General Office of the State Council, Circular on the Establishment of a System for Security Review 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

China screens M&A deals for national security reasons.

Clp Reference: 2300/11.02.03 Promulgated: 2011-02-03

Issued: February 3 2011


Effective: 30 days after issuance

Applicability: Security review of acquisition of domestic financial institutions by foreign investors will be provided for separately (Article 5).

Main contents: The scope of security review of acquisition of domestic enterprises by foreign investors (Security Review) shall be as follows: acquisition by foreign investors of domestic military armament enterprises and suppliers to military armament enterprises, enterprises adjacent to key and sensitive military facilities and other entities that are crucial to national defence and security; and acquisition by foreign investors of important agricultural product, important energy and resources, important infrastructure, important transport service, key technology, major equipment manufacturing and other such enterprises that are crucial to national security and where actual control may be secured by the foreign investors (Article 1).

The subject of Security Review includes the following:

(1) the impact of an acquisition transaction on national defence and security, including the effect on the production capacity for domestic products, the provision capacity for domestic services required for national defence and related equipment and facilities;

(2) the impact of an acquisition transaction on the stable operation of the national economy;

(3) the impact of an acquisition transaction on the basic livelihood of the public; and

(4) the impact of an acquisition transaction on the research and development capacity for key technologies that have a bearing on national security (Article 2).

clp reference:2300/11.02.03promulgated:2011-02-03

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