CHINA Law and Practice Contributed by: Jeff Liu, Jeanette Wang, Yulong Lai and Yun Bi, Shihui Partners
institution must then report to the relevant financial regulators, usually within a specified timeline (eg, ten working days), and submit complete application materials to them. Application materials typically include, among other things: • background information and qualifications of the investors; • transaction documents relating to the equity change; and • internal organisational decision-making docu - ments. The approval process usually involves (i) a pre-accept - ance period to decide whether to formally accept the application and (ii) a formal review period after the authority has accepted the application (usually no more than three months from the date of acceptance, with possible extensions). The review may include written submissions, on-site inspections, interviews, hearings and/or follow-up information requests. In certain cases, the regulator may stop the clock during a review period. Upon com - pleting the review, the regulatory authority issues a decision approving or disapproving the application. Other Regulated Sectors Regulatory authorities Non-financial sectoral approvals are governed by national sectoral regulators (and their local counter - parts). Local sectoral regulators are local governmen - tal departments that exercise approval authority within their respective administrative regions. Approval process The approval framework for other regulated sectors is similar to that for financial institutions. However, spe - cific procedural requirements and approval timelines vary by regulator. Regulated entities undergoing mergers generally submit complete application materials to the original approving or licensing authority.
Application materials vary by industry but usually include qualification documents, licensing materials, transaction documents and internal decision-making materials. Approval timelines Approval duration ranges from several weeks to sev - eral months (normally no longer than 60 days) after receiving complete application materials, depending on, eg, industry characteristics, deal complexity and business scope. 6.3 Substantive Standards and Discretion Financial Sector Financial regulatory authorities (eg, the NFRA, the CSRC, the PBOC) reviewing change of control or change of major shareholders typically examine the following factors: • Investor qualification standards • Funding source compliance standards • Shareholding cap and quantity restrictions Financial regulators usually apply more stringent cri - teria to controlling shareholders than to major share - holders (investors holding more than 5% of shares). Other Regulated Sectors For other regulated sectors, regulators (eg, the MIIT, the NHC, the NEA) may consider the following sub - stantive standards in their approval processes: • Alignment with industry development planning goals and policies • Qualification requirements • Adequate safety production safeguards • Environmental protection compliance • Market access and competition considerations • Foreign investment restrictions • Fitness and propriety standards
• Foreign investment restrictions • Fitness and propriety standards
Regulators retain discretion to balance industry regu - lation and market development. They may impose special conditions or requirements (eg, on business conduct or operator rights and obligations) through licence attachments or approval decisions.
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