Legal Regulation Of Foreign Capital Purchasing System

Since the Reform and Opening Policy was first carried out in 1979, especially afterChina's entry to WTO in 2001, China's economy has grown step by step from theprimary opening and become one part of the world's economic integration course.Along with China's well-developing economic trends, steadily-enhanced economicstatus and gradually-completed economic and legal system, form of direct using ofoverseas investments could not only limit itself to Greenfield Investment any more, butthere was an increasing number of deals where foreign investment entities wereestablished through acquisition of the assets or equity of existing local entities byoverseas capital. However, the majority of Chinese existing laws in connection withforeign direct investment merely governs and regulates the Greenfield Investment sector,which subsequently results in the lack of laws and regulations on the monopolyfollowing the M&A activity taken by foreign investors. This article will begin withanalysis of the necessity and feasibility of legal regulations on the M&A activity takenby foreign investors, and discuss how to set up and complete China's legal system foranti-monopoly involved in M&A activity taken by foreign investors, in light ofavailable patterns of legal system from international society.This article will consist of six sectors. The first part, which is introduction, willbriefly introduce changes in the forms of using foreign investments in China andunfavorable effects brought by M&A patterns, which sets a general background for thisarticle. The first chapter will highlight the reason why M&A activity taken by foreigninvestors should be regulated in China and the nomological foundation upon which theanti-trust legal system regarding the aforesaid M&A activity shall be set up. The currentstatus of the anti-trust legal system for M&A activity will be briefly described in thesecond chapter, where the defects of such legal system will be analyzed as well.Afterwards, the third chapter will be based on the introduction of characteristics ofexisting M&A laws in developed countries, demonstrating that it is necessary to adoptsuch legislative manner as that Anti-Trust Law shall constitute the basis on whichanti-trust rules with respect to the M&A activity taken by foreign investors areparticularly prescribed. To what extent the anti-trust legal system shall apply and, howto choose patterns of the system will be defined and discussed in the fourth chapter. Inthe meantime, this chapter will describe both substantive and procedural rules involvedin the legal system in question. As to the former, judging principles and criteria ofunlawful monopoly and monopoly exemption will be described. To the latter, executiveorgans, reporting, examination and supervision system will be highlighted. Lastly, theconclusion sector will summarize the whole text of this article.