China''s New National Security Review Mechanism Born
中国外资并购的国家安全审查制度简析
李治国 (Edwin Zhiguo Li)
【关键词】国家安全审查制度
【全文】
The Cabinet of China, the State Counsel, promulgated the Notice on the Establishment of the National Security Review Mechanism for the M&A of the Domestic Enterprises by the Foreign Investors on Feb. 12, 2011 (the Security Review Rule). Since the implementation of the Anti-monopoly Law of the PRC as of August 1, 2008 (the AML), the relevant component authorities (the AML Authority) have issued a lot of detailed regulations and rules for the clarification of the vague in the AML and for guidance in the daily practice (the Detailed Rules). The Detailed Rules bring more transparency to both the officials in the AML Authority and the players in the market. Among those Detailed Rules, only the Provisions of the State Council on Thresholds for Prior Notification of Concentrations of Undertakings were issued by the State Council in the form of decree. This Security Review Rule is the second one issued by the Cabinet. This article will analyze it for the interested readers and potential foreign acquirer to solve some of their concerns.
National Security of China
The Security Review Rule comes from Article 31 of the AML which states that
"where a foreign investor participates in the concentration of undertakings by merging or acquiring a domestic enterprise or by any other means (the Deal), and national security is involved, besides the examination on the concentration of undertakings in accordance with this Law, the examination on national security shall also be conducted according to the relevant provisions of the State."
It took more than two years after the implementation of the AML for the promulgation of this Security Review Rule which can only be drafted and formed by the State Council due to its significance. Although there is no clear definition of "national security" which is hard to do so without the unanimous definition having been reached around the world, we can summarize the most concern of the Chinese government when they are discussing the national security of China in the Security Review Rule:
