对外贸易经济合作部、国家税务总局、国家工商行政管理总局、国家外汇管理局令[2003]年第3号

（Promulgated by the Ministry of Foreign Trade and Economic Cooperation， State Administration of Taxation， State Administration for Industry and Commerce and State Administration of Foreign Exchange on 7 March 2003 and effective as of 12 April 2003.）

颁布日期：20030307 　实施日期：20030412 　颁布单位：对外贸易经济合作部、 国家税务总局、 国家工商行政管理总局、 国家外汇管理局

Article 1　These Provisions are formulated in accordance with the laws and administrative regulations concerning foreign-invested enterprises and other relevant laws and administrative regulations in order to promote and standardize investment by foreign investors in China， introduce foreign advanced technology and management experience， enhance the level of utilization of foreign investment， realize reasonable allocation of resources， ensure employment and safeguard fair competition and national economic security.

Article 2　For the purposes of these Provisions， the term “merger with and acquisition of domestic enterprises by foreign investors” shall mean a foreign investor purchases the equities of the shareholders of a non-foreign-invested enterprise in China （Domestic Company） by agreement or subscribes to the capital increase of a Domestic Company， so as to convert and re-establish the Domestic Company as a foreign-invested enterprise （Equity Merger and Acquisition）； or， a foreign investor establishes a foreign-invested enterprise and purchases by agreement and operates the assets of a domestic enterprise through that enterprise， or， a foreign investor purchases the assets of a domestic enterprise by agreement and establishes a foreign-invested enterprise with such assets to operate the assets （Asset Merger and Acquisition）。

Article 3　Merger with and acquisition of domestic enterprises by foreign investors shall comply with the laws， administrative regulations and departmental rules of China and follow the principles of fairness and reasonableness， consideration for equal value and good faith， shall not result in excessive concentration， exclusion or restriction of competition， and shall not interfere with the social and economic order or harm the public interest.

Article 4　Merger with and acquisition of domestic enterprises by foreign investors shall comply with the requirements of the laws， administrative regulations and departmental rules of China regarding qualifications of investors and industrial policies.

In an industry where the Foreign Investment Industrial Guidance Catalogue does not permit enterprises wholly owned by foreign investors， no merger and acquisition may result in foreign investors holding the entire equity interest of an enterprise. In an industry in which the Chinese party must have a controlling interest or a relative controlling interest， the Chinese party shall maintain its controlling or relative controlling interest in the enterprise after the enterprise in that industry is merged and acquired. In an industry in which participation of foreign investors is prohibited， foreign investors may not merge with or acquire any enterprise in that industry.

Article 5　Establishment of foreign-invested enterprises by foreign investors by way of merger with and acquisition of domestic enterprises shall be subject to approval of the examination and approval authority pursuant to these Provisions and require the registration of the change or registration of establishment with the registration administration authority. The ratio of the capital contribution of the foreign investor in the registered capital of the foreign-invested enterprise established upon merger and acquisition shall not be less than 25% in general. If the ratio of capital contribution of the foreign investor is less than 25%， the establishment of the enterprise shall be examined， approved and registered pursuant to the existing procedures for examination， approval and registration of establishment of foreign-invested enterprises， except otherwise provided in laws and administrative regulations. The examination and approval authority shall annotate the words “ratio of foreign investment less than 25%” in the foreign-invested enterprise approval certificate issued to the enterprise. The registration administration authority shall annotate the words “ratio of foreign investment less than 25%” in the foreign-invested enterprise business licence issued to the enterprise.

Article 6　For the purposes of these Provisions， the examination and approval authority shall be the PRC Ministry of Foreign Trade and Economic Cooperation （MOFTEC） or the department in charge of foreign trade and economic cooperation at provincial level （Examination and Approval Authority at Provincial Level）， and the registration administration authority shall be the PRC State Administration for Industry and Commerce （SAIC） or its authorized local administration for industry and commerce.

If a foreign-invested enterprise established upon merger and acquisition is of such a particular type or industry that requires examination and approval of MOFTEC according to the provisions of laws， administrative regulations and departmental rules， the Examination and Approval Authority at Provincial Level shall forward the application documents to MOFTEC for examination and approval， and MOFTEC shall decide to approve or disapprove the application in accordance with the law.

Article 7　In an Equity Merger and Acquisition by foreign investors， the foreign-invested enterprise established upon merger and acquisition shall succeed to the claims and debts of the target Domestic Company.

In an Asset Merger and Acquisition by foreign investors， the domestic enterprise selling its assets shall assume its original claims and debts.

The foreign investors， the target domestic enterprise， the creditors and other parties concerned may enter into a separate agreement on the disposition of the claims and debts of the target domestic enterprise， provided that such agreement does not harm the interests of any third party and the public interest. The agreement on the disposition of claims and debts shall be submitted to the examination and approval authority.

The domestic enterprise selling its assets shall， within 10 days of its resolution concerning sale of assets， issue a notice to its creditors and publish an announcement on a national newspaper at or above provincial level. Within 10 days of the date of receipt of the notice or the publication of the announcement， the creditors shall have the right to demand the domestic enterprise selling its assets to provide a corresponding security.

Article 8　The parties to a merger and acquisition shall determine the transaction price on the basis of the appraisal result of an asset appraisal institution on the value of the equities to be transferred or the assets to be sold. The parties to the merger and acquisition may agree on an asset appraisal institution established according to law in China. The asset appraisal shall adopt an internationally-accepted appraisal method.

If a merger with and acquisition of domestic enterprise by foreign investors leads to a change in the equities formed with State-owned assets or a transfer of the title of State-owned assets， an appraisal shall be conducted in accordance with the provisions concerning the administration of State-owned assets to determine the transaction price.

Transferring capital offshore in disguise by transferring equity or selling assets at a price that is obviously lower than the appraisal result is prohibited.

Article 9　If a foreign investor establishes a foreign-invested enterprise upon merger and acquisition of a domestic enterprise， the foreign investor shall， within three months of the date of issue of the business licence of the foreign-invested enterprise， pay the full consideration to the shareholder that transfers his equity interest or the domestic enterprise that sells the assets. In special circumstances where the payment period needs to be extended， subject to approval of the examination and approval authority， the foreign investor shall pay at least 60% of the full consideration within six months of the date of issue of the business licence of the foreign-invested enterprise and pay off the full consideration within one year， and shall distribute the earnings in accordance with the ratio of capital contribution actually paid-up.

In an Equity Merger and Acquisition by foreign investors， if there will be an increase in the capital of the foreign-invested enterprise established upon merger and acquisition， the investors shall stipulate the time limit for capital contribution in the contract and the articles of association of the foreign-invested enterprise established upon the conversion. If it is stipulated that the capital contribution shall be made in one lump sum， the investors shall pay capital contribution in full within six months of the date of issue of the business licence of the foreign-invested enterprise. If it is stipulated that the capital contribution shall be made in instalments， the first instalment of capital contribution of each investor may not be less than 15% of the amount to which it subscribes， and the contribution shall be paid in full within three months of the date of issue of the business licence of the foreign-invested enterprise.

In an Asset Merger and Acquisition by foreign investors， the investors shall stipulate the time limit for capital contribution in the contract and the articles of association of the foreign-invested enterprise to be established. If a foreign-invested enterprise is established to purchase by agreement the assets of a domestic enterprise and to operate such assets， the investors shall pay the portion of the capital contribution that equals to the amount of the consideration for such assets within the time limit for payment of consideration specified in the first paragraph of this Article， and the time limit for paying the rest of the capital contribution shall be agreed upon in the format specified in the second paragraph of this Article.

If a foreign investor establishes a foreign-invested enterprise upon merger and acquisition of domestic enterprise and the ratio of the capital contribution of the foreign investor is less than 25%， the capital contribution of the investors made in cash shall be paid in full within three months of the date of issue of the business licence of the foreign-invested enterprise. The capital contribution of the investors made in kind and/or industrial property rights shall be paid in full within six months of the date of issue of the business licence of the foreign-invested enterprise.

The means of payment for consideration shall comply with the provisions of the relevant laws and administrative regulations of the State. If a foreign investor uses the shares over which he has the right of disposal or the Renminbi-denominated assets legally owned by him as means of payment， such payment shall be subject to verification and approval of the foreign exchange control authorities.

Article 10　After a Domestic Company has been converted and re-established as a foreign-invested enterprise upon the purchase by a foreign investor of its shareholder equity by agreement， the registered capital of such foreign-invested enterprise shall be the registered capital of the original Domestic Company， and the ratio of capital contribution of the foreign investor shall be the ratio of its purchased equity in the original registered capital. If the Domestic Company subject to Equity Merger and Acquisition increases its capital at the time of merger and acquisition， the registered capital of the foreign-invested enterprise established upon merger and acquisition shall be the sum of the registered capital of the original Domestic Company and the amount of capital increase. The foreign investor and the other original investors of the target Domestic Company shall determine the ratios of their respective capital contribution to the registered capital of the foreign-invested enterprise on the basis of the asset appraisal of the Domestic Company.

After a Domestic Company has been converted and re-established as a foreign-invested enterprise upon subscription by a foreign investor of the capital increase of the Domestic Company， the registered capital of such foreign-invested enterprise shall be the sum of the registered capital of the original Domestic Company and the amount of the capital increase. The foreign investor and the other original investors of the target Domestic Company shall determine the ratios of their respective capital contributions to the registered capital of the foreign-invested enterprise on the basis of the asset appraisal of the Domestic Company.

Subject to approval， the Chinese natural person shareholders of the Domestic Company subject to Equity Merger and Acquisition who have held the status of shareholders in the original company for over one year may continue to be Chinese investors of the foreign-invested enterprise established after the conversion.

Article 11　In an Equity Merger and Acquisition by foreign investors， the upper limit of the total investment amount of the foreign-invested enterprise to be established upon merger and acquisition shall be determined in accordance with the following proportions：

1. if the registered capital is less than US$2，100，000， the total investment amount shall not exceed the registered capital by 70%；

2. if the registered capital is over US$2，100，000 and not more than US$5，000，000， the total investment amount shall not exceed the registered capital by 2 times；

3. if the registered capital is over US$5，000，000 and not more than US$12，000，000， the total investment amount shall not exceed the registered capital by 2.5 times；

4. if the registered capital is over US$12，000，000， the total investment amount shall not exceed the registered capital by 3 times.

Article 12　In an Equity Merger and Acquisition by foreign investors， investors shall submit the following documents to the examination and approval authority with the relevant examination and approval power based on the total investment amount of the foreign-invested enterprise to be established upon merger and acquisition：

1. the unanimous resolution of the shareholders of the target domestic limited liability company concerning the consent to the Equity Merger and Acquisition by the foreign investor or the resolution of the shareholders' general meeting of the target domestic company limited by shares concerning the consent to the Equity Merger and Acquisition by the foreign investor；

2. the application of the target Domestic Company for conversion and re-establishment as a foreign-invested enterprise according to law；

3. the contract and articles of association of the foreign-invested enterprise to be established upon merger and acquisition；

4. the agreement for purchase of the shareholder equity of the Domestic Company or for subscription to the capital increase of the Domestic Company by the foreign investor；

5. the financial auditor's report of the target Domestic Company for the most recent financial year；

6. the supporting documents in respect of the identification， commencement of business and creditworthiness of the investors；

7. the details of the enterprises in which the target Domestic Company has invested；

8. the （copies of） business licences of the target Domestic Company and the enterprises in which it has invested；

9. the placement plan for the staff and workers of the target Domestic Company； and

10. the documents required to be submitted according to Articles 7 and 19 hereof.

Where the business scope， scale and the obtaining of land use rights of the foreign-invested enterprise to be established upon merger and acquisition requires permits from other relevant government departments， such relevant permits shall be submitted together with the above documents.

The business scope of the existing companies in which the target Domestic Company has invested shall comply with the requirements of industrial policies on foreign investment. If such requirements are not complied with， it shall be adjusted.

Article 13　The agreement for purchase of equity and subscription of capital increase of Domestic Companies specified in Article 12 hereof shall be subject to the laws of China， and shall include the following main contents：

1. the particulars of the parties to the agreement， including their names， domiciles and the names， positions and nationalities of their legal representatives， etc.；

2. the amount and price of the equity to be purchased or the capital increase to be subscribed；

3. the time limit and method of performance of the agreement；

4. the rights and obligations of the parties to the agreement；

5. liabilities for breach of contract and resolution of disputes； and

6. the date and place of the signing of the agreement.

Article 14　In an Asset Merger and Acquisition by foreign investors， the total investment amount of the foreign-invested enterprise to be established shall be determined according to the transaction price of the assets purchased and the actual scale of production and operation. The ratio of the registered capital to the total investment amount of the foreign-invested enterprise to be established shall comply with the relevant provisions.

Article 15　In an Asset Merger and Acquisition by foreign investors， the investors shall submit the following documents to the examination and approval authority with the relevant examination and approval power based on the total investment amount， enterprise type and industry of the foreign-invested enterprise to be established upon merger and acquisition and in accordance with the laws， administrative regulations and departmental rules concerning establishment of foreign-invested enterprises：

1. the resolution of the party or authority holding the ownership of the domestic enterprise concerning the consent of the sale of the assets；

2. the application for establishment of the foreign-invested enterprise；

3. the contract and articles of association of the foreign-invested enterprise to be established；

4. the asset purchase agreement between the foreign-invested enterprise to be established and the domestic enterprise， or， the asset purchase agreement between the foreign investor and the domestic enterprise；

5. the articles of association and （copies of） the business licence of the target domestic enterprise；

6. proof of notice and announcement to the creditors of the target domestic enterprise；

7. the supporting documents in respect of the identification， commencement of business and creditworthiness of the investors；

8. the placement plan for the staff and workers of the target Domestic Company； and

9. the documents required to be submitted according to Articles 7 and 19 hereof.

If the purchase and operation of the assets of the domestic enterprise pursuant to the preceding paragraph requires permits from other relevant government departments， such relevant permits shall be submitted together with the above documents.

Where a foreign investor purchases the assets of a domestic enterprise by agreement and uses such assets to establish a foreign-invested enterprise， the foreign investor may not carry out business activities with such assets prior to the establishment of the foreign-invested enterprise.

Article 16　The asset purchase agreement specified in Article 15 hereof shall be governed by the laws of China， and shall include the following main contents：

1. the natural particulars of the parties to the agreement， including their names， domiciles and the names， positions and nationalities of their legal representatives， etc.；

2. the inventory and the prices of the assets to be purchased；

3. the time limit and method of the performance of the agreement；

4. the rights and obligations of the parties to the agreement；

5. liabilities for breach of contract and resolution of disputes； and

6. the date and place of the signing of the agreement.

Article 17　If a foreign investor merges with and acquire a domestic enterprise to establish a foreign-invested enterprise， the examination and approval authority shall decide to approve or disapprove the establishment according to law within 30 days of the date of receipt of all the documents required to be submitted， except otherwise provided in Article 20 hereof. If the examination and approval authority decides to approve the application， it shall issue a foreign-invested enterprise approval certificate.

If a foreign investor purchases the shareholder equity of a Domestic Company by agreement and the examination and approval authority decides to approve the purchase， the examination and approval authority shall at the same time copy the relevant approval document to the foreign exchange control authorities at the places where the equity transferor and the Domestic Company are located. The foreign exchange control authority at the place where the equity transferor is located shall handle the foreign investment exchange registration procedures for the equity transferor and issue the foreign investment exchange registration certificate evidencing the receipt of consideration for Equity Merger and Acquisition by the foreign investor.

Article 18　In an Asset Merger and Acquisition by foreign investors， the investors shall， within 30 days of the date of receipt of the foreign-invested enterprise approval certificate， apply for registration of establishment with the registration authority and obtain a foreign-invested enterprise business licence.

In an Equity Merger and Acquisition by foreign investors， the target Domestic Company shall apply for registration of the change with the original registration authority in accordance with these Provisions and obtain a foreign-invested enterprise business licence. If the original registration authority does not have the jurisdiction over the application， it shall transfer the application to a registration authority that has the jurisdiction within 10 days of the date of receipt of the application documents together with the registration file of that Domestic Company. The target Domestic Company shall submit the following documents when applying for registration of its change and shall be liable for the authenticity and validity of such documents：

1. the application for registration of change；

2. the resolution of the shareholders' meeting （general meeting） of the target Domestic Company in respect of the equity transfer or capital increase in accordance with the PRC， Company Law and its articles of association；

3. the agreement for purchase of the shareholder equity of the Domestic Company or for the subscription of the capital increase of the Domestic Company by the foreign investor；

4. the amended articles of association or the amendment to the original articles of association and the contract of the foreign-invested enterprise that shall be submitted as required by law；

5. the foreign-invested enterprise approval certificate；

6. the supporting documents in respect of the identification， commencement of business， and creditworthiness of the foreign investor；

7. the amended list of members of the board of directors， the document recording the names and domiciles of new directors and the appointment documents of the new directors； and

8. other relevant documents and certificates required by the SAIC.

Where there is a transfer of State-owned equity and subscription of capital increase of a company with State-owned equity by foreign investors， the approval document of the competent economic and trade authority shall also be submitted.

The investors shall， within 30 days of the date of receipt of the business licence of the foreign-invested enterprise， carry out the registration procedures with the relevant authorities such as the taxation， customs， land administration and foreign exchange control authorities.

Article 19　If a merger with and acquisition of domestic enterprise by a foreign investor is in any of the following circumstances， the investors shall report the relevant circumstances to MOFTEC and the SAIC：

1. the turnover of a party to the merger and acquisition in the Chinese market for the current year exceeds Rmb 1.5 billion；

2. the aggregate number of enterprises merged and acquired in the relevant industry in China within one year exceeds 10；

3. the market share of a party to the merger and acquisition in China has reached 20%； or

4. the merger and acquisition will result in a party to the merger and acquisition having a market share of 25% in China.

In cases where the above criteria have not been fulfiled， the foreign investor may also be required to give such report if so requested by the competing domestic enterprises， the relevant functional departments or industry associations and if in the opinion of MOFTEC or the SAIC a tremendous market share is involved in the merger and acquisition by foreign investors， or where other important factors such as seriously affecting market competition or the national economy， the people's livelihood and the national economic security exist.

A party to the merger and acquisition referred to above includes the affiliated enterprises of foreign investors.

Article 20　If a merger with and acquisition of domestic enterprise by a foreign investor is in any of the circumstances specified in Article 19 hereof， and is considered by MOFTEC and the SAIC to be likely to result in excessive concentration， obstruction to fair competition or harm to the interests of consumers， MOFTEC and the SAIC shall， within 90 days of the date of receipt of all the documents required to be submitted， jointly or separately after consultation call the relevant departments， authorities， enterprises and other interested parties to a hearing and decide to approve or disapprove the merger and acquisition according to law.

Article 21　If any of the following circumstances arises in connection with an offshore merger and acquisition， the parties to the merger and acquisition shall submit the merger and acquisition proposal to MOFTEC and the SAIC before the merger and acquisition proposal is announced to the public or when it is submitted to the competent authority of the country where the parties are located. MOFTEC and the SAIC shall examine whether the merger and acquisition will result in excessive concentration in the domestic market， obstruction to fair competition in China or harm to the interests of domestic consumers， and shall decide whether or not to consent to the merger and acquisition：

1. a party to the offshore merger and acquisition owns assets of more than Rmb 3 billion in China；

2. the turnover of a party to the offshore merger and acquisition in the Chinese market for the current year is more than Rmb 1.5 billion；

3. the market share of a party to the offshore merger and acquisition and its affiliated enterprise（s） in China has reached 20%；

4. the market share of a party to the offshore merger and acquisition and its affiliated enterprise（s） in China will reach 25% as a result of the offshore merger and acquisition； or

5. the number of foreign-invested enterprises in the relevant industry in China in which a party to the offshore merger and acquisition has direct or indirect equity interests will exceed 15 as a result of the offshore merger and acquisition.

Article 22　In a merger and acquisition that meets any of the following criteria， one of the parties to the merger and acquisition may apply to MOFTEC and SAIC for exemption of examination：

1. it can improve the fair competition conditions of the market；

2. it restructures a loss-making enterprise and safeguards employment；

3. it introduces advanced technology and management personnel， and enhances the competitiveness of the enterprise in the international market； or

4. it can improve the environment.

Article 23　The documents submitted by investors shall be classified according to provisions and attached with tables of contents. All documents required to be submitted shall be in Chinese.

Article 24　These Provisions shall apply to merger with and acquisition of domestic enterprises by companies with an investment nature established according to law by foreign investors in China.

The existing laws， administrative regulations concerning foreign-invested enterprises and the Changes in the Shareholder Equities of Foreign-invested Enterprises Several Provisions shall apply to Equity Merger and Acquisition of foreign-invested enterprises in China by foreign investors. Matters not covered therein shall be handled by reference to these Provisions.

Article 25　Merger with and acquisition of enterprises of other areas of the PRC by investors from Hong Kong Special Administrative Region， Macao Special Administrative Region or Taiwan area shall， mutatis mutandis， be handled in accordance with these Provisions.

Article 26　These Provisions shall be implemented as of 12 April 2003.