25.06.07 15:30 Age: 17 yrs

Mergers & Acquisitions Face Security Scrutiny

Beijing, China - June 25, 2007

Mandatory national security checks on foreign companies' acquisition of domestic players have been included to the draft anti-monopoly law submitted yesterday to the top legislature for a second reading.

"Foreign mergers and acquisitions (M&As) of domestic companies or foreign capital invested in domestic companies in other forms should be examined if the cases are related to national security," said the draft submitted to the 28th session of the Standing Committee of the National People's Congress (NPC).

There is already a national-security check framework in place for foreign M&As, but it has been included in draft legislation for the first time.

According to a regulation jointly issued by six government agencies late last year, foreign investors have to apply for approvals from the Ministry of Commerce when their purchases of domestic companies affect national economic security, are in key sectors or lead to the transfer of operating rights of famous domestic brands.

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Source: By Jiang Wei (China Daily/Xinhua)