As merger and acquisition activity accelerates in China, the rules and regulations governing such activity are evolving rapidly. This article briefly summarizes China's foreign investment regime and regulatory changes that may affect M&A and private equity transactions by foreign investors.
The first law in modern times permitting foreign investment in China was the Chinese-foreign joint equity venture law adopted in 1979. Since then, and particularly in the last five years pursuant to China's accession to the WTO, China's foreign investment regime has evolved significantly. Recently, the pace of change has accelerated, with new laws, regulations or rules being adopted almost every month.
Most of the foreign investments in China to date have been direct investments in greenfield projects in the form of an equity joint venture (EJV), cooperative joint venture (CJV), wholly foreign-owned enterprise (WFOE), or, to a limited extent, foreign-invested joint stock company limited by shares (FIJSC)....