CHINA Law and Practice Contributed by: Jeff Liu, Jeanette Wang, Yulong Lai and Yun Bi, Shihui Partners
3.4 Timing of Notification and Standstill Obligations If mandatory notification is triggered, a notification must be filed and cleared before closing. Before the SAMR grants clearance, the undertaking must not implement the transaction; otherwise, it may constitute gun jumping. The Provisions on the Review of Concentrations of Undertakings effective from 15 April 2023 provide a non-exhaustive list of actions that may constitute gun jumping as follows: • effecting changes to corporate entity registration or the register of shareholders; • appointing senior management personnel; • participating in business decision-making and management; • exchanging sensitive information with other opera - tors; and • carrying out business integration. 3.5 Exemptions and Simplified Procedures There are exemptions and simplified procedures applicable to certain transactions. According to the AML, the following types of transac - tions may be exempted from merger filing: • where one of the undertakings involved in the con - centration holds at least 50% of the voting shares or assets of each of the other undertakings; or • where at least 50% of the voting shares or assets of each undertaking involved in the concentra - tion are held by an undertaking not involved in the concentration. The simplified procedure applies to the following types of transactions: • where all undertakings involved have a collective market share of less than 15% in the same relevant market; • where the undertakings involved have a vertical relationship, and each has or collectively they have a market share of less than 25% in the vertical market;
• where the undertakings involved do not have a vertical relationship, and each has less than a 25% share in all related markets; • where the undertaking involved establishes a joint venture outside China, and the joint venture does not engage in economic activity in China; • where the undertaking involved acquires equity or assets of a foreign enterprise that does not engage in economic activity in China; or • where a joint venture jointly controlled by two or more undertakings becomes controlled by one or more of them through the transaction. 4. Merger Control – Procedure and Substantive Assessment 4.1 Review Phases and Timelines There are three phases of the statutory review time - line for transactions formally accepted by the SAMR, which are: • Phase I: lasting a maximum of 30 calendar days from the date the SAMR formally accepts the filing; • Phase II: lasting a maximum of 90 calendar days from the date the SAMR informs the parties in writ - ing the beginning of Phase II; and • Phase III: extending the timeline for another 60 calendar days under certain circumstances. In practice, most transactions reviewed under the simplified procedure are cleared within the Phase I period, and the transactions under the normal review procedure are cleared in Phase II or III. Before formal acceptance by the SAMR, there is no statutory review timeline. In practice, it may take one or two months (subject to the completeness of the information submitted in the initial filing report). 4.2 Information Requirements and Pre- Notification The SAMR issued the Notification Form for the Merger Review of Concentration of Undertakings (“Notifica - tion Form”), which sets out the information to be sub - mitted, mainly including the following:
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