Chinese Premerger Notification Requirements

October 3, 2005
While the People's Republic of China continues its halting steps toward robust merger control legislation, many foreign investors and companies are not aware that current PRC premerger notification regulations may require notification of and approval for offshore transactions not involving Chinese parties. Under the relatively low mandatory reporting thresholds, offshore transactions where any party has assets in the PRC, has sales in the PRC, has market share in the PRC or will hold direct or indirect assets in the PRC, may be affected. While analysts hope that new legislation under consideration will reduce the burden for purely offshore transactions, investors and businesses alike should be aware of the merger control jurisdiction that China asserts. This article will focus on the existing regulations, transaction thresholds, the process for notification and approval, and the significant changes included in the proposed legislation.