Foreign acquisition of Chinese Enterprises to be vetted for national security risks

Foreign acquisition of Chinese Enterprises to be ...

China alert - Issue 9, March 2011

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Foreign acquisition of Chinese Enterprises to be vetted for national security risks

The State Council issued a circular, Guo Ban Fa [2011] No. 6 ("Circular 6"), on 3 February 2011, setting out the security review system for foreign investors seeking to acquire Chinese enterprises.

 

The objectives of Circular 6 are to provide guidance on the orderly development of acquisition activities of foreign investors in China and to safeguard the national security of China. Circular 6 will be effective 30 days after the date of its issuance on 3 February 2011 i.e. 5 March 2011. Subsequently, the Ministry of Commerce (MOFCOM) issued an announcement that provides rules on the implementation of Circular 6 ("Announcement 8") on 4 March 2011. Announcement 8 is valid for the period from 5 March 2011 to 31 August 2011. According to Announcement 8, the public can provide feedback to MOFCOM on the application of Announcement 8 within the period from 5 March 2011 to 10 April 2011. According to the speech of Mr. Chen Deming, China's Minister of Commerce in the press conference of the Fourth Session of the Eleventh National People's Congress on 7 March 2011, Announcement 8 may be subject to revision, depending on such feedback.

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