Modes of Merger and Acquisition
Under the Provisions on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, foreign investors may merge with
or acquire Chinese domestic enterprises in the following two ways:
1.Equity merger and acquisition: A foreign investor acquires shares
held by the shareholders of a domestic enterprise or contributes to
the increased capital of a domestic enterprise, thereby changing
its status to an FIE.
2.Asset merger and acquisition: A foreign investor establishes an
FIE and through it acquires and operates the assets of a domestic
enterprise, or acquires the assets of a domestic enterprise and,
with such asset investment, establishes an FIE to operate the
Application and Registration Procedures
Foreign investors merging with or acquiring domestic enterprises to
form FIEs should submit their application to MOFCOM or the
provincial level foreign trade and economic cooperation department
and, upon approval, apply to the registration organ for
registration alteration or establishment registration. The
registration organ is the State Administration for Industry and
Commerce or its authorised local office.
Unless otherwise stipulated, the approval organ should decide
whether or not to approve the establishment of FIEs through merger
or acquisition by foreign investors within 30 days of the receipt
of all documents required. The approval organ should issue the
approval certificate if approval is given.
In the case of asset merger or acquisition by foreign investors,
the investor should apply to the registration organ for
establishment registration within 30 days upon receipt of approval
certificate for FIEs and obtain an FIE business licence.
In the case of equity merger or acquisition by foreign investors,
the acquired company should apply to the original registration
organ for registration alteration and obtain an FIE business
licence. Where the original registration organ is not authorised to
handle such formalities, it should forward the application together
with the registration records of the company concerned to the duly
authorised registration organ within ten days of its receipt.