CHINA Law and Practice Contributed by: James Hu, Yingjie Kang, Huihui Li, Sherry Xu, Bivio Yu and Lisa Zhao, Fangda Partners
by various countries about data privacy and subsidies which distort the markets – and the steps taken by certain countries to limit Chinese access to advanced technology – may continue to push China to focus on developing these technologies independently, and to take retaliatory or self-protective measures such as the recent promulgation of export control laws and data protection laws. Attracted by the low labour and operation costs, some foreign invested companies have moved their manufacturing plants in China to South-East Asian countries. In July 2025, the National Development and Reform Commission (NDRC), together with several other min - istries, issued the Notice on Implementing Several Policy Measures to Encourage Reinvestment in China by Foreign-Invested Enterprises. The policy aims to encourage foreign-invested enterprises to reinvest their profits in China by introducing measures such as reducing land-use costs (through leasing, lease- before-transfer and flexible tenure arrangements), simplifying approvals for establishing new legal enti - ties, and facilitating cross-border fund transfers. Local governments are also competing with each other to win foreign investment. Acquisitions in China can be structured as asset or share acquisitions, and such transactions are sub - stantially similar to M&A deals conducted in other jurisdictions. Except for the prior review clearances and approvals mentioned under 3.2 Regulation of Domestic M&A Transactions , and the foreign owner - ship limits in certain industries, foreign acquisitions of Chinese business would not be subject to any other significant restrictions. Acquisitions of Chinese public companies are subject to further regulation, as is customary in other jurisdic - tions, for change-in-control transactions. These trig - ger tender offer requirements. 3. Mergers and Acquisitions 3.1 Transaction Structures Investors should also be aware of the procedural issues involved in acquiring business held by Chinese parties, exiting from investments in China and remit -
ting proceeds across the border, which may have an impact on conditions precedent and the price adjust - ment clause in transaction documents. 3.2 Regulation of Domestic M&A Transactions Investing in Public Companies Investing in public companies is subject to approvals, as elaborated under 5.2 Securities Regulation , and may trigger disclosure or general tender offer require - ments pursuant to the securities laws and listing rules. Merger Control Review Depending on the turnovers of the concentrating par - ties, an M&A transaction may require clearance from the competition authority. Please refer to 6. Antitrust/ Competition . National Security Review Depending on the nature of the transaction, a national security review may be triggered. Please refer to 7. Foreign Investment/National Security . Review and Approval by Sector Regulators Prior approval from regulators may be required if the sector in which investment is made is regulated, as is the case with financial institutions. State-Owned Asset Rules If the target asset or company is deemed a state- owned asset, the transaction may fall within the pur - view of the State-Owned Assets Supervision and Administration Commission (SASAC) or its local coun - terparts or delegates. It may then need to comply with certain requirements, such as asset valuations and appraisals, prior approvals or filings with SASAC or competitive bid requirements. 4. Corporate Governance and Disclosure/Reporting 4.1 Corporate Governance Framework Under the PRC Company Law, companies may form as either a limited liability company (LLC) or a company limited by shares. Private companies may choose either of the two forms, but they typically form as LLCs, whereas public companies must form as companies limited by shares. LLCs are limited to
131 CHAMBERS.COM
Powered by FlippingBook