• Interim Regulations on Issues Relating to Implementing the Security Review System for Foreign Investors' Merger and Acquisition of Domestic Enterprises (MOFCOM Circular No.8)
  • April 13, 2011
  • Law Firm: Troutman Sanders LLP - Atlanta Office
  • On March 5, 2011, Ministry of Commerce ("MOFCOM") promulgated some subsequent procedural rules entitled Interim Regulations on Issues relating to Implementing the Security Review System for Foreign Investors' Merger and Acquisition of Domestic Enterprises ("Interim Regulations"). These Interim Regulations were issued based on the prior State Council's Circular on the Establishment of the State Security Review System concerning Merger of Domestic Enterprise by Foreign Investor ("Circular") which took effect on March 3, 2011 and will remain valid until August 31, 2011.

    The Interim Regulations provide a set of application documents that the foreign investor shall submit to MOFCOM state security review, including

    • the application letter and a description of transaction;

    • the notarized and legalized foreign investor's identification or registered incorporation evidence, letter of creditworthiness and identification documents of the legal representative or the authorized persons;

    • a statement of corporate structure and a statement of governmental relationship;

    • a statement of the target, Articles of Association (“AOA”), business licence (copy), latest audited financial statements, enterprise structure prior and after the transaction, and a description of the investors of the target;

    • The Articles of Association, joint venture agreement or partnership agreement, and a list of the proposed management (such as the directors and general managers) of the merged or acquired enterprise;

    • Where it is an equity acquisition , documents such as the equity transfer agreement or the capital increase agreement, the shareholders' resolution and relevant assets evaluation reports shall be provided. Where the transaction is an assets acquisition, documents such as a resolution of the asset sale, an asset purchase agreement, information of the relevant parties, and the relevant asset evaluation report shall be provided;

    • Documents of the impacts after the transaction regarding the foreign investor's voting power over the shareholder's meeting, board of directors, and the management as well as other statements of the foreign investor's actual control over the financial, employment and technological arrangements and the supporting documents relating to the above impact; and

    • Other documents required by the MOFCOM.

    MOFCOM will notify the applicant and its local counterparts the written decision made by the multi-authroity joint committee.