China to Review Foreign M&A Deals for Security Purposes

A new regulation issued by the Chinese government states that if mergers and acquisitions involving foreign investors are seen as a threat to national security, than those deals should be terminated, reports the China Daily.

 

Similarly, any previous mergers and acquisitions of domestic companies by foreign investors that are found to have threatened national security will be terminated. As an alternative, the Ministry of Commerce (MOC) may "take relevant measures such as equity and asset transfers or other methods to eliminate their (mergers and acquisitions) influence on national security."

 

Reviews will be also needed for foreign mergers and acquisitions of domestic enterprises operating in security-related sectors that may be controlled by foreign investors after being acquired, such as agriculture, energy and resources, infrastructure and transportation.

 

The regulation will take effect from Sept 1 of this year, the ministry said.

 

 

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