Research On Review Criteria Of Foreign Investment And National Security Review In M&A

Recent years,the number of foreign investment projects is becoming larger in China,China has become a main target market to invest in the world.But for a large number of foreign mergers and acquisitions projects,our country has no specialized national security review system.However,a large number of Chinese enterprises go abroad,and the investors encountered the National Security Review in foreign M&A,especially the standards of the review from the host country.In asymmetrical merger environment,Chinese scholars called for the establishment of the National Security Review in foreign M&A.In 2015,the Ministry of Commerce issued the Foreign Investment Law(Draft Amendment)(herein after referred to as the Draft),in order to establish China’s national security review system.Due to many factors,this article only chooses three factors,which are national economic security,foreign government-controlled transaction and network and information security.And some recommendations will be put forward.This paper main consists of four parts.The first part: Firstly,the concept of the National Security Review in foreign M&A will be stated,especially the concept of foreign direct investment,mergers and acquisitions,national security and the National Security Review in foreign M&A.Secondly,the standards of national security review in different countries will be compared,such as the United States,Canada,Australia and China,which elaborates under the different background,every country does have their own different emphasis.At the same time,the review standards in the Draft will be listed.The introduction explained previously contributes to the later study.The second part: the national economic security.First of all,the paper expounds the concept and the scope of national economic security,the relationship between economic security and national security,in which national economic security is an important part of national security.Secondly,although the United States did not make specific definition about national security,but the economic security has been listed in the review standards,which expands to the energy security and technology security.And through the case of CNOOC’s acquisition for UNOCAL,the United States emphasize energy security.Then,regulation economic security in French will be introduced,French pays much attention to national economic security,such as the information industry,biotechnology industry,and retailing industry.Fourthly,the scope ranges up to finance transportation,telecommunication,insurance and so on in Australia.By comparing different rules of these countries,some suggestions will be put forward.By comparing the regulations of the main countries,some references will be given to the definition of the scope of our economic security.Finally,the present situation of legislation and theoretical research,and the situation of M&A about national economic security in our country will be introduced.In order to protect national brand,retail business,financial security,and agricultural security,we should expand the range of the economic security,including the financial security,agricultural safety.The third part:about foreign government-controlled transaction.First of all,the paper expounds the concept of foreign government-controlled transaction,and the reasons why other countries examine these transactions strictly.Because foreign government-controlled transaction may be influenced by the government’s policy and get government’s support,so they are more competitive than other investors.Then,through the regulations of the main countries,the United States enacted strict rules,the concept of “control”is about influencing substantive matters.And Canada supervises strictly these kind transactions,by improving the review threshold of state-owned enterprises,and refine the censorship of state-owned enterprises,in the field of oil sand investment.Australia’s attitude to the transactions shifts from loose to strict.Through the case of Aluminum Group M&A Rio into,it is concluded that Australia supervises these kind transactions strictly.Finally,according to the present situation of legislation and theoretical research,and the situation of M&A about foreign government controlled transaction in China.No regulations of foreign government-controlled transaction,and the ratio of the "control" prescribed is not comprehensive.Then the concept of foreign government-controlled transaction in the Draft is advanced,and it is recommended to learn the substantive control provisions from the United States,expanding substance cases of control,and open-ended list of qualitative approach.The fourth part: network and information security.Firstly,the paper expounds the concept and importance of information and network security.Secondly,the related regulations of the network and information security in some main countries will be introduced.Although America does not specify whether the transaction of network and information security is reviewed,but they remain cautious in foreign M&A.By the transaction of Hutchison Whampoa M&A America Global Crossing,it is concluded that the U.S.government supervises the transaction strictly.Canada has similar provisions,the transaction in the culture and communication industry will remain strictly limited or the proportion is limited.Finally,according to the present situation of legislation and theoretical research,and the situation of M&A about net and information security in China,the Draft is advanced in the rules of net and information security.It is suggested that we should refine related areas in information and network security,and put the cases that the proportion is less than 50% but threats network and information security in the list.The paper compares the review standards among different countries,and by cases analysis,trying to make some reasonable suggestions to the national security Review system in China.