What is the legal framework for mergers and acquisitions of businesses in China?

The legal framework for mergers and acquisitions of businesses in China is based on the PRC Company Law. This law provides the applicable regulations governing the formation and functioning of enterprises in China, as well as the procedures for mergers and acquisitions of businesses. Pursuant to the law, an acquirer may choose to either incorporate a new company, or acquire some or all of the assets of an existing company. When establishing a new company, the parties to the business venture must decide on the type of entity and register it with the Administration of Industry and Commerce. Furthermore, if the company is foreign-invested, it must be registered with the Ministry of Commerce. For an acquisition, the acquisition agreement must be signed between the parties before submitting it to the Competition Review Office of the State Council for approval. Furthermore, any merger or acquisition involving parties from outside of China may be subject to a national security review. This is to ensure that any foreign investment does not affect China’s national security interests. The parties are also required to obtain approval from the Anti-Monopoly Bureau of the State Council for merger and acquisition activities that meet certain criteria. Overall, the legal framework for mergers and acquisitions in China is complex and can be difficult to navigate. It is important for companies to understand the legal requirements and adhere to the applicable regulations in order to ensure compliance.

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