GUIDE TO MERGER AND ACQUISITION IN CHINA 2006 CONTENTS CHAPTER 1 BUSINESS SCOPES AND FOREIGN INVESTMENT INDUSTRIAL GUIDANCE CATALOGUE..................................................................................................................................2 CHAPTER 2 APPROVALS OF ESTABLISHEMENT OF FOREIGN-INVESTED ENTERPRISES (“FIEs”)..................................................................................................................3 CHAPTER 3 THE FOREIGN INVESTMENT ESTABLISHMENTS IN CHINA..........................4 Sino-Foreign Joint Ventures......................................................................................................4 Wholly Foreign-Owned Enterprises .........................................................................................5 Foreign-Invested Joint Stock Limited Companies ....................................................................6 Holding Company.....................................................................................................................6 Representative Offices ..............................................................................................................7 CHAPTER 4 TYPES OF MERGER AND ACQUISITION TRANSACTION................................8 Equity Acquisition....................................................................................................................8 Asset Acquisition ......................................................................................................................9 Mergers ..................................................................................................................................11 Offshore Acquisition ...............................................................................................................12 CHAPER 5 APPRAISAL AND CONSIDERATION .....................................................................13 CHAPER 6 REGULATORY APPROVAL PROCESSES FOR ACQUISITION............................14 General Approval ....................................................................................................................14 Antitrust Approval...................................................................................................................18 Miscellaneous Review/ Approval ...........................................................................................21 CHAPTER 7 FOREIGN EXCHANGE CONTROL ......................................................................24 CHAPTER 8 TAXES ISSUES.....................................................................................................25 Enterprise Income Tax ............................................................................................................25 Value Added Tax (“VAT”).......................................................................................................26 Business Tax ...........................................................................................................................27 Stamp Duties ...........................................................................................................................27 Deed Tax ................................................................................................................................27 Custom Duties.........................................................................................................................27 Land Appreciation Tax............................................................................................................28 Tax Considerations in a Merger and Acquisition Transaction.................................................28 Equity Acquisition...........................................................................................................28 Asset Acquisition ............................................................................................................29 Merger............................................................................................................................29 CHAPTER 9 EMPLOYMENT ISSUES......................................................................................30 CHAPTER 10 LATEST DEVELOPMENT.................................................................................32 CONCLUSION..............................................................................................................................35
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