Foreign M & A Legal Issues Research

The thesis, based on the history, status quo and future prospect of mergers and acquisitions in relation to foreign investment, is an analysis concerning an array of legal barriers in the process of foreign investors' merging and acquiring state owned enterprises as well as a series of constructive suggestions to the relevant Chinese legal system benefiting from mature legal practices of developing countries. Chapter 1 springing from "M& A, a vague notion", from a conceptual prospect of the term, elaborates on the concept, i.e. mergers and acquisitions are different levels. However, in the Contemporary Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investment jointly issued by MOFTEC, the State Tax Bureau, the State Administration of Industry and Commerce and the State Currency Control Bureau on January 2, 2003, though M & A in relation to foreign element is mentioned, there are only equity acquisition and asset acquisition without defining what is merger, which leave it a legal flaw when it comes to mergers between foreign investors and state-owned enterprises. Chapter 2 introduces the modes of foreign capital M& A. Chinese existing laws only stipulate two modes, equity acquisition and assets acquisition. However, in practices, there are others. For instance, horizontal, vertical and mixed M&A; goodwill and hostile M&A; M&A in cash and in equity; lever and non-lever M&A; direct and indirect M&A; assigned and trusted M&A. All of the above but not limited to should be regulated in laws. Focus of the thesis is on direct, indirect and pro M&As. Chapter 3 is about legal status of the subject in foreign capital M&A, i.e. lawful criterion on who is a foreign investor, with a creative opinion of using both criteria of registration place and capital control as testing stone. At the meanwhile, regulations on other conditions for foreign investors' legal status is under the question while suggestions as to definition of the issue in law and practice is raised. In Chapter 4, the author analyzes the WTO regulations on national treatment, China's promises related and the law spirit behind it and holds the opinion that state-owned enterprises should be treated by "below national treatment" or "above national treatment", which both fail to comply with WTO regulations and spirits. In Chapter 5, the author compares misdescription of M&A and trust M&A and concludes that they are not dodging law and should be recognized as legal by law. Chapter 6 deals with the issue of foreign-related "debt-to-equity swap" with actual cases in which foreign investors acquire state-owned enterprises by way of "debt-to-equity swap" and presents the author's views and opinions. Chapter 7 focuses on M&A practice and legislation in America, which deserve study in depth while critically analyzes China's existing laws and regulations on the topic. The author, as a scholar and legal practitioner, presents his advice and suggestion on how to improve relevant legal system. As a whole, this thesis studies sensitive legal issues on foreign related M&A. Sufficient cases and practical experience concerning are used to prove the flaws in relevant legal systems. Crème de la crème of foreign legislation in M&A, esp. that of American law mirrors practical problems in foreign M&A in China. Accordingly, the author gives his suggestion on how to better legal frame in foreign related M&A.