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By Susan Ning, Huang Jing and Shan Lining

On March 4 2011, just one day before the implementation of the national security review mechanism1, the Ministry of Commerce (MOFCOM) released the MOFCOM Interim Rules for Implementation (Interim Rules). These Interim Rules came into effect on 5 March and are set to expire on 31 August 2011.

The Interim Rules provide more details in relation to how the national security review process is initiated, documents to be submitted and more details the initiation of a national security review, the required documents, and the review decisions.
 Continue Reading MOFCOM issues national security review interim rules

By Susan Ning, Yin Ranran, Huang Jing

There have been concerns about Chinese government’s foreign investment policy ever since the State Council announced the formal establishment of the national security review ("NSR") regime in China.  At a press conference of the Fourth Session of the 11th National People’s Congress held on March 7, 2011, China’s Minister of Commerce Chen Deming reiterated that China’s "opening-up" policy will remain unchanged.  According to Chen, whereas China is in the process of further opening up to the world, introducing the NSR regime ensures that national security concerns will be addressed in a transparent manner and it is in line with international practice. 

The NSR regime is not particular to China.  The United States first instituted the NSR process in the 1980s.  Other jurisdictions, such as Australia, Germany, Canada, also have similar processes (see our article entitled More on China’s national security review regime – the American regime vs the Chinese regime).  Through our research, we find that during the past few years, the following contemplated outbound investments by Chinese companies underwent the NSR process:Continue Reading List of Outbound Investments by Chinese Companies Scrutinized for National Security Concerns

By Yuan Min, Wang Jianzhao , and Kirby Carder, King & Wood Insurance Department, Beijing Office

Last Sunday during a press conference held during the National People’s Congress, China Insurance Regulatory Commission (CIRC) Chairman Wu Dingfu announced that the CIRC is currently creating its policy for the use of insurance premium funds to invest government subsidized affordable housing projects. He specifically stated that China does not have a legal barrier to insurance companies investing insurance funds in affordable housing projects, and he also said that the CIRC plans making Shanghai the first city where this is possible. However, he cautioned that the main priority in insurance fund investment must still be risk management because any investments must provide a return so that an insurance company’s duty to pay its policyholders claims can be met.Continue Reading The China Insurance Regulatory Commission has Announced that it will Pilot Allowing Insurance Funds to Invested in Affordable Housing Development Projects in Shanghai

By Yuan Min, Wang Jianzhao , and Kirby Carder, King & Wood Insurance Department, Beijing Office

During a press conference held last week during the National People’s Congress, China Insurance Regulatory Commission (CIRC) Chairman Wu Dingfu annouced that the the CIRC will set up an insurance exchange in Shanghai as part of the Chinese government’s goal of making Shanghai an international finance center. This official announcement shows that the CIRC is serious about setting up an exchange. Yet, at present this announcement probably should just be considered a statement of their intentions because the CIRC did not offer any details on what the purpose of that exchange will be or who will participate in that exchange.Continue Reading The China Insurance Regulatory Commission has Announced that it will Create a Pilot Insurance Exchange Project in Shanghai

By Susan Ning, Liu Jia and Angie Ng

In March every year, lawmakers and political advisers from the National People’s Congress (NPC) (Chinas equivalent of Parliament) and the Chinese People’s Political Consultative Committee (CPPCC) (China’s top advisory body) conduct sessions in Beijing to take stock of social, legal and economic issues in China for the preceding year; and discuss objectives (in relation to the same issues) for the year going forward1.    These sessions are often referred to as the "two sessions".

Two statements which have arisen during these two sessions; are of particular interest (from an antitrust law perspective):
 Continue Reading The annual “two sessions” and antitrust law noises

By Yuan Min, Wang Jianzhao , and Kirby Carder, King & Wood Insurance Department, Beijing

On February 18th, 2011 the China Insurance Regulatory Commission ("CIRC") Chairman Wu Dingfu made an announcement that the CIRC will be focusing more attention on regulating bank assurance based insurance policy sales. He noted that insurance purchasers are being given misleading advice about the best insurance policies for for their needs when they are consulting with insurance agents at Chinese banking institutions. The Chairman stated that protecting insurer purchasers interests is one of the CIRC important interests, and is one of the cornerstones to the sustained growth of the Chinese insurance industry.Continue Reading The China Insurance Regulatory Commission has Announced that it is Requiring its Local Offices to Issue Written Instructions for its Enforcement Staff to Reduce Illegal Activities in Bank Assurance Insurance Policy Sales

By King & Wood’s Trademark Practice

The Law of the Application of Law for Foreign-related Civil Relations of the People’s Republic of China was promulgated on October 28, 2010 and will come into force on April 1, 2011. The new law absorbs the latest achievements of the research and legislation in the field of the private international laws, which is widely viewed as having reflected the contemporary legislation ideas and incorporated innovative rules, and the issuance of this law would have accomplished the systemization and modernization of the conflicting rules concerning foreign-related relations in Chinese legislation system.Continue Reading China’s New Foreign-Related Civil Relations Law Harmonizes Conflicting Rules

By Susan Ning, Angie Ng and Shan Lining

On 3 February 2011, China’s State Council released a notice which governs a national security review process for foreign acquisitions of domestic companies1.   This national security review process will be implemented on 5 March 2011.

Since the release of the notice, there has been a flurry of articles and commentaries in both the legal and business media circuit.  Foreign businesses who wish to invest in China are concerned that this is potentially another tedious clearance process (on top of the corporate, regulatory and antitrust clearance processes) to pass before they are free to close their proposed transactions.Continue Reading More on China’s national security review regime – the American regime vs the Chinese regime

By Susan Ning, Shan Lining and Angie Ng

On 5 March 2011, China will implement its first National Security Review (NSR) regime.  This NSR regime will govern foreign acquisitions of domestic companies.  The precise boundaries of this NSR regime has been set out in a notice (specifically, a Notice on Establishing National Security Review by Foreign Investors issued by the State Council1. ). 

We know, from the notice mentioned above that, broadly, a foreign-local transaction may only be caught if: (a) the foreign company acquires de facto control over a local company; and (b) the local company is involved in selling goods or services in relation to either national defense security or national economic security.  [Note that if a foreign company acquires a local company involved in selling goods or services in relation to national defense security, the threshold set out in (a) (i.e. de facto control) does not need to be established.  In other words, the transaction will come under the purview of the notice, despite there being no de facto control.]

This article outlines the above mentioned two thresholds (i.e. de facto control) and what is meant by national defense and national economic security in more detail.
 Continue Reading Will my transactions be subject to the new National Security Review regime?