Research Legal Issues Of Foreign Mergers And Acquisitions Of State-owned Enterprises

With the reform of China economic system and accession to WTO, merger and acquisition (M&A) of state owned enterprises (SOEs) has been the hotspot of foreign investment. It has benfits and harm to SOES. On one hand, it promotes the reform of SOEs. On the other hand, it brings new risk and problems to us. In order to make the activity in an orderly manner and ensure the legitimate rights and interests of SOES and foreign investors, it is urgent to study some related legal issues and perfect our legal system. Only under good legal environment can the activity succeed.The M&A of SOEs can be traced to 1990s. We must define foreign investment and M&A, and know its yesterday and today and its influence on our economy. This is our startpoint The M&A of SOEs can be realized in many ways, every one having its own traits. S o we should classify and analysize them in legal method to guide our SOEs. During the M&A of SOEs, we have to clarify and solve all kinds of problems, such as enterprises' legal status after M&A , taxation affairs, the sources of funds, the estimation of state owned properties, the arrangement of workers and debts, protective measures against malicious M&A, and so on. These promlems may hinder the activity if they can' t be properly and timely solved.Our legal system on the M&A of SOEs has many defects, which frustracts foreign investors and enhances the risk of SOEs. So we should perfect it by studying some advanced countries. Legal principle plays an important role in a law or in a legal system. So we should at first establish reasonable legal principles. This paper gives six consultative principles: the principle of citizen treatments, the principle of promoting competition and constraining monopoly, the principle of ensuring economic security and social stability, the principle of protecting the workers of SOEs, the principle of protecting small and middle stockholders and the principle of protecting the creditors.The State Council and local legislative institutions should be asked to check up current legal documents on the M&A of SOEs, and rectify or abolishsome unreasonable and out-of-date rules. But what is most important is to drawup a basic law on M&A--M&A law-, which is the core and foundation ofthe whole legal system on M&A. This paper tries to design its basic contents and legislative style. Besides, we should rectify securities law and draw up anti-monopoly law.M&A is apt to give rise to monopoly. In order to prevent foreign investors from monopolizing china market and destroying established competition order, we must draw up our anti-monopoly law. so, especially, this paper elaborates anti-monopoly against M&A of SOEs, and tries to design rules of anti-monopoly law.