Study Of Legal Issues Of Foreign Acquisition Of Domestic Enterprises

From the perspective of qualifications of the subjects, market access regarding merger and acquisition of domestic enterprises by foreign investors('M&A'), as well as regulations by security law, matters arouse out of the M&A are analyzed in this paper. By employing the theories of civil law, comparative law and judicial sociology, together with social survey, comparative analysis and positive analysis, a series of legal issues concerning the M&A are thoroughly studied and discussed. Besides, bearing the achievements already made by German and American in mind, constructive suggestions in respect of the M&A have been made in this paper, aiming to offer a thought to improve the legal system of the M&A. In addition to the Introduction, the paper is comprised of five more chapters.In the first chapter, beginning with the definitions of foreign investors and merger and acquisition, differences between merger and acquisition of domestic enterprises by foreign investors and merger and acquisition of domestic enterprises by Chinese enterprises are given out. Meanwhile, the characteristics and main types of the M&A are described in this chapter. The chapter is ended with a concise introduction to the current legal systems respectively relating to the M&A of China, Germany and America.The second chapter describes the qualifications of the subject, mainly focusing on the standards of how to identify legitimate foreign investors and the qualifications of the target enterprises. The author holds that registration place and capital control standard shall be used together as the two standards of how to identify a foreign investor. As for the qualifications of the target enterprises, analysis and discussions mainly focus on State-Owned enterprises ('SOE'), believing that the SOE not restructured can be the target enterprises in the M&A as well.The third chapter presents the basic theories on market access and security review of the M&A. Circular of the General Office of the State Council on the Establishment of Security Review System Concerning Merger and Acquisition of Domestic Enterprises by Foreign Investors ('Circular') was just published in 2011, and comments are made on the Circular in this paper. The Circular is very cautious about security review of the M&A. This chapter also pays attention to the anti-trust issues regarding market access in the M&A. From the perspective of security law, the forth chapter focuses on the regulation of the M&A, mainly presenting the disclosure of shareholdings, mandatory tender offer system and QFII. As a transitional system due to non convertible of the national currency under capital account in the present capital market, QFII will disappear when national currency is convertible under capital account, yet it is of vital importance to the capital market currently. Disclosure of shareholdings which realizes the information disclosure in capital market and upholds the right to know of the investors makes sure that the capital market is under rational operation through consolidating the rational basis for the individual investors. Mandatory tender offer system confirms the principle of equal opportunities of all investors and a healthy system of equity withdrawal which manifests the general principle that the same right of the same share and the same value of the same share.In chapter five, the aim of the legal system of M&A is summarized. Then the paper returns to the reconstruction of the legal system of M&A, an issue of practical meaning.Above all, many important legal matters in connection with the M&A are utterly discussed and studied, and relevant defects and deficiencies are pointed out and criticized in this paper. By learning good regulations on M&A from the developed countries, proposes on the construction of legal system of M&A have been made, throwing a sprat to catch a herring.