(I) Meeting the requirements of China's industrial policies on utilization of foreign investment. It can be seen from the scope of application of the M&A Provisions that the legal consequences of either equity M&A or asset M&A lead to the establishment of foreign-invested enterprises, the essence of which is the entry of foreign investment in China. Therefore, foreign-invested M&A activities shall, as newly established foreign-invested enterprises, meet the requirements of China's industrial policies on utilization of foreign investment.

In compliance with Article 4 of the M&A Provisions, the industrial sectors with access by foreign investors upon M&A shall meet the requirement of the "Catalog for Guidance of Foreign Investment Industries", for the industries where foreign investors are prohibited from operation as specified in the Catalog, no foreign investor shall merge any enterprise engaged in such industries. For the industries with requirements for share holding as specified in the Catalog, the enterprises upon M&A shall still meet the corresponding requirements.

Meanwhile, according to Article 12 of the M&A Provisions, for the merged target companies, their originally invested enterprises shall also meet the requirements of the industrial policies, and otherwise, foreign investors shall not merge the target companies. The enterprises with investment from the merged target companies may adjust their business scope in advance or at the same time with the M&A or the target companies may carry out restructuring with their invested companies.

(II) For some special industries, the relevant laws, administrative regulations and department rules should be observed. The basic principles of civil law, such as equality, fairness, equal price and compensation and good faith, should be observed in equity transfer and asset purchase agreements, contracts of foreign-invested enterprises, and undertakings of other civil activities relating to the M&A. Excessive concentration should not occur, competition should not be eliminated or restricted, the social market economic order should not be disturbed and public interests should not be damaged as a result of the M&A.