Definitions Of Asset Acquisition

 

An Asset Acquisition is defined as including both (i) the establishment of a FIE by foreign investors with the purpose of using such FIE to acquire and operate assets purchased from PRC domestic companies; and (ii) the direct acquisition of assets from PRC domestic companies by foreign investors who then use those assets for establishing a FIE.

 

Application Documents for Asset acquisition

 

1.  the business licenses (duplicates) of the merged domestic company

2.  Notarised and legalised ID documents or certificate of incorporation of the foreign investors and letter of creditworthiness

3.  The resolution of the property rights holders or governing body of the domestic enterprise on the consent of the sale of the assets

4.  The application for the establishment of the post-acquisition FIE contract and articles of association of the FIE to be established

5.  The asset purchase agreement signed by the foreign-funded enterprise to be established and the domestic enterprise, or by the foreign investor and the domestic enterprise

6.  The articles of association and the business license (duplicate) of the target company

7.  The creditor notification issued by the target company and the creditor’s statement on the contemplated acquisition

8.  The proposal to arrange employees in the target domestic enterprise

9.  The documents relevant to the target company’s liabilities arrangement, appraisal report and disclosures and explanations made by the parties to the acquisition

10.  Other documents related to the following may be required: permit/license obtained for the contemplated asset acquisition

 

De facto Control

 

De facto control of a Chinese enterprise by a foreign enterprise refers to the foreign investor becoming a controlling shareholder or a de facto controller of the Chinese enterprise via the M&A transaction in question, which includes:

 

①A foreign investor, its controlling parent company and/or its controlled subsidiary taking more than 50 per cent of the equity interests of the merged or acquired Chinese enterprise

②Several foreign investors cumulatively taking more than 50 per cent of the equity interests of the merged or acquired Chinese enterprise

③A foreign investor having a major influence over the decision of the meeting of the shareholders or the board of directors of the merged or acquired enterprise although the foreign investor acquires less than 50 percent of the equity interests of the merged or acquired Chinese enterprise

④A foreign investor taking de facto control over business decision-making, finance, human resource or technology of the merged or acquired Chinese enterprise

 

Factors to Consider on National Security

 

①Influence of the M&A transaction over national defence (including capacity of manufacturing domestic products, providing domestic services or providing the facilities and equipments in question for national defence)

②Influence of the M&A transaction over the stable running of China’s economy

③Influence of the M&A transaction over basic social life and order

④Influence of the M&A transaction over research and development of key technology regarding national security

 

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