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By Huang Jianwen King & Wood Mallesons’ Investment Group

huang_jianwenOn April 24, 2015, the newly amended Drug Administration Law of PRC (“Drug Administration Law”) was passed by the 14th session of the Standing Committee of the National People’s Congress and took effect on the day of promulgation. Previously the Drug Administration Law was amended twice, respectively in 2001 and 2013.

The 2015 revision amends or deletes Article 7, 14, 55, 89, and 100. The three highlights of the new Drug Administration Law are as follows:
Continue Reading Analysis of the revisions in the Drug Administration Law

By Huang Jianwen, King & Wood Mallesons’ Investment Group

huang_jianwenThe amended PRC Food Safety Law (the “2015 Food Safety Law”) is regarded by many in the media as the harshest food safety law in history. The liabilities of food safety violators are significantly increased under the new food safety legislation. Moreover, it establishes a new and more refined food safety regulatory system that gives food safety regulators broader and more robust supervisory powers. The 2015 Food Safety Law was passed by the Standing Committee of the National People’s Congress on April 24, 2015 and will take effect on October 1, 2015.
Continue Reading Selected Highlights of the Amended PRC Food Safety Law

By Zhang Baosheng, Liu Bin and Zhu Jinshu  King & Wood Mallesons‘ Dispute Resolution Group

张保生刘斌On 31 March, 2015, the Supreme People’s Court issued four model cases, including Shagang LLC. (Shagang) v. Kaitian LLC.(Kaitian), a case in relation to an objection to enforcement of a distribution plan. In the case, the Court has referred to the Deep Rock Doctrine originated from the United States, states for the first time that shareholders whose capital contribution is insufficient shall be subordinated to external creditors of the company with respect to their payable debts. The Deep Rock Doctrine, as a rule established in other jurisdictions, shall be applied and considered in China legal practice with prudence and comprehensive consideration.
Continue Reading When equities no longer equitable: applying the Deep Rock Doctrine in PRC

By Xu Ping Iris Feng and Feng Yuan King & Wood Mallesons’ Mergers & Acquisitions Group

xu_pingOn April 9, 2015, the State Council officially promulgated the Decision on the Bank Card Clearing Agencies Access Management (《关于实施银行卡清算机构准入管理的决定》) (the“Decision”), which will come into effect on June 1, 2015.

As a response to a WTO ruling that China must open its bank card clearing market, the long awaited Decision announces the opening of market to both domestic and foreign players.  As a result, China UnionPay, the only domestic bank card clearing agency for decades, will usher competitors, including international card companies, banks, as well as domestic third party payment agencies, who will be able to operate RMB-denominated bank card clearing business in the People’s Republic of China (the “PRC” or “China”).
Continue Reading New Bank Card Clearing Rules Heralds a Post-UnionPay Era

002Welcome to the third edition of Red Tape, King & Wood Mallesons’ quarterly review of global regulatory developments.

This edition covers the good, the bad and the ugly in terms of regulations affecting cross-border investment.

Download PDF version, please click here.

003Merger, Coalition and Recast

—King & Wood Mallesons released China Bulletin TMET Special Issue

Change has started and keeps on going on…

The unprecedented wave of the mobile internet has swept through traditional industry and marketplaces.

Through merger and coalition, the recasting of industries just goes on.

With this ongoing opportunity, King & Wood…

By Susan Ning, Hazel Yin, Al Wu, Sarah Eder and Lingbo Wei   King & Wood Mallesons’ Antitrust Group

NING, Susan (Xuanfeng)尹冉冉On 4 December 2014, the Provisions of the Ministry of Commerce on Imposing Additional Restrictive Conditions on the Concentration of Business Operators (for Trial Implementation) (hereinafter the “Provisions of Restrictive Conditions”) was officially enacted by the Ministry of Commerce of the People’s Republic of China (MOFCOM), based on its 2013 draft version (hereinafter the “2013 Draft Provisions”). Restrictive conditions in merger reviews are also referred to as “merger remedies”. Pursuant to Articles 28 and 29 of the Anti-monopoly Law (hereinafter “AML”), where a concentration of business operators will or may eliminate or restrict competition, MOFCOM may decide to attach restrictive conditions to its clearance decision in order to reduce the adverse impacts on competition. MOFCOM has given conditional clearance in 24 cases since AML came into effect. Given that the imposition of restrictive conditions on proposed transactions may impact heavily on the parties and the nature of the transaction, even altering the relevant market and development of the relevant industry, the publication of the Provisions of Restrictive Conditions will be of great significance not only to the merger review process, but also to the business decisions of the relevant companies.

The Provisions of Restrictive Conditions came into effect on 5 January 2015. At the same time, MOFCOM’s Interim Regulations on Implementing the Divestiture of Assets or Businesses in Concentrations of Business Operators dated 5 July 2010 (hereinafter “the Regulations on Divestiture”), were repealed. The Provisions of Restrictive Conditions will become an important reference point for the enforcement of restrictive conditions. The Provisions of Restrictive Conditions contain 7 chapters addressing restrictive covenants, including when such covenants will be imposed, the mechanisms for supervising their implementation, the consequences of failing to comply, the procedure for amending them and when the obligations will come to an end .
Continue Reading Developments to the Merger Control Regime in China: MOFCOM’s Provisions on Imposing Additional Restrictive Conditions on Concentrations of Business Operators (for Trial Implementation)

By King & Wood Mallesons Oil & Gas Team

The Catalogue of Industries for Guiding Foreign Investment (2015 Revisions) (NRDC & MOFCOM Order No. 22) (《外商投资产业指导目录（2015年修订）》〔国家发展和改革委员会、商务部令第22号〕) (“2015 Catalogue”), issued by the National Development & Reform Commission (“NDRC”) and the Ministry of Commerce (“MOFCOM”), takes effect April 10, 2015, and revises some investment categories affecting the oil & gas sector. Among these revised categories are those affecting investments involving enhanced oil recovery technology (“EOR”), as well as seismic companies, drilling contractors and well service providers. In addition, other changes appear to further clarify that investments into shale and other unconventional oil & gas projects are governed by the same rules and restrictions as those applying to conventional oil & gas investments.
Continue Reading Changes to PRC FDI policy affecting the oil & gas industry

By King & Wood Mallesons’ Dispute Resolution Group

Over the past few years, revolving trade crises have frequently occurred in China, such as the steel trade crisis in 2011 in Southern China and the financing fraud case in Qing Dao last year. In these cases, many large state-owned enterprises were caught in crises of revolving trade. In particular, the Qingdao Port Case attracted worldwide attention.

With our previous legal practice experience in these cases, we discuss the relevant issues regarding revolving trade and treatment methods for enterprises.
Continue Reading The risk and treatment of revolving trade

By Wang Peng and Chen Shaozhu King&Wood Mallesons’ Securities Group

wang_pengThe potential for the development of equity-based crowd-funding under the current legal framework

Similar to P2P lending (peer-to-peer lending), equity-based crowd-funding is a kind of public capital raising. Equity-based crowd-funding is a collective effort to provide finance in support of third party projects with a certain portion of equity as reward, incentivizing investors by allowing them a piece of the pie in a budding startup. Crowd-funding is the practice of raising money from the public and is subject to relevant laws governing fundraising, such as The Securities Law, the Criminal Law and various interpretations and opinions on the handling of criminal cases involving illegal fundraising (Fundraising Regulations) by the Supreme People’s Court and other organs.  Equity-based crowd-funding generally involves the transfer of equity in corporations, and is also regulated by the Corporate Law and other relevant regulations.
Continue Reading Equity-based Crowd-funding and its Supervision in China Today