M&A in China

The M&A business has always been a way for business to progress, grow, sometime fail, but it is a key element in a capitalist market, allowing success or failure. Now China has promulgated a new law which ex post facto would deny an M&A action if in the Government's opinion it threatens national security.

China Daily states:

If any mergers and acquisitions involving foreign investors are determined to be a threat to national security, those deals should be terminated, according to the regulation.

In addition, any past mergers and acquisitions of domestic companies by foreign investors that are found to have threatened national security will be terminated. As an alternative, the MOC may "take relevant measures such as equity and asset transfers or other methods to eliminate their (mergers and acquisitions) influence on national security," according to the regulation.

The regulation will take effect from Sept 1 of this year, the ministry said.

 This may make further investments difficult.