Approval Process for Foreign Investment Mergers and Acquisitions of Domestic Enterprises in China

Drawing from over a decade of experience in handling such issues, Xu Baotong's legal team shares the following.

The approval process for foreign investment mergers and acquisitions mainly consists of two stages: declaration and examination. According to the provisions of the Foreign Investment Law of the People's Republic of China and its implementing regulations, foreign investors who establish foreign-invested enterprises through mergers and acquisitions or acquire equity, assets, or other interests of existing foreign-invested enterprises shall declare and submit relevant documents in accordance with the law.

Declaration Stage:

Foreign investors need to apply online through the "National Foreign Investment Information Reporting Management System" of the Ministry of Commerce or other designated systems, and submit relevant materials including but not limited to the merger plan, business plan, qualifications of all parties, resolutions of the shareholders' meeting, due diligence reports, etc.

If it involves national security review, according to the provisions of the State Council on the Standard for Declaration of Operators' Concentrations and the Anti-Monopoly Law, it may be necessary to apply to the State Administration for Market Regulation for the concentration of operators' review.

Examination Stage:

The Ministry of Commerce or its designated local commercial authorities will conduct formal and substantive examinations of the declaration materials. The examination includes whether it complies with national industrial policies, special management measures for foreign investment access (negative list), and whether there are risks of market monopoly, etc.

The national security review is conducted by the State Administration for Market Regulation, and if necessary, relevant departments will conduct the review together. The focus of the review is whether the merger and acquisition transactions affect China's national security.