Mumbai: China is planning stricter regulations on foreign acquisition and merger of domestic firms, to ensure that such M&As foster China`s economic growth without threatening its economic security.
China is planning to bring in over 20 supporting regulations for acquisition or merger of domestic companies by foreign firms. These regulations would be in place before the country''''s anti-trust law comes into effect on August 1 next year, reports quoting Cheng Siwei, vice chairman of the standing committee of the national people`s congress, said.
The proposed regulations would help ensure that foreign M&A deals foster China`s economic growth without threatening its economic security, he said.
The antitrust law would bring into focus foreign merger and acquisition for China to see if they posed a potential threat to national security, the news agency report quoted Cheng as saying.
The first criterion would be whether the domestic firms were fairly priced and second whether the deal would lead to company asset growth, the report said.
In terms of the assessment of acquisition effects, the firms'''' assets, which include physical assets, intangible assets and the future added value, should first be valued reasonably. Secondly, it is also important to supervise those foreign enterprises to ensure their business operations abide by the law, he added.