A new year for China M&A

February 09, 2009 | BY

clpstaff

As China faces up to the challenges of a global recession, lawyers are calling for changes to the country's regulatory regime for mergers and acquisitions. Proper support for acquisition financing and foreign currency conversion will boost the market and encourage investors. More clarification of joint-venture funding and anti-monopoly rules will also help.

By Phil Taylor.

China is facing hard times, just like the rest of the world. Although recent research has shown that the country is better placed to ride out the storm than many of its neighbours, investors and practitioners cannot afford to be complacent.

    The government has recently made some significant reforms in the hopes of encouraging more mergers and acquisitions. One change was the implementation of a new set of tax rules governing re-organisations. According to a recent report in Asialaw, the Corporate Reorganisation Tax Rules, replacing Circulars 71 and 207, may be in place by the end of March 2009 and should make M&A “easier to manage”. They are said to allow foreign-invested enterprises (FIEs) to carry out tax free re-organisations and share-for-share equity transactions.

    Tax reforms are a good start – but it is clear that there is still a lot more to be done. China Law & Practice spoke to a number of well-known M&A lawyers about their views on the landscape in 2009. Here are the wishes that top the list.

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