China Implements a Security Review System for Certain Mergers and Acquisitions of Domestic Enterprises by Foreign Investors

The Chinese State Council has officially implemented a Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “Review System”) based on a set of interim rules (the “Rules”) issued earlier this year.

Mergers and acquisitions by foreign acquirers (“M&A”) will be reviewed under the Review System based on factors such as the target’s industry, the type of M&A, and the right to de facto control. Foreign acquirers must submit an application to China’s Ministry of Commerce (“MOFCOM”) for review prior to certain mergers or acquisitions of a domestic enterprise.

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