THE INFLUENCE OF CHINESE REGULATIONS IN THE CASE OF MERGERS & ACQUISITIONS
CASE STUDY: MERGERS & ACQUISITION OF THE CHINESE CHIP PRODUCER TRAN SIST
KLAUDIA BRUDLO CHRISTOPHER GÖLLNITZ GABRIEL BÖHM
Introduction and general regulation Since China became a member of the World Trade Organization in 2001 several steps have been taken by the Chinese government to move towards a market- oriented economy. ...view middle of the document...
Provincial level NDRC approval is required for all investments below the thresholds mentioned above. • Central level MOFCOM approval is required for investments of $100 million or more; or for those which are spread over multiple countries or regions. • Provincial level MOFCOM approval will be required for investments in any sector .accounting between $10 million and $100. million. • Reviewing a risk of monopoly concentration in case of a potential acquisition. • In the process of strategic business and investment planning it is obligatory to comply with requirements issued by AMB.
MOFCOM Responsible for administering and supervising overseas investment
Anti-Monopoly Bureau (Within MOFCON)
State Administration of Industry and Commerce (SAIC) Responsible for advancing legislation concerning the administration of industry and commerce
Final approval of the company’s name and business scope; issuing business licence.
http://www.lehmanlaw.com/fileadmin/lehmanlaw_com/Publications/Mergers___Acquisitions__SL__January_2007_.pdf (Date of request: October 5, 2013)
In addition to these regulations, which are necessary to establish a legal form of the enterprise, we need to take further issues in consideration. They do not have to be met when executing an M&A action, but will definitely appear after the process is completed. We can identify five different primary aspects2: • • • • Intellectual Property/Patents: WTO, State Intellectual Property Office; Trademarks: Trademark office of SIAC; Environment: NDRC; Granted Land Use Right: Chinese Government.
2 http://www.minterellison.com/files/Uploads/Documents/Publications/Reports%20Guides/RG_2010_EstablishingBusChina_Eng_[SYD0900 31].pdf (Date of request: October 5, 2013)
forms Once the regulations mentioned above have been fulfilled, the next steps depend on the legal form of business presence. In our case, three main forms could be considered, as we mentioned before, which we will discuss now in more detail.
Sino- Foreign Joint Ventures There are two types of Joint Ventures in China: the equity JV (EJV) and the cooperative or contractual JV (CJV). They may appear similar on the surface but have different implications for the structuring of your entity in China.3 Sino-Foreign Cooperative Joint Venture (CJV) • The foreign company brings in the technology, key...