Legal Issues Concerning Transnational Merger And Acquisition

In recent years, China has become the focus of foreign investment. Theforeign investors increase the capitals to our country and the means ofinvestment is tended to flexibly. Meanwhile transnational M&A (merger andacquisition) becomes an important way that the foreign capitals enter themarket of our country. In the past five years, the turnover of M&A of Chinaincreases greatly annually and China is becoming one of the most activecountries on enterprise M&A in the Asian-Pacific area. After China's entry toWTO, the process of the globalization of economy is improved obviously inthe world. Since 2002, our country had issued a series of laws and regulationsof M&A which made the rules of the foreign investment acquisition ofdomestic enterprises standardized further, and had accelerated the speed offoreign capitals entering the Chinese market by purchasing the domesticenterprises objectively. This article discussed the management oftransnational M&A thoroughly by analyzing the laws and regulations ofM&A in our country, referring to the relevant legislation of developedcountries, such as European Union, U.S.A., etc., and the current regulationsof transnational M&A in the world. In the first part of the article, the author introduced the concept oftransnational M&A, classficaion and the other related concepts briefly.Transnational M&A (or international M&A sometimes) is the merger andacquisition that crosses border or includes different nations' enterprises andits remarkable characteristic is its transnationalism or internationalism whichembodies in that participating enterprises have the different nationalities, theshareholders of the enterprises have the different nationalities, M&A takesplace abroad or the property of the enterprise lies in foreign country, etc.. Theform of M&A generally consists of merger by absorption, merger by newestablishment, Equity Acquisitions and Asset Acquisitions, In the second part of the article, the author introduced the legal systemof M&A in China and carried on the explanations to several importantregulations that were issued recently at large. The Provisional Regulationson Mergers and Acquisitions by Foreign Investors with Domestic Companiesincludes the range of M&A, the figure of voting stock which is controlled byforeign investors, dealing with the debt and credit of the goal enterprise and 45asset valuation for the foreign investors, etc.; The Administrative Measuresfor Acquisition of Listed Companies prescribes the way of acquisition of thelisted company, the sincere obligation of the shareholders, the company boardof directors and the independent directors, etc. exhaustively. It builds up thelegal system of M&A with Security Law and will play a positive roll tooptimize the resource distribution of listed company , promote the nationaleconomic restructure and improve the corporate governance structure oflisted company; The Interim Provisions on Utilizing Foreign Investments toRestructure State-owned Enterprises consists of several kinds of utilizing theforeign capitals to restructure the state-owned enterprise, essential qualities ofthe foreign investor, essential qualification for the restructured state-ownedenterprise, the principles of restructuring and procedures. It forms the policysystem of utilizing the foreign capitals to restructure our state-ownedenterprise with the Transfer of State Shares and Legal Person Shares in ListedCompanies to Foreign Investors Circular, and exerts an important influenceon adjusting and optimizing the state-run economic layout .Accordingly itpromotes the strategic reorganization of the state-owned economy greatly,and has accelerated the steps of establishing modern enterprise system in thestate-owned enterprise; The Foreign Investment Industrial GuidanceCatalogue(2002) opens telecom, gas, heat, supply and drain of water whichare forbid to the foreign investors for the first time. It also h...