Recently, General Office of the State Council issued the Notice of Launching the Security Review System for Acquisitions of Domestic Enterprises by Foreign Investors (“the Notice”). The Notice will come into effect on March 5, 2011.

Recently, General Office of the State Council issued the Notice of Launching the Security Review System for Acquisitions of Domestic Enterprises by Foreign Investors (“the Notice”). The Notice will come into effect on March 5, 2011.

Security review system for acquisition of domestic enterprises by foreign investors (hereinafter referred to as "Security review") is neither created by China, nor meaning to deter foreign investment. A lot of developed countries have set up M&A Security review for many years to protect their own national security related interests. China already started Security review a few years ago, but it hasn’t yet released the formal regulations until now. The Security review system covers two sectors:

i) foreign investors’ acquisition of military industrial enterprises or military industry related supporting enterprises, enterprises located near key and sensitive military facilities, and other entities relating to national defense;

ii)foreign investors’ acquisition of key domestic enterprises in areas such as agriculture, energy and resources, infrastructure, transport, technology, assembly manufacturing, etc., whereby the foreign investors might acquire the actual controlling right thereof.

Continue Reading New Notice Strengthens National Security Review