To ensure the Provisions on M&A of a Domestic Enterprise by Foreign Investors coincide with the Antimonopoly Law and the Provisions of the State Council on Thresholds for Declaration of Concentrations of Undertakings, revision of the Provisions on M&A of a Domestic Enterprise by Foreign Investors have been made as follows:

1.       The original Chapter 5 Antimonopoly Review has been canceled and a new article has been added in the Supplementary Provisions as Article 51, providing: “According to the provisions of the Antimonopoly Law, where M&A of a domestic enterprise by a foreign investor meets the thresholds for declaration of the Provisions of the State Council on Thresholds for Declaration of Concentrations of Undertakings, the foreign investor shall make a declaration with the MOFCOM and shall not carry out the deal without declaration.”

The following articles and chapters shall be adjusted accordingly.

2.       The following articles have been revised as follows:

            Paragraph 4 of Article 16, i.e. “where a foreign investor merges a domestic enterprise to establish a foreign-invested enterprise and its/his contribution is less than 25% of the registered capital of the enterprise, the investor shall make its investment all in cash” shall be revised as “in case a foreign investor merges a domestic enterprise to establish a foreign-invested enterprise and its/his contribution is less than 25% of the registered capital of the enterprise, if it/he make its/his investment in cash”.

            Paragraph 1 of Article 36, i.e. “if the domestic company and the overseas company fail to go through the procedures for alteration of equity within six (6) months since issuance of the business license, the approval certificate with remarks and the approval certificate of overseas investment by Chinese enterprise shall be invalidated automatically, and the registration administrative authority shall examine and approve the registration on alteration based on the application documents for registration on equity alteration submitted by the domestic company in advance, so as to restore the equity structure of the domestic company to the status before the equity merger” shall be revised as “if the domestic company and the overseas company fail to go through the procedures for alteration of equity within six (6) months since issuance of the business license, the approval certificate with remarks and the approval certificate of overseas investment by Chinese enterprise shall be invalidated automatically. The registration administrative authority shall examine and approve the registration on alteration based on the application documents for registration on equity alteration submitted by the domestic company in advance, so as to restore the equity structure of the domestic company to the status before the equity merger”.

            The “ultimate controller” in Subparagraph 1 of Paragraph 1 of Article 42 and Subparagraph 3 of Paragraph 1 of Article 44 shall be revised as “actual controller”.

This Decree shall enter into force on the date of promulgation.

The Provisions on M&A of a Domestic Enterprise by Foreign Investors is re-promulgated according to the relevant revisions herein.

Annex: Provisions on M&A of a Domestic Enterprise by Foreign Investors

Minister: Chen Deming

June 22, 2009