Form a proper view of new security review rules

Foreign firms are advised to become familiar with a new notice codifying a national security review and initiate contact with relevant officials to open up effective communications about the application procedure.

On February 3, the State Council issued the Circular on Establishment of the Security Review System in Respect of Acquisition of Domestic Enterprises by Foreign Investors (国务院办公厅关于建立外国投资者并购境内企业安全审查制度的通知) (Circular). This new regulation formalises a national security review procedure and will be effective as of March 5 2011.

In specific industries and under certain conditions, foreign companies intending to complete an M&A with a domestic target must voluntarily submit an application to the Ministry of Commerce (Mofcom) for a national security review.