From 5 March 2011, foreign investors wishing to purchase or merge with domestic companies need to be aware that aside from the usual regulatory approvals (e.g. foreign investment approvals; antitrust approvals etc), there is now a formal national security review (NSR) regime in place in China.
China’s NSR regime is governed by a notice issued by the State Council, entitled “Notice by the General Office of the State Council in relation to the institution of the National Security Review system for mergers and acquisitions of domestic enterprises by Foreign Investors” (Notice). The Notice sets out the scope for the NSR and also sets out substantive tests in relation to which transactions would fall under the NSR regime and how transactions would be assessed against this regime. The Ministry of Commerce (MOFCOM) has also published rules entitled “Interim Rules for Implementation” (Rules) which sets out procedures and time-frames for the NSR regime.
