China Securities Regulation Commission ("CSRC") is the
authority in charge of supervising Chinese listed companies. In
August 2010 and November 2011, CSRC published on its website two
FAQs addressing application of the merger control regime under the
Anti-Monopoly Law ("AML") to listed companies.
In the August 2010 FAQ, CSRC explicitly confirms that for
mergers and acquisitions or reorganizations of listed companies
that are notifiable under the AML, clearance by MOFCOM is a
pre-condition for CSRC to issue its approval of the
transaction.1 According to the FAQ, companies applying
for CSRC approval shall fulfill the following requirements:
The applicant shall confirm whether the transaction has reached
the merger filing thresholds and provide the relevant
If the transaction triggers the merger filing thresholds, the
applicant shall submit MOFCOM's clearance decision to the
The applicant's financial advisor shall verify and provide
expert opinion on whether the merger has triggered the merger
filing thresholds, and whether the merger is in compliance with the
relevant laws and regulations;
The applicant's legal advisor shall provide legal opinion
on whether the transaction is in compliance with the AML, whether
the transaction is approved by MOFCOM, and whether there are any
All of the above statements/opinions made by the applicants or
the outside advisors, together with the MOFCOM decision, shall form
part of documents to be disclosed to the public.
For a notifiable transaction involving listed companies where
both CSRC and MOFCOM antitrust approval is required, how to
streamline the different approval process in terms of timing is
another important issue.
In practice, some listed companies may not be able to get
MOFCOM's antitrust approval within the application period
specified by the CSRC which is six months at the maximum, either
because they failed to make a timely filing or because the filing
process itself is lengthy.
In the November 2011 FAQ, the CSRC provided guidance on how to
solve the timing problem.2 According to this FAQ, if the
applicant fails to get the antitrust approval (or other approvals,
such as foreign investment approval and national security approval)
within the specified time line and hence cannot submit the
application documents to CSRC timely, the applicant shall report
and explain to CSRC or its branches, and make the relevant public
announcements. The applicant shall also keep the CSRC or its
branches updated of the application status and make public
announcements every 30 days about the application progress. Once
the approval is obtained, the applicant shall make public
announcement within 3 days and submit to CSRC the complete
application package within 3 days.
The CSRC guidance explicitly confirms the applicability of the
AML to transactions relating to Chinese listed companies. Failure
of making a notification may generate risks not only under the AML
but also the relevant CSRC rules and regulations in relation to
In addition, since the MOFCOM antitrust review process usually
takes quite long, it is for the benefits of the listed company to
assess the notifiability of its transaction at the very early stage
and to start preparing for the filing if the transaction does fall
under the AML.
Anyone with standard form contracts who deals with small business must review the contracts for potential unfair terms.
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