(I) Examination and approval agency

The legal consequences of foreign economic and trade M&A transactions are the establishment of a foreign-invested enterprises, and hence examination and approval should be went through for the new establishment of foreign-invested enterprises. According to Articles 5 and 6 of the M&A Provisions, a foreign investor shall, when merging a domestic enterprise to establish a foreign-invested enterprise, go through examination and approval by the examination and approval authorities. The approval organ in the present provisions shall be the Ministry of Commerce or the department at the provincial level in charge of foreign trade and economic cooperation. Where, in accordance with the laws and administrative regulations, a foreign-invested enterprise established after the merger belongs to the foreign-invested enterprises of certain types or in certain industries, such as banking, insurance and securities, that shall be approved by other competent authorities, examination and approval should also be went through with other competent authorities in accordance with the laws and administrative regulations.
What deserves mentioning is that where the proportion of foreign investors’ contribution to the capital of the newly established foreign-invested enterprise upon the asset M&A is less than 25%, it shall still go through the examination and approval provided for by the M&A Provisions. The approval and registration organs shall, when issuing the approval certificates of foreign-invested enterprise and the business license, indicate on the certificates the following words: “investments contributed by the foreign party are less than 25%”.

According to Articles 12 and 15 of the M&A Provision, where a newly established foreign-invested enterprise upon the asset M&A is required to obtain the permit for obtaining the land use rights due to the changes of the business scope and the business scale or foe merging assets, it shall go through the formalities for permits prior to submission for approval.

(II) Examination and approval authority

The Ministry of Commerce and local competent authorities of foreign economy and trade shall determine their authority of examination and approval by the total investment of the enterprises. Those with total investment no more than USD30m shall go through the examination and approval directly with the department at the provincial level in charge of foreign trade and economic cooperation. Where, in accordance with the laws, administrative regulations or departmental rules, a foreign-invested enterprise belonging to the foreign-invested enterprises of certain types or in certain industries that shall be approved by the MOC, if after the merger becoming a foreign-invested joint-stock company or a foreign-invested M&A service enterprise, the approval organ at the provincial level shall transfer the application documents to the MOC for examination and approval.