Acquisition of SOEs in Shanghai: New Rules Open the Market

Bill Shouyun Tong, and Tom Yu, Wyselead Law Firm, Shanghai

The Shanghai State-owned Assets Supervision and Administration Commission, the Shanghai Foreign Investment Commission and the Shanghai Administration for Industry and Commerce jointly issued the Acquisition of State-owned Enterprises in the Municipality by Foreign Investors Several Opinions Implementing Rules (上海市关于外资并购本市国有企业若干意见的实施细则)(the Implementing Rules) on August 4 2003.¹ The Implementing Rules were enacted pursuant to the relevant national legislation on the acquisition of SOEs by foreign investors and the Acquisition of State-owned Enterprises in the Municipality by Foreign Investors Several Opinions (the Several Opinions), which were promulgated on April 4 2002.

The Implementing Rules have incorporated some of the latest provisions on the acquisition of SOEs by foreign investors promulgated at the national level and have set out detailed procedures for the acquisition of SOEs by foreign investors in Shanghai specifically. The Implementing Rules and the Several Opinions together with the Using Foreign Investment to Reorganize State-owned Enterprises Tentative Provisions (the SOE Reorganization Provisions, promulgated by the State Economic and Trade Commission, the Ministry of Finance, the State Administration for Industry and Commerce and the State Administration of Foreign Exchange on November 8 2002), the Acquisition of Domestic Enterprises By Foreign Investors Tentative Provisions (promulgated by MOFTEC, the State Taxation Bureau, the State Administration for Industry and Commerce and the State Administration for Foreign Exchange on March 7 2003), and the Administration of Equity Rights Transactions Procedures (promulgated by Shanghai Municipality on December 22 1998) have formed the basic legal framework for the acquisition of SOEs in Shanghai by foreign investors.