shall not exceed 3 times.
    12th article foreign investors equity merger of, investors should according to merger Hou by set foreign investment enterprise of investment total to has corresponding approval permission of approval organ submitted following file: (1) was merger territory limited responsibility company shareholders consistent agreed foreign investors equity merger of resolution, or was merger territory Corporation agreed foreign investors equity merger of shareholders Assembly resolution; (2) was merger territory company law change established for foreign investment enterprise of applications; (3) merger Hou by set foreign investment enterprise of contract, and articles; (4) foreign investors purchase territory company shareholders equity or subscription territory company increased funding of agreement; (5) was merger territory company recently financial annual of financial audit report; (6) investors of identity proved file or opened proved, and funding letter proved file; (7) was merger territory company by investment enterprise of situation description; (8) was merger territory company and by investment enterprise of license (copy); (9) was merger territory company workers placed plans
    (10) the requirements of this article seventh, 19th in the documents submitted.
    Foreign-funded enterprise established after the merger of the scope, scale, access to land, involving other relevant Government Department, related to the license file should be submitted.
    The merged domestic company invested company shall meet the requirements of foreign investment industrial policies; non-compliant should be adjusted. Article 12th 13th article of the provisions of the share purchase agreement and the domestic company to increase capital agreement shall be governed by the laws of China, and shall include the following main elements: (1) the situation of the parties to the agreement, including the name (name), shelter, legal representative name, position, nationality, etc;

    (2) the purchase or subscription of shares and equity price; (3) the time of performance, performance of the agreement; (4) the rights and obligations of the parties to the agreement; (5) breach of contract, dispute resolution, (6) the time and place of signing the agreement. Article 14th acquisitions by foreign investors, buying assets should be based on the transaction price and the production scale of the proposed total investment of the enterprises with foreign investment.
    Plans to establish foreign-funded enterprises registered capital and total investment ratio should be consistent with the relevant provisions.
    15th article foreign investors assets merger of, investors should according to intends established of foreign investment enterprise of investment total, and enterprise type and the by engaged in of industry, in accordance with established foreign investment enterprise of legal, and administrative regulations and sector regulations of provides, to has corresponding approval permission of approval organ submitted following file: (1) territory Enterprise property holds people or power institutions agreed sold assets of resolution; (2) foreign investment enterprise established applications; (3) intends established of foreign investment enterprise of contract, and articles;
    (4) intends established of foreign investment enterprise and territory Enterprise signed of assets purchase agreement, or, foreign investors and territory Enterprise signed of assets purchase agreement; (5) was merger territory enterprise of articles, and license (copy); (6) was merger territory Enterprise Notification, and announcement creditors of proved; (7) investors of identity proved file or opened proved, and about funding letter proved file; (8) was merger territory enterprise workers placed plans; (9) This provides seventh article, and 19th article requirements submitted of file.
    In accordance with the provisions of the preceding paragraph to buy and operate enterprise's assets in the territory, involving other relevant Government Department, related to the license file should be submitted.
    Foreign investor purchases the assets of the agreement and the assets invested by enterprises with foreign investment, before the establishment of enterprises with foreign investment shall be subject to the asset management activities.
    16th article this provides 15th article provides of assets purchase agreement should applies China legal, and should including following main content: (1) agreement parties of natural status, including name (name), residence, statutory representative people name, and positions, and nationality,; (2) intends purchase assets of listing, and price; (3) agreement of perform term, and perform way; (4) agreement parties of right, and obligations; (5) default responsibility, and dispute solution; (6) agreement signed of time, and locations. 17th foreign investor merges a domestic enterprise to establish foreign-invested enterprises, except as provided in the article 20th, the approval authority shall submit all documents required by receipt date of 30th, law's decision to approve or disapprove.
    Decided upon approval of foreign-invested Enterprise approval certificate issued by the approval authority. Foreign investor purchases the shareholders equity of the agreement, approved by the approval authority for the decision, should remove the files copied to the share transfer approved, companies within the local Foreign Exchange administration departments.
    Equity transfer party local Foreign Exchange Administration for its foreign exchange foreign exchange registration procedures, and provide foreign investors equity acquisition price paid in foreign exchange registration certificates.
    Article 18th acquisitions by foreign investors, investors should be on the date of receipt of the certificate of approval for foreign-invested enterprises within 30th, establishment registration applications made to the registration authority, to receive foreign investment business license. Foreign investors equity merger, the merged domestic company shall, in accordance with the provisions of the original registration organ for change registration, receiving foreign investment business license. Of the original jurisdiction of the registration authority are not registered, from the date of receipt of the application file should be forwarded to the registration authority having jurisdiction in the 10th, and together with the territory of company registration files. Was merger territory company in application change registration Shi, should submitted following file, and on its authenticity, and effectiveness is responsible for: (1) change registration applications; (2) was merger territory company according to People's Republic of China company law and the company articles made of on equity transfer or increased funding of shareholders will (Assembly) resolution; (3) foreign investors purchase territory company shareholders equity or subscription territory company increased funding of agreement; (4) modified Hou of company articles or original articles of amendment and law need submitted of foreign investment enterprise contract
    (5) foreign-invested Enterprise approval certificate (6) the identity document for foreign investors or incorporation certificate and the credit certificate (7) the amended list of Board of Directors, records released the names of Directors, residence documents and the appointment of new directors; (8) the provisions of the State administration for industry and Commerce and other relevant documents and certificates.
    Transfer of State-owned shares and foreign investors of State-owned stock company increased capital, should also submit the approval documents of the economic and trade authorities.
    Investors from the date of receipt of the foreign investment business license in the 30th, taxation, customs, land management and foreign exchange management departments registration.
    19th foreign investor merges a domestic enterprise under any of the following circumstances, investors should be involved to the Ministry and the State administration for industry and Commerce reports: (1) merger party market turnover in China of over 1.5 billion yuan that year; (2) the acquisition of domestic companies in related industries within one year more than 10; (3) acquisition party in China's market share has reached 20%;
    (4) the party merger led to mergers and acquisitions in China's market share to 25%.
    Does not meet the conditions referred to in the preceding paragraph, but there should be competition between domestic enterprises, relevant functional department or trade associations request, or of the State administration for industry and Commerce of the Ministry thinks that mergers and acquisitions by foreign investors tremendous market share, or if there are other serious market competition or the people's livelihood and national economic security, and other important factors can also require foreign investors to report.
    The above merger party, including affiliates of foreign investors.
    20th article foreign investors merger territory enterprise involved this provides 19th article by said case one of, Ministry and national business administration General think may caused excessive concentrated, prejudice due competition, and damage consumers interests of, should since received provides submitted of all file of day up 90 days, common or by consultations separate convened about sector, and institutions, and enterprise and other interest relationship Party held hearing, and law decided approved or not approved. Foreign mergers and acquisitions of the article 21st of the following circumstances, the acquirer should be in announced mergers and acquisitions programmes before or reported to the competent authorities of the host country at the same time, submit to the Ministry and the State administration for industry and Commerce mergers and acquisitions programmes. Ministry and national business administration General should review whether exists caused territory market excessive concentrated, prejudice territory due competition, and damage territory consumers interests of case, and made whether agreed of decided: (1) outside merger party party in China territory has assets 3 billion Yuan Yuan above; (2) outside merger party party when in China market Shang of turnover 1.5 billion Yuan Yuan above; (3) outside merger party party and associated enterprise in China market share has reached 20%
    (4) due to overseas mergers and acquisitions, party and its affiliates overseas mergers and acquisitions in China's market share of 25% (5) because of overseas mergers and acquisitions, overseas mergers and acquisitions a party, directly or indirectly, shares of foreign-invested enterprises in related industries in the territory of more than 15.
    Mergers and acquisitions of the 22nd under any of the following circumstances, merging party may apply to the foreign trade and economic cooperation and the State administration for industry and commerce to review exemptions: (1) to improve the conditions of fair competition in the market, (2) restructure loss-making companies and job security, (3) to introduce advanced technology and management personnel and to enhance the international competitiveness of enterprises and (4) to improve the environment. 23rd investor relevant documents and files in accordance with the provisions of the classification, and attach a file list.
    Requirements application submit all documents in Chinese.
    Article 24th of legally established in China by overseas investors investment company mergers and acquisitions of domestic companies, these provisions shall apply.
    Equity to foreign investors to merge domestic enterprises with foreign investment, to apply the existing foreign-invested enterprise law and administrative regulations, as well as the investors in foreign investment enterprises several provisions concerning the ownership change, which does not require the reference to these regulations.
    25th Hong Kong S.A.R., and Macau S.A.R. and Taiwan investors in the area of mergers and acquisitions of domestic enterprises in other regions, with reference to these regulations.
                                                                              26th article of the regulations come into force on April 12, 2003.

Related Laws