On The National Security Review System In The Foreign M&A Activities

At the background of economic globalization, the increasing foreign M&A activities have posed a severe challenge to the national security. In order to safeguard national security and prevent foreign M&A activities from an adverse impact on national security, many countries in the world constantly have established the national safety review systems. Currently, the legislation of the national security review system in the foreign M&A activities in China lies at its primary stage and has a lot to be improved. This thesis puts forward the preliminary assumption of setting up the national security review system in the foreign M&A activities in China based on the comparison with and analysis of the related systems among the U.S., Canada and Japan. This thesis consists of five chapters which can be represented as follows:In chapter one, we make a brief introduction about the case of CNOOC acquisition of Unocal case and then bring about the main problems to be resolved, the previous researches of related problems and the research methods in this thesis.In chapter two, we expound the implication of foreign M&A activities, the national security and censorship and compare the National Security Review with Anti-monopoly Review, whereby we point out their differences in goals, function ,requirements and the scope of application and the contents to be reviewed. Also, we note their interrelationship. Then we analyze the harm of the foreign M&A activities and the functions of the national security review system.Chapter three deals with the current situation and the deficiencies of the national security review system in the foreign M&A activities in China, i.e. overemphasized principles , lack of manipuility, Legislative blind spots and vague concepts. Through the analysis of Laigang case—the acquisition of Arcelor Mittal and Carlyle Xugong case,we confirm that it is necessary and urgent that we should enhance the establishment of the national security review system in the foreign M&A activities in China from the perspective of practice.From the perspective of comparison, Chapter four is concerned with the analysis of and comparison with related regulations of the national security review system in the foreign M&A activities among the U.S., Canada and Japan. We base our analysis mainly on the targets , the standards and the procedures of review . We delimit the targets of review mainly according to the main M&A and M&A behavior. With regard to the standards of review, the legislation in Canada and Japan does not touch upon this respect at all and the U.S. merely list some factors to be considered in review. Nevertheless, all the three countries have specific formulations of the procedures of review in detail . These formulations have provided an enlightenment to the establishment of the national security review system in the foreign M & A activities in China.Chapter five deals with the preliminary assumption that we should establish the national security review system in the foreign M&A activities in China. First ,we should make the legislative purpose clear i.e. to strike a balance between attracting foreign investment and safeguarding national security. Second, we should establish the national security review body and National Security Review Commission in foreign investment in charge of national security review. Third, we should delimit the targets of review, which include mergers of foreign investors , acquisition of and control over Chinese enterprises. Fourth, we have to define the standards of review and regulate some factors to be considered in review according to China's actual situation. Fifth, we should establish the detailed procedures of review which consist of the procedures of "brought to the process", "review procedures" and "to start the procedures again".