Research On The Audit System Of The National Security Involved In The Foreign Merger And Acquisition

This paper takes an instance of foreign capital M & A (mergers and acquisitions) as example to analyze the requirements of national security review mechanism of China, and to make comparative analysis with the U.S. national security review mechanism, then to put forward advice on how to improve our national security review system from its scope, object, review and supervision and remedy measures and other aspects. All of these serve to promote foreign investors to invest in China, regulate these investments and introduce foreign advanced technology and management experience to China through the use of measures. The first part of this paper describes the details of Carlyle's Purchasing of XCMG (Xuzhou Construction Machinery Group).The second part analyses the focus and disagreement in XCMG case. One of the views considers that XCMG industry belongs to the "to encourage investment class" on the "foreign-invested enterprise catalogue", so the national security review on the merger and acquisition is unnecessary. Another view holds that it is a must to employ national security review as XCMG is China's the most complete and most competitive large group, which has been an industry leader, otherwise it will be a serious threat to industrial safety, and even to national security. In author's opinion, the contention concentrates on whether the national security review is necessary. According to the 2006 "Acquisition of Domestic Enterprises by Foreign Investors", it has not been conclusive: whether XCMG belongs to the key industries, whether the M & A will affect State economic security lacks of standards for identification, how the Ministry of Commerce review it, how the review process and how long the review period lasts. Therefore, to improve the national security review mechanism of foreign capital M & A is the key to regulate foreign capital M & A .The third part introduces the national security review mechanism of foreign capital M & A of the U.S. By illustrating its review process, review body and review standard, the author thinks that the U.S. legal system of merger and acquisition review is complete and emphasizes on congressional supervision of the system. We should learn from their experience to facilitate the national security review mechanism of foreign capital M & A in China.The fourth part describes the development of our national security review mechanism of foreign M & A in recent years with emphasis on introduction of February 2011 "on the establishment of a foreign investor acquires a domestic enterprise security censorship notice". This notice fills the blank of the national security review mechanism of foreign capital M & A as regulatory documents, but its contents are not the complete. And the author makes a comprehensive proposal combined related systems of the U.S. Second, the current national security review of foreign M & A is made in the form of executive orders under the State Council. The executive orders exist certain autonomy at the operational level, but they cannot replace the laws and regulations. Therefore, we should speed up the legislative progress, and timely formulate the "foreign M & A review of the National Security Law "or set up a special chapter of "national security review of foreign acquisitions"in the Foreign Investment Law. Finally, the supervision mechanism and remedy measures of national security review mechanism of foreign M & A should be completed.