CHINA Law and Practice Contributed by: Bing Zhai, Commerce & Finance Law Offices
2.6 National Security Review China has established a national security review mechanism for acquisitions, particularly those involving foreign investors or sensitive indus - tries. Acquisitions in sectors such as defence, energy, technology and infrastructure may trigger a national security review. The review assesses whether the transaction poses risks to national security. The review is conducted by an inter-ministerial committee led by the NDRC and MOFCOM. Transactions deemed to threaten national secu - rity may be blocked, modified or subject to addi - tional conditions to mitigate risks. 3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments In April, the State Council issued the New Nine National Guidelines, proposing to fully leverage the capital market’s role as the main channel in the M&A process, strengthen its functions in property pricing and trading, broaden financing channels for M&A, diversify payment methods and encourage listed companies to focus on their core businesses. By comprehensively uti - lising M&A, equity incentives and other meth - ods, companies are being urged to improve their development quality. This policy set the tone for the year’s active M&A market, guiding listed companies to actively seek M&A opportunities aligned with their core businesses and enhance their competitiveness through resource integra - tion. On 24 September, the CSRC released the Six M&A Guidelines, emphasising market-oriented principles and enhancing the capital market’s role in M&A. The guidelines support listed com -
Termination costs vary by approach. Unilateral termination may require statutory compensation depending on the circumstances, while mutual agreement termination involves negotiated com - pensation, often above the statutory minimum. Factors like employee preferences, budget, and past practices influence compensation. Addi - tionally, employers must address outstanding payments, such as unused annual leave, social insurance, taxes or equity incentives, arising from the labour relationship. Key considerations during termination include the following. • Documentation: mutually agreed termina - tion requires the signing of a labour contract termination agreement, with key provisions including payment settlement, liability waivers and post-termination obligations; unilateral termination requires the issuance of a termi - nation notice, the content of which depends on the termination approach. • Non-compete clauses: These determine whether restrictions are enforced or waived based on business needs, especially if the sold business no longer competes. • Labour union involvement: Unions must be notified for unilateral termination and consult - ed for economic layoffs to ensure compliance and communication. • Employee representative assemblies: For SOEs, major decisions like restructuring require union consultation and employee assembly approval. • Labour authorities: It is necessary to report economic layoffs and engage local authori - ties at an early stage to prevent or manage disputes.
460 CHAMBERS.COM
Powered by FlippingBook