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When you’re doing business in China, you need insight from local experts and know-how you can trust. You need market standard agreements that you know work under Chinese law and up-to-date guidance to help you manage risk.

Practical Law China is a new online know-how service from Practical Law, the leading provider of know-how to lawyers worldwide. It brings together the expertise of our team, all former lawyers at top firms and companies around the world, with insight and guidance from leading Chinese and International law firms.

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"I have always considered Practical Law resources to be of the highest quality. I particularly like their plain English approach, which is of critical importance in China."

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Practical Law China

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Take part in Practical Law China’s benchmarking survey on market practice on choice of governing law in China-related contracts.

China resources are organised into practical toolkits to help you carry out common transactions

From establishing a business in China to international M&A and boilerplate commercial agreements, our China toolkits will help you work smarter and mitigate risk when carrying out transactions with Chinese counterparties. Each toolkit provides a series of practical resources, including standard documents and clauses, checklists and practice notes.

About Practical Law China

The best way to experience Practical Law China is to try it

"I have always considered Practical Law resources to be of the highest quality. I particularly like their plain English approach, which is of critical importance in China."

- Robert Lewis, International Managing Partner, Zhong Lun Law Firm

Practical Law China

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Take part in Practical Law China’s benchmarking survey on market practice on choice of governing law in China-related contracts.

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Practical Law resources are created and kept up-to-date by our team of expert legal editors

Standard documents and clauses

Start from a template you can trust with more than 100 international market standard documents and clauses, localised to work under Chinese law

View extract:

Post-acquisition WFOE Articles of Association: China

These articles of association (Articles) for a wholly foreign-owned enterprise (WFOE) are not based on a Practical Law document and do not use Practical Law boilerplate. Instead, they adopt the general structure and format of templates promulgated and recommended by the PRC Ministry of Commerce (MOFCOM), which reflect certain requirements of applicable Chinese law as well as the customary expectations of approval authorities.

These post-acquisition WFOE Articles retain the same structure and much of the content of the standard WFOE Articles. Many clauses of the WFOE Articles are required under the Law of the People's Republic of China on Wholly Foreign-Owned Enterprises 2000, the Regulations for the Implementation of the PRC WFOE Law 2001, and the Company Law of the People's Republic of China 2005. Other clauses of the Articles derive from the template Articles issued by MOFCOM and are customarily included.

These WFOE Articles are designed for use in connection with the acquisition by a foreign investor of 100% of the equity interests in a target Chinese company. Under Article 2 of the Provisions on Mergers & Acquisitions of a Domestic Enterprise by Foreign Investors 2006 (amended 2009) (2006 Cross-Border M&A Provisions), on completion of such an acquisition, the target Chinese company is to be converted from a purely domestic entity to a foreign-invested enterprise (FIE). If the foreign investor acquires all of the equity in the target Chinese company, then the target is converted into a WFOE. If the foreign investor acquires less than all of the equity in the target Chinese company, then the target is converted into an equity joint venture (EJV) or (less commonly) a co-operative joint venture (CJV) (see Country Q&A, Structures: China: International Joint Ventures).

Acquisition of all of the equity in a Chinese target is permitted only in cases in which the Chinese Foreign Investment Catalogue permits a wholly foreign-owned structure in the given industry. In respect of foreign direct investment in China, foreign investors generally prefer a WFOE to either type of joint venture, but in the context of a cross-border acquisition of an existing Chinese company, this is a matter which will be subject to negotiation between the parties and the particular dynamics of the transaction.

The establishment of a WFOE (or any FIE) requires the preparation and submission for approval of a package of documents relating to the investor together with preliminary approvals from a number of regulatory authorities, some of which are common to all FIEs, while others are specific to the industry in which the WFOE will engage.

Practical Law China and Zhong Lun Law Firm
Contents
Hide Note: About this documentNote: About this document
About this document
About this document

The wholly foreign-owned enterprise (www.practicallaw.com/2-522-0166) (WFOE) articles of association (Articles) is one of the fundamental documents used in Chinese foreign direct investment (www.practicallaw.com/4-524-1926) (FDI) practice and dates from the mid-1980s, when the Chinese legislature, the National People's Congress (www.practicallaw.com/8-522-0291), adopted the first Wholly Foreign-Owned Enterprise Law in 1986.

Originally, use of WFOEs was restricted to high-tech industries and export-oriented businesses. Once those restrictions were relaxed in the late 1990s, WFOEs quickly became the preferred foreign investment vehicle in China and remain so to date, if permitted. Foreign ownership is still restricted in some industry sectors. Investment restrictions are set out in the Catalogue for the Guidance of Foreign Investment Industries 2011 (www.practicallaw.com/6-523-4406) (2011 Foreign Investment Catalogue). If restrictions are imposed, the investor may want to consider finding a suitable Chinese partner and entering the industry using an equity joint venture (EJV) or co-operative joint venture (CJV) structure (for more information, see Article, China's new foreign investment catalogue comes into effect (www.practicallaw.com/8-517-7264)).

This standard document, for the establishment of a WFOE following a foreign investor's purchase of all the equity interests in a Chinese entity, has been adapted from the standard WFOE Articles of Association template issued by the Ministry of Commerce (www.practicallaw.com/1-522-0242) (MOFCOM) and its predecessor institutions. It reflects established market practice over more than two decades since the early period of China's economic opening, and also reflects the requirements of:

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Integrated drafting notes

Get guidance and practical tips on what you need to do differently in China. These detailed drafting notes flag up where law and practice diverge and where international counsel might expect to get push-back from Chinese counterparties

View extract:

Due diligence information request: China

Contents
Hide Note: About this documentNote: About this document
About this document
About this document

Purpose of document

This standard document contains a set of long-form legal due diligence enquiries for use in China in the acquisition of the following (among other entities):

This document has been adapted from Standard document, Legal due diligence information request: long form: share purchases (www.practicallaw.com/7-200-3932).

How will this document help you?

International companies and financial institutions may instruct either a local Chinese law firm or the China office of an international law firm (acting alone or in co-operation with a local Chinese law firm) to conduct the due diligence process. It is becoming increasingly common for international companies and financial institutions to instruct (either directly or indirectly) local Chinese law firms to take a lead or an important supporting role in the due diligence process, in whole or in part. This is not only due to cost considerations but also to the greater on-the-ground resources available in multiple locations across China in the larger Chinese law firms.

Financial and tax due diligence is very often undertaken by accounting firms rather than law firms. Given the regulatory risks associated with China acquisitions, particularly arising from foreign legislation such as the US Foreign Corrupt Practices Act 1977 (www.practicallaw.com/6-501-6309) (FCPA) and the UK Bribery Act 2010, it is important that counsel remain closely engaged in overseeing the due diligence process.

A significant percentage of due diligence exercises concerning domestic Chinese target companies will generally disclose certain problems involving technical non-compliance with applicable legal requirements, including:

  • Problems with land use rights (www.practicallaw.com/2-522-1948) and building ownership rights.

  • Problems with government approvals and licences for business operations.

  • Pollution discharge exceeding environmental requirements.

  • Improper or unregistered loans.

  • Labour, social insurance, as well as health and safety matters.

  • Improper or suspicious payments or methods of doing business.

Further, documentation for procurement, supply, licensing and other transactions undertaken by many Chinese target companies tends to be fragmentary, particularly when they are intra-group. Gaps often exist in the corporate records of affiliates in the target company's group. These issues reflect the divergence between legal requirements and practice and are often matters that can be rectified as a condition to closing.

The corporate records of foreign-invested target companies in China tend to be more complete with fewer compliance gaps. However, some foreign-invested target companies operating in industry sectors that are subject to restrictions on foreign investment use nominee shareholder and other similar arrangements in an effort to circumvent these restrictions. These arrangements entail additional regulatory and practical risks that require careful analysis and assessment.

It is not unusual for some Chinese domestic target companies to fail to provide the full set of requested due diligence documents or even all basic due diligence documents in response to an initial document request. This is due in part to the lack of familiarity on the part of many Chinese domestic target companies with the purposes of due diligence in the context of an acquisition transaction. However, it is also due to the fact that in many Chinese domestic target companies document control systems are often weak. In many cases there is no single repository within the organisation for all of the documents included in the due diligence document request. In some cases it will be necessary to send a team in advance of the due diligence process to the target's premises to talk through the document request with the relevant department managers so that the requested documents can be collated. It is not uncommon for due diligence in China to require several successive rounds of requests, document reviews, management interviews and follow-up requests for supplemental documents and written or verbal clarifications.

Equity interests in Chinese target companies

The vast majority of domestic companies and foreign-invested companies in China do not issue shares. Instead, equity interests in such companies take the form of "registered capital", which is the amount of capital contributed by the shareholders and registered with the relevant government departments. For these companies, the concepts of issued and authorised capital, preferred and common shares and so on are not applicable. Further, transfers of and other changes to registered capital will always require registrations and approvals of relevant government departments. By contrast, Chinese domestic companies limited by shares (including publicly listed companies) and foreign-invested companies limited by shares do issue shares, and the transfer of these shares is subject to fewer restrictions. However, the acquisition by a foreign party of either shares or registered capital of a purely domestic Chinese target company will still be subject to the Provisions on the Merger or Acquisition of Domestic Enterprises by Foreign Investors 2009 (www.practicallaw.com/7-521-4846) (2009 M&A Regulations) and related laws and regulations. These will trigger approval and registration requirements and the conversion of the target into a foreign-invested company with registered capital. See Country Q&As:

Introduction

We are making this information request to assist our legal due diligence review in connection with the proposed purchase by [FULL COMPANY NAME] (Buyer) of [the entire OR [PERCENTAGE]% of the] registered capital of [FULL COMPANY NAME IN ENGLISH AND CHINESE] (Company) from [FULL COMPANY NAME IN ENGLISH AND CHINESE] (Seller) [agreed to be purchased under [heads of terms OR memorandum of understanding OR letter of intent] dated [DATE]] (Transaction).

Where the Company has subsidiaries or affiliated companies (together, Company's Group), please treat any request for information relating to the Company as applying to each of member of the Company's Group.

When supplying replies and copy documents in response to this information request, please comply with the following guidelines:

  1. Provide the appropriate documents or information, or an appropriate negative statement, as soon as is practicable.

  2. Do not wait until you have collected all the requested documents and information before responding to us; where you are unable to provide some answers or documents immediately, simply mark the response to the corresponding question "to follow", and answer the remaining questions.

  3. Provide a written response where the documents do not clearly explain the position.

  4. Where you are uncertain of the scope of any question, or the relevance of any information or document, please provide as much information as you can. Please work on the basis that we would rather be provided with too much rather than too little information.

  5. Where appropriate, differentiate between information that is of significance to the operation of the business of the Company and the Company's Group and information that is of low importance.

  6. Where the same information or document is supplied in response to two or more different questions, you need not repeat your response if all appropriate cross-references are made.

  7. Regularly update your responses as more information becomes available or if subsequent events make any existing response inaccurate.

  8. Provide the documents requested in lever-arch files with an index, using the same headings and numbering adopted in this information request.

[To assist in our legal review we may hold interviews with the Company's management.]

This is an initial request for information and we may ask for further information in due course.

Responses to this information request are not disclosures for the purposes of any warranties in the legal documents relating to the Transaction.

[NAME OF BUYER'S LAWYERS]

[DATE]

Please provide the information and copy documents requested below.

1. CORPORATE STRUCTURE AND RECORDS

Hide Note: Corporate structure and recordsNote: Corporate structure and records
1. Corporate structure and records
Corporate structure and records

The exact corporate documents that a company is required to have depends on various factors such as:

  • Business sector.

  • Type of company.

  • Geographic location.

Important issues to keep in mind are:

  • It is not unusual for Chinese domestic companies to undergo significant changes in name, ownership, business scope, and location but to fail to comply with administrative formalities when doing so. A historical review of this basic company information is therefore necessary. Foreign investment enterprises generally have a better record of compliance.

  • The Chinese economy is highly regulated, and therefore it is not unusual to discover in due diligence that the target company has failed to obtain required permits or approvals for its business operations, or that the approvals have not been given at the proper level.

  • Abuse of company powers of attorney in favour of a company executive or their friends and relations is not uncommon.

1.1 Details of the following current [and historical information] in relation to the Company together with related corporate documents:

(a) full company name;

(b) the following corporate documents:

(i) business licence (original and duplicate);

(ii) project proposal, feasibility study report, and related government approvals (if relevant);

(iii) approval reply and approval certificate (if relevant); and

(iv) capital contribution report and capital verification report;

Hide Note: Capitalisation requirements and documents for Chinese domestic companiesNote: Capitalisation requirements and documents for Chinese domestic companies
1.1(b)(iv) Capitalisation requirements and documents for Chinese domestic companies
Capitalisation requirements and documents for Chinese domestic companies

Capitalisation requirements

The Company Law of the People's Republic of China 2005 (www.practicallaw.com/7-521-4766) (2005 Company Law) has capitalisation requirements for domestic Chinese companies that differ in part from those for FIEs. However the documentation requirements are the same.

Article 26 of the 2005 Company Law requires the investors in a domestic company to make an initial contribution to a company's registered capital of no less than 20% of the amount stated in the business licence (unless special regulations stipulate a lower percentage of the company's registered capital). Alternatively, the investors can make an initial contribution of no less than the statutory minimum (usually, the statutory minimum amount of the registered capital for a limited liability company is RMB30,000 and RMB5 million for a company limited by shares). For FIEs, the investors must make an initial contribution of at least 15% of the approved amount of registered capital.

The shareholders of a domestic company are required to fully capitalise the company within two years of the date of establishment, while for a domestic investment company, the deadline is five years. For FIEs, the deadline for capitalisation is generally also two years, but the required capitalisation schedule depends on the size of the company. The capitalisation schedule must be detailed in the joint venture contract (if relevant), articles of association and other incorporation documents.

Documenting capitalisation

The 2005 Company Law and other Chinese legislation have specific requirements concerning the documents for capitalisation. The company itself must issue a capital contribution certificate to the investor that made the contribution (Article 32). These certificates are not transferable. Additionally, the company must retain a certified public accountant registered in China to verify the capital contributions made and issue a capital contribution report ( a formal report verifying the amount and nature of the capital contributions) (Article 29). Different types of contributions have different types of documentary requirements:

  • For cash contributions, the auditor typically will require evidence that cash has been deposited to the account of the entity.

  • In-kind contributions are subject to valuation.

  • Only tangible assets and intellectual property rights (not merely licence rights) can be contributed as capital.

(c) any approvals, certificates or permits for special industries or business activities (such as banking, telecom, pharmaceutical licences);

Hide Note: Special operating licences in ChinaNote: Special operating licences in China
1.1(c) Special operating licences in China
Special operating licences in China

For many categories of business (the range of which is about 100), a special operating licence issued by the relevant industry regulatory body is required in addition to the business licence with an appropriate approved business scope. Examples of business areas that require separate industry operating licenses include:

  • Food manufacturing.

  • Pharmaceuticals.

  • Agricultural seeds.

  • Telecommunications.

  • Banking.

  • Insurance.

  • Engineering and construction.

In many cases, these operating licences are issued in a separate application process after the entity business licence has been issued. Depending on the regulatory framework, the industry regulator sometimes issues a preliminary approval before the entity is established. In many cases, a change in ownership, and more specifically, the introduction of an element of foreign ownership, will trigger a requirement to reapply for a new operating licence. In a foreign acquisition of all or part of the equity of a domestic target company, the target company must be converted into a WFOE or an EJV (or a CJV), which requires the issuance of a new business licence for the new entity form, and that converted entity will generally also need to reapply for relevant operating licences in its own name.

Any restrictions in a given industry sector on direct foreign investment will similarly apply to foreign acquisitions of equity interests in a domestic Chinese enterprise. See Country Q&A, Share acquisition documents: China: International Acquisitions (www.practicallaw.com/2-107-4616).

(d) registered address and locations within China and abroad, including a branch, representative office, as well as related approvals and registrations;

Hide Note: Operating locations for businesses in ChinaNote: Operating locations for businesses in China
1.1 Operating locations for businesses in China
Operating locations for businesses in China

The establishment of a branch of a company requires additional documentation. It must be registered with the relevant local office of the State Administration for Industry and Commerce (www.practicallaw.com/0-522-0313) (local AIC), which issues a business licence to the branch. A branch can engage in business operations, but the branch must operate within the business scope of the company setting up the branch.

(e) registered capital and whether fully contributed and total investment (if applicable);

Hide Note: Total investment amountNote: Total investment amount

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Practice notes

Understand the law and how it applies in practice with clear and detailed how-to guidance to support foreign investment activity in China

View extract:

Governing law clauses in China-related commercial contracts

An overview of the restrictions Chinese law imposes on choice of governing law, including the basic rule for foreign-related contracts and when foreign law can be chosen. The note also considers the exceptions to the foreign-related contract rule and the specific contracts that must be governed by Chinese law.

Jessica Fei, Briana Young, Fang Wu and Chris Chung, Herbert Smith Freehills
Contents

This note looks at the choice of governing law in China-related commercial contracts, including, among other things, the Chinese regulatory framework and the consequences of failing to agree a governing law clause. New legislation related to governing law was adopted in China in 2010, which in part changes the approach to these issues.

To help you understand this change in approach, this note gives the basic rule for foreign-related contracts and the four conditions under that rule, one of which a contract must satisfy to be considered a foreign-related contract. A list of the seven contracts that must be governed by Chinese law is also included.

For public policy reasons foreign law cannot be the governing law under two circumstances, which are listed, along with a list of the legislative areas involving Chinese social public interest that cannot be excluded by the choice of foreign law.

In this note, "China-related" is used to refer to contracts where either:

  • One of the parties is an entity incorporated or organised in mainland China or is an individual with mainland Chinese nationality.

  • Part or all of the contract is to be performed in mainland China or has its subject matter within mainland China (for example, an asset purchase or construction project in mainland China).

"China-related contract" is not a Chinese legal term, but reflects common usage among lawyers.

This note only considers commercial contracts that are negotiated between parties. It does not consider consumer or standard form commercial contracts.

Restrictions imposed by Chinese law on choice of governing law

In the last few years, China has updated and consolidated its legislation on conflict (choice) of law issues. The rules, as explained below, are now more harmonised with international legislation, while continuing to protect Chinese national interests.

Foreign-related contracts: basic rule

The basic rule under Chinese law is that parties may choose a foreign governing law if the contract is "foreign-related", as defined under Article 126 of the Contract Law of the People's Republic of China 1999 (1999 Contract Law) and related legislation.

To be foreign-related, a contract must meet at least one of the following four conditions:

  • At least one of the parties is a foreign individual, foreign entity or stateless person. This is determined by place of incorporation or registration for companies and other entities, and by nationality for individuals. Companies incorporated in Hong Kong, Macau and Taiwan are treated as foreign for the purposes of this rule. Although foreign-invested enterprises (FIE) (外商投資企業) (www.practicallaw.com/6-521-9509) set up in mainland China, such as joint ventures and wholly foreign-owned enterprises (WFOE) (外商獨資企業) (www.practicallaw.com/2-522-0166), are wholly or partially foreign funded, they are Chinese legal persons because they are incorporated in China.

    Regarding individuals, mainland Chinese citizens are not considered foreign unless they have permanent residency abroad. However, citizens of Hong Kong, Macau and Taiwan are treated as foreign under Chinese civil law. Non-mainland Chinese citizens are always foreign. Stateless individuals are also treated as foreign.

  • The subject matter of the contract is outside mainland China. This is determined by the location of the subject matter of the contract. For example, if two Chinese parties contract to purchase land outside mainland China, the contract is foreign-related and may be governed by foreign law. Conversely, if the foreign connection is merely incidental to performance, it is unlikely that the contract will be considered foreign-related. For example, a contract to build a factory in China is not foreign-related under this heading even if the factory is intended to produce goods for export trade.

  • The occurrence, modification or termination of the civil legal relationship between the parties occurs outside mainland China. If a contract is executed, amended or terminated outside mainland China, this may satisfy the "occurrence, modification or termination" test, with the result that it would be regarded as foreign-related.

    However, parties seeking to rely solely on this condition must generally show that they have a legitimate commercial reason for executing, amending or terminating a contract outside mainland China. Due to the difficulty in determining what would be sufficient in this respect, this third test is not used as frequently as the first two. The Chinese courts will refuse to treat a contract as foreign-related if they believe that the parties are relying on this condition purely to avoid Chinese law governing the contract. For example, if two Chinese parties meet in Hong Kong to execute or terminate a contract performed in China and select foreign law on that basis, it is likely that a Chinese court would disregard that selection (Article 11, Interpretation of the Supreme People's Court on Certain Issues Concerning the Application of the "Law of the People's Republic of China on the Application of Laws to Foreign-Related Civil Relations" (I) 2012 (2012 Foreign-Related Civil Relations Interpretation) and Article 304, Opinions of the Supreme People's Court on Some Issues Concerning the Application of the Civil Procedure Law of the People's Republic of China 1992 (www.practicallaw.com/2-521-5396)).

  • The habitual residence of a party or both parties concerned is outside mainland China. This is a new condition, added by the 2012 Foreign-Related Civil Relations Interpretation, which took effect on 1 July 2013. The meaning of "habitual residence" differs depending whether a natural person or a legal person is concerned. The habitual residence of a company or other legal person is the jurisdiction in which it has its principal place of business (Article 14, Law of the People's Republic of China on Application of Laws to Foreign-Related Civil Relations 2010 (2010 Foreign-Related Civil Relations Law)).

    The habitual residence of an individual is the place where he has resided continuously for at least one year and that forms the centre of his life when the foreign-related civil relationship is established, changed or terminated (Article 15, 2012 Foreign-Related Civil Relations Interpretation). An example is a commercial contract with a Chinese company founder who has emigrated to Hong Kong and has residency but is not yet a permanent resident. There is an exception for places where the individual receives medical treatment, goes on secondment (labour dispatch) or performs public services.

Counsel drafting or reviewing a governing law clause should consider the above conditions carefully, taking into account the facts of the transaction in question.

Choosing foreign law

In commercial practice it is not uncommon for English law, for example, to be chosen as the governing law of an agreement, even if neither party is English. However, this arrangement was sometimes challenged by Chinese courts that were not familiar with international commercial practice. Article 7 of the 2012 Foreign-Related Civil Relations Interpretation upholds international commercial practice by confirming that contract parties may select the law of any jurisdiction, even where it is unrelated to their contract. A contract between a Canadian party and Chinese party, for example, can be governed by English law or Hong Kong law (or any other foreign law), unless the contract falls into one of the exceptions below.

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Checklists

Understand the law and how it applies in practice with clear and detailed how-to guidance to support foreign investment activity in China

View extract:

China merger filing checklist

A checklist of the key actions parties must undertake when preparing for a People's Republic of China (PRC) merger filing. The checklist is prepared by reference to the PRC merger notification form (MNF) promulgated by the Chinese Ministry of Commerce (MOFCOM), China's merger control authority in July 2012. The checklist looks at the preliminary assessment, early preparation for a merger filing through information collection and preparation of the MNF. The MNF should be submitted to MOFCOM for a decision and the checklist considers the tasks that should be completed between case docketing and decision.

Practical Law China

This checklist looks at the key steps a party should take when preparing for a People's Republic of China (PRC) merger filing. It is important to plan for PRC merger filings as early as possible and this checklist provides guidance on preparing for the preliminary assessment. It looks at information collection and preparation of the PRC merger notification form (MNF). The MNF should be submitted to the Chinese Ministry of Commerce (中华人民共和国商务部) (www.practicallaw.com/1-522-0242) (MOFCOM) as soon as possible and the checklist provides information on the tasks to be completed between case docketing and MOFCOM's decision.

For an overview of Chinese anti-monopoly law, see Country Q&A, Competition law in China: overview (www.practicallaw.com/5-500-8611).

Preliminary assessment

As China has become a key merger control jurisdiction for global mergers and acquisitions (M&A) and joint venture transactions, it is important to plan for China merger filings as early as possible.

Identify an internal legal team to work on the preliminary assessment, supported by external counsel as required.

Make a preliminary assessment on the following issues:

  • Notifiablity of the contemplated transaction.

  • Potential competition concerns.

  • Prospect and timeline of PRC merger clearance.

Collect the information required to support the preliminary assessment, including:

  • Basic deal structure.

  • Turnover of the parties concerned.

  • Products and territories concerned.

  • Major market players and their market shares.

Obtain advice from local PRC counsel regarding the impact of Chinese merger control legislation on relevant deal clauses such as conditions precedent and long stop dates.

In an auction sale, whether a PRC merger filing will be required and the likelihood of receiving unconditional clearance from MOFCOM are among the key factors in first round bids assessment so it is important for the parties to be able to take a confident position on these issues from the outset.

A pre-filing consultation procedure has been made available for the transaction parties to obtain greater clarity about the notifiability of any specific operation and other substantive or procedural issues in connection with the merger review. MOFCOM is generally cautious and often advises that operations must be notified unless it is comfortable with the positions taken by the notifying parties.

Information collection and groundwork

If a PRC merger filing is necessary, due to the lead time required between submission of the MNF and MOFCOM's decision, it is important to undertake preparation at least five to six weeks before the likely signing of the deal.

Organize a dedicated and well co-ordinated corporate task force comprised of appropriate business, marketing or finance staff, as well as external consultants.

Prepare a customized information collection questionnaire based on the requirements of the MNF:

  • Organisational information.

  • Transaction related information.

  • Competition analysis related information.

  • Compliance related information.

  • Administrative documents.

Assign the collection tasks to different responsible parties based on the nature of the information requested. Prepare a project timeline, work streams list or group contact list to facilitate the work process and communications.

Prepare follow-on questionnaires if required after reviewing the initial information collected.

Leverage the information collected during the transaction from the following channels to streamline the MNF information collection process:

  • Preliminary assessment.

  • Legal due diligence.

  • Public sources.

  • Company's previous filings.

Cite the original data source of any market or business figures provided. MOFCOM tends to give more weight to data from public sources during the merger review process.

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China Glossary

Demystify Chinese legal language with clear definitions for nearly 100 commonly-used Chinese legal terms, regulatory authorities and types of agreement, in English and written Chinese

View extract:

Chop (seal) (扒(封))

All Chinese government authorities, institutions, and companies have an official chop or seal, the use of which binds the organisation legally. An impression of the chop must be registered with the public security authorities. The making of an entity's chop is closely regulated. Chops are used in addition to and sometimes instead of the signature of the legal representative (www.practicallaw.com/4-522-0033). In addition to its official chop, a company generally also has both a finance and a contract chop. The legal representative has a personal chop, which is also registered with the public security authorities and local Administration of Industry and Commerce (www.practicallaw.com/0-522-0313) (AIC). Prudence dictates strict controls over the use of company chops to prevent fraud.

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Legislation

Delve deeper and examine local law for yourself with integrated links to up-to-date legislation on Westlaw China*

*You will need a subscription to access content on Westlaw China.

China country Q&As

Q&A overviews to help you get up to speed on the essentials of Chinese law, fast. Overviews are written in clear, plain English by leading lawyers from international law firms and come with an innovative Q&A comparison tool so you can instantly compare the law in China with that in other jurisdictions. China country Q&As are part of Practical Law multijurisdictional guides and are available to all Practical Law subscribers.

About Practical Law China

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"I have always considered Practical Law resources to be of the highest quality. I particularly like their plain English approach, which is of critical importance in China."

- Robert Lewis, International Managing Partner, Zhong Lun Law Firm

Practical Law China

We want to hear from you

Take part in Practical Law China’s benchmarking survey on market practice on choice of governing law in China-related contracts.

Our team of experts put their years of experience at your service

Sophie Cameron

Sophie Cameron is Head of Practical Law China. Sophie was an editor for a magazine publisher before training as a solicitor in Freshfields Bruckhaus Deringer's London office, where she qualified into the litigation department and completed a secondment to Reuters’ legal department. Sophie subsequently moved to the employment department of Bates, Wells & Braithwaite, where she specialised in contentious and advisory employment work for individuals and charities and regularly appeared in the employment tribunal.

Sophie was also a Visiting Research Fellow at the Fawcett Society in 2005 and co-authored a report on the reform of gender equality legislation. Sophie joined Practical Law in 2004 to scope and launch the UK Employment service. In 2008 she oversaw the creation of the UK Public Sector service. Sophie has been managing our China service since its inception.

Sophie studied at Cambridge University, City University and the College of Law. Sophie is currently a non-practising solicitor.

Susan Finder

Susan Finder is Practical Law China editor. Susan has more than 20 years of experience in the international Asian legal market, as an academic and as a corporate and commercial law practitioner.

Susan spent ten years in the China Business Group at Freshfields Bruckhaus Deringer in Hong Kong. She also worked at Heller Ehrman and Winston & Strawn in Hong Kong. She recently worked in the Policy and Support department of the Listing Division at the Hong Kong Stock Exchange where she oversaw a major corporate governance reform programme.

Susan taught for six years in the Law Department of the City University of Hong Kong. Prior to this she studied at Yale, Harvard and Columbia Universities and was a research fellow at Harvard Law School's East Asian Legal Studies Center.

Susan is admitted to the New York State Bar and District of Columbia Bar and is a Registered Foreign Lawyer in Hong Kong. In 2011 she was included on the panel of the China International Economic and Trade Arbitration Commission (CIETAC) arbitrators. Susan speaks Mandarin Chinese and Russian.

Peter Davies

Peter Davies is a Practical Law China editor.

Peter Davies joined the team in 2013 from Paul, Weiss, Rifkind, Wharton & Garrison, where since 2008 he had been an associate in the Hong Kong office. While there he advised on private equity investments and technology, media and telecoms M&A transactions in Greater China. Peter trained as a solicitor in London with Herbert Smith Freehills and also worked for two years as an associate in the M&A group at Dewey & LeBoeuf in London.

Peter is a regular speaker on the Hong Kong Venture Capital Association Private Equity Fundamentals training course. He has also delivered in-house training courses on aspects of PRC and Hong Kong law and on core skills for associates. Peter speaks fluent Mandarin and conversational Cantonese. He was admitted as a solicitor in England and Wales in 2006 and in Hong Kong in 2011 and is currently non-practising in both jurisdictions.

Jane-May Cross

Jane-May Cross is a Practical Law China editor. Jane-May trained and qualified with Reed Smith. In 2008, she joined Practical Law as an editor in the Cross-border department, managing projects such as the Life Sciences, Corporate Real Estate and Investment Funds multi-jurisdictional guides.

Jane-May was appointed a Practical Law China editor in September 2011. She speaks Cantonese, is learning Mandarin, is fluent in French, and holds a French law diploma.

Jane-May studied at the University of Leicester, Université Jean Moulin (Lyon III) and the College of Law. Jane-May is currently a non-practising solicitor. Jane-May is currently on maternity leave.

Sara Catley

Sara Catley is Head of Editorial - International Services. Sara trained at Slaughter and May and qualified into the tax group in 2001. She joined Practical Law in 2005 as an analyst writing on key market trends, noteworthy transactions and market practice developments across all practice areas. In 2008, Sara helped launch Practical Law’s US web services and then became head of Practical Law’s cross-border service and standalone financed content and directories businesses. Sara now leads Practical Law’s international subscription services, developing our international content and looking after the needs of our international customers. Sara is a non-practising solicitor.

Andre Brown

Andre Brown is Senior Commissioning editor. Andre joined Practical Law in 2004 as a research editor for the Which lawyer? directory and headed the team from 2008 until 2012. During this time, he had a strong focus on the Asia Pacific and Middle Eastern markets. Andre is now a Senior Commissioning editor and works with our contributors to create Practical Law resources, as well as developing and maintaining our contributor relationships.

Alice Gartland

Alice Gartland is a journalist, business consultant and lawyer, having trained and practised within the corporate department at Linklaters in London and Beijing. She is a regular contributor to a number of leading China-focused business and legal publications (both English and dual language).

Alice has advised clients on investment and commercial strategies for China and doing business in China generally, from intellectual property rights issues to creating an employees’ code of conduct. Her research and writing covers a range of legal and business development issues including: foreign direct investment, business law and human rights; Chinese investment in Central and Eastern Europe; and the role of women in the Chinese legal profession.

Alice speaks Mandarin, having studied at Tongji University in Shanghai, and holds a BA in East Asian Studies and an MA in Chinese and Business (distinction). Alice is writing market analysis pieces for Practical Law China. Alice is a non-practising solicitor.

Mike Jones

Mike Jones joined Practical Law China in September 2013 on secondment as an assistant editor, having previously worked as an assistant editor for the Media and Commercial teams and as a paralegal for the Tax, Private Client and Share Schemes & Incentives teams. He graduated in 2009 from University College London with a degree in ancient history. He completed the Graduate Diploma in Law in 2010 and the Legal Practice Course in 2011. Mike has a particular interest in China and Hong Kong having lived there previously.

About Practical Law China

The best way to experience Practical Law China is to try it

"I have always considered Practical Law resources to be of the highest quality. I particularly like their plain English approach, which is of critical importance in China."

- Robert Lewis, International Managing Partner, Zhong Lun Law Firm

Practical Law China

We want to hear from you

Take part in Practical Law China’s benchmarking survey on market practice on choice of governing law in China-related contracts.

The Practical Law China Consultation board advises on the direction of the service and ensure that it stays at the leading edge of practice

Member Job title and Organisation

Michelle Chen

Director, China Business, Berwin Leighton Paisner, London

John Jiang

Partner, Zhong Lun Law Firm, Beijing

Robert Lewis

International Managing Partner, Zhong Lun Law Firm, Beijing

James Ng

Principal, JN Legal Consulting and Consultant, Wragge & Co, Guangzhou

Tim Smith

Executive, Rouse & Co International, Beijing

Briana Young

Professional Support Lawyer, Herbert Smith Freehills, Hong Kong

Strategic Partner

Practical Law and Zhong Lun Law Firm formed a strategic partnership to create Chinese legal know-how resources in 2011. Zhong Lun Law Firm was the first top-tier Chinese law firm to set up a London office in May 2012.

Our professional support team has worked closely with Zhong Lun lawyers to produce China standard documents on cross-border China M&A transactions.

Contributing firms

We work with leading Chinese and international firms on some of our resources, including the following:

Bird & Bird
DLA Piper
Goodwin Procter
Han Kun
Herbert Smith Freehills
Jun He
King & Wood Mallesons
Norton Rose Fulbright
Risk Advisory Group
Rouse & Co International

For a full list of contributors, please see the China contributors page

About Practical Law China

The best way to experience Practical Law China is to try it

"I have always considered Practical Law resources to be of the highest quality. I particularly like their plain English approach, which is of critical importance in China."

- Robert Lewis, International Managing Partner, Zhong Lun Law Firm

Practical Law China

We want to hear from you

Take part in Practical Law China’s benchmarking survey on market practice on choice of governing law in China-related contracts.

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