How many stages has foreign M&A experienced in China? What are the characteristics of these periods?
StageTime periodMain Features I1995-1998 a) Most M&As incurred in manufacturing industry b) The buyers are mostly large international capital c) The targets are focused on listed company II1998-2001 a) The scope of M&A extended to electronic manufacture, glass, rubber and food industries b) Indirect control mode was adopted III2001-Present a) Foreigners have begun […]
In order to maintain the peaceful and competitive market order and social public interest, realize the effective allocation of social resources, promote the healthy development of competitiveness of enterprises, market economies have adopted the antitrust legislation and practices for implementing governmental regulation in the sense of antitrust in the M&A of enterprises.
Type of M&A (Million Dollars) Requirement Asset M&A In accordance with the requirement for newly established foreign-invested company Equity M&A Registered capital<2.1 Total Capital < 10/7 * Registered capital 2.1<5 Total Capital < 2 * Registered capital 5<12 Total Capital < 2.5 * Registered capital Registered capital>12 Total Capital < 3 * Registered capital
The price for the actual transactions may rationally float against the specific valuation results. Special state provisions should be considered on the transfer of the state-owned assets. Foreigners are prohibited from diverting capital abroad in a disguised form by transferring share rights or selling assets at a price obviously lower than the valuated one.
The M&A Provisions requires that the assets appraisers shall adopt the appraisal methods internationally used.
Type of M&A Calculation Method Asset M&A Total pain in capital Equity M&A Only purchase equity Original registered capital Purchase added equity Original registered capital+ Added capital
The percentage of foreign investment may be determined as the ratio of the capital contribution by foreign investors against the capital contribution by all the investors to the registered capital.
The contribution by foreign investors to the registered capital of the equity joint ventures should be no less than 25% in general. Where the proportion is less than 25%, it shall get the approval and make registration. Investments contributed by the foreign investors lower than 25% upon the M&A shall no enjoy tax reduction treatment […]
The relevant laws, administrative regulations and department rules should be observed.
The enterprises with investment from the merged target companies may adjust their business scope in advance or at the same time with the M&A or the target companies may carry out restructuring with their invested companies.
