New Chinese International Merger and Acquisition Rules
(Akron/Tire Review) In a move that appears to target the onslaught of overseas investment, China’s Ministry of Commerce implemented new rules earlier this month that increase government regulation of foreign companies’ mergers with and acquisitions of domestic Chinese businesses. The rules expand on previous provisions issued in 2003. The new regulations require regulatory approval whenever a proposed transaction involve a foreign company that has more than 3 billion yuan (approximately $376 million) in assets, more than 1.5 billion yuan ($188 million) in revenue within China, or a 20 per cent or larger share of the domestic market; give foreign investors more than a 25 per cent share of the Chinese market; involve a foreign company that has concluded more than 10 deals over the preceding year in related industries; result in a foreign company’s control of a famous Chinese brand or trademark; or otherwise affect ‘national economic security,’ a term that the regulation leaves undefined.