| In recent years, the pace of corporate mergers and acquisitionsaccelerates in China. Equity contribution as one of the essential forms ofmergers and acquisitions, experienced from "forbidden" to "permitted" inthe legislation. And the development of foreign-invested enterprises, asone of the important components of the national economy, the role cannotbe underestimated. Foreign-invested enterpirses equity contributionagreement, since the mixing characteirstics of both "equity contribution","foreign-invested enterpirse it is complex to determine the validity ofcontract. If the parties to the contract enter into the equity contirbutionagreement, without fully understanding the factors influencing thevalidity of equity contribution of foreign-investment enterpirses,apparently they are difficult to predict their own interests and risks.Beginning with a virtual foreign equity contirbution case, the articledivides into three parts to discuss what affects the validity of a foreignequity contirbution agreement. The first part is the impact of the legal nature on equity contributionagreement. To start with, it introduces the similarities among thecontirbution agreement, the enterprise contract and the promoteragreement. Then it analyzes the legal nature of equity contributionagreement, explores whether the difference between the contract and thecollective behavior will influence the validity of equity contributionagreement.The second part is the status of an equity contribution agreementwhich has not obtained approval from competent administrativeauthoirties. First, it analyzes the potential administrative examinationsrelating to the approval of a foreign-invested enterprises equitycontribution agreement, based on the introduction of currentadministrative examination process. I t also defines the nature of theadministrative examination and the direction of reform of foreigninvestment approval. Secondly, it adopts a judicial interpretation of thecontract without the administrative approval is an ineffective contract,and puts forward an argument due to multiple approvals involved, thelack of approval of the equity transfer also leads to an ineffectivecontract. The Writer recommends reducing the scope，simplifyingprocedures of administrative examination, establishing internal mechanisms for consultation and co-linkage mechanism between judicialand administrative systems to coordinate foreign investment approval.The third part is the relationship between conflicts of legal rules andequity contribution agreement. The selection of rule conflicts is asfollows: First, the individual with Chinese nationality becomes theshareholder of a Sino-foreign joint venture; second, no unanimousconsent to equity contirbution is obtained from all original shareholdersof the invested enterprises (acquired company with limited liability). Itanalyzes mandatory norms scope, the impact on the effectiveness of thecontirbution agreement, and proposes the enactment of "ForeignInvestment Law" to replace the existing law, re-organize the structure oflaws. |
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