The Procedure of the National Security Review
Who are initiators?
In accordance with the Security Review Rule, the following bodies have the right to request the Panel to initiate the national security review:
- MOFCOM
- The other relevant departments or ministries under the State Council
- National-wide industrial organizations
- The enterprises in the same industry of the target company
- The upstream and downstream enterprises of the target company
(for the last four bodies collectively as the Relevant Bodies)
The MOFCOM can submit the request to the Panel for national security review if they received the notification or application from the acquirer and believed that the Deal should go through the national security review. This submission should be done within 5 business days after it decides the national security review is necessary.
If the acquirer do not submit notification to the MOFCOM or MOFCOM decides not to submit the request for national security review to the Panel, any body listed above, except for the MOFCOM if it consider the request unnecessary, has the right to recommend the Panel to initiate the national security review through MOFCOM. It seems that, in this case, the MOFCOM is obliged to forward these recommendations to initiate the national security review without any discretion. It should be noted that there are no timeframe for the MOFCOM''s forwarding job.
The review of the Panel
The Security Review Rule stipulates a two-step procedure. The first step is the preliminary review and the second step is the special review which is required if the Deal causes more anxiety of the Panel in the first step.
- The preliminary review
The preliminary review will be a consultation with the Relevant Bodies listed above by the Panel in writing. The consultation should be done within 5 business days after the Panel receives the request from the MOFCOM. And the Relevant Bodies shall give the comments on the Deal within 20 business days once they receive the consultation letter from the Panel. Unless all the Relevant Bodies hold the opinions that the Deal will affect the national security, the Deal shall be moved to the next step for the special review.
